Recently, the Auditor-General of the Federation, Mr. Anthony Ayine hosted a retreat for stakeholders including the Public Accounts Committees of the National Assembly in Lagos. He also used the opportunity to outline his audit agenda as well as make a case for the passage of the Audit Autonomy Bill currently before the Senate. Ugochukwu Aliogo presents the excerpts:
Many people do not really know about the Office of the Auditor-General of the Federation. So, could you tell us briefly what this Office is all about?
Okay, thank you very much. I agree with you, it’s an office that has been doing much, but it appears it is not visible. Section 85 of the Nigerian Constitution is very clear about the functions of the Office of the Auditor-General of the Federation. We have as an office, the mandate to audit all public accounts of the Federation of Nigeria; that is all offices, and the courts inclusive. This basically means our function is to protect the public interest by carrying out a detailed examination of the national accounts of the country and submitting the report to the National Assembly. And the essence of it is for the purpose of accountability. Quite often people talk about good governance, at times without knowing those critical ingredients that make good governance. Two of these, I mean, before you can have good governance, you must have transparency and accountability; basically, this is the core, the function of the Office of the Auditor-General for the Federation, to ensure there is transparency, there is accountability in government. Once you have these, you can be sure of good governance in place.
In what way is the Office of the Auditor-General of the Federation different from the Office of the Accountant-General of the Federation?
The difference is that the Accountant-General’s office is concerned with maintaining accounts, carrying out transactions like payments, receipts and to draw up accounts and financial statements. The Auditor-General’s work is to examine the accounts prepared by the Accountant-General, and to give an unbiased and objective opinion whether the accounts present a true and fair view of the transactions of government, and also the financial position as disclosed in the financial statements of the Accountant-General; whether the financial statements reflect the true position of the state of affairs at a particular date. So the two functions are different: the Accountant-General maintains the accounting records, prepares financial statements; but the Auditor-General gives assurance. For instance, investors may want to invest in Nigeria; yes, they will look at the financial statements prepared by the Accountant-General. What will give credibility and assurance to them that yes, we can invest in this country is the assurance, which is provided by the Auditor-General? So, that’s very critical. And this leads to what exactly we emphasise about independence of the Office of the Auditor-General of the Federation; because whether an investor or financial analyst or other stakeholders who are interested in the accounts of the nation, will expect to see that the Auditor-General operates in an environment where he/she enjoys true independence; that yes, he carries out his audit work, certifies and gives his audit opinion objectively. So, the two are different functions.
So that means that the two of them must never be friends?
I don’t think so. It’s not really that way. They could be friends; but you see, this is where the question of integrity comes in. And that is what holds an auditor. There is nothing wrong in being friendly with the Accountant-General, but that has nothing to do with your work if you have the integrity. The Auditor-General must have the integrity. The day there is no integrity, you (the Auditor-General) are as empty as anything. So being an auditor does not mean that you completely isolate yourself. If the friendliness is not there, you will even face challenges, because the data you are working with, the information, the explanation you need, you must obtain them from the Accountant-General. So if there is no friendliness, you may encounter more challenges. Please understand me very well, the friendliness here does not mean compromise. You may have a friendly atmosphere for the purpose of working relationship, but that has nothing to do with the issue of compromise, because if you come across matters that you need to express, maybe give an adverse opinion, why not? But that will not stop you from having a friendly relationship. It’s important that there is that friendly relationship with the people you’re auditing; otherwise, you will not even be able to get the information you need. Note that normally, we specify: “I have obtained all the information and explanation considered necessary for the purpose of my audit.” If otherwise, you also state. So if you antagonise yourself, you may not have the right information to enable you to work. The key thing is that you must be conscious of your integrity and you preserve that. That is where we emphasise about making the auditor-general independent. Because once you’re independent you should be able to preserve your integrity. But where in doing your work you are constrained by relying on others, it affects your work. So, please it’s not that you have to be an enemy; no! Yes, we can be friendly; but the Auditor-General must be firm and courageous, for you to achieve the desired goals and objectives.
For quite some time now, some stakeholders including ICAN and others, have been clamouring for the independence of the OAuGF, and they’ve been asking the Senate to pass the Audit Bill. So what do you think is wrong? Why do you think the Senate has been hesitating in passing this bill?
