Flaws in government accounts! [N54 Billion wrongly posted...34 Ministries/Agencies default on budget]

From John-Abba Ogbodo, TheGuardian News:
Nigeria seems to be fast descending into an era when officials and institutions of the Federal Government no longer have common facts on the state of the treasury.

There are fears that if the trend continues, the figures emanating from keepers of the treasury may no longer be realistic for budgeting and socioeconomic planning.

A further insight into a report sent by officials of the Federal Ministry of Finance to the National Assembly, on how the Nigerian National Petroleum Corporation (NNPC) reportedly mismanaged the country’s resources, indicates a serious disagreement between the Auditor-General of the Federation (AFG) and the Office of the Accountant-General of the Federation (OAGF) over financial records of the country.


Among the issues in dispute are non-compliance with the time limit for submitting the yearly accounts of the government to the appropriate authorities and posting of some figures to the wrong sections or units, and non-verification of certain funds for the period under review.

The Auditor-General, who queried the records of the OAGF in the report, claimed that N54 billion pensions fund was wrongly posted.

In his yearly report for 2010, which he submitted to the National Assembly, the Auditor-General, Samuel Ukura, said the submissions made in two tranches by the OAGF in two different copies in June and November 2011 contravened the Fiscal Responsibility Act in use in the country.

"The financial statements numbers 1 to 4 with notes to the accounts were first submitted by the Office of the Accountant General of the Federation to my office on June 1, 2011 and re-submitted on November 10, 2011. 

"The submissions in June and November contravene section 49(1) and (2) of the Fiscal Responsibility Act 2007, which states that (i) ‘the Federal Government shall publish their audited accounts not later than six months following the end of the financial year,’ (ii) Federal Government shall, not later than two years following the commencement of this Act and thereafter, not later than seven months following the end of each financial year, consolidate and publish in the mass media, the audited accounts of the previous year. This section, particularly section 49(2) meant that if the Accountant-General of the Federation was to comply with the law in reference to section 2, he should have submitted the financial statements to my office on or before April 2011 considering my responsibility under section 85(5) of 1999 constitution."

He, therefore, asked the Accountant-General to explain the late submission of “the financial statements to my office which makes it impossible for the Federal Government to comply with section 49 (1) of the Fiscal Responsibility Act 2007.’’

The report added that the bank statements of other funds of the government amounting to about N326.3 billion for the year under review were not made available for verification, adding that “the sources of the figures in respect of one per cent Ecological Fund, 0.5 per cent Stabilization Fund and 1.68 per cent Development of Natural Resources could not be confirmed because they were not included in the documents provided by Revenue and Investment Department in OAGF.”

The AGF continued: “The figure of N21,897,261,413.92 for the Economic Community of West African States (ECOWAS) levy was at variance with N21,514,884,453.84 provided by Revenue and Investment Department. This brought about a difference of N382,376,960.08. The closing balance of the naira equivalent of $7,016,244.03 in respect of Central Bank of Nigeria-Federal Government of Nigeria (CBN/FGN) Independent Revenue Account (USD) with JP Morgan was not included in the total figure in Note 10 whereas the receipts into the account were not monetized into the CFR.

“There were deductions in the closing balances of 10 of the funds. The indication is that there were items of expenditure as debits in the accounts of each of the funds. Further audit examination showed that there was a total sum of N256,336,700,810.56 as expenditure in all of the 10 funds, as shown by the movements in funds.

“However, as in the previous year’s reports, the figures of these 10 funds could not be confirmed because bank statements were not produced for audit. The Accountant-General of the Federation has been requested to provide explanation in respect of the expenditure (debits) in each of the 10 funds stating the nature, approval and authority; provide the Appropriation Act of the National Assembly for the expenditure from each of the 24 funds.”

The AGF raised the red flag over non- compliance with the Pension Reform Act saying, “it is disturbing and worrisome that the issue of wrong treatment and non- adherence to the new Pension Reform Act 2004 section 29 (1) in respect of Retirement Benefit Bond Redemption still continued in 2010 despite my audit reports on this issue since 2004. The total amount of N54,217,388,574.25 was paid in 2010 into Redemption Fund account with the CBN opened in favour of National Pension Commission. Audit examination of statement No.2 and Note 10 revealed that the sum of N54,217,388,574.25, which was the amount paid into the fund, formed part of the transactions called cash balances of the funds of the government. This was then shown under assets of the Federal Government. The corresponding amount of N54,217,388,574.25 was shown under liabilities as part of the other public funds instead of disclosing the investment portfolio of the funds. The implication of this transaction was that the disclosure requirement and the correct treatment of the amount have not been fulfilled.

“Also, the amount of N54,217,388,574.25 was not cash balance of funds of FGN, since the requirement of the Act section 29 (1) is to show the investment portfolio which the funds had been put into. This amounts to making efforts to implement the accounting treatment of the law in a wrong way, even when it was critically clear that the sum of N163,667,388,571.25 paid into the fund since 2006 to 2010 was not invested.”

The report also asserted poor budget performance in 2010. “The analysis of the closing balances in Note 12 showed that about 34 Ministries, Departments and Agencies (MDAs) had closing balances of over N1,000,000,000.00 amounting to N409,393,556,287.91 as at December 31, 2010. This meant that there was poor budget performance on the part of the affected MDAs. These closing balances suggest late releases of funds for projects and programmes for economic development thereby resulting into poor budget performance,” the report added.