The moderating role of the audit committee on internal governance and financial sustainability in local government in Ghana

Abstract

The need to enhance the financial sustainability of municipalities cannot be overemphasised. Despite the presence of internal governance mechanisms and the mandate of the Metropolitan, Municipal and District Assemblies (MMDAs) to raise revenue internally, they are still not financially sustainable because their internal revenue collection has not increased from previous years. Therefore, the study aimed to develop and propose a framework that incorporates how audit committee attributes can strengthen the relationship between the board of directors and internal auditors' attributes for MMDAs to be financially sustainable. Arguing from the perspectives of agency and resource dependency theories, data covering the period 2016 - 2020 were collected from the Ghana Auditor-General's report of the 207 MMDAs purposively selected to measure the financial sustainability of MMDAs. The study used a census balanced panel data design and survey approach to administer 621 structured questionnaires to the chief audit executives, audit committee, and board of directors' chairpersons in the 207 MMDAs. Data collected were analysed using descriptive statistics and partial least-squares structural equation modeling (PLS-SEM). The findings indicated that all the internal governance variables (board size, board independence, board gender diversity, internal auditor independence, internal audit size, internal auditor competence, audit committee meetings, audit committee independence, and audit committee competence) have a direct significant relationship with financial sustainability. The findings also showed that audit committee meetings moderate the relationship between board size, internal auditor independence, internal auditor competence, and financial sustainability. The findings further showed that audit committee competence moderates the relationship between internal auditor competence and financial sustainability. However, audit committee meetings failed to moderate board independence, board gender diversity, internal audit size, internal audit competence, and financial sustainability significantly. Also, audit committee independence and competence failed to moderate the board of directors and internal audit attributes significantly.

Based on the findings, the researcher concludes that as part of the processes of reforming the public financial management system and increasing decentralisation in Ghana, this study has proposed a feasible framework. If adopted and implemented, it can improve internal governance mechanisms, and internally generated revenues, which will enhance the financial sustainability of MMDAs.

Isidingo sokuthuthukisa ukusimama kwezimali komasipala ngeke kugcizelelwe ngokwedlulele. Nakuba zikhona izindlela zokuphatha zangaphakathi kanye negunya leMihlangano Yezifunda Zomasipala, Umasipala kanye Nezifunda (MMDAs) ukuthi ziqoqe imali ngaphakathi, kodwa abakasimami ngokwezimali ngenxa yokuthi ukuqoqwa kwemali yabo engenayo akunyukanga uma kuqhathaniswa neminyaka edlule. Ngakho-ke, ucwaningo luhlose ukwakha kanye nokuphakamisa uhlaka oluhlanganisa ukuthi izici zekomidi locwaningo mabhuku zingaqinisa kanjani ubudlelwano phakathi kwebhodi labaqondisi kanye nezici zabacwaningi mabhuku bangaphakathi ukuze ama-MMDA akwazi ukusimama ngokwezimali. Ngokuphikisana nemibono yenhlangano kanye nemiqondo yokuncika kwezinsiza, ehlanganisa isikhathi sika-2016 - 2020 yaqoqwa embikweni woMcwaningi Mabhuku Jikelele waseGhana wama-MMDA angama-207 akhethwe ngenhloso ukulinganisa ukusimama kwezezimali kwama-MMDA. Ucwaningo lusebenzise umklamo wemininingwane yeqembu elinganiselwe lokubalwa kwabantu kanye nendlela yocwaningo ukuze kuphathwe uhlu lwemibuzo ehlelekile engama-621 kubaphathi abakhulu bamacwaningi mabhuku, ikomiti lokucwaninga amabhuku, kanye nosihlalo bebhodi labaqondisi kuma-MMDA angama-207. Imininingwane eqoqiwe yahlaziywa kusetshenziswa izibalo ezichazayo kanye nesifanekiso esilinganisela ubudlelwano phakathi kokuguquguquka okucashile (PLS-SEM). Okutholakele kuveze ukuthi zonke izinto eziguquguqukayo zokuphatha kwangaphakathi (ubukhulu bebhodi, ukuzimela kwebhodi, ukwehluka kobulili bebhodi, ukuzimela komcwaningi mabhuku wangaphakathi, ubukhulu bocwaningo mabhuku lwangaphakathi, ikhono lomcwaningi mabhuku wangaphakathi, imihlangano yekomiti lokucwaninga amabhuku, ukuzimela kwekomiti locwaningo mabhuku kanye nekhono lekomidi lokucwaninga amabhuku) zinobudlelwano obubalulekile obuqondile. ngokusimama kwezezimali. Okutholakele kuphinde kwakhombisa ukuthi imihlangano yekomidi locwaningo mabhuku yengamela ubudlelwano phakathi kobukhulu bebhodi, ukuzimela komcwaningi mabhuku wangaphakathi, ikhono lomcwaningi mabhuku wangaphakathi, kanye nokusimama kwezimali. Okutholakele kuphinde kwakhombisa ukuthi ikhono lekomidi lokucwaningwa kwamabhuku lengamela ubudlelwano phakathi kwekhono lomcwaningi mabhuku wangaphakathi kanye nokusimama kwezimali. Kodwa-ke, vi imihlangano yekomidi locwaningo mabhuku yehlulekile ukwengamela ukuzimela kwebhodi, ukwehluka kobulili bebhodi, ubukhulu bocwaningo mabhuku lwangaphakathi, ikhono lokucwaninga amabhuku kwangaphakathi, kanye nokusimama kwezimali kakhulu. Futhi, ukuzimela nekhono lekomidi lokucwaninga amabhuku kwehlulekile ukwengamela ibhodi labaqondisi kanye nezici zocwaningo lwangaphakathi. Ngokusekelwe kokutholakele, umcwaningi uphethe ngokuthi njengengxenye yezinqubo zokuguqula uhlelo lokuphathwa kwezimali zikahulumeni kanye nokwandisa ukwabiwa kwezindawo eGhana, lolu cwaningo luphakamise uhlaka olungenzeka. Uma lwamukelwe futhi lwasetshenziswa, lungathuthukisa izindlela zokuphatha zangaphakathi, kanye nemali engenayo etholwa ngaphakathi, okuzothuthukisa ukusimama kwezezimali kwama-MMDA.

