LET'S BRACE FOR CHALLENGES AHEAD (P.24) 17-09-08

Story: Kofi Yeboah

THE Chief of Staff and Minister for Presidential Affairs, Mr Kwadwo Mpiani, has called on the public sector to brace itself for the challenges ahead as the nation aspires to become an investment destination, a middle-income and an oil-producing country.
“It is only appropriate that the public sector braces itself with the appropriate principles, concepts, methodologies and tools required for effective risk management in the public sector,” he said.
Mr Mpiani made the call in Accra yesterday when he opened the third annual Internal Audit Forum on the theme, “Risk management in the public sector: The role of internal auditing”.
The two-day forum, which is under the auspices of the Internal Audit Agency (IAA), is being attended by chief directors, chief executives and heads of ministries, departments and agencies (MDAs), as well as metropolitan, municipal and district assemblies (MMDAs).
It is in pursuance of Section 3 (2) (f) of the Internal Audit Agency Act, 2003 (Act 658), which requires the IAA to ensure that risks are adequately managed in MDAs and MMDAs.
The participants are discussing practical ways of identifying, assessing, mitigating and monitoring risks in the public sector.
Mr Mpiani observed that events around the world, such as natural disasters, economic declines, unstable fuel and commodity supply and prices, food shortages and environmental pollution, posed challenges that ought to be addressed by “carefully crafted risk management strategies that are relevant to their contexts and rooted in internationally accepted best practices”.
Floods, fire, non-maintenance of state assets, poor record keeping and financial fraud were among the risk factors that the Chief of Staff believed starred the country at the moment.
He disagreed with the suggestion that risk was a natural phenomenon about which nothing could be done, contending that while some risks related to events that could not be determined, “structured foresight and insight can be brought to bear on carefully-designed and executed risk management procedures to minimise the consequences and impact of the occurrence of these undesirable events”.
Mr Mpiani said risk management was an integral component of good corporate governance and urged public sector institutions to manage risk continuously in all aspects of their institutions.
He charged chief executives in the public sector to ensure that their respective organisations developed and implemented a risk management framework, as well as provided risk implementation guide, by June 2009.
Furthermore, he said they must accelerate work on the Internal Audit Regulations in order to provide the necessary legislative framework for risk management in the public sector.
The Chairman of the Internal Audit Board, Mr Samuel Crabbe, said risk management was about getting the right balance between innovation and change, on the one hand, and the avoidance of shocks and crises, on the other.
He said risk was unavoidable and so every organisation needed to take action to manage risk in a way that it could justify.
“Risk management organises what cannot be organised because individuals, corporations and governments have little choice to do so,” he remarked.
Mr Crabbe stressed the need for all public sector institutions to appreciate risk management and organise themselves in the face of deepening uncertainties, adding, “We must formalise the management of risk and incorporate it into all our activities.”
The Director-General of the IAA, Mr Patrick Nomo, said there was an improvement in the practice and status of internal auditing in MDAs and MMDAs at the end of August 2008, compared with the situation in 2005.
At the moment, 201 out of 342 MDAs and MMDAs have established and staffed their Internal Audit Units (IAUs), compared to 58 in 2005.
Again, 207 of the institutions have now established their Audit Report Implementation Committees, as against 16 in 2005, while 126 of them have signed Internal Audit Charters to ensure that internal auditors get unrestricted access to records and information within their organisations, compared to seven in 2005.
Mr Nomo said although there was no such thing as a risk-free environment, many risks could be avoided, reduced or eliminated through effective risk management practice.
He, therefore, urged public sector organisations to integrate risk management into their operations.