Revenue collection: NNPC, DPR, FIRS illegally deducted N1.5tr — Auditor-General

By AdvocateNews on 05/12/2019

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Anthony Ayine
Anthony Ayine

Out of the N6.4tn generated by revenue collection agencies in 2017, about N1.5tn was deducted and not remitted into the federation account in violation of the provisions of the Constitution.

The Office of the Auditor-General for the Federation, disclosed this in its audit report for 2017 which was released on Wednesday in Abuja.

The report, which was signed by the Auditor-General for the Federation, Mr Anthony Ayine, said the money was deducted by four agencies without authorisation.

The agencies are the Nigerian National Petroleum Corporation, the Federal Inland Revenue Service and the Department for Petroleum Resources.

The 320-page report said that while the NNPC generated the sum of N2.41tn, it made a deduction of N1.3tn before remitting the balance of N1.07tn into the federation account.

For the DPR, it said the agency generated N733.05bn, deducted and paid N26.77bn into a royalty account before remitting the balance of N706bn into the federation account.

The report also said that the FIRS generated N2.66tn but paid about N2.45tn into federation account.

Ayine in the report expressed concern over the deductions of funds, stating that it had impacted negatively on the funds available for allocation to the three tiers of government.

He made a recommendation to the Accountant-General of the Federation, Mr Ahmed Idris, that all deductions made at source should be stopped as they violated Section 162 of the 1999 Constitution of the Federal Republic of Nigeria.

He added that in view of the unauthorised deductions, all defaulting agencies should be appropriately sanctioned.

The report read in part, “The total revenue inflows to the federation account from the various collecting agencies as per the Central Bank of Nigeria component statements for the period under audit amounted to 6,422,596,646,680.26.

“Department of Petroleum Resources collected the sum of 733,054,301,173.04  but paid a net figure of 706,283,397,141.80 to the federation account after deducting excess proceeds on royalty of 26,770,904,031.24.

“The total amount of 2,653,810,173,226.72 was generated by the FIRS for the period under audit; however, the actual amount paid into the federation account was 2,457,272,701,077.09  after deducting 196,537,472,149.63 being the total excess proceeds on royalty.

“These collecting agencies made deductions from the revenue collected by them. This act contravenes the provisions of Section 162 (1) of the 1999 Constitution which stipulate that ‘The federation shall maintain a special account to be called the federation account’ into which shall be paid all revenues collected by the government of the federation.’

“This has been a regular subject of my reports which has been ignored over the years.”

When contacted, the Head, Communications and Servicom Department, FIRS, Wahab Gbadamosi, requested an electronic email to enable him to check with relevant departments.

He was yet to respond as of the time of filing this report.

However, a senior official in the FIRS told our correspondent in confidence that the service did not maintain a collection account of its own.

The official said all taxes that were collected on behalf of the government by the FIRS were paid into an account domiciled in the CBN.

The official added that the agency did not touch the money before it was remitted into the federation account.

On the other hand, the Head, Public Affairs, DPR, Mr Paul Osu, denied that the agency made any illegal deductions.

“The DPR, as a revenue-collecting agency, ensures inflows of revenues into the federation accounts. It does not have any power to deduct from the revenues,” he said.

The auditor-general said that despite the provisions of Financial Regulation 3210(v) which enjoin the chief executive officers of government agencies to submit both the audited accounts and management reports to him not later than 31st May of the following year of accounts, about  265 of them had yet to comply with the provisions as of June 30 this year.

He said while 160 agencies defaulted in submission of audited accounts for 2016; the figure rose to 265 agencies that defaulted in 2017; while 11 agencies had never submitted any financial statements since inception.

He said, “Although, we have noticed a marked improvement since my last report, there are still some violations of statutory financial reporting obligations by parastatals.

“Stringent sanctions, including withholding financial releases and sanction of the chief executive officer, should be imposed on defaulting agencies who do not render timely accounts, as provided in the Constitution, financial regulations and other relevant laws.

The AGF in the report explained that a number of major weaknesses and lapses in the management of public funds and resources were identified across several ministries, departments and agencies during the annual audit.

Some of these lapses include irregular expenditures, failure to surrender surplus revenues running into billions of naira to the treasury and continuing failures in the implementation of International Public Sector Accounting Standards.

“Overall, our findings are indicative of significant weaknesses in expenditure control, accounting, financial reporting and in the completeness and accuracy of the consolidated financial statements.

“As in previous years, the annual budgeting process of the Federal Government remains flawed and unable to support genuine development.

“Delays in the passage of the budget had a direct impact on the ability of the MDAs to perform their functions and rendered the annual budget execution process ineffective to a large extent.

“There remains the need for the executive and the legislature to work better together on the passage and implementation of budgets, if Nigeria is to achieve meaningful development.”

In the area of payment procedures and policies in the MDAs, Ayine said his office found that several payments totalling N26.6bn were made with a total of 140 infractions identified in the payments made by the MDAs.

He said the sum of N8.6bn was expended in 25 infractions without presenting payment vouchers to justify the payments made in the transactions.

This, he noted, was contrary to the provisions of Financial Regulation 601, which states that “All payment entries in the cash book/accounts shall be vouched for on one of the prescribed treasury forms.

The provision also stated,  “Vouchers shall be made out in favour of the person or persons to whom the money is actually due.

“Under no circumstances shall a cheque be raised or cash paid for services for which a voucher has not been raised.”

The audit also discovered that 10 MDAs embarked on international travels and training without requisite approval from the appropriate authorities as specified in extant circulars, thereby, expending the sum of N2.66bn on international travels despite strict restriction placed on it.

Furthermore, he said the sum of N2.78bn was expended without providing supporting documents with the payment vouchers in 22 infractions in these MDAs.

Some of the agencies are the Federal University Dutsin-Ma in Katsina with N8.4m; National Examination Council with N298m; and Federal Civil Service Commission Abuja with N2.6m; National Health Insurance Scheme N5.5m.

He said, “Violation of extant regulations may lead to misappropriation and misapplication of funds.

“The Minister of Finance should ensure that all MDAs are fully on the Government Integrated Financial Management Information System platform and that no payment is made without passing through the platform.

“The use of manual payment vouchers should be abolished.   I further recommend that appropriate sanctions are applied to all involved in instances of payments being made without the expected supporting documents and/or approvals.”

In the area of contract awards, execution and payment, the audit report stated that there was violation of Section 19 (a-j) of the Public Procurement Act  2007 and other extant rules and regulations in relation to public procurement.

He said the audit revealed that 51 transactions, across several MDAs, did not comply with the provisions of the Public Procurement Act, 2007.

He added that a total of 27,83bn was expended in various contract-related transactions that were reflective of waste or loss of public funds.

“The degree of violation of the Public Procurement Act ranges from ignoring due process, over-invoicing/contracts’ prices inflation, payments for contracts/services not executed and other forms of deviations from the Act,” he added.

The AGF said in the report that weaknesses in contract award and contract management could lead to loss of government funds as the people would not get value for money spent by the government.

He said failure to follow due process could continue to give room to corruption and diversion of public funds for private uses.

“It can lead to abandonment of projects and prolonged delay in completing ongoing projects,” he added.

He recommended that the Minister of Finance should direct the activation of the Procurement Module of the GIFMIS for use across the MDAs.

This, he stated, should be properly followed up to ensure compliance especially through non-release of funds except for certified procurements.

Ayine also urged the finance minister to give directives to enable the GIFMIS Audit Module to give access to all federal auditors for proper monitoring of procurement activities. --Punch

Posted 05/12/2019 05:54:42 AM


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