The Nigeria Extractive Industries Transparency Initiative (NEITI) will commence a comprehensive and independent audit of the fiscal allocation and statutory disbursements of the extractive industries revenue funds from the federation account to Nigeria's three tiers of government.
The audit will amongst other objectives establish how funds from the account were distributed and received by the federal, state and local government councils.
A statement from NEITI Sunday in Abuja stated that the Federal Executive Council (FEC), presided over by President Goodluck Jonathan, approved the project at its last meeting on Wednesday, November 28.
NEITI said in the statement that the audit was equally designed to provide base line information and data to the three tiers of government on the basis of computation of who gets what, how and why.
It added that the exercise would also explain if each of the three tiers gets from the funds their actual due.
Accordingly, emphasis will be laid on the application and utilisation of the funds by the various beneficiaries at the federal, state and local government levels, while the 13 per cent derivation and relevant institutions that directly receive allocation from the federation account will be covered as well.
NEITI also noted that the audit is expected to review policies and procedures in the disbursement and utilisation of extractive revenue funds by the three tiers of government and that major agencies to be covered by it include the Niger Delta Development Commission (NDDC), Petroleum Development Technology Fund (PDTF), Central Bank of Nigeria (CBN) and the Federal Government's share of derivation and ecology funds.
It said: "The audit will also investigate the administration and application of excess crude oil accounts, the 13% derivation, allocation to states and local government councils, as well as ecological funds operations.
"During the exercise, the NEITI audit will specifically ask questions and seek answers for details of receipts into the federation account from the oil and gas, mining sector, and validate allocations to federal, state and local government areas made from the Federation Account Allocation Committee (FAAC).
"The exercise will also establish the balance in the federation account during the period under review (2007 - 2011)."
NEITI further stated that it would appraise, analyse and validate any deduction made from the funds before allocation by FAAC and seek justification(s) for such deduction(s).
"The Federal Government's budget for each year showing the amount projected to be received from the oil and gas sector in particular will be examined against the budget to each entity," it said.
Speaking on the importance of the exercise, the Executive Secretary of NEITI, Mrs. Zainab Ahmed, expressed confidence that the exercise would provide the baseline information and data required to block any leakage in the system, and identify potential opportunities to channel oil, gas and mining revenues to areas of critical national needs with a view to reducing poverty in Nigeria.
Ahmed explained that the Fiscal Allocation and Statutory Disbursement Audit would provide enough information and data required to restore the trust of Nigerian citizens in the governance process and rebuild institutional confidence among the three tiers of government.
She said: "It is also an important step by NEITI to ensure that huge revenues from the natural resources in our country are used to uplift the people through grassroots-based development in all the nooks and crannies of the nation."