Lawyer and Deloitte Partner, Yaw Appiah Lartey, has urged the State Interests and Governance Authority (SIGA) to separate commercial entities from public-service institutions in its reporting to provide a more accurate picture of the performance of state-owned entities.

According to him, combining institutions established primarily to provide public services with profit-making entities can distort the overall assessment of their financial performance.

Speaking on JoyNews’ Newsfile on Saturday, September 5, Mr Appiah Laryea said SIGA should streamline its reporting based on the nature and mandate of the entities under its supervision.

He explained that about 90% of the entities covered by the report are engaged in commercial activities, while roughly 10% are public-service institutions or special-purpose vehicles.

He argued that commercial entities should be assessed primarily on profitability and operational performance, while public-service institutions should be evaluated based on the services they are mandated to provide.

“We should not engage in consolidating entities that are engaged in pure public service with entities that are engaged in commercial activities. That is misreported.”

Mr Appiah Lartey cited the Ghana Education Trust Fund (GETFund) as an example of how such aggregation could produce misleading results.

According to him, about 99% of GETFund’s revenue comes from parliamentary allocations, meaning that its reported financial position can reflect government funding rather than the kind of commercial profitability expected of a business entity.

“And so over time, once we are merging public service institutions with commercial or profit-making institutions, you have this problem,” he said.

Separate reporting categories

Mr Appiah Laryea proposed that SIGA establish separate reporting categories for profit-making entities and institutions whose primary responsibility is the delivery of public services.

“All profit-making organizations or entities are reported as one. All public service or non-profit-making organizations that are just providing public service, like building schools, whatever they are supposed to do, are also reported separately,” he said.

He further argued that consolidation should only be undertaken where entities operate within comparable sectors and environments.

Audited accounts improve

Despite his concerns about the classification of entities, Mr Appiah Laryea commended SIGA and government for improvements in the submission of audited financial statements.

He noted that the number of entities that submitted audited accounts increased from 53 in the previous reporting period to 108 in the latest report.

“So audited financial statements increased from 53 to 108. So that's an improved corporate governance framework, and we must commend government or the SIGA for it,” he said.

However, he stressed that submitting audited financial statements alone does not constitute full compliance with corporate governance requirements.

He said state-owned entities must also ensure that their financial statements go through the appropriate governance processes, including annual general meetings (AGMs).

“If you just submit your financial statement without having a general meeting or annual general meeting, that does not meet the overall corporate governance requirements,” he cautioned.

“We should not just be interested in just submitting financial statement. We should ensure that that financial statement has properly gone through the mill, including having annual general meetings,” he added.

Mr Appiah Laryea’s comments come amid discussions over SIGA’s latest State Ownership Report and how best to measure the financial and operational performance of Ghana’s state-owned entities.