Presidential assent to Federal Audit Service Bill (2)

By Eze Onyekpere

While the Bill is not perfect, it seeks to position Nigeria’s federal audit system to respond to the demands of the Lima Declaration of Guidelines on Auditing Precepts (adopted at the IX Congress of the International Organisation of Supreme Audit Institutions-INTOSAI) which states that the concept and establishment of audit is inherent in public financial administration as the management of public funds represents a trust. Audit is not an end in itself but an indispensable part of a regulatory system whose aim is to reveal deviations from accepted standards and violations of the principles of legality, efficiency, effectiveness and economy of financial management, early enough to make it possible to take corrective action in individual cases, to make those accountable to accept responsibility, to obtain compensation, or to take steps to prevent – or at least render more difficult such breaches.

By aligning Nigeria’s standards with global public financial management standards, the Bill creates institutional and systemic impact through some of the core provisions.  It creates an autonomous Federal Audit Service, being a corporate body with perpetual succession and a common seal. The Federal Audit Board strengthens the independence and autonomy of the Auditor General for the Federation (AuGF), especially on recruitment, promotion and discipline of staff, conditions of service and remuneration of the Service. The Bill provides for a competitive and transparent appointment procedure and for the first time, spells out the qualifications of candidates for appointment to the office of AuGF. This was not available under extant law. Fair hearing is now explicitly entrenched as part of the procedure for removal of the AuGF – service of notice of intention to remove with the reasons underlying the removal and fourteen days timeframe to prepare and make a defence either in person or by legal representative.

Now defined in the Bill is the expanded functions of the AuGF. This is not reliant on subsidiary legislation like Financial Regulations and expanded to explicitly include beyond financial audit vis, value for money and performance audit, forensic audit,  audit of special funds, classified expenditure, donations, grants and loans, all revenues accruing to FGN, disaster grants and aids, subsidies, performance information, counterpart funded projects, public private partnerships of FGN; special audits, etc. This broad mandate is supported by Principle 3 of the Mexico Declaration being; A sufficiently broad mandate and full discretion, in the discharge of Supreme Audit Institution (SAI) functions.

Beyond the traditional powers, the decision on the methodology to adopt in respect of an audit and the nature and extent of audit are part of the independence of the AuGF. The following new powers have been granted to AuGF: Unrestricted access to information; to summon and take evidence on oath and resort to courts to compel appearance; investigative powers where sufficient prima facie evidence exists to warrant investigation. Also, there is now the power to surcharge the amount of any expenditure which has not been duly brought into the account or the amount of any loss or deficiency incurred and to revoke any surcharge imposed by the AuGF; direct the withholding of the emoluments and allowances of any person who fails or refuses to reply to audit queries within 30 days and for as long as the person fails to comply. Furthermore, the AuGF under the Bill has unrestricted access to persons, books, documents, property, etc., necessary for the discharge of statutory responsibilities and the power to examine accounts and records of individual or corporate bodies where public funds have been traced or suspected to have benefited from illegal transfer of public funds.

The terms and conditions of service, remunerations, benefits and allowances of audit staff is now to be determined after considering; the need to attract and retain quality manpower for the Service; specialised nature of work to be performed by the Service; and salaries paid in similar government agencies to persons with equivalent responsibilities, expertise and skills.

This improves the conditions of audit staff and will incentivise performance.

Internal Audit Reports of MDAs are now to be submitted to the AuGF on monthly, quarterly and half yearly basis by Internal Auditors of FGN offices and courts. This will facilitate the work of the AuGF. Audit Reports have been expressly declared as public documents to be uploaded on the website of the AuGF after submission to NASS. This will facilitate public access to audit documents and aid the work of the media and civil society. The Bill now provides for a mandatory exit conference between the AuGF and the leadership of the Auditee. A clean copy of the audit report should be provided to the Auditee. This facilitates transparency of the audit process and provides the opportunity for the Auditee to further respond to the issues raised in the audit. This will enhance citizen trust through public access to audit reports.

There are risks involved if the president fails to assent to the Bill. The first is the sustained reliance on a repealed legislation, an obsolete 1956 audit framework which will continue to frustrate improvements in public finance management. There will be continued weak enforcement of audit findings. It will undermine anti-corruption efforts and fiscal discipline. Finally, it will limit Nigeria’s ability to meet international accountability standards.