GRA-SML deal: Akufo-Addo told to set up a 3-member team to study the KMPG report and suggest way forward

After SML was engaged, a Chamber of Bulk Oil Distributors’ industry report, a 2021 Ernst & Young audit report commissioned by GRA and a report by the Revenue Assurance and Compliance Enforcement of the Ministry of Finance all found that there might be underreporting, under-declaration and potential revenue leakages.

“On three occasions (between June 2017 and September 2017), GRA sought approvalfrom the Public Procurement Authority (“PPA”) to use the single source procurementmethod to engage SML to provide transaction audit services.

KPMG also found that there was no evidence that the 2018 and 2019 contracts (transaction audit services, external price verification, and downstream petroleum audits) were submitted to the GRA Board for discussion and approval contrary to the GRA Act, Corporate Governance Manual for Governing Boards/Councils of the Public Services, and sound and accepted corporate governance practices.

The GRA Board approved the extension of SML’s services to cover the auditing of the upstream petroleum and minerals sectors, as specified in the 2023 Contract.

“Regarding the transaction audit services, KPMG concluded that SML partially delivered onthe service requirements.

This is also partly due to GRA’s lack of instituting monitoring and evaluation processes toassess the performance of the service and hold its personnel and SML accountable fornon-performance.

“Regarding the external price verification services, KPMG concluded that SML deliveredpartially on the service requirements and that, given the observations made during theinvestigations, GRA may not have obtained all the expected benefits from the service.

Regarding the downstream petroleum audit services, KPMG determined that there was an incremental volume of 1.7 billion litres and an incremental tax revenue of GHS 2.45 billion for the period under review.

“There were also qualitative benefits, including a 24/7 electronic real-time monitoring of the outflow and partial monitoring of inflows of petroleum products at depots where SML had installed flowmeters.

Other qualitative benefits include six levels of reconciliation done by SML to prevent revenue losses to GRA and the sharing of discrepancy reports with GRA to follow up.

“SML had yet to implement the upstream petroleum audit and minerals audit services, and therefore, there could be no assessment as to whether GRA would derive value or benefit from that service.

During itsinvestigation, KPMG noted that such transaction monitoring services are usually pricedusing a fixed fee pricing model.