About N4.973trillion unsubstantiated balances were observed by the Office of the Auditor General for the Federation (AGF), audit of the Federal Government’s consolidated financial statement in 2019.
Speaking in Abuja while submitting the 2019 Audit report to the Clerk of the National Assembly (CNA), Ojo Amos Olatunde, the AGF, Adolphus Aghughu, decried the inability of his office to effectively and efficiently detect mismanagement of public funds by the various Ministries, Departments and Agencies (MDAs), to adequately check corruption.
He said: “From the audit carried out on the 2019 Federal Government Consolidated Financial Statement, unsubstantiated balances amounting to N4.973trillion were observed. The N4.973trillion unsubstantiated balances are above the materiality level of N89.34billion set for the Audit.”
Materiality in this instance refers to the effect the quoted amount will have in various contexts, and the level is determined by the auditors during the audit planning process usually based on the entire financial statements to be audited.
Consequently, the AGF said queries were issued against agencies found to be involved in the infractions.
Government accountability
Indeed, the United Nations Department of Economic and Social Affairs (UN/DESA), in 2019, reiterated the importance of government accountability.
Its report on the Role of External Audit in Enhancing Transparency and Accountability for the Sustainable Development Goals (SDGs), said: “Audit recommendations can be a powerful tool to help governments improve SDG implementation.”
While not being compulsory, the report noted that many countries have adopted the SDGs as a reference framework for their own actions. “This has encompassed determining nationally adapted objectives and targets and aligning national development strategies and plans and even budget processes to the SDGs. In such countries, this brings the Agenda and the SDGs squarely into the domestic policy sphere.”
Audit challenges
Aghughu told the CAN, who was represented by his Deputy, Bala Yabani that his office operations are being crippled by a myriad of factors, which invariably create room for all forms of financial infractions across the various MDAs.
Ensuring long-term fiscal sustainability requires that governments engage in continual strategic forecasting of future revenues and liabilities, environmental factors and socio-economic trends in order to adapt financial planning accordingly.
He attributed one of such problems to the absence of a Federal Audit Service Law, which he said is a big challenge as far as effective and efficient public sector auditing is concerned.
“This is a law that is needed as the basis of fiscal sustainability. Absence of it at the federal level is very worrisome going by the fact that some of the states of the Federation have the required law in place.
Fiscal sustainability is defined as “the ability of a government to maintain public finances at a credible and serviceable position over the long term.”
The Organisation for Economic Co-operation and Development (OECD), notes that “Ensuring long-term fiscal sustainability requires that governments engage in continual strategic forecasting of future revenues and liabilities, environmental factors and socio-economic trends in order to adapt financial planning accordingly.”
It added, “High and increasing debt levels are harmful to governments’ fiscal positions and can cause a vicious cycle of growing debt, reducing the potential for economic growth as funds are diverted away from productive investments.”
Aghughu listed other operational challenges to include gross underfunding. “For example, the office is understaffed but there is no money for recruitment. Imagine many of our state offices having just two or three staff; auditing is done by a team not by an individual.”
“Accommodation is also part of the problem, as our staff in Lagos are about to be evicted from their office due to litigation. These are aside the problem of insecurity seriously affecting our scope of coverage.”
He argued that auditing the government’s consolidated financial statement on yearly basis is expeditiously carried out as made available by the Office of the Accountant General of the Federation.
He said: “You will recall that on the 25th of March this year, the Audit of Consolidated Financial Statement of the Federal Government for the 2018 was submitted to this office for the required investigation of queries raised in it by the National Assembly. Just five months after, we are here again to make submission of the 2019 Audit Report.”
Responding, the Deputy Clerk Yabani, promised to submit the report to the Clerk for onward submission to both the Senate President Ahmad Lawan, and Speaker of the House of Representatives, Femi Gbajabiamila for the required legislative consideration.
“Your complaints are very germane. They will surely be conveyed to the appropriate quarters that will surely do the needful on them because the people heading the quarters have listening ears,” he assured.