Appraisal of the Federal Audit Service Commission Bill - Innovation and Implications;
The Status Quo (Statement of Problem)
The Office of the Auditor General for the Federation has a pivotal role to play in public financial management and anti-corruption measures, especially in terms of public accountability, by ensuring compliance with financial rules and regulations, relevant legislation, ensuring due process in public expenditure and thereby minimising the incidence of corruption. However, due to the limiting empowerment provisions of Sections 85 - 89 of the Constitution and political interference which mitigates its independence and functionality, the office is yet to play this pivotal role towards an effective transparent and accountable financial system in Nigeria.
Specifically, Section 85(3) prohibits the AGF from auditing the accounts of statutory corporations, agencies, commissions and authorities and limits his oversight to only "periodic checks" and "comments".
Nonetheless, these statutory corporations and many other Ministries, Agencies and Departments (MDAs) fail to submit their audited financial statements to the office of the AGF despite the provision of Financial Regulation 3210(v) which enjoins the Chief Executive Officers of the bodies to submit both the audited accounts and management reports. Apart from the number of defaulting MDAs rising astronomically, the Auditor General of the Federation reported that 11 MDAs had never submitted their financial statements for audit since January 12, 2017 when he assumed office. Furthemore, the 2017 Audit Report published by the Office of Auditor General of the Federation had defaulting MDAs rising to 265, up from the 160 defiant ones in 2016. Some agencies do not even have audited accounts as claimed by the Chairman of the Senate Public Accounts Committee, Mattew Urhoghide.
The situation is compounded by the fact that there are no sanction measures against defaulting bodies and persons. Indubitably, this Bill seeks to pivotally reposition the office of the AGF and rectify many of the legal and institutional lacunae that impede the independent and extensive exercise of oversight powers of the office towards a transparent and accountable financial system. However, few impediments remain unrectified.
The Innovation (Implications of the Bill)
The Federal Audit Service Commission Act has 3 major objectives;
- Enhance the powers of the Auditor-General of the Federation (AGF) towards an effective, transparent and accountable financial system.
- Establish the Federal Audit Service Commission which summarily regulates the composition and discipline of staff of the AGF office.
- Repeal the Audit Ordinance of 1958 and Public Accounts Committee Act of 2004.
Notable Enhanced Powers
- Select methodology to be adopted in respect of an audit, and the nature and extent of an audit.
- Request persons in employ of MDAs, International institutions whose accounts are being audited by the office of the AGF to make appearance at a specified place and time; or produce documents, books or records in control of such person.
- Investigate and make extracts from any record, book or document of any MDA or International institution...
- Surcharge (and revoke surcharge) the amount of any expenditure which has not been duly brought into account or the amount of any loss or deficiency incurred.
- Audit money accruing to the nation or federal MDAs or other public entities and international institutions.
- Audit donations, grants, loans and other forms of assistance accruable to the federal government MDAs.
The Bill also expands the operational responsibilities of the AGF with regards to expressing an independent opinion on the result of each audit relying on a listed indices which guarantees accounting and auditing best standards and practices.
The Bill empowers the AGF to issue audit queries and to direct the withholding of emoluments and allowances due to the person after 30 days of issuance of the query by which the person is deemed to have failed to comply.
Suummons and Warrant of Arrest
The Bill empowers the AGF to issue summons to persons to appear before it to give evidence, orally or in writing, and where such person fails to appear without reasonable excuse, to issue a warrant to the Police for the arrest of such person. It also penalises persons who give false evidence or refuse to take a witness oath or affirmation.
Offences and Penalties
Any person who;
- Wilfully obstructs the lawful functions of the AGF; without lawful justification, fails to comply with lawful order of the AGF; unlawfully denies access to books, documents and records; knowingly presents to the AGF a false document/statement shall be liable on conviction to a fine of N300,000 or a jail term of not less than 3 years.
Corporate entities shall be liable on conviction to a fine of N5000,000
- Where a Staff of the office of the AGF commits any offence relating to misuse of information or collusion, the person shall be liable on conviction to a fine of N300,000 or a jail term of not less than 3 years, or both.
- Furthermore, pursuant to the AGF’s power to summon and arrest as mentioned above, it is an offence for persons to refuse to appear before the AGF when summoned; give false evidence; and refuse to take a witness oath or affirmation.
Protection from Litigation
No civil or criminal proceedings shall be instituted against the Auditor-General on the basis of any action or omission committed by him or any report submitted to the National Assembly. Documents and reports submitted by the AGF to the National Assembly shall be accorded same rights as those emanating from the National Assembly pursuant to the Legislative Houses (Powers and Privileges) Act.
Establishment of a Federal Audit Service Commission;
Assumption of powers of the Federal Civil Service Commission with regards to:
- Appointment of staff into the office of the AGF (but not to appoint AGF/Audit commission).
- Recruitment, promotion and discipline of staff (this would inadvertently address the issue of shortage of skilled manpower).
- Determine with relevant government agencies the salaries and conditions of service of the staff of the AGF and Audit commission.
- Subject to the constitution, make rules and regulations for the realisation of the objectives of the Bill/Act.
- The Constitution and the Bill (which is subject to the Constitution) still precludes the powers of the AGF from auditing accounts of statutory corporations, agencies, commissions and authorities