The Auditor General is unhappy with the Kumasi Metropolitan Assembly (KMA) for using monies allocated to it by government for development under the District Assembly’s Common Fund (DACF) to pay a judgment debt.
It said in some instances, the monies were used on recurring expenditure.
The findings are contained in a management letter on the District Assembly’s Common Fund and other statutory funds of KMA for the year ended December 31, 2020.
The Auditor General notes that management of the Assembly used the District Assembly Common Fund (DACF) allocations to settle judgment debts totalling ¢670,720.78.
The four contractors named to have been paid are Kerecom Company Limited, Sapso Construction Limited, Saboabu Enterprise and Osbon Enterprise.
In all cases, the Assembly defaulted in payment of contractual debts which the contractors sought legal action against the Assembly with the Court awarding judgment debts in favour of the contractors.
According to the Auditor General, the inability of management to honour payment obligations to the contractors at the due dates and failure on the part of management to resort to arbitration instead of court settlement resulted in huge debts.
The report says the use of DACF funds to pay judgment debts that were not budgeted for deprived the Assembly of the needed funds to provide needed amenities to improve the living conditions of their constituents.
Also, guidelines for the utilisation of the District Assembly Common Fund for the 2019 fiscal year, district assemblies are required to spend not more than 20% of their allocation on administration.
But a review by the Auditor General of disbursement from the DACF revealed that management disbursed more than 20% of their allocations on administration without any justification.
It blames the lack of effective control for curtailing recurrent expenditure coupled with the availability of funds in the DACF accounts as the cause of the non-compliance to the guidelines.
In the same management report, the auditor general says contrary to financial regulations, management of the Assembly paid Osbon Enterprise a total amount of ¢607,186.00 instead of the contract sum of ¢585,404.16 resulting in an overpayment of ¢21,781.84 to the contractor.
The management did not justify the excess payment in variation, material price fluctuation claim, or additional works.
According to the report, the irregularity occurred because the works engineer did not keep and update records on the contract. The overpayment has resulted in a loss of ¢21,781.84 to the Assembly, the report noted.
The report recommended that the overpayment of ¢21,781.84 should be recovered from the contractor or, in default, the Coordinating Director (Akuamoah Boateng); David Abbam Adjei (Finance Officer) and the Works Engineer (David Ameyaw), who approved the payment to be jointly held liable to refund the amount.
According to the report, the Management of KMA, has not responded to the audit observation.
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