Question Tag: Public Funds

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  • 6 Marks

PSAF – Nov 2016 – L2 – Q2b – The context of public financial management.

Explaining key financial management provisions in the 1992 Constitution.

State and explain FOUR key financial management provisions in the 1992 Constitution. (6 marks)

i) Responsibility Accounting: The constitution defines clearly the powers and responsibilities of financial stewards (individual office holders) and their precise roles and functions, e.g., the appointment and roles of the Auditor General.

ii) Approval and Authorization Policies: It defines clearly approval and authorization policies, e.g., loans shall be approved by Parliament.

iii) Revenue Policies: The constitution has outlined revenue policies to regulate the revenue function, e.g., all revenues, receipts, and trust monies shall be paid into the Consolidated Fund.

iv) Establishment of Public Funds: The constitution establishes public funds for efficient management of government business.

v) Financial Management and Accounting Practices: Public sector financial management practices established by the constitution include:

Public debts charged to the Consolidated Fund.
The Bank of Ghana as the central bank in charge of monetary policy.
Establishment of public corporations.
vi) Imposition of Taxes: The right to impose taxes in Ghana is vested in Parliament.

  • 4 Marks

PSAF – Nov 2016 – L2 – Q2d – Public Expenditure and Financial Accountability Framework.

Identifying essential provisions of the Financial Administration Act to protect public funds.

In Ghana, the government has enacted the Financial Administration Act, 2003 and the Financial Administration Regulations (L.I. 1802) to ensure that public funds and resources are properly safeguarded and are used economically, efficiently, effectively and with due propriety.

Required:
Identify TWO essential provisions of the Financial Administration Act and Regulations meant to protect public funds and safeguard public resources and property. (4 marks)

The Act and Regulations:

i) Establish the Consolidated Fund, the central mechanism for the control of public finances, outlining the principle by which funds are collected into the consolidated fund, kept, and disbursed.

ii) Establish the modalities for the collection of revenue.

iii) Establish budgetary control over public finances related to revenue and expenditure and to receipts and payments. For example, it outlines government borrowing and lending, transactions in trust moneys, and any other transactions occurring within the Consolidated Fund.

iv) Describe the conditions under which appropriations are made. Government expenditure is subject to annual legislative appropriation.

v) Establish the mechanism by which the Controller and Accountant General ensures that payments from appropriations are lawfully made. No payment must be made except in a manner provided by law. Specific enactments may give continuing authority for payments such as charged expenditure.

vi) Establish principles under which Government Accounts are managed and kept, the preparation of government accounts, and the reporting of final accounts of government.

vii) Describe the management and accountability of Government stores.

viii) Outlines the establishment and operations of revolving funds.

(2 marks for 2 points = 4 marks)

  • 4 Marks

PSAF – Nov 2016 – L2 – Q2c – The context of public financial management.

Explaining modalities for making payments out of the Consolidated Fund.

Explain FOUR modalities for making payments out of the Consolidated Fund. (4 marks)

i) Payments should be approved by Parliament in the Appropriation Act according to the purpose described and within the limits set by item classification.

ii) Release of funds to government entities shall be in accordance with warrants issued by the Ministry of Finance and copied to the Controller and Accountant General.

iii) A valid obligation must exist before making a payment, e.g., supplier performs contract and submits invoices to institutions for processing and payment.

iv) All payments must be certified by the head of department or an authorized officer accountable for the use of public monies.

v) A competent person must certify that goods have been received or services have been carried out as expected.

vi) The invoice and other documents requesting payment must be correct, suitable for payment, and the creditor properly identified.

vii) The approval process of the MDA must be fully followed.

  • 5 Marks

PSAF – July 2023 – L2 – Q5c – Public sector financing initiatives

Outline the sources of income for the District Assembly Common Fund (DACF) and the Petroleum Holding Fund (PHF).

In accordance with Article 175 of the Constitution of the Republic of Ghana, the Public Funds of Ghana consist of the Consolidated Fund, Contingency Fund, and such Other Funds as may be established by or under the authority of an Act of Parliament. Other Funds established by or under the authority of an Act of Parliament include the District Assembly Common Fund (DACF) and the Petroleum Holding Fund (PHF).

