Audit Company KPMG has recommended to President Akufo-Addo to terminate the upstream petroleum and minerals audit service provided to the Ghana Revenue Authority (GRA) by Strategic Mobilisation Ghana Limited (SML).
In a five-page press release on Wednesday, April 24, 2024, the President accepted KKPMG’s recommendations on the basis that no payments had been made for those services.
“The upstream petroleum audit and minerals audit services have not yet been commenced, and no payments have been made in respect of those services; therefore, they may be terminated.”
The decision follows a KPMG audit into contracts involving GRA and SML, amid allegations of irregularities and controversy.
However, recognizing the potential to prevent significant revenue leakages through these audits, the President has directed that the Ministry of Finance and the GRA conduct a comprehensive technical needs assessment, value-for-money assessment, and stakeholder engagements before implementing such services.
Additionally, the President has also approved the termination of “transaction audit and external price verification services,” noting that KPMG’s investigation revealed GRA’s partial benefit from these services due to inadequate monitoring to ensure that SML performed according to the contracts.
KPMG also found that the GRA introduced external price verification tools within its Integrated Customs Management System (ICUMS), rendering reliance on SML for external price verification redundant.
However, there was positive news for SML’s downstream petroleum audit services. The President acknowledged that these services have provided significant benefits to the state.
“There has been an increase in volumes of 1.7 billion litres and an increase in tax revenue to the State of GHS 2.45 billion. KPMG also observed that there were qualitative benefits, including a 24/7 electronic real-time monitoring of outflow and partial monitoring of inflows of petroleum products at depots where SML had installed flowmeters and six levels of reconciliation done by SML.”
“This minimises the occurrence of under-declarations. However, it is important to review the contract for downstream petroleum audit services, particularly the fee structure. Given the experience and proficiency of SML over the last four years of providing this service, the President has directed that the fee structure be changed from a variable to a fixed fee structure. Other provisions of the contract worth reviewing include clauses on intellectual property rights, termination, and service delivery expectations.”
This decision comes in the wake of an investigative report by The Fourth Estate, which raised allegations of irregularities in a multi-million dollar contract awarded to SML by GRA. In response, both GRA and SML denied any wrongdoing, and SML has since initiated legal action against The Fourth Estate for alleged defamation.
The President has requested that the Ministry of Finance and the GRA implement these directives immediately and provide his office with updates on the steps taken.