I would not like to think that the Senate is hesitating to pass the Audit Bill. Perhaps it may be they were not having a proper perspective of the independence of the Auditor-General. And that is why the retreat that we have just ended was useful; we considered it necessary so that we could interact; we exchanged ideas, we enlightened ourselves; experiences in other African countries about the auditor-general’s independence were shared by international guest speakers, the relationship that should exist between the auditor-general’s office and the Legislature, the need to appreciate what benefits will be accruable not only to the Legislature but to the Nigerian federation if the Auditor-General is truly independent were explained. I mean the importance of the passage of the Audit Bill we are talking about was clear. Another thing too is that perhaps we need to do more enlightenment in terms of the content, the benefits of this Bill. So it’s not as if the Senate is not willing to pass the Bill. I have the conviction that the pragmatic Senate that we have now, I think they are willing; I believe by the time they get to appreciate exactly what the country will benefit when the issue of audit independence is finally settled, I am sure they will pass the Bill and be able to partner with the Office. So what we need to do is to interact more, to relate more, have a more robust relationship with the Senate and explain quite a number of issues. If they have any areas in the Bill that are not clear to them, it will be necessary to explain. I don’t want to believe that the Senate is not willing, but I think they just need to have a proper understanding why this Office needs true independence. It’s a bit sad that Nigeria being the giant of Africa, we are still down. There is a rating in AFROSAI-E – that is African Supreme Audit Institutions, English speaking countries – we have a grading or rating, Level 1 to 5. Nigeria currently is at Level 2! Smaller African countries are up there, Level 4, Level 5; we are still struggling at Level 2. And one key element is that the Supreme Audit Institution must be independent; not only the legal independence, but also administrative independence must be there, and the financial independence. And this singular element has been holding down the Supreme Audit Institution in Nigeria because we have a Monitoring Committee within this AFROSAI-E organisation; and, they come for monitoring, to see, to assess to what extent you’ve gone; legal independence? Yes, we have. Fine; for us here, the Constitution provides.
What about administrative independence? Are you recruiting your staff within the system, your training, promotions and everything about personnel, are they done within the Supreme Audit Institution? Here, we have a situation where our personnel are recruited and promoted through the Federal Civil Service Commission or Head of Service of the Federation to post staff to the Office; and that is not acceptable within the AFROSAI-E context, and even in the international Audit community, that is a minus as far as the audit independence is concerned. What about financial independence, how do you get your funding? Can you be sure of your funds? We still have challenges. For instance, the 2017 Budget, what the Office of the Auditor-General for the Federation got is very, very discouraging. Outside the personnel emoluments, we have approximately about N700 million including capital funds. For you to effectively operate the Office, and to execute your mandate, you need funds. And you discover that when you have that kind of funding the international community will look at you that you’re not serious. What can you do with that? So, the independence expected is not just the legal. I have already stated that we have the legal independence, no doubt. But the administrative and financial independence is still a key challenge, and there is no way we can move to Level 3 with the situation we still have; and I believe that the Nigerian Senate when they get to appreciate all these things, I trust they will do the right thing. In fact, other African countries are looking up and saying ‘Nigeria, what is happening? Take the leadership within the AFROSAI-E bloc.’ But we can’t move because we don’t have the independence which a number of other smaller African countries have attained. Quite a number of them they have their own Audit Acts which specify the additional powers of the Auditor-General, the duties, what the Auditor-General can do and all that. But here we still have this problem. The House of Representatives has passed the Bill, but it is still before the distinguished Senate of the Federal Republic of Nigeria. We are hoping that the distinguished Senators will see reason, and the need to expeditiously pass the Bill. This will help the auditor-general’s office to deliver effectively on its mandate; even if it means amending any area, but by then it will be a step forward if the Audit Bill is passed into Law.
When you assumed office you must have outlined some goals that you will like to achieve during your tenure. What are those goals and how do you intend to go about achieving them?
