• The Scope of Financial Activities of government has expanded tremendously since the country gained its independence and therefore there is the need to restructure, reform and decentralize methods and management of financial operations to reflect the diversity of public financial management in Ghana;
• Stewardship and Control is the act of protecting public property and money and control involves having the power or ability to make decisions. In the exercise of stewardship and control a head of government department is expected to produce quarterly profiles of reports about his/her unit. He is also responsible for undertaken the following:
  o Control of expenditure;
  o Handle unexpected events;
  o Control cash limits;
  o In some cases he may be called upon to produce a summary of economic prospects of his organisation.
  o Control problems resulting from excessive bureaucracy will be improved through greater delegation of power and decentralization.
• Local government authorities are best suited to plan, initiate, coordinate, manage and execute policies in respect of all matters affecting the local people since they are familiar with the environment.
• Enhancing and sustaining public accountability obviously require decentralization of public financial management because the lack of control at the local level makes it difficult to take financial decisions.
• Decentralized financial administration may reduce cost of making decisions and bringing financial administration closer to the local citizens especially in matters of revenue collection and management.

The Government of Ghana (GoG) in 1988 embarked upon the implementation of a comprehensive decentralization policy and local government reform program aimed at establishing efficient decentralized government machinery as a means to provide strong support for participatory development. This was further given a boost by Chapter 20 of the 1992 Constitution. Article 240 (1) of the Constitution provides that, ‘Ghana shall have a system of Local Government and administration, which shall as far as practicable, be decentralized’. The Constitution further provides that:

• Parliament shall formulate laws to enhance the capacity of Local Government Authorities to plan, initiate, co-ordinate, manage and execute policies in respect of matters affecting the local people within their areas.
• There shall be established for each Local Government unit a sound financial base with adequate and reliable sources of revenue.
• To ensure accountability of Local Government authorities, people in particular local government areas shall, as far as practicable be afforded the opportunity to participate effectively in governance.

In order to operationalise the above, the Local Government Act, 1993 (Act 462) was passed to outline in practical terms the political, administrative and fiscal mandates of the Metropolitan, Municipal and District Assemblies (MMDAs) in their areas of jurisdiction.

Act 462 seeks to establish decentralized administration through the transfer of power, authority, functions ,competence and means from the Central Government Ministries, Departments and Agencies (MDAs) to local government (LG) units, specifically i.e the Metropolitan, Municipal and District Assemblies (MMDAs) for improved service delivery to people.

In Ghana, Fiscal Decentralization seeks to ensure the transfer of adequate financial resources from central Government to Local Governments with sufficient autonomy to allocate these resources in the provision of socio-economic services.

i. Management Of Devolved Financial Resources

• Provision of local services;
• Level of local taxation and revenues (rates, fees, fines);
• Government’s ability to finance other projects, especially capital projects;
• Resource mobilization.

ii. Public Accountability And Public Budgeting

• Resource allocation;
• Public debates or stakeholder consultation;
• Administrative /organisational system.
• Answerability to communities.

iii. Financial And Budgetary Control

• Compliance to financial rules, laws and objectives of organization;
• Effective and efficient expenditure management;
• Judicious use of MMDA funds and other resources;
• Safeguarding of assets of assembly;

iv. Political Empowerment

• Administrative control;
• Capacity building;
• Economic development (local and national);
• Full complimentary and timely financial support by central government, donor;agencies, NGO’s, etc.