Required:
With respect to each fund (DACF and PHF), outline THREE (3) sources of income.

Sources of Income for DACF:

  1. 2.5% of VAT:
    A statutory transfer of 2.5% of Value Added Tax (VAT) receipts is made to the DACF monthly.
  2. Other Moneys Allocated by Parliament:
    Parliament may allocate other funds to the DACF as necessary, in addition to the statutory transfer.
  3. Donations, Grants, and Gifts:
    The DACF can receive income from donations, grants, and gifts from various sources, both domestic and international.

Sources of Income for PHF:

  1. Royalties from Oil and Gas:
    Royalties paid by oil and gas companies operating in Ghana are a primary source of income for the PHF.
  2. Revenues from Direct or Indirect Participation:
    Revenues derived from the government’s direct or indirect participation in petroleum operations, including state-owned enterprise (SOE) shares, contribute to the PHF.
  3. Corporate Income Taxes:
    Taxes levied on the profits of upstream and midstream petroleum companies operating in Ghana are also a significant source of revenue for the PHF.
  • 3 Marks

PSAF – March 2024 – L2 – Q5b – The context of public financial management

Discuss the constitutional provisions for authorizing withdrawals from public funds.

The 1992 Constitution of the Republic of Ghana is the supreme framework for public financial management in Ghana. To protect the public purse, the Constitution makes provision on authorizing withdrawal from public funds.

Required:
In relation to public financial management, discuss THREE (3) ways of authorizing withdrawal from the public funds under the 1992 Constitution. (3 marks)

The withdrawal of discretionary expenditure from public funds should be authorized by:

  1. An Appropriation Act: Withdrawal from public funds is permitted when the budget is approved by a resolution of Parliament.
  2. A Supplementary Budget Approved: Where Parliament approves a supplementary estimate laid before it, withdrawal can be made.
  3. Request for Expenditure Approved in Advance of Appropriation: The Constitution also envisages a situation where a budget cannot come into force by 1st January and permits the President to request Parliament to allow spending prior to the approval of the budget. When such a request is approved, it constitutes appropriate authority to withdraw from the public funds.
  • 10 Marks

PSAF – May 2018 – L2 – Q2a – The context of public financial management

Define a Covered Entity, Public Funds, and identify sources for the Sinking Fund under the PFM Act 2016.

The Public Financial Management (PFM) Act 2016, Act 921 applies to a covered entity and a public officer responsible for receiving, using, or managing public funds. The PFM Act, Act 921 provides for the creation of a sinking fund by the Minister to be used to redeem specific debt obligations of the Government.

Required:
i) What is “a Covered Entity” as defined by the PFM Act 2016, Act 921? (3 marks)

ii) What is “Public Funds” as defined by the PFM Act 2016, Act 921? (2 marks)

iii) Identify FIVE sources of money for the sinking fund. (5 marks)

i) The PFM Act 2016 defines a covered entity to mean:

  • Executive, Legislature, and Judiciary;
  • Constitutional bodies;
  • Ministries, Departments, Agencies, and local government authorities;
  • The public service, autonomous agencies;
  • Statutory bodies.

(3 marks maximum)

ii) The PFM Act, consistent with the 1992 Constitution, defines public funds as:

  • The Consolidated Fund, the Contingency Fund, and any other fund established by or under an Act of Parliament.

(2 marks maximum)

iii) Under the PFM Act, the following are the sources of money for the sinking fund:

  • Periodic contributions of specified amounts determined by the Minister as part of the annual budget.
  • Repayment inflows of money on-lent by the Ministry to covered entities, state-owned enterprises, and public corporations.
  • Moneys that accrue to the Fund from the investment of moneys of the Fund.
  • Moneys borrowed or raised from capital markets for the purpose of redemption of existing debts.
  • Moneys approved by Parliament for debt repayment under subsection (4) of section 23 of the Petroleum Revenue Management Act 2011 (Act 815).
  • Any other moneys that the Minister, with the approval of Parliament, determines to be paid into the Fund.

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