Auditor says fed MDAs overshot budget by N1.24b without approval
By Jeph Ajobaju, Chief Copy Editor
Federal Accountant General Ahmed Idris withdrew N1.695 trillion from the Consolidated Revenue Fund (CRF) in the 2019 financial year without approval, according to the report of federal Auditor General Adolphus Aghughu.
The report also indicted 42 Ministries, Departments, and Agencies (MDAs) for overshooting their personnel budget to the tune of about ₦1,241,137,873,164.36 without approval by National Assembly (NASS).
The report, referenced AuGF/AR.2019/01, dated 18 August 2021, and signed by Aghughu, has been submitted to the Clerk of the NASS for onward transmission to the Public Accounts Committees of the Senate and House of Representatives.
It is the latest in the festering series of corruption in MDAs unravelled by fellow government agencies which President Muhammadu Buhari has ignored, some of which have prompted Socio-Economic Rights and Accountability Project (SERAP) to sue him to court to recover missing or stolen funds, instead of overtaxing citizens.
________________________________________________________________
Related articles:
Probe N3.14b missing in Finance Ministry, SERAP tells Buhari
ICPC discovers 257 duplicated projects in 2021 budget
Abuja cranks out more taxes for officials to steal. Literally
_______________________________________________________________
Violations of Fiscal Responsibility Act (FRA)
“[Idris] submitted the FGN Consolidated Financial Statements (CFS) for the year ended 31 December 2019 to the Auditor General for the Federation (AuGF) for audit on 25 May 2021 through forwarding letter with Ref. No. OAGF/CAD/1724/VOL.II/220, dated 24 May 2021 contrary to the provisions of extant regulations. The submission was late by 10 month,” the report said.
The report named the MDAs that engaged in “unusual positive variances in their personnel costs” to include
- Ministry of Budget and National Planning – N146.130 million
- National Intelligence Agency – N20.769 billion
- Directorate of State Services – N20.620 billion
- Nigeria Customs Service – N10.503 billion
- Nigeria Prisons Service (Now Correctional Services) – N9.130 billion
- Federal High Court, Lagos – N8.572 billion
- Nigeria Defence Academy – N6.928 billion
- Defence Intelligence Agency – N6.152 billion
- National Youth Service Corps – N4.371 billion
- Nigeria Immigration Service – N3.397 billion
- Universe of Maiduguri – N3.471 billion
- Federal Road Safety Corp – N3.379 billion
- National Security Adviser – N3.095 billion
- Defence Missions – N2.846 billion
- Nigeria Air Force – N2.650 billion
- Centre for Automative Design and Development – N2.269 billion
- Police Formations and Commands Headquarters – N1.492 billion
- University of Nigeria Teaching Hospital – N1.062 billion
- Federal Medical Centre, Azare – N22.77 (twenty-two naira, seventy-seven kobo)
The report said:
Weaknesses in internal control system
A total 55 MDAs had an overdrawn or credit balance of ₦2.340 trillion for 2019 and another 848 MDAs had ₦645.063 billion positive or debit balances.
Weaknesses in the internal control system in the consolidation process could serve as Impediments to Public Accounts Committees (PACs) oversight and the possibility of sub-optimal decisions by government officials.
Idris should be asked to comply with the FRA particularly Section 49(1) on submission of audited financial statements not later than six months after the end of the year, failure which appropriate sanction should be applied.
“[Idris] was the only Officer of the Federal Government … that signed the Consolidated Statement of Financial Position without indicating his FRC of Nigeria registration number, a component that carries the approval of the CFS, contrary to the extant regulations, while there was no signature with FRC of Nigeria registration number of the … Minister of Finance, Budget and National Planning … on the Consolidated Statement of Financial Position.
“The above anomalies could be attributed to weaknesses in the internal control system in the consolidation process.”
Inaccurate financial statements
FGN Consolidated Financial Statements is inaccurate and incomplete information on FGN CFS and lacks integrity
The Minister of Finance, Budget and National Planning should be asked to co-sign and date the FGN CFS with the Accountant General of the Federation before it’s submission.
[Idris] failed to prepare standalone financial statement of MDAs but rather consolidated the unaudited trial balance of about 950 MDAs
Non-preparation and submission of individual MDAs’ standalone financial statements for audit prevented evaluation of the basis of measurement, recognition and disclosure of the elements of the financial statements before consolidation.
Such standalone financial statements that would have facilitated the understanding of the CFS were not made available due to weaknesses in the internal control system in the consolidation process.
This action could lead to misstatement of the CFS understatements of current assets and current liabilities and distraction of users from understanding the transactions and other events that have occurred.
[Idris] should be requested to “restate the positive cash and cash equivalent balance of ₦645,063,521,913.13 as current asset in the [CFS] Position, and also estate negative cash and cash equivalent balance of ₦2,340,640,382,771.27 as current liability in the [CFS] Position.”
Some 55 MDAs had overdrawn bank balances amounting to N6.150 billion contrary to the FRA because the MDAs had weaknesses in the internal control system in the consolidation process.
This could lead to financing unapproved/extra budgetary expenditure and exposure of the Federal Government to avoidable interest payments.
[Idris] could not provide adequate information on transfer payments made to individual beneficiaries totalling N15.534 billion across 36 MDAs and the names of the beneficiaries were not disclosed.
Diversion, misappropriation of funds
There was the risk of diversion of public funds and misapplication of funds and [Idris] should provide details of the beneficiaries of the N15.534 billion spread across 36 MDAs in connection with transfers to individuals.
[Idris] failed to disclose the cost of servicing the N19.910 trillion as well as N4.287 trillion short term loans and debt of ₦347.198 billion which was supposed to have been recognised as expenses, while the exchange rate for the transaction was also not disclosed.
