Legislative Financial Oversight in Ghana

Table of Contents

Background and Introduction

The Nature of PACs

Review of Relevant Literature

Addressing the Argument on Institutional Contextual Variables

The Role of Public Accounts Committees

Factors that Influence effective Parliamentary Scrutiny of Public Funds

Results

Conclusion

References

Abstracts

Parliamentary financial accountability is one of the most important elements of good financial governance. In particular, financial oversight responsibility of parliament over the activities of the executive branch of government play a significant role in ensuring value for money for the use of public funds. In the ex post oversight functions of parliament, public accounts committees (PACs) are the main mechanisms that parliaments within the Commonwealth framework employ to perform financial oversight responsibilities. The study examines the role of the Public Accounts Committee of Ghana (PAC) and discusses some of the key internal and external structural issues most likely to affect the performance of the Committee. The study makes recommendations on best practices needed to improve the Committee´s performance. Data for the study were obtained from interviews with Members of the Public Accounts Committee of Ghana, Staff of the Ghana Audit Service, Financial Accountability Experts and Civil Society Organizations in the field of good financial governance.

Background and Introduction

Public accounts committees are parliamentary institutions by which Westminster-style parliaments exercise their role in the oversight of public funds. As former British colonies gained independence and established their respective parliaments, their government structure was modeled after the British Westminster style parliament and as a result, had their respective PACs. (Commonwealth Parliamentary Association report 2006). It is noted that changes in the nature of governments have affected the original model of this committee. Also, other parliaments such as Ethiopia, Rwanda, Finland and most recently Morocco have adopted this committee in their parliamentary financial accountability framework. (Stapenhurst et al. 2008; Wehner 2003:21).

The first national PAC was established in Denmark in 1851. However, a detailed global archetype of public accounts committee is traced to the British PAC. (Stapenhurst et al. 2012:4; Pelizzo and Stapenhurst 2008:118). Leigh (2007) provides a detailed historical account and explained how William Gladstone in 1859 played an influential role in the creation of the Committee of Public Accounts in the UK. After many unsuccessful attempts to create this committee, Gladstone in 1861 moved for the motion for the committee´s establishment. In 1862, the House of Commons passed a Standing Order to make the committee permanent.ⁱ The committee has existed till present day and has become very common in many Commonwealth countries.

The Public Accounts Committee is one of the standing committees of the Parliament of Ghana. The Committee was established under the first Parliament of the Fourth Republic in 1993 and has been in existence up to date. The legitimacy of the PAC is traced to the provisions of the 1992 Republican Constitution. Article 103 (1) specifically asserts that parliament shall appoint standing committees and other committees as may be necessary for the effective discharge of its functions. Clause (2) of this article opines that the standing committees shall be appointed at the first meeting of parliament after the election of the Speaker and the deputy Speakers. Clause (3) of this provision argues that the committees of Parliament shall be charged with such functions, including the investigation and inquiry into the activities and administration of ministries and departments as Parliament may determine; and such investigation and inquiries may extend to proposals for legislation. Clause (5) states that "the composition of the committees shall, as much as possible, reflect the different shades of opinion in Parliament". (The Constitution of the Republic of Ghana 1992: 71-72)

The Nature of PACs

The committee is institutionalized in many forms. It could be by a country´s constitution, the standing orders of parliament or by an Act of parliament. With the exception of Australia where the chairperson of the committee is a government member, in most cases in the Commonwealth, opposition members are given most prominent positions such as that of the chairmanship. This practice emerged out of strong conventions or sometimes from the parliamentary standing orders as it is aimed at giving the opposition a fair chance to exercise its parliamentary oversight of government´s operations. Presently, the committee is seen as an important means to ensure parliamentary financial scrutiny of the government´s operations and a vehicle to achieving transparency and accountability of public funds.

Review of Relevant Literature

Until recently, not adequate information had been published on how to improve the work of public accounts committees to addressing public financial accountability. (Wehner 2003:21). Generally, literature on legislative oversight had predominantly focused on established industrial democracies and not on developing ones. Very recent publications on public accounts committees are recorded by Stapenhurst et al. 2012; Hedger and Blick 2008; Stapenhurst, Pelizzo, et al 2008; Wehner (2003) and few others. The World Bank Institute and the Commonwealth Parliamentary Association (CPA) have also been contributing through academic research to the development of public accounts committees and parliamentary oversight in general.

