The Ghana Revenue Authority (GRA) failed to deduct GH¢13.38 million in VAT from payments made to Strategic Mobilisation (Ghana) Limited (SML) over an eight-month period, the full KPMG report has revealed.

According to the report, between September 1, 2020 and April 30, 2021, a bulk payment to SML covering invoices for an eight-month period had no VAT or Withholding Tax deductions.

“This contradicts GRA’s standard practice of deducting such taxes for payments to SML between June 1, 2020 and August 31, 2023,” the full report of the KPMG released by President Akufo-Addo stated.

The report said, additionally, SML failed to fulfil its statutory obligations by neither filing returns nor remitting these taxes to GRA.

Pursuant to Section 71(1) of the GRA Act, SML owes GRA GH¢18.50 million in accrued interest on its tax liability as of January 31, 2024, the report noted.

It added that consequently, the total liability incurred by SML amounts to GH¢31.88 million.

“At the time of our review, we noticed the discrepancy and informed GRA, leading to their subsequent communication with SML, demanding settlement of the outstanding amount,” the report added.

Contract Terms Review

KPMG stated that covered firms should also ensure that any contracts in which the Government of Ghana (GoG) is a party are examined by institutional legal resources and, if necessary, the Attorney-General to ensure that the contract terms do not disadvantage the GoG.

“For contracts that include the GoG as a party, it is advised that the Attorney-General, who serves as the principal legal advisor to the government, reviews the contract to ensure the terms are compliant with all relevant laws and the interests of the government are protected and not exposed to any avoidable financial or reputational liabilities,” the report stressed.

According to KPMG, the Office of the Attorney-General and the Ministry of Justice should also develop standardised terms and conditions that include key clauses such as intellectual property rights, indemnity, and termination provisions in all contracts.

This measure will ensure the interests of the GoG and public entities are protected in every agreement.

“Additionally, in cases where a contract holder oversees the preparation of a contract, the legal team should conduct a thorough review to align the clauses to the benefit of the covered entity and GoG,” he said.

BOT Model

GRA should consider creating contracts for significant system installations based on Build-Operate-Transfer (BOT) models as an alternative, KPMG recommended.

It explained that this would ensure that GRA retains ownership of the asset while leveraging the vendor’s experience and resources in system deployment, knowledge transfer/training, and maintenance support.

VfM Assessments

The report said GRA should perform Value-for-Money (VfM) assessments biennially for contracts exceeding a lifespan of two years to optimise benefits.

“Additionally, contracts with durations less than two years should undergo one-time or annual assessments as agreed by both parties to ensure and monitor efficiency and VfM.

PFMA Compliance

The report reiterated that one major area that needs to be examined is Section 33 of the Public Financial Management Act (PFMA) 2016, (Act 921), which requires multi-year expenditure commitments to be approved by the Minister of Finance and Parliament.

It stated that while this is an important accountability measure, the Act’s current absence of a clear threshold may result in an excessive number of agreements being presented to Parliament.

For KPMG, this could lead to delays and administrative bottlenecks in the approval process and ultimately, commencement of key projects.

“A reasonable threshold that balances accountability and efficiency should be considered as an amendment to the Act to enhance implementation.

“In addition, it appears compliance with this section of the Act is not widespread,” the report noted.

Contracts Monitoring

It recommended that GRA should develop a contract monitoring framework to govern the evaluation of the performance of significant contracts.

This is because the contracts make provision for periodic monitoring and evaluation assessment of the effectiveness of the performance of the contract.

According to KPMG, at a minimum, the framework should set out appropriate governance structures to oversee and demand accountability on the status and performance of the contract.

It should also identify the contract owner who will be accountable for the contract as well as individuals who will be responsible for facilitating and monitoring performance against the defined metrics, provide feedback and guidance to the consultant, and address any concerns or issues promptly.

It again wants the framework to outline the timing and nature of information (updates or reports) to be shared with the Executive Management team and the Board for review.

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