Local Govt 2.pdf

LECTURE NOTES ON PUBLIC SECTOR ACCOUNTING:

EXTERNAL FUNDING FOR MMDAs

ACCT 402: UNIVERSITY OF GHANA BUSINESS SCHOOL, DEPARTMENT OF

ACCOUNTING, LEGON-ACCRA

TABLE OF CONTENTS

1. District Assemblies Common Fund (DACF)

2. District Development Fund

3. Urban Development Grant

4. Social Intervention Fund

5. Others

LOCAL GOVERNMENT ACT 2016

ESTABLISHMENT OF THE DISTRICT ASSEMBLIES COMMON FUND (I)

125. (1) In accordance with Article 252 of the Constitution there shall be a

Fund to be known as the District Assemblies Common Fund. (2) The District Assemblies Common Fund consists of

(a) Moneys allocated by Parliament; and

(b) Any interests and dividends that accrue from the investments of moneys from the Common Fund.

(2) The allocation made by Parliament shall be paid into the Common Fund in quarterly instalments.

(3) The moneys that accrue to the Common Fund shall be distributed among the District Assemblies on the basis of a formula approved by Parliament.

(4) The Administrator of the Common Fund shall submit proposals for the formula to Parliament for consideration within three months after the end of each financial year.

ESTABLISHMENT OF THE DISTRICT ASSEMBLIES COMMON FUND (II)

Parliament to make allocations to District Assemblies for development

126. (1) Parliament shall annually allocate not less than 5% of the total revenue of the country to the District Assemblies for development.

(2) The total revenues of the country includes the revenues collected by or accruing to the central Government other than foreign loans and foreign grants, non-tax revenue,

petroleum revenue paid into the Petroleum Holding Fund under section 3 of the Petroleum Revenue Management Act, 2011 (Act 815) and revenues already collected by or for District Assemblies under any enactment.

(3) The Minister shall, in consultation with the Minister responsible for Finance, determine the category of expenditure of the approved development budget of District Assemblies that must in each year be met out of amounts received by the District Assemblies from the District Assemblies Common Fund.

EXPENSES OF THE COMMON FUND

132. (1) the expenses incurred by the Common Fund shall be a charge on the

Common Fund as approved by Parliament.

(2) Charges including bank charges on transfers and charges on interest shall be charged on the Common Fund.

(3) For the purposes of this section, “expenses” include salaries and allowances.

ACCOUNTS AND AUDIT

133. (1) The Administrator shall keep books of account and proper

records in relation to the accounts of the Common Fund in the form approved by the Auditor-General.

(2) The Administrator shall submit the accounts of the Common Fund to the Auditor-General for audit within three months after the end of the financial year.

(3) The Auditor-General shall, not later than three months after the end of the financial year, audit the accounts and forward a copy of the audit report to Parliament.

ANNUAL REPORT

134. (1) The Administrator shall, within one month after the receipt of

the audit report, submit an annual report to Parliament covering the activities and the operations of the Fund for the year to which the report relates.

(2) The annual report shall include the report of the Auditor- General and shall include the manner in which the Administrator has distributed the moneys lodged in the Common Fund.

Complaints

135. Any person or District Assembly dissatisfied with the performance of

the functions of the Administrator may submit a complaint to the Commission on Human Rights and Administrative Justice.

OUTLINE PRESENTATION OF URBAN DEVELOPMENT GRANT

1. Overview of Local Government Capacity Support Projects (LGCSP)

2. What is Urban Development Grant (UDG)?

3. Objectives of the UDG

4. Expected Outcome

5. Eligibility Criteria

6. Allocation of UGD

7. Disbursement conditionalities

8. Utilisation

OVERVIEW OF LOCAL GOVERNMENT CAPACITY SUPPORT PROJECTS (LGCSP)

•

The LGCSP provides cash transfers to MMAs through the Urban

Development Grant (UDG). The UDG, has a total grant sum of

140,000, 000 USD for a period of five years ending 31

_December

2016 and is open to all 46 Metropolitan and Municipal Assemblies

participating in the LGCSP project.

•

The UDG can only be used to fund social infrastructural projects,

such as educational and health infrastructure, markets and lorry

parks as well as water and sanitation, which has already been

identified in the District Assembly’s approved Medium Term

Development Plan.

•

The funds cannot be used to procure vehicles, office or residential

accommodation for the district assembly and its staff.

WHAT IS URBAN DEVELOPMENT GRANT (UDG)?

•

It is an annual performance based grant to 46 Metropolitan and

Municipal Assemblies (MMAs) from the donor partners

•

It follows most of Government of Ghana (GoG) and District

Development Fund (DDF) principles, rules and procedures

•

It follows and uses the standard Functional Organisational

Assessment Tool (FOAT) assessment but applies an extra set of

UDG performance measures

•

The period of grant is 2012-2016

OBJECTIVES OF THE UDG

•

To improve the management and local service

delivery capabilities of urban Assemblies

•

To begin a transition to greater self-financing of

MMAs over the long term

•

To provide MMAs with an additional source of

funding

EXPECTED OUTCOME

•

Improve predictability of funds transfer for improved

and more realistic annual budgeting

•

Improved quality and timeliness of financial

reporting

•

Register annual auditing of financial statements and

adequate follow ups

ALLOCATION OF UDG

•

The size of the UDG for an MMA in a particular

year will be determined based on

•

MMA`s score on the UDG performance

measures Population and

DISBURSEMENT

CONDITIONALITIES

Preparation and submission of:

1. Work plan and budget

2. Procurement plan

3. Six financial statements for the final six months

of the previous financial year for the first

installment and

4. Six financial statements for the first six months

of the current year for the second instalment

UTILISATION OF FUNDS

•

Shall as much as possible, follow the DDF development menu

Allowable expenditures will be those covered by the approved MTDs

and AAPs

•

As a guiding principle, any expenditure from the UDG should as far

as possible benefit the communities in the MMAs

•

UDG funds, like DDF, can be used for expenditures under items 2 &

item 3

•

Maintenance Items (Goods and Services)

1. Maintenance of community and social infrastructure backed by a

maintenance plan and budget as

2. Plant and machinery

3. General equipment

CONSTRUCTION WORKS (ITEM 3 ASSETS)

1. Contruction of new projects

Consultancy fees

Contractors’ fees

Site preparations

Permit and legal fees

Construction materials

2. Rehabilitation expenses on buildings and Plant and Machinery

Purchase of

Plant and Equipment

Furniture

3. Completion of ongoing abandoned projects

4. Payment for issues related to environmental and social safeguards

such as permit fees and regularisation titles, free planting and

landscaping etc.

DISALLOWABLE EXPENDITURE FOR THE UDG

1. Investments outside the MMAs Medium term development

Plan (MTDPs)

2. Purchase of Cars

3. Purchase of motorbikes and bicycles

4. Construction and furnishing of MMAs administrative

offices and residential accommodations for MMAs staff

5. Investment in loans, other micro credit schemes and other

securities

6. Payment of allowances to Assembly Members and staff

7. Acquisition of lands