Within the Commonwealth framework, PACs occupy a key area at the apex of legislatures´ scrutiny and oversight processes. (Hedger and Blick 2008 op, cit.). It is one of the most important standing committees of parliaments. Wehner strongly argues that PAC is the ultimate institutional judge in the ex post assurance process. (Wehner 2003:24). McGee (2002), with the support of the World Bank Institute embarked on a survey research in 52 national and state/provincial parliaments in countries of the Commonwealth and beyond in Africa, Asia, Australasia, Canada and the United Kingdom. The study was carried out across 170 parliaments and legislatures. Respondents were asked several open ended questions in a designed questionnaire that explored ways to enhance parliamentary scrutiny of public funds. In this study, public accounts committee of parliaments and the Auditor General were identified as two major institutions that played most important role in ensuring public financial accountability. McGee recommended that a cordial relationship between the two institutions were necessary to enhance the committee´s performance. Arguing on the committee´s performance, he acknowledged that the different context upon which PACs operated determined the reason why some PACs were more successful than others. McGee´s study specifically concluded that "parliament´s most important committee in the area of oversight and scrutiny is undoubtedly the Public Accounts Committee". (McGee 2002:1-9).

In 2005, Stapenhurst et al. sought to further deepen the analysis of McGee´s survey, because, they observed that McGee failed to adequately identify the factors that were needed to enhance the effectiveness of PACs. Their study sought to define PACs successes and identify those factors that impacted on PACs performance. Again, selected respondents within the Commonwealth Parliamentary Association were asked to respond to several close and open ended questions. The study employed both qualitative and quantitative methods in their data collection and analysis. In the final analysis, they argued that specific institutional factors accounted for the successes and failures of the committee. Factors such as the committee´s power to investigate all past and present government expenses and the power to follow up on government actions in response to the committees´ recommendations were identified as key factors that determined the performance of the committee. Like McGee, Stapenhurst et al. observed that the committees´ relationship with the Auditor-General played an important role in the performance of the committee. The conclusion drawn from the two research accounts is that the contexts upon which PACs operate play an important role in the successes or failures of the committee. This study agrees with the observations of the two research account. However, with regard to the relationship between the auditor general and public accounts committees it is noted that the findings of both accounts fails to adequately establish the kind of relationship that needed to exist between the PAC and the AGs department to effectively ensure public financial accountability. The study fills this gap with detailed review of the financial accountability concept and the purposes upon which the two institutions were established.

Addressing the Argument on Institutional Contextual Variables

Wehner (2003) in his comparative study of public accounts committees in the Commonwealth argued that "although PACs in the Commonwealth are remarkably similar, at the same time, they operated in vastly different contexts, which give rise to rather different challenges and opportunities to the committee". (Wehner 2003:22). Wehner recommended that these critical contextual issues needed to be addressed. Hedger and Blick (2008) in their work on: "How to Improve the Effectiveness of Public Accounts Committees" observed that “the effectiveness of the PAC did not only depend on the committees´ features but also on the political, economic, social and cultural context in which the committee operated. (Hedger and Blick 2008: 1). The key observation in this study was that any effort aimed to strengthen the work of public accounts committees to ensure financial probity, efficiency and value for money must appreciate and address those specific factors that could promote and inhibits such reforms within the distinctive circumstances of specific countries. (Ibid: 1). Similarly, Premchand (1999) argued that one of the key strategies to improve public financial accountability is to look into the work of these institutions and ascertain as to why their full potential is not realized. (Premchand 1999: 60). In the same vein, Rabrenovic´ strongly emphasized that (...) "it is not in dispute that each country finds its own financial accountability system, best suited to the local institutional environments and culture". (Rabrenovic´ 2009: 24). Nakamura followed this discussion and specifically argued that (...) "in thinking about legislatures oversight function, it is important to examine time, societal context and execution branches as both enabling and limiting oversight". (Nakamura 2008: 6). The study builds on the institutional argument of David Judge (2005) that (...) "institutions do not exist in isolation and they have to be studied in their relations with other institutions and the social, economic and political contexts in which they operate". (Judge 2005:1-2).

The Role of Public Accounts Committees

With the exception of Australia where the PAC has an additional role to examine government estimates, public account committees basically perform their assigned role through the examination of public finances after expenditure by government has occurred. (Ex post oversight). PACs scrutinize the accounts of government to ensure that money voted by parliament has been spent according to the purpose upon which the money was appropriated. PACs examine the effectiveness of public expenditure to ensure that value for money has been achieved. The committee in many parliaments serves as the audit committee of parliament. This position makes PACs one of the most important institutions in public financial accountability. It is further argued that PACs can equally investigate specific issues such as government accountability to parliament regarding expenses approved by the government, effectiveness and efficiency of government-enacted policies, and the quality of the administration. (Pelizzo and Stapenhurst 2008:120).

