Deloitte Partner: Ghana SOE AGM Corporate Governance Compliance Beyond Financials

• Deloitte Partner Yaw Appiah Lartey cautioned Ghanaian state-owned enterprises (SOEs) that submitting audited financial statements alone is insufficient for full corporate governance compliance.
• He stressed that SOEs must also hold Annual General Meetings (AGMs) to properly scrutinize and approve their financial reports.
• While the number of SOEs submitting audited accounts increased significantly from 53 to 108, this positive trend does not negate the need for AGMs.
• Lartey commended the government and the State Interests and Governance Authority (SIGA) for the improved reporting but urged a focus on comprehensive governance processes.
• He also suggested SIGA differentiate its assessment criteria for commercially oriented SOEs versus public service institutions.

His emphasis on the necessity of Annual General Meetings highlights that the true value of financial reporting lies in its scrutiny and approval by appropriate corporate structures, rather than just its mere existence.

Yaw Appiah Lartey, a distinguished Lawyer and Partner and Africa Leader for Infrastructure & Capital Projects (I&CP) and Economic Advisory in Deloitte Africa, and Government and Public Sector Industry Deputy Leader, recently issued a significant caution to state-owned enterprises (SOEs) in Ghana. His remarks, made during an appearance on JoyNews’ Newsfile on Saturday, September 5, underscored a critical gap in corporate governance practices. Lartey emphasized that merely submitting audited financial statements, while a positive step, does not fulfill the comprehensive corporate governance requirements expected of these entities.

His intervention comes amidst ongoing discussions surrounding the latest State Ownership Report issued by the State Interests and Governance Authority (SIGA). These conversations are part of a broader national effort aimed at enhancing transparency, accountability, and overall corporate governance across Ghana’s extensive portfolio of state-owned entities. While acknowledging the commendable progress in financial reporting, Lartey highlighted that the process extends far beyond just filing documents.

The Deloitte partner pointed out a notable improvement in the number of state entities submitting audited accounts, which saw a significant rise from 53 in the previous reporting cycle to 108 in the most recent period. He lauded both the government and SIGA for this positive development, recognizing it as a clear indication of progress in the corporate governance framework. However, he stressed that this advancement, while welcome, represents only one facet of robust corporate governance, urging SOEs to ensure their financial statements undergo proper scrutiny through established governance processes.

For Ghana State Owned Enterprises, compliance with corporate governance requirements necessitates more than just timely financial disclosures. Mr. Lartey articulated that the submission of audited financial statements, without the crucial step of holding an Annual General Meeting (AGM), falls short of meeting the overall corporate governance standards. He asserted that financial statements must be properly subjected to the required governance processes, which inherently include active deliberation and approval at an AGM.

The increase in audited financial statement submissions, from 53 to 108 entities, was indeed a positive indicator of improved adherence to reporting deadlines. This progress, as noted by Lartey, reflects positively on the efforts of the government and the State Interests and Governance Authority (SIGA) in promoting better oversight. However, he underscored that this achievement, while commendable, should not be mistaken for complete Ghana SOE AGM corporate governance compliance. The SIGA corporate governance report discussions, therefore, must extend beyond mere submission rates to the quality and completeness of governance processes.

Furthermore, Lartey proposed a nuanced approach for SIGA’s assessment of state entities. He argued that the performance metrics for commercially oriented organizations should be distinct from those applied to institutions primarily established to provide public services. This differentiation, he suggested, is essential because the two categories inherently require different measures of performance and accountability, ensuring that assessments are fair and relevant to their respective mandates.

The implications of Mr. Lartey’s counsel are significant for Ghana SOE AGM corporate governance compliance and the broader landscape of public sector accountability. His emphasis on the necessity of Annual General Meetings highlights that the true value of financial reporting lies in its scrutiny and approval by appropriate corporate structures, rather than just its mere existence. This perspective is crucial for fostering genuine transparency and accountability within these vital state-owned entities.

Compliance officers and legal advisors to Ghanaian SOEs are thus urged to review their entities' corporate governance practices to ensure AGMs are actively held. The message is clear: simply meeting reporting deadlines by submitting audited accounts is insufficient for full compliance and could attract further scrutiny from the State Interests and Governance Authority. The call is for SOEs and SIGA alike to move beyond a tick-box approach to governance, focusing instead on ensuring that financial statements "properly go through the mill," including robust discussions and approvals at AGMs.

This proactive stance is vital for strengthening the integrity of Ghana’s state-owned sector. By ensuring that financial statements are not just filed but are thoroughly examined and approved through formal governance mechanisms like AGMs, SOEs can demonstrate a deeper commitment to their fiduciary responsibilities and contribute more effectively to national development goals.

Compliance officers and legal advisors to Ghanaian SOEs should review their entities' corporate governance practices to ensure Annual General Meetings (AGMs) are actively held, as merely submitting audited financial statements is insufficient for full compliance and could attract SIGA scrutiny.

Source: Original reporting via Emma Ankrah for Carbonatix