My vision is to have an Audit Office that has the capacity to deliver effective and credible audit services. A Supreme Audit Institution (SAI) that is truly a first class agent of transparency and accountability in government business transactions. Our end products are the Audit Reports. Every audit work ends in a report. We should be able to have credible audit reports that provide value addition. Now, from my assessment in the office, more of what we call compliance and regularity audit is what is going on majorly. Globally, the audit profession has moved away from this compliance and regularity audit to more specialised areas; performance audit in areas like government projects and programmes, environmental audit, etc. If you look at Nigeria today, there are quite a number of areas that we have environmental challenges. Now we should be able to branch into these specialised areas. The government is carrying out a lot of programmes; it’s not enough to answer the question did they comply with guidelines or regulations? What about the impact, the outcome on the lives of the people? What can bring out this clearly is performance audit. Such performance audit should be able to evaluate the success or failure of government projects and programmes.
This type of audit should be able to say whether or not a government project or programme was able to achieve the very objective for which it was intended; an activity that was carried out was carried out effectively, economically and efficiently, what we call the 3Es in performance or the other phrase, maybe for a layman to appreciate, Value-For-Money Audit. Are we getting value for all these programmes? Take for instance in Nigeria we are never lacking in terms of programmes – Operation Feed the Nation, Mass Mobilisation for Self Reliance, Social Justice, and Economic Recovery (MAMSER), National Directorate of Employment (NDE), in fact, a number of programmes. But at the end of all these programmes, do we really have desired outcomes or impact? So, we need to move away from just saying comply with this regulation, comply with this other one, to assess to see what has been the effectiveness of these programmes. And I think if we can do some of these things, branching into these specialised areas of audit, we should be able to advise the government in terms of utilisation of the resources we have in this country.
Look at the environment we are in Nigeria, it’s sad and unfortunate; that is why Mr. President is so passionate and firm about the issue of fighting corruption; being aware that we are in a nation that has been infested with these corrupt practices, we need to also begin to look at the area of developing forensic audit. Because you will discover that a lot of cases about fraud go to court. The forensic audit will help us to gather evidence that can stand the test of legal matters. So, we won’t wait until matters are going to court; we need to be proactive, we need to prepare and reposition our office. Given a country where the issue of corrupt practices are rampant, we should begin to think seriously of developing forensic audit, having a forensic lab and all these things. I have such things in view, looking at the kind of environment we are operating in. The bottom line of this is that the Nigerian citizens should get the best for their money, the resources that God has deposited in this country. So, may be in just a few words: my vision is to add value to what Nigerians are getting for the resources, the efforts of government and all these; we should see clear value addition to whatever thing that is here. I think our audit should begin to address those kinds of things, not just rely on, yes, MDAs have complied with this and that; they have done what should be done. I think we should begin to go beyond such considerations so that the Nigerian people can have value and benefits from the abundant resources God has deposited in this country. We are fortunate we have a President who is passionate and determined to see that the rights things are done, for the benefit of the citizenry of this country.
So how do you hope to implement those lofty ideas?
Incidentally, with audit, the key thing is having the right personnel who have the capacity and integrity to do the right thing. So the issue of capacity-building; training and retraining are the key; we need to upgrade the appropriate skills of the required staff. The other area is IT audit. The world today is going electronic in processing financial transactions, so we must develop a robust IT audit system. Audit staff must have appropriate skills. Because quite a number of MDAs are going into electronic processing, so you can’t continue to talk of a manual audit. We should develop IT skills to help us. For instance, recently I was discussing with my data centre consultant, and I said I want to have a situation where I can sit at my desk and access MDAs; where if you have red flags, I can move in to carry out necessary audit work, not until damage has been done in an MDA. With appropriate technology, I should be able to sit in my office, have access to some critical MDAs, even if you have read-only access. I should be able to see the transactions, where there are red flags you move in to help the government. It will give us the opportunity for proactive action; you don’t have to wait until there is a major problem. Let me paint a real scenario. I am sure we have seen in our context in this country that once somebody has taken out money, the chances that you can recover 100 per cent are very, very low. In fact, that you can recover even 75 per cent, I think it is very difficult. So we have to begin to develop appropriate measures, through technologies now, to be able to advise government timely, to prevent certain things from happening; because that will help. Look at the cost of litigation, the efforts in recovering the stolen money; they are very costly. So if there are methods and measures to stop or prevent irregular practices we advise or recommend promptly. I think preventive measures will pay off handsomely than waiting until somebody has taken the money; he’s gone and then we are later going to court; I think that is expensive, and the chances of full recovery are not there.
