- 4 Marks
Question
a) The Public Financial Management Regulation makes the Principal Spending Officer (PSO) personally responsible for all payments of the covered entity. To mitigate possible risk exposure of the PSO during the payment process, the regulations provide guidance to assist approving authorities before signing off any payment.
In recent times, the Auditor-General has faulted PSOs for infractions such as misapplication of funds, misappropriation of funds, and partially accounted payments among others. Similar observations were cited in the 2023 Management Letter of Nipa Ye Municipal Assembly.
Required:
i) With reference to the PFM Regulation 2019, LI 2378, explain the provisions available to the PSO in the payment process before approval.
ii) Distinguish between misapplication of funds and misappropriation of funds as used by the Auditor-General with an example each.
Answer
i) Provisions for the PSO under PFM Regulation 2019 (LI 2378) before payment approval:
According to Section 78 of the PFM Regulation 2019, a Principal Spending Officer of a covered entity is personally responsible for ensuring the following before approving any payment:
- Validity, accuracy, and legality of the claim: The PSO must verify that the claim for payment is lawful and accurate.
- Supporting documents: There must be evidence of services received, work certificates, or other supporting documents before any payment is approved.
- Commitment control process: The commitment for payment must be approved through the Ghana Integrated Financial Management Information System (GIFMIS) by generating a Local Purchase Order (LPO).
- Budgetary control: The PSO must ensure that sufficient unspent appropriation exists for the payment.
- Compliance with regulations: The PSO should ensure that the payment is in line with all applicable laws and financial policies.
ii) Difference between Misapplication of Funds and Misappropriation of Funds:
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Misapplication of Funds: This occurs when funds are used for purposes other than their originally intended use, usually without criminal intent. It may result from administrative errors or negligence.
- Example: Using funds allocated for healthcare to finance an educational project.
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Misappropriation of Funds: This involves the deliberate and illegal use of funds for personal gain or unauthorized purposes. It typically constitutes financial fraud or theft.
- Example: A public official siphoning funds meant for public service delivery into their personal account.
- Uploader: Salamat Hamid