21 January 2014

Nigeria: Auditor-General Replies Leadership - Why We Can't Audit NNPC Accounts

The Office of the Auditor-General of the Federation (OAuGF) has admitted that it is facing ethical and professional threats including shortcomings in carrying out its constitutional mandate of periodically checking and vetting the accounts of the Nigerian National Petroleum Corporation (NNPC) and other government statutory organisations.

The admission was contained in OAUGF's reply to LEADERSHIP's request for a report of the audited financial account of the NNPC in the last five years.

The letter, dated January 15, 2014, with reference number 158/GEN.CORR.AGF/275 and signed by F. O. Eliminhele for the auditor-general of the federation, Mr Samuel T. Ukura, said that, despite the threats and shortcomings, the audit report which LEADERSHIP requested was not available because "the OAuGF does not audit the accounts of NNPC for now in line with provisions of Section 85 (3) (b) of the Constitution (as amended )".

While Section 85 (2) of the 1999 Constitution empowers the auditor-general of the federation or anyone authorised by him to audit "the public accounts of the Federation and of all offices and courts of the Federation" and submit his report to the National Assembly, Subsection 3 of Section 85 reads: "Nothing in subsection (2) of this section shall be construed as authorising the Auditor-General to audit the accounts of or appoint auditors for government statutory corporations, commissions, authorities, agencies, including all persons and bodies established by an Act of the National Assembly". However, the auditor-general shall provide NNPC and similar bodies with a list of qualified external auditors to choose from, guide on fees to pay the external auditors, comment on their accounts and the external auditor's reports.

Also, subsection 4 of Section 85 empowers the auditor-general to "conduct checks of all government statutory corporations, commissions, authorities, agencies, including all persons and bodies established by an Act of the National Assembly".

Highlighting its shortcomings in auditing the NNPC account, the OAuGF said, "There have been some ethical and professional threats hampering the capability of OAuGF to carry out the vetting and periodic checks of the Accounts of Government Statutory Corporations, Commissions etc including NNPC Operations (as a conglomerate with about 20 sub-organisations, 12 Government Agencies) and about 30 companies (subject to issuance of new licenses) operating in the oil and gas Industry in accordance with sections 85(4)and comment on same having been audited by NNPC appointed Auditors in line with section 85(3)(b) as a consolidated report of this kind that would meet your need.

"It is hoped that once the Audit Act is passed into law, these threats shall be mitigated by proper repositioning of the OAuGF to carry out the audit of these Institutions. Consequently, the OAuGF does not audit the accounts of NNPC for now in line with the provisions of section 85(3)(b) of the Constitution as earlier stated."

The auditor-general pointed out that the burgeoning of NNPC's operations since the oil boom of the 1970s and failure of the Audit Act to capture the various reforms in the oil sector have hampered the capacity of his office periodically check and vet the audit report of government statutory organisations.

LEADERSHIP's request, on the strength of the Freedom of Information Act (FOI), is anchored on the controversy surrounding the non- repatriation of oil revenue by NNPC as alleged by the governor of the Central Bank of Nigeria (CBN), Sanusi Lamido Sanusi, in an official memo to President Goodluck Jonathan. Sanusi had claimed that NNPC failed to repatriate $49.8bn of oil revenue to the federation account.

But reconciliation meetings held by the coordinating minister for the economy, Ngozi Okonjo-Iweala, reduced the disputed amount to $10.8bn while the NNPC recently claimed that it spent the said $10.8bn on payments for fuel and kerosene subsidies as well as to protect oil installations from vandalism.

LEADERSHIP invoked the FOI law and wrote to the NNPC, the National Assembly and CBN for information within their respective domains on the controversial revenue, but none of them has replied.

With respect to addressing its failure in discharging its constitutional duty of checking and vetting audited reports of the NNPC and other statutory organisations, the OAuGF said it is carrying out reforms which include training and knowledge-sharing in the audit of oil and gas accounts, engaging consultants to train its staff in oil and gas auditing, recruitment of professional accountants and pursuing the amendment of the Audit Act of 1958 by the National Assembly.

LEADERSHIP checks showed that the OAuGF has been poorly funded and understaffed in recent years and these have incapacitated it to discharge its functions. It was gathered that many government offices and courts have not had their accounts audited in years. For example, some Nigerian missions overseas have not seen an auditor in the last 20 years. The auditor-general is charged with, among other functions, enforcing accountability responsibility in ministries and extra-ministerial developments or any other person or authority entrusted with public funds; ensuring prudent disbursement and utilisation of public funds, manpower resources and other public properties, using the economy, efficiency and effectiveness of audit technique; ensuring regular and prompt audit of all ministries and extra-ministerial departments, and maintaining government auditing standard for public sector audit.


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