And all these will help in the fight against corruption?
Definitely! And, the Office of the Auditor-General for the Federation is given the constitutional mandate to ensure transparency and accountability through our work; it should be the foremost institution to contribute to the anti-corruption war. Agencies like the EFCC and ICPC are doing very well and I commend their efforts immensely. However, they have their limitations in scope. OAuGF has the constitutional mandate as the foremost institution that, if properly empowered, should contribute effectively to the fight against corruption. Our scope is wider.
Let me make reference to the past administration, of President Goodluck Jonathan; whereby a lot of public funds were allegedly disappearing; there was a time the former Central Bank Governor, Sanusi Lamido Sanusi, raised the alarm that $20bn was missing from the federation account. So I just want to bring in the Office of the Auditor-General. During that time do we say the Office or the person in charge was incompetent or negligent not to have discovered this?
I don’t think so. The problem is on the non-treatment of our audit reports. Some of those issues that are being published in the newspapers are already in the audit report; that’s the truth. If you have access to the audit reports, some of these matters, even that particular matter you are referring to is already in the audit report. So I think and perhaps the problem is that these findings are not available to the public; they are already before the National Assembly. Yes, our responsibility is to audit and report to the National Assembly. Our own is to report, and once we report to the National Assembly, they have the responsibility to consider the reports and pass a resolution for executive action. So some of the issues in the newspapers are already in the audit reports; that’s the truth about it. Luckily some of these issues are currently being discussed with the PACs of the National Assembly, and I am happy that even during the retreat, there was that mutual understanding and agreement that once audit reports are submitted to the National Assembly as it is done in other climes, as best practice all over, especially in the developed world, once audit report is submitted to the National Assembly or legislature, it has become a public document. Therefore, the OAuGF is free to host it on its website so that even citizens can have access to the report. By the time this process is effected and people have access, some of these issues will be easily known.
So are you collaborating with the EFCC and ICPC in the fight against corruption?
Oh yes! Very much; we have identified currently about 16 critical stakeholders, EFCC and ICPC inclusive. We can best fight corruption when there are synergy and collaboration. So, we are currently collaborating with ICPC, EFCC, and many other agencies; as I said already, we have identified 16 critical stakeholders and have gone ahead to appoint contact persons that will be interfacing with these agencies; because that’s the best way for us to fight corruption. It’s not something that could be done by a single agency or in isolation. So synergy and collaboration will be the best approach; exchange of information will help to support Mr. President’s war against corruption.
Are you also collaborating with states and local governments in the country?
Definitely; we have contact persons we have appointed that will be interfacing with auditors-general in states and local governments. We are already discussing and we are also planning if budgetary provisions permit us, maybe beyond just one annual conference, maybe half yearly, a conference that we can discuss matters of common interest to our work together; also as the Supreme Audit Institution in Nigeria, we should be able to develop some training programmes, both local and international programmes that should benefit not only the Office of the Auditor-General for the Federation, but that should be of benefit to the states and local governments. Approaching the fight against corruption and also to ensure transparency and accountability in our system, it has to be a holistic thing. Because if you are only looking at the federal and you’re neglecting the states and the local governments, you will have a problem. Because while you’re making progress you will discover that these other levels will drag you down. So the best approach is to adopt a holistic approach so that we are all moving together, because today, the majority of our citizens are in the rural areas. And what level of government covers these areas? It’s the local governments and the state governments. So it should be a holistic thing so that we are moving together; that is the only way that the Federation of Nigeria will be the better for it.
It is believed that the Auditor-General for the Federation should be advising the Federal Government on the management of public funds. And recently people have been saying that the government has been borrowing too much. So what is your office doing to ensure that we don’t choke ourselves with these debts?
