The Imperative Of A New Audit Legislation

The Constitution of the Federal Republic of Nigeria 1999, as amended (“Constitution”) in s.85 (1) and (2) establishes the office of the Auditor General for the Federation with powers to audit the public accounts of all offices and courts of the Federation. The equivalent provision for states is S. 125 (1) and (2) of the Constitution. Constitutional provisions on the auditing of public accounts are limited to independence, tenure, remuneration, submission of audit reports to the Public Accounts Committees (“PACs”) of the National Assembly and powers in relation to the audit of government statutory corporations, agencies and commissions. The Constitution did not go into the definition of processes and procedures, coverage, ambit and other details of the audit function. These need to be fleshed out by a subsequent legislation.

The Audit Act of 1956 was not reproduced in the Laws of the Federation of Nigeria 1990 and by s.5 (1) of the Revised Edition (Laws of the Federation of Nigeria) Decree 1990, the Act ceased to be part of Nigerian laws. However, no new audit law has been enacted at the federal level since then and audit reports at the federal level have consistently referred to the Constitution. As such, there is a lacuna in that area of the law.

Beyond the fact that the Audit legislation has ceased to be law, the provisions of the previous law are no longer in tune with modern realities of best practices and comparative experiences in the audit function. The audit function has moved beyond financial, compliance and regularity audits. Issues of transparency, accountability, value for money and performance measurement, sustainable environmental practices, information technology and forensic audits have been mainstreamed into the modern audit lexicon and practice. As usual, Nigeria lags behind and has a lot to learn from comparator countries even in sub-Saharan Africa.

Auditing is part of the cycle and chain of public expenditure management which in Nigeria has been undergoing policy and legislative reforms in the last fourteen years. The reforms include the Fiscal Responsibility Act 2007 which covers issues of budget formulation, medium term expenditure framework, budget execution and reporting, deficits, borrowing and debts management, public access to information and enforcement provisions. The Public Procurement Act 2007 provides for a competitive, accountable, transparent, value for money procurement process from the stages of planning, bid solicitation, review, evaluation, award of contracts, mobilisation fees, performance guarantees and project implementation. The Service Delivery Initiative provides the framework for Ministries, Departments and Agencies (MDAs) to set and work towards service delivery targets. The missing link in all these reforms is the auditing and evaluation function which is virtually the last part of the budgeting process. It is impossible for these public expenditure management reforms to succeed if a critical component of the chain (auditing) is very weak.

Audit reports are usually late and in arrears by three to four years. Although, the Constitution requires the Auditor General to send his reports to the PAC within ninety days of receiving the Accountant General’s financial statements, the law is silent on the timing for the submission of the Accountant General’s statements. The current audit function appears to be a frustrating exercise in report writing. The Auditor General produces a report which is sent to the PACs of the legislature. The PACs conduct their hearings, conduct investigations if necessary, conclude their deliberations and produce yet another report. What happens to the recommendations in the first and second reports? Available evidence shows that audit recommendations are treated with levity by MDAs. Despite the provisions of the Financial Regulations 2000, there is hardly a follow up on the recommendations. This sets the stage for the year after year reoccurrence of the same set of “financial felonies and misdemanours” by MDAs.

Audit reports are hardly in the public domain. Yes, the reports may be published in the website of the Auditor-General for the Federation but simplified versions that engage the ordinary citizen is not available. The press, non-governmental organisations and other components of civil society working on anti corruption issues hardly engage the Auditor General’s office or the work of the PACs because of lack of information and or capacity. There is no statutory mandate for the publicity of audit reports but publicity is one of the best practices in modern day auditing. Several investigations in the National Assembly on the management of public finances in the current dispensation have revealed a lot of financial felonies. An empowered Auditor General’s office with a proper mandate, funding and staffing would either have nipped these violations in the bud or would have made them public knowledge some years ago.

Empirical evidence demonstrates no link between the work of the anti corruption agencies and the office of the Auditor General. What is the purpose of indicting a public officer as having misappropriated or mismanaged millions of naira if nothing is done to recover such money? As punishment follows the offence, the lack of a clear follow up system encourages impunity and deprecates the work of the Auditor General.

In conclusion, the extant audit regime is overdue for reforms. It is a sad fact that the executive under President Obansanjo sent an Audit Bill to the National Assembly and the Assembly duly passed the bill. The former President however failed, neglected and refused to assent to the bill. This was repeated in the Goodluck Jonathan presidency and Muhammadu Buhari’s first term in office. This brings us back to the status quo, where debates on the bill now reintroduced will start de novo in 2019.