Irregularities and other sharp practices in the accounts of some government ministries, agencies and parastatals captured in the Auditor General for the Federation(AuGF) 2001 report have resulted in the loss of billions of Naira, according to a report of the Committee on Public Accounts (PAC), which has just been presented to the Senate.
The Committee said that the audit query on the expenditure of a whopping N4.9 billion by the Ministry of Water Resources meant for the Improved National Assess to Water Supplies information”.
The PAC, in its report, also said that the Federal Ministry of Education had many outstanding issues to explain, pointing out that “out of a total 75 queries, only 11 have been resolved”. It stated further: “a god number of issues revolved around wasteful expenditure, non-adherence to budget and outright fraud.
“It is yet to be explained how a contract for supply of material for items already in use in Schools should cost the Ministry the sum of N328 million (for the supply of coat of arms for schools). Another hanging issue was the manner of contract awards for Unity Schools in excess of their authorized budgetary provisions”.
The Committee’s searchlight on the Central Bank of Nigeria (CBN) according to the report revealed, what it (committee) called a major irregularity in the policy of the apex bank’s accounting system that emphasizes the writing off of expenditure on land and buildings each year against the provision for capital projects while ““ that on other fixed assets such as motor vehicles, furniture and equipment are written off as operating expenses”.
According to the Committee: “the opinion of the Auditor-General in respect of the anomaly is that ‘‘these assets are in effect being written off in the year of acquisition’’ and this practice according to the Auditor-General is at variance with standard accounting practice, which requires that expenditure on such assets be capitalized and written-off over their useful life.
“The CBN’’s response to the Auditor-General’s comment is that the organization derives authority in respect of the queried accounting practice from Section 5, sub-section 1 (a) of CBN Act, 1991. Upon scrutiny of the CBN Act under reference, the Committee discovered that the section relied on, states inter alia: “The bank shall in respect of each financial year, determine its operating surplus, which shall be the remaining sum from its income and other receipts after meeting all current expenditures.
The report said, “ The Committee rejects the section as an authority to legalise irregularity. Accordingly, PAC will in due course propose an amendment to the CBN Act as it relates to the section.
“The absence of an asset register for capital acquisitions like lands, buildings and vehicles could result in colossal losses of government property. The effect of this danger can be imagined when we take into account that in 2001 alone, CBN spent the sum of N2.37 billion on: furniture, equipment, vehicles and supplies (N543 million) and computer systems development (1,53 billion). It is the opinion of the committee that the management of CBN is aware of this and should account for the irregularity”.
The Committee’s consequent requests, which the Senate approved included, among others, issuing directives to the affected authorities to recover the monies misapplied as well as stoppage of the practice of writing-off fixed assets against operating expenses in the year of acquisition by the CBN, for instance, in the manner it has been doing and ““revert to the standard accounting practice as recommended by the AuGF”.