[Idris] should disclose the sources of servicing interest on FGN Domestic Bond (₦322,424,513,500.00) and Service Charge on external loan (₦24,774,262,420.00) as well as the exchange rates used for the translation on 31 December 2019.
[Idris] should reverse the recognition of accrued interest of ₦2,033,226,507,505.75 credited to Transitional Reserves to Interest Payable.
There was negative balance of ₦1,704,377,683.41 reported by nine MDAs under Unremitted Deductions and 29 other MDAs were responsible for negative balances in payables.
A sum of ₦668.162 billion was recognised as net changes in reserves without information to show how the changes came about.
“The net changes under reference was the arithmetical difference between the closing balance of ₦23.338 trillion as at 31st December 2019; and the opening balance of ₦22.670 trillion as at 1st January 2019 without justification.”
Unusual positive variances
About 42 MDAs reported unusual positive variances in their personnel costs amounting to ₦1.241 trillion, but while the personnel costs budget of the 42 MDAs was ₦473.680 billion, the actual expenditure was ₦1.714 trillion.
A total 84 MDAs exceeded their overhead cost for the year 2019 by about N1.006 trillion.
“The sources of the extra spending were not disclosed neither was the evidence of supplementary appropriation or approved virement provided.
“The total expenditure reported by the MDAs was ₦1.044 while the budget was ₦38,208,742,119.99 hence the extra budgetary expenditure of N1.006 trillion.
“[Idris] might have released Overhead in excess of Appropriation or that the MDAs incurred excess Overhead expenses over the recurrent budgetary provision without approved supplementary estimate or virement by the National Assembly.”
Idris responded to the Auditor General saying: “OAGF cannot justify why MDAs are involved in extra budgetary expenditure. But the affected MDAs have been contacted, and their responses will be forwarded as soon as they are received. MDAs have been requested to provide the authority where applicable.”
Irregular withdrawals of funds
There were irregular withdrawals of funds amounting to about N60.832 billion from public funds for purposes outside the aim for the establishment of the respective funds, contrary to both the Constitution and Financial Regulation.
There was no evidence that the purpose for which the funds were withdrawn were appropriated for by the NASS as provided by the Constitution.
[Idris] must ensure that payments are made in line with the purposes for which the funds are established and also ensure adherence to both the Constitution and Appropriation Act.
[Idris] lumped together land and building captured as Building-General with the same total of N1,125,821,710,476.79 whereas the cost of the Land should have been disclosed separately.
Constituency projects worth about N531.835 billion (as of 31 December 2019) were written off in contravention of Accrual Accounting Standards which require the spread of depreciation of Property, Plant and Equipment (PPEs) over their estimated useful lives.
There was no justification for the negative balance of N125.416 billion under constituency projects.
[Idris] should produce authority (i.e. Instruments of Transfer of Assets – Constituency Projects valued at N531,835,908,350.60) to host communities before their write-off and disclose departure from requirement of IPSAS 17 in the financial statements.
[Idris] should provide details of negative balance of N125,416,331,821.70 in respect of constituency projects and re-instate the constituency projects as assets in accordance with IPSAS 17 in the financial statements.
A sum of N3.278 billion was recognised as Recovery of Arrears of Remittance of Operating Surplus without details of the MDAs from which the amounts were recovered.
The periods/years for which the operating surplus were in arrears against each MDA were not disclosed, while outstanding arrears of operating surplus, after the recoveries, from each MDAs were not disclosed.
[Idris] failed to disclose in his financial statement judgement debts and other contingent liabilities involving Nigeria such as the judgement debt of $6.6billion, plus accrued interest, awarded in favour of Process and Industrial Developments Limited (P&ID) by a London Tribunal in January 2017 against Nigeria in a case of failed gas project decided.
“Though the case is still being prosecuted in both the United Kingdom and United States of America Courts, Nigeria may be required to pay the judgement debts plus interest otherwise, P&ID may be empowered to seize Nigeria’s Commercial Assets, if the case is eventually decided against Nigeria.”
Four MDAs had balances recognised as “Other Reserves” totalling ₦197,307,191,724.55 but “the nature and purpose of “Other Reserves” was not stated. Idris should disclose what is meant by other reserve.
The Tertiary Education Trust Fund (TETFund) presented about N14.990 billion as available For Sale Assets Reserve without additional information to aid understanding of the assets.
[Idris] should provide the nature, initial recognition criteria and additional disclosure to aid understanding of the assets available for sale reserves.
Extra-budgetary spending
MDAs engaged in extra-budgetary spending to the tune of N5.892 trillion.
“There were no budgets for some Revenue items recognised in the Consolidated Statement of Financial Performance amounting to ₦5.892 trillion ….
“The sum of ₦372,830,364,925.01 was recognised as ‘Aid & Grants’ in the CSF Performance but nothing was shown under the budget column in the Consolidated Statement of Comparison of Budget and Actual.
“The resulting variances on revenue items not budgeted for could not be justified on ground of performance, the main essence of the Consolidated Statement of Budget and Actual.
“The above anomalies could be attributed to weaknesses in the internal control system in the consolidation process.”
Irregularities in aids and grants
Irregularities in the disclosure of aids and grants amounted to N372.830 billion and there was no explanation provided to explain the donors, purpose and nature of items presented for audit.
About 41 MDAs disbursed grants and contribution amounting to about N400.802 billion without budgetary provision, leading to extra budgetary spending.
Another N329.988 billion was spent by some MDAs as employees’ benefits and subsidies without budgetary provisions.
Discrepancies were discovered between the amount consolidated and amount confirmed by MDAs, to an overstatement of about N5.823 trillion.
The amount confirmed by 34 out of 47 MDAs that responded to the circularisation was different from what was consolidated.