Borrowing itself is not wrong. It is the utilisation of the borrowed funds that is the critical area that people should be concerned about. If you are borrowing to address, like what the current government is looking at, critical infrastructure – look at the state of our roads for instance – there is nothing wrong with that; now if you borrow to address these; look at the power sector, what we are passing through, if you’re not borrowing just for consumption but for infrastructure upgrade, I don’t see anything wrong with the borrowing. And people are only looking at the borrowing in terms of the figures, but there is international yardstick or benchmarks; what is the percentage of borrowing in relation to our GDP? And recently during Budget analysis, the Minister of Budget and National Planning showed clearly that our borrowing level is good. I think the benchmark is about 3 per cent, and Nigeria’s borrowing level is below 3 per cent; so we are still below the international benchmark. So people should not just be looking at it that oh, the country is borrowing; look at some basic statistics. Are we borrowing for consumption? No. But if borrowing is to address some critical infrastructure there is nothing wrong with borrowing, if our borrowing has not gone beyond the international benchmark, there is nothing wrong with borrowing. So these are the things that people need to examine before they express an opinion against borrowing. As an office, if we observe any departure from this benchmark, we express our opinion and advise government accordingly. That is our role. We make appropriate recommendations to government.
So what is your Office doing to make sure that the government does what it says it is going to do with all these borrowed funds?
Our role normally as an Audit Office, we look at the terms of borrowing; we examine what purpose the funds were borrowed for; what are the terms of borrowing, whether favourable or not; what are the projects that these funds were borrowed for. So at the point of execution and at the point of auditing, you’re armed with the terms of borrowing, so your examination will be against such criteria. You’re looking at the purpose for which the funds were borrowed, the projects, etc. Is the money being spent on the projects it was borrowed for? Then you do your own monitoring to see that the execution or the spending of the funds is in compliance with the terms of the borrowing and it’s addressing those projects. Anything contrary to that as a watchdog you raise the red flag; you draw the attention of the government that there is a departure – if there is any – and make your recommendations, to make sure that at the end of it, the purpose for which the funds were borrowed is achieved. That is the role of the watchdog, as the auditor-general’s office.
Since you assumed office what have been revenue leaks that you have identified?
Thank you for this question. I have not yet identified revenue leakages. But it is a priority area for me. Identifying revenue leak is a priority; all revenue due to government needs to come into the treasury. Because when revenue is up, the deficit in the Budget will go down. This will also have a positive effect on our borrowing level. So, it is imperative that we must examine in detail the collection and accounting processes of government revenue in all MDAs, so as to identify any possible leaks and recommend effective measures to block such leaks. As at today revenue from oil is still ranking number one for the government of the Federation of Nigeria. Therefore, NNPC is important here. For instance in the 2017 Budget expected revenue from oil is contributing about 41 per cent. Another important non-oil revenue comes from the Federal Inland Revenue Service, the Nigeria Customs Service, etc. The issue of sales of domestic crude oil and remittances to Federation Account is also very important. We will diligently examine all these sources of government revenue and make appropriate and helpful recommendations to government. The bottom line is that any identified leaks will be reported on, with appropriate recommendations.
Based on the current audited account of the federal government right now, do you think there is renewed confidence by international investors to come and invest in Nigeria?
I think from available information, even though the media, because I read media reports, I think there is very clear confidence in the Nigerian economy; because quite a number of investors are showing interest in various areas. Take the case of the mining sector for example. I think there has been renewed interest of foreign investors coming into Nigeria for investing in the mining sector; I think even in agriculture there are indicators to show clearly that there is renewed interest by investors to come into Nigeria. So that is not in doubt, and it is quite indicative of the confidence they have in the Nigerian economy. There is openness in government transactions and strong willingness for transparency and accountability. That is what investors want to see in place.
The financial regulating Act provides that audited accounts of federal parastatals should be provided to the OAuGF not later than May 31st of the following year. But recently you raised an alarm that the last audited annual accounts of NNPC submitted to your office, was that of 2010. So is there any punishment for federal government parastatals that fail to comply with such date for submission?