Wehner (2003) shared the view of Erskine May and made the following observation which remains very critical in understanding the exact role of public accounts committee. It was observed that:

The aim of PAC is not on policy and neither is the committee interested in whether policy is carried out efficiently, effectively nor economically. The committee´s main concern is to ensure that public monies are applied for the purposes prescribed by parliament, that extravagance and waste are minimized and sound financial practices are encouraged in estimating and contracting, and in administration, generally. The main work of the committee is to make officials answer for their actions, raise questionable issues and place them within the public domain. The committee´s mandate is not to question policies although policies could result from PACs reports but to raise issues in the public domain. The committee is not meant to directly impose and enforce sanctions on officials implicated in the AGs reports. (Wehner 2003:19).

As an audit committee of parliament, PACs have become increasingly involved not only in financial auditing but, also in performance auditing just like the Auditor General. This newly assigned role is to help ensure more transparency and value for money for the use of public funds.

Factors that Influence effective Parliamentary Scrutiny of Public Funds

In 2005, Wang developed a comprehensive framework for analyzing accountability relationship between the executive and the legislature. The model sought to explain the basic workings of the horizontal accountability relationship between these two institutions. Wang´s model specifically explains the parliamentary function most central to holding the executive accountable. Wang called these legitimation and decisional/influence functions. These two functions were sub-divided into social legitimacy and policy making function of parliament. The social legitimacy and policy making function of parliament according to Wang were based on a set of internal and external variables. Wang argued that "the legislature´s basic accountability relationship to the executive is expected to be determined by social legitimacy, constitutional powers and external agents". These factors were identified as external agents. On the other hand, factors such as committee system, party and party groups and various characteristics of the chamber were identified as internal variables that reinforced parliamentary accountability function.

Wang cautioned that internal variables such as the administrative structure and party and electoral system should be assessed when considering the workings of the internal legislative environment. He observed that "the party and electoral system impact substantially on the party groups in parliament and their relationship to the executive". (Ibid.4). One of the important points made in this framework as part of the external factors was the institution of the judiciary. This point according to Wang could be assessed based on the potential conflict between parliament and the judiciary. At the end, it was argued that in practice it was not possible to make a direct distinction between external and internal variables. This notwithstanding, the framework presents an extensive information that helps to analyze the accountability function of parliament in relation to the executive branch of government. Wang´s model helps us to identify some of the contextual variables most likely to impact on the accountability function of parliament. (Wang2005:1-21).

In the CPA report, Wehner argued that a comprehensive financial scrutiny is achieved when parliament safeguard and makes a purposeful contribution towards meeting the public expenditure management objectives of affordability, prioritization and value for money. (Wehner 2001:8-9). In identifying the factors that affect effective oversight of public funds, Gray and Jenkins observed that:

"Budget day is pure theatre, more suited to the talents of parliamentary eccentrics than to a serious appraisal of alternative policies...On the expenditure side, parliamentary procedures run in parallel to the real decisions, being peripheral though constitutionally necessary. The estimate cycle does not provide MPs with a mechanism for articulating their priorities". (Gray and Jenkins 1983:170)

Pilkington on similar account observed that there was very little public or parliamentary input into the estimate procedure. (Pilkington 1997:48). Similarly, Bird noted that although legislators have to approve expenditure budgets, the exercise is not effectively done. He opined that "very detailed technical statements are presented by expert departmental officials to be considered by a large inexpert legislature in the form of debate". (Bird 1973: 31). Shephard on the other hand argued that the behavior of parliamentarians can be a factor in determining the effectiveness of parliament in executive oversight. (Shephard 2008: 183). On the part of Ghanaian Parliament, Dapaah- the chairman of the public accounts committee of Ghana from 2009-2013 has publicly argued that instead of parliament to engage in effective oversight of public funds, MPs have turned this exercise into shameless political game to suit their own partisan interests.ⁱⁱ

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ⁱ http://www.parliament.uk/documents/commons-committees/public-accounts/pac-history-booklet-pdf-version-pl.pdf.

ⁱⁱ http://politics.myjoyonline.com/pages/news/201208/92000.php