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How Nigeria can recover billions through audit

By Charles Ofomata
16 January 2020   |   3:36 am
The Office of the Auditor General of the Federation (OAuGF) has just recently published the audited report for the financial statements of the federation for the year ended

The Office of the Auditor General of the Federation (OAuGF) has just recently published the audited report for the financial statements of the federation for the year ended 31st December 2017 otherwise called the 2017 audit report. This is coming 19 months after the end of the year to which the report relates.

The long delay in the release of the report is totally unacceptable, more worrisome is the fact that despite the long delay in releasing the report, 265 agencies of government are yet to submit their audited financial statements to the Auditor General up to the end of 2017, 160 agencies have not submitted up to December 2016 while 11 agencies have never submitted their financial statements since inception.

The report observed that Revenue Generating Agencies and other Ministries, Departments and Agencies who deduct the statutory Withholding Taxes, Value Added Taxes, Stamp Duty, Capital Gains Tax and other statutory taxes did not carry out their duties appropriately to the benefit of the Federal Government, thereby leading to a significant reduction in revenue accruable to the Federal Government.

Firstly, 16 revenue-generating agencies did not remit a total of nineteen Billion, twenty-five Million, three hundred and eighty-four thousand, one hundred Naira, twenty-nine Kobo (N19,025,384,100.29) to the Consolidated Revenue Fund, with the Bureau of Public Enterprise (BPE) topping the list of unremitted Revenue, with the sum of Seven Billion, Five Hundred and Eighty-Five Million, One Hundred and Sixteen Thousand, Four Hundred Naira (₦7,585,116,400.00). Revenue Generating Agencies dissipate funds on excessive overhead expenditure and extra-budgetary expenditure on contracts thereby reducing their operating surplus.

Furthermore, twenty-six (26) of the MDAs that were audited did not deduct and/or remit a total of N1,650,417,379.30 (One billion, six hundred and fifty million, four hundred and seventeen thousand, three hundred and seventy-nine naira, thirty kobo). Overall, audit found that the sum of N20,675,801,479.59 (Twenty billion, six hundred and seventy-five million, eight hundred and one thousand, four hundred and seventy-nine naira, fifty-nine kobo) in various Taxes (PAYE, WHT, VAT, etc.) in the year under review, was not remitted to the Consolidated Revenue Fund of the Federal government by Ministries, Departments, and Agencies (MDAs).

The report further reviewed the payments procedures and policies in MDAs against the standing Regulations and Policies of the Federal Government and found out that several payments totaling Twenty-six billion, six hundred and four million, five hundred and fifteen thousand, three hundred and seventy-four naira and fifty-five kobo (26,604,515,374.55) was made with a total of 140 infractions identified in the payments made by the MDAs. The sum of N8,608,588,928.68 was expended in 25 infractions without presenting Payment Vouchers to justify the payments made in the transactions, which is contrary to the provisions of FR 601, which states “All payment entries in the cash book/accounts shall be vouched for on one of the prescribed treasury forms. Vouchers shall be made out in favor of the person or persons to whom the money is actually due. Under no circumstances shall a cheque be raised or cash paid for services for which a voucher has not been raised.” Also, a total of 10 MDAs embarked on International Travels and Trainings without requisite approval from the appropriate authorities as specified in Extant Circulars, thereby, expending the sum of N2,660,420,450.05 on International Travels despite strict restriction placed on it.

Furthermore, the sum of N2,789,475,927.84 was expended without providing supporting documents to the Payment Vouchers in 22 infractions in the MDAs. The auditor General further reports: We assessed the compliance of MDAs with Section 19 (a-j) of the Public Procurement Act (PPA) 2007 and other extant rules and regulations in relation to public procurement. We discovered fifty-one (51) transactions, across several MDAs, that did not comply with the provisions of the Public Procurement Act, 2007.

A total of twenty-seven billion, eight hundred and thirty-three million, three hundred and fifty-one thousand, eight hundred and fifty-six naira, eighty-three kobo (₦27,833,351,856.83) was expended in various contract-related transactions that are reflective of waste or loss of public funds. The degree of violation of the Public Procurement Act ranges from ignoring due process, over-invoicing/contracts’ prices inflation, payments for contracts/services not executed and other forms of deviations from the Act.

The Audit report further states: We reviewed the granting of cash advances to staff across MDAs in compliance with relevant rules and regulations and found out that the sum of One Billion, Four Hundred and ten Million, two Hundred and fifty-four Thousand, eight hundred and three Naira and sixty-eight Kobo (₦1,410,254,803.68) remained unretired Cash Advances granted by twenty-nine (26) MDAS.

Furthermore, the sum of one billion, one hundred and ninety-five million, six hundred and fifty-two thousand, six hundred and sixty-naira, six kobo (₦1,195,652,660.06) was granted, as cash advances by twenty-one (21) MDAs above the threshold of ₦200,000.00 which indicates circumvention of procurement processes and avoidance of tax deductions. While in three (3) MDAs, the sum of one billion, five hundred and thirty-four million, six hundred and one thousand, nine hundred and eighty-nine naira, sixty-one kobo (₦1,534,601,989.61) was unrecovered loans.

One thing is identifying breaches in public fiancé management just as has been exposed in the 2017 audit report but even more important are steps and measures to recover the funds and equally prevent further breaches. It is obvious from the above that about 80 billion Naira has either been mismanaged, misapplied, misappropriated or stolen. This is definitely a huge loss to the treasury especially at a time when the country is facing serious revenue challenges.

Unfortunately, there are so many hindrances to the ability of the office of the Auditor-General to be able to recover the huge sums above and prevent future occurrences. Most of these hindrances will be redressed by the yet to be passed Federal Audit Service bill which seeks to empower the Auditor General to among other things surcharge the amount of any expenditure which has not been duly brought into the account or the amount of any loss or deficiency incurred, and also revoke any surcharge imposed by him, direct the withholding of the emoluments and allowances of any person who fails or refuses to reply to audit queries within 30 days and for as long as the person fails to comply, have unrestricted access to persons, documents, records and other information necessary for the proper discharge of his statutory duties.

The bill also states that the Auditor-General may, in the course of exercising his powers or performing his functions, summon a person as witness to give evidence either orally or in writing. And that where a person is summoned as a witness and the person refuses or fails to appear, without any reasonable excuse, the Auditor-General may issue a warrant to the police for his arrest.

Any person who intentionally gives false evidence either orally or in writing as a witness commits the offence of perjury. It shall be an offence under this Act for a person -without lawful justification or excuse to willfully hinder or resist the Auditor-General or any person authorized by the Auditor-General in the performance of his functions, refuse or fail to comply with any lawful request, order or directives of the Auditor-General or any person authorized by him, or refuse or fail to give to the Auditor-General or any person authorized by the Auditor-General, access to any property, books, records, returns or other documents.

With this kind of empowerment, the office of the Auditor General of the Federation will be better positioned to effectively recover funds such as detailed above and more importantly prevent future losses to the treasury.
Ofomata wrote from Centre for Social Justice CSJ, Abuja.