The Guardian
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‘How NNPC’s forensic audit was done’

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NNPC-GMD-DAWHA

NNPC GMD, Joseph Dawha

INDICATIONS have emerged that the international audit company, which handled the forensic audit of the nation’s oil company actually labeled the report as below “examination or a review in accordance with Generally Accepted Auditing Standards (GAAS) or attestation standards.

GAAS audits are traditional financial statement audits, with the requirement for the auditor to provide an opinion or assurance on financial statement, while a forensic audit on the other hand is specific to a matter for investigation, which does not require the forensic auditor to provide assurance or opinion on the financial status, but provide answers to specific matter being investigated.

According to authoritative sources, the company has reiterated that it was more imperative for the disclaimer to be presented in situations where the forensic auditor would not have received all the information required or indeed doubts the “reasonableness” of any information provided.

Recently, the forensic audit of the Nigerian National Petroleum Corporation (NNPC), which was commissioned to unravel the alleged missing $20 billion from the returns of the corporation, is currently enmeshed with criticisms and suspicion over its result and public disclosure.

The sources said that GAAS audit focuses on two key issues involving the independent auditors looking for evidence that the statements conform to principles and deciding if the statements fairly represent the company’s financial position in all material aspects, but noted that this type of audit is unlikely to reveal financial statement fraud.

In this case it was more imperative for the disclaimer to be presented in situations where the forensic auditor would not have received all the information required or indeed doubts the ‘reasonableness’ of any information provided. Two key areas of concern here are:

Citing examples, the sources listed that lack of information on NPDC for which remittances of over $5 billion were not made to the Federation account and additional expenses of $2.8 billion submitted as claims.

In these cases, the auditors clearly presented that these were not submitted to the Senate and raised questions as to whether these relate to crude operations.

In a note titled: “Clarifications on Comments on PwC NNPC Forensic Audit”, obtained by The Guardian, from the sources, the Nigerian National Petroleum Corporation (NNPC) provided transaction documents for additional costs of $2.81billion incurred not directly related to crude oil processing.

The note showed that the auditor stated clearly in their report that the government needs to clarify if such deductions should be made by NNPC as a first line charge, before remitting the net proceeds of domestic crude to the federation accounts.

It also showed that the auditor stressed that if these are deemed not to be valid deductions, then the amount due from NNPC would be estimated at $2.07 billion, beside the expected known remittances from the oil company.

On the scope of assignment, the sources said it was restricted to checking allegations made by the former Governor of the Central Bank of Nigeria on unremitted funds for a specific period of 15months.

The auditor was also expected to look at submissions that had been made to the Senate, adding that public expectations that the audit covered all of NNPC’s operations and looking at all records in details are not practicable, even as it was not part of the term of engagement.

The sources also noted that it appeared that after submitting the initial report, NNPC had more information available and that the report also clearly drew a line on the information received after November 2014.

By the development, they argued that it was virtually impossible for any professional that has been ‘compromised’ to provide that level of detail that has obviously been misunderstood by those who are not knowledgeable.


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