The Controller and Accountant General’s Department says salaries of state agencies will be put on hold if such agencies exceed their compensation budget starting end of July this year.
A circular is expected to be sent to all Ministries, Departments and Agencies (MDAs) to this effect as part of a new policy that will actively involve the Finance Ministry.
The Controller and Accountant General’s Department says it has observed MDAs exceed their budget for salary payment which tends to put a huge financial burden on the state.
“It is obvious that many MMDAs [Municipal, Metropolitan and District Assemblies], MDAs have exceeded their budget for compensation. We are always at the Ministry of Finance to give reasons why salary budgets have been exceeded,” Controller and Accountant General, Eugene Ofosuhene said.
He continued that, “If your salary budget cannot sustain and support the actual payment, we will put a hold on that until the MDA goes to the Finance Ministry to ask for more money under the budget. That’s the pressure so we cannot be paying salaries when we do not have sufficient budget to sustain it.”
The Controller also indicates that 65 per cent of government total expenditure for some time now has gone to pay compensation.
This trend has affected the funding of capital expenditure like road constructions.
“If the government is paying close to about 100 for total expenditure, 65 is going to compensation, once you pay and pay interest on domestic and foreign debt, the money is finished. There is no money to pay capital expenditure, road construction, schools etc,” he said.
“We don’t think it is the best so this government wants to change things. We are more responsible and discipline in the way we do our thing. We want to make sure that we are paying the right people,” he said.
MDAs are now to be conscious of their salaries because staff engaged by the state agencies without financial clearance will not be paid their salaries under the new policy.
Controller Accountant General Department (CAGD) Mandate
The CAGD is mandated to process and pay salaries to all Ministries, Departments and Agencies (MDA), Municipal, Metropolitan and District Assemblies (MMDA) and other subverted agencies.
All the seven or more public universities together with all polytechnics (now technical universities), all the security services, defence department and all subverted agencies are included.
The Controller says all these must be synchronised and made sure that whatever being paid for finally will hit the compensation of the employee’s budget.
What Is Compensation Budget?
The amount of money companies spend on employee compensation each year represents a significant portion of operating expenses. Annual compensation planning involves preparing budgets to address salary increases, salary structure adjustments, promotion increases and variable pay expenditures.
Typically, the budget process occurs well in advance of the fiscal year end so that cost projections can be included in operating budget forecasts for the coming year. Compensation budgeting is often misunderstood, underemphasized and oversimplified.
Many employers tend to factor in only an employee’s annual salary and benefits when considering personnel costs.
But this short-sighted approach can lead to a budget shortfall and employee dissatisfaction – two critical errors that can threaten a company’s operations, culture, profitability and survival.
Ghana Integrated Financial Management Information System (GIFMIS)
The Controller has been speaking at a staff durbar of workers of the Controller and Accountant General’s Department (CAGD) in Kumasi, as part of his visit to the Ashanti Region to acquaint himself with their work.
Mr. Eugene Ofosuhene has asked all public sector accountants to strictly adhere to the Ghana Integrated Financial Management Information System (GIFMIS), the new financial reform scheme for improved financial transparency.
The GIFMIS seeks to promote transparency, efficiency and accountability in public financial management.
He says it is illegal for accountants of MMDAs and MDAs to operate outside the platform.
Mr. Ofosuhene urged workers of the Department to embrace the GIFMIS, which formed part of the reforms to ensure timely dissemination of information for financial management.
The initiative, he said, would improve the effectiveness of revenue collection and maximize payment and commitment control.