Tlhokego ya go tokafatsa tsweledisego ya ditšhelete ya bommasepala e botlhokwa thata. Le mororo go na le mekgwatiriso ya ka fa gare ya taolo le taolelo ya Dikokoanotheomolao tsa Mmasepala wa ditoropokgolo, Mmasepala wa ditoropo le Mmasepala wa dikgaolo (di-MMDA) go oketsa lotseno la ka fa gare, ditšhelete tsa tsone di sa ntse di sa tsweledisege ka ntlha ya gore kgobokanyo ya tsone ya lotseno la ka fa gare ga e a oketsega dingwageng tse di fetileng. Ka ga jalo, thutopatlisiso e ikaelela go tlhama le go tshitsinya letlhomeso le le tsenyeletsang tsela e dipharologantsho tsa komiti ya boruni di ka tiisang ka gone kamano fa gare ga boto ya bakaedi le dipharologantsho tsa moruni wa ka fa gare go dira gore ditšhelete tsa di-MMDA di tsweledisege. Mabaka a neelwa go lebilwe tiori e e ka ga kamano ya batho ba ba mo taolong le tsamaiso ya setheo le ditiori tse di tsepamisang mo go ikaegeng ga setheo se se rileng ka setheo se sengwe go bona metswedithuso ya sone, deitha e e akaretsang paka ya 2016 - 2020 e kgobokantswe go tswa mo pegelong ya Moruni-Kakaretso wa kwa Ghana ya di-MMDA di le 207 tse di tlhophilweng ka lebaka la go lekanyetsa tsweledisego ya ditšhelete ya di-MMDA. Thutopatlisiso e dirisitse tsela ya go lebelela batsayakarolo botlhe ka nako e le nngwe le mokgwatiriso wa go kgobokanya deitha ka go botsa batho dipotso tse di amanang le tlhotlhomiso go tsamaisa dipotsolotso tse di kgobokanyang deitha di le 621 mo bakhuduthamageng-bagolo ba boruni, komiti ya boruni, le badulasetilo ba boto ya bakaedi mo di-MMDA di le 207. Deitha e e kgobokantsweng e sekasekilwe ka go dirisa dipalopalo tse di sobokanyang le go tlhalosa deitha le mokgwa o o dirisiwang go fopholetsa kamano e e raraaneng fa gare ga dipharologantsho tse di farologaneng (PLS-SEM). Diphitlhelelo di kaile gore dipharologantsho tsotlhe tsa taolo ya ka fa gare (bogolo jwa boto, boikemedi jwa boto, go akarediwa ga bong jo bo farologaneng mo botong, boikemedi jwa moruni wa ka fa gare, bogolo jwa boruni jwa ka fa gare, bokgoni jwa moruni wa ka fa gare, dikopano tsa komiti ya boruni, boikemedi jwa komiti ya boruni, le bokgoni jwa komiti ya boruni) di na le kamano ka tlhamalalo le tsweledisego ya ditšhelete tsa setheo. Gape diphitlhelelo di bontshitse gore dikopano tsa komiti ya boruni di lekanyetsa kamano fa gare ga bogolo jwa boto, boikemedi jwa moruni wa ka fa gare, bokgoni jwa moruni wa ka fa gare, le tsweledisego ya ditšhelete tsa setheo. Diphitlhelelo viii di bontsha go ya pele gore bokgoni jwa komiti ya boruni bo lekanyetsa kamano fa gare ga bokgoni jwa moruni wa ka fa gare le tsweledisego ya ditšhelete tsa setheo. Le fa go ntse jalo, dikopano tsa komiti ya boruni di paletswe ke go lekanyetsa boikemedi jwa boto, go akarediwa ga bong jo bo farologaneng mo botong, bogolo jwa boruni jwa ka fa gare, bokgoni jwa boruni jwa ka fa gare, le tsweledisego ya ditšhelete tsa setheo mo go bonalang. Gape, boikemedi le bokgoni jwa komiti ya boruni bo paletswe ke go lekanyetsa dipharologantsho tsa boto ya bakaedi le tsa boruni jwa ka fa gare mo go bonalang. Go ya ka diphitlhelelo, motlhotlhomisi o swetsa ka gore jaaka karolo ya ditirego tsa go tokafatsa mokgwatsamaiso wa taolo ya ditšhelete tsa puso le go oketsa go anamisiwa ga taolo ya bothati-gare go dikarolwana tse dingwe kwa Ghana, thutopatlisiso eno e tshitsintse letlhomeso le le ka dirisiwang bonolo. Fa le ka amogelwa le go tsenngwa tirisong, le ka tokafatsa mekgwatiriso ya taolo ya ka fa gare, le lotseno le le dirilweng ka fa gare, moo go tla oketsang tsweledisego ya ditšhelete ya di-MMDA.