The Act you made reference to, is the Fiscal Responsibility Act, 2007. Recently when I paid a courtesy visit to the Minister of State for Petroleum I raised that issue. And the minister stated very clearly that actually when he assumed duty, yes, he met a situation where the accounts of the NNPC had been in arrears. I must commend his courage and sincerity, and his efforts, from what he explained; and I could see very clearly from the discussions we had, his desire and willingness to remedy that situation. From what he stated, they have clear and concrete plans to overcome that situation. On my part in my office, I’m discussing with my heads of departments on the approach we are going to adopt. It’s not only when millions are missing that you say you’re writing an audit report. The law says accounts or financial statements should be submitted or audited accounts should be submitted just like you rightly quoted (May 31st of every succeeding year).
Now, once we have that situation (of late or non-submission); that in itself is a basis for a report to the National Assembly; making a report to the National Assembly, that XYZ parastatals have not submitted their Audited Financial Reports. Currently, I am doing an assessment of parastatals to establish the status of their audited accounts. At the conclusion of the assessment we are doing now, I am going to forward a report on that; it is not only until there is a report that shows ‘X’ Naira is missing, but the fact that there is non-compliance with the law in itself, provides a basis for an Audit report, as far as it borders on financial matters. In fact even in the retreat we just concluded I discussed with the Chairman, House of Representatives Public Accounts Committee, by way of sensitising the PAC, so that when such a report is sent to the National Assembly, it will be appreciated – because when there is a failure like that it is dangerous; and when we are talking about the issue of transparency and accountability such failure is a setback for transparency and accountability. Because timeliness is of the essence; timely reporting, timely auditing, they are critical if we are to ensure transparency and accountability.
So one of the things we discussed is that we need to review the area of sanctions. In some areas, the available sanctions are out-dated or non-existent. We have noted some of these things with the members of the National Assembly. These issues have been raised; we should be able to review, even if it means reviewing our statutes or laws, to introduce sanctions that once you breach this, this is the sanction; update the ones that are available that are out-dated, and where they are non-existent, we introduce sanctions. Because it is only where you have a sanction regime that they are applied to serve as a deterrent for such breaches in future; so we are currently addressing this issue with the PACs of the National Assembly. This area of sanctions makes the passage of the Audit Bill very urgent and imperative. Definite sanctions will be provided in the Audit Acts to give potency to Audit Recommendations and NASS resolutions.
So you believe that the independence of the OAuGF will help Nigeria to fight corruption?
Definitely! Constitutionally, the Office of the Auditor-General of the Federation is the foremost institution to fight corruption through its activities towards transparency and accountability; when we go into an organisation, be it a ministry, department or agency, we do a detailed work, starting from system review – you look at the system itself, you examine the controls, then you examine the transactions; so it is detailed work. For other agencies mostly their work is based on petitions; and the question is what happens if there is no petition in an area? That section will just go quietly. But when an auditor comes into an MDA he/she reviews the whole system. For other Agencies, their work is based mostly on petitions received and so restricted. But the handicap that the Office has all these years is the absence of proper funding and the issue of true independence we are talking about. But I have a personal conviction that once these matters are addressed, definitely the Office will deliver credibly. One sure way to empower the Office is the passage of the Audit Bill; passing that Bill into law is critical. In other countries, the benefits of such audit Acts are very clear. Within the sub-region in Africa where we belong, they are surprised why up till now there is no Audit Act in Nigeria.
When we meet at conferences they are surprised that the giant of Africa that all should look up to, has no Audit Act; to them it’s funny. In this retreat that we just ended in Lagos, the Auditor-General of Ghana was there; and the Deputy Auditor-General from Sierra Leone, in fact in his country he is in charge of PAC matters; both of them spoke very clearly, and they were surprised and they presented their countries’ positions giving clear examples of what is operational in their countries; the kind of independence they have in their own countries. Our Distinguished Senators of the PAC and the Honourable Members of the House of Representatives PAC were there, and they listened to them and asked questions. I am confident that they would support and be at the forefront of asking that this Audit Bill is passed into law. The current situation that we are is not doing the country any good. So passing this Audit Bill into law is very, very critical. The Audit Act will provide the necessary administrative and financial independence, thereby supporting the legal independence already provided in the Constitution. It will also assist the Supreme Audit Institution (SAI), Nigeria, to earn international respect among the comity of nations.