Presidential assent to Federal Audit Service Bill (1)

By Eze Onyekpere

Audit is part of the budgeting and public finance management chain. While other parts of the chain including fiscal responsibility, public procurement, management of treasury funds, etc., have been reformed through new laws and policies, the audit component remains the weakest part of the chain. However, a chain is as strong as its weakest point and this accounts for the major part of the weaknesses in Nigeria’s federal public finance management system. Audit has long been neglected and it is hardly discussed in popular media. This discourse reviews the background legal and institutional audit environment and makes a case for presidential assent to the Federal Audit Service Bill.

The Federal Audit Service Bill (as passed by the House of Representatives in 2023 and the Senate in 2025) represents a landmark reform aimed at modernising Nigeria’s public audit system, replacing the obsolete Audit Ordinance of 1956.While the Bill speaks to the repeal of the Federal Audit Ordinance of 1956, it is imperative to note that the Audit Ordinance (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. The Act is not reproduced in the Laws of the Federation of Nigeria 2004. However, no new audit law has been enacted at the federal level since then. As such, there is a lacuna in that area of the law. Assuming without conceding that the Audit Act of 1956 is still extant law, it is outdated, obsolete and needs to be replaced. A seventy-year-old colonial law enacted at a time when federal public expenditure was less than one hundred million pounds cannot be used to manage public expenditure in excess of N68trillion.

It is in the light of the foregoing that critical stakeholders in public finance management endorse the National Assembly’s approval and passage of the Federal Audit Service Bill, being a Bill for an Act to repeal the Audit Ordinance of 1956, and enact the Federal Audit Service Bill, 2023, to establish the Federal Audit Service, provide additional powers and functions for the Auditor-General for the Federation, establish the Federal Audit Board, and for related matters. However, President Bola Ahmed Tinubu is yet to grant assent to the Bill.

The Bill introduces institutional independence for the Auditor-General for the Federation, expands audit scope, strengthens enforcement powers, and aligns Nigeria’s audit framework with international standards. Its assent is critical to improving fiscal discipline, reducing corruption, and enhancing public sector performance.

When assented to, the new Audit Act will provide strategic benefits to Nigeria in the economic, governance and accountability, institutional and systems fields. The economic benefits include reduced revenue leakages through stronger audit enforcement. Year after year audit reports highlight trillions of resources in revenue leakages that are never recovered. Coming at a time of lean resources, when public borrowing and debt service is outstripping retained revenue, this will be a very big advantage for the welfare of Nigerians. The performance and value for money angle will enhance efficiency of public expenditure thereby increasing effectiveness of public expenditure. It will increase remittances from ministries, departments and agencies of government to the treasury.

Enhanced management of public debt, subsidies and donor funds through more effective audits will improve the fiscal space for investment in critical infrastructure, human capital development and will be fundamentalto improvements in service delivery. Nigeria’s rating on investment risk is bound to improve if the federal audit system improves and meets international benchmarks. The poor rating from corruption perception surveys will also improve. This will lead to cheaper credits from public and private financial institutions and better standing in the comity of nations. 

In terms of governance and accountability benefits, the Auditor-General for the Federation is the foremost constitutional anti-corruption agency. Strengthening the office will lead to enhanced preventive measures and collaboration between the office and other pillars of integrity will reduce corruption. With new powers of investigation, collaboration with other agencies and the power to trace public funds which have been mingled with individual and corporate resources, the anti-corruption drive will wear a new face.

Law as the command of the sovereign backed by sanctions has no meaning in a regime where infractions are not followed up with penal sanctions. Law as an instrument of deterrence and punishment for offenders has been strengthened through creation of offences and spelling out of sanctions in accordance with the requirements of the fair hearing provisions of the Fundamental Rights Chapter of the Constitution of the Federal Republic of Nigeria 1999 as amended. This has been a big gap under the extant audit regime but has now been fixed by the Bill.

Existing sanctions are mainly administrative and were encumbered through long bureaucratic processes. The new provisions facilitate that link between infractions and legal sanctions. The current auditing function appears to be a frustrating exercise in report writing. The Auditor General for the Federation produces a report which is sent to the Public Accounts Committees (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, 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 misdemeanours by MDAs.