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FG 2016 financial statement full of undisclosed, unremitted revenues — AuGF Report





By Emma Ujah, Abuja Bureau Chief & Mike Eboh
….Says NNPC pays marginal oil revenue to govt
….NNPC reacts
Auditor-General
of the Federation, Mr. Anthony Ayine, has faulted the 2016 Financial Statement of the Federal Government as having several undisclosed revenues and poorly disclosed expenditures.

According to the report submitted to the National Assembly, the AuGF expressed disappointment at the shoddy job by Accountant-General of the Federation, AGF, Mr. Ahmed Idris, which led to the late submission of the report to the National Assembly.

According to him, the non-disclosure and non-remittance of revenues by some agencies of government into its coffers have become a critical factor militating against the economy.

Auditor-General of the Federation, Mr. Anthony Ayine

The report indicated that Nigerian National Petroleum Corporation, NNPC, paid only marginal oil export revenue into the Federation Account, in the year under consideration.

NNPC reacts

Meanwhile, in his reaction, Group General Manager, Group Public Affairs Division of the NNPC, Mr. Ndu Ughamadu, said: “The total NNPC lifting is made up of the joint venture volumes where we are entitled to approximately 57 per cent and the PSC in which we average 18 per cent.

‘’The PSC is encumbered by the skewed fiscal arrangements that ceded most benefits to the investors as incentives for high risk investments. The 35 per cent, therefore, represents the gross NNPC lifting from all arrangements.

“Also, where the partner funds our projects through any carry or third party financing, NNPC liftings are also adversely impacted. There is nothing unusual about the 35 per cent lifting recorded for that year.

“NNPC remittances are sum of the naira payments to FAAC for domestic liftings and the US$. The US$ remittances are not of cash call. The total gross revenue for the year is not $2.3 billion and much higher.

‘’The figure cited is the payments receipts in US$ and does not include naira receipts. You can’t isolate the dollar receipts from the naira payments The auditor general’s team may have been misunderstood.”

The report

The report said:  “J V Cash calls are funds injected into Joint Ventures by the NNPC on behalf of the Federation. These funds are obtained out of revenues accruing to the Federation that would otherwise have been paid onto the Federation Account for allocation to the three tiers of government.

“First, it is unclear how and where the asset values of these investments in Joint Ventures on behalf of the Federation are determined and reported. Second, from the analysis and review of the Revenue and Account documents presented by the Crude Oil Marketing Department, COMD, of the NNPC in respect of sales of crude oil and gas and payment of JV Cash Call funding, it was observed that only a marginal sum was returned as revenue from Export of Crude Oil and Gas revenue inflows to the Federation Account for January to December, 2016.

“From the total receipts by NNPC of US$2,399,642,012.90 (N569,143,803,033.21 from export sales of crude oil and gas for the year, a total amount of US$2,348,880,056.93 (N517,354,153,159.77) was paid out to fund JV Cash Calls.”

Non-disclosure of NNPC revenue

The AuGF said  his office also discovered poor disclosure of receipts from the Nigerian National Petroleum Corporation, NNPC .

“First, it was observed from Note 1 to the financial statements that the breakdown of sources that made up the net receipts of N1,325,774,477,847.94 from NNPC was not disclosed.

Ahmed Idris

“Furthermore, we observed that the net receipt per an extract schedule from the Federation Account (Revenue from NNPC) showed a total receipt of N797,749,790,090.74, resulting in a difference of N528,024,687,757.20 in comparison with the N1,325,774,477.847.94 earlier disclosed,” he said.

Other revenues

He added: “The component of the financial statements and Note 9 thereon revealed that a total of N578,931,562.10 was recorded as , “Other Revenue  for the year January to December 2016.”

“There was a failure to define in clear terms what constitutes Other Revenue in line with disclosure requirements. This is especially key for MDAs that are not Revenue generating, but had substantial figures recorded as Other Revenue.

“Some MDAs recorded Nil figures as Other Revenue which could not be justified considering the nature and activities of these MDAs, as they were expected to have Other revenues”

Mr. Ayine regretted that the AGF failed to address the irregularities, even after the AuGF raised the issue.

He said, “There is a significant risk that the balances included in the Financial Statements as Other Revenue are understated. The Accountant-General was requested to include all “Other Revenues” of the excluded MDAs, and to provide further disclosure of what constitutes Other Revenue. The responses received to our observations did not address the issue raised.”

Accountant-General submitted Financial statements 5 times with material errors and misstatements

Mr. Ayine said in the report:  “I am required by Section 85 (5) of the Constitution of the Federal Republic of Nigeria 1999 (as amended), to submit my Report on the audit of the Accountant-General s Financial Statements to the National Assembly within 90 days of receipt of the Statements from the Accountant-General of the Federation.

‘’The Financial Statements of the Federal Government for the year ended 31st December, 2016 were first submitted to me by the Accountant-General of the Federation on 30th June, 2017. Following my preliminary observations, the Statements were significantly amended and resubmitted on 29th

“September, 2017. Further amendments to the Financial Statements led to another re-submission on 29th December, 2017 and 16th January, 2018 before the final version was eventually submitted on 20th March, 2018.

“Our findings resulted in different significant adjustments being made by the Accountant-General at each stage in response to observed material lapses. This led to a 5th version of the signed financial statements being presented to me on the 20th March 2018.”

Accounting Officers ignore audit queries

He said further:   “Response to audit queries – The Ministries, Departments and Agencies (MDAs) and their accounting officers are reverting to the situation in the past where they did not promptly respond to audit observations. I am concerned about this development, which is a major setback to our accountability process.

“Where accounting officers fail to respond to audit queries, the implication is that they have no explanation to offer. They should be compelled by the Public Accounts Committees to comply with the audit recommendations on such issues.

Poor accounting by OAGF

“For example, in the final version of the financial statements, the total revenue figure of N3,723,250,178,676.90 in the statement of financial performance was exactly the same as the total inflow from operating activities in the Cash flow Statement, a situation more credible under the cash basis of accounting.

“This implies that the total revenue figures for 2016 did not take account of significant receivables, some of which are included in the statement of financial position as revenue in arrears. As a further example, the sum of N2,291,017,578,522.34 was disclosed as transfers to other government entities as expenditure within the statement of financial performance. The same figure is also disclosed as an outflow to other government entities within the statement of cash flows.

In addition to the accrual accounting lapse, the disclosure also indicates that the entire sum transferred out has been treated as an expense, regardless of whether the recipient entities expended the funds on recurrent or capital items, or whether some of the funds were not expended.

These findings undermine the integrity of the financial statements and indicate that the balances stated are unlikely to be fairly presented on an accrual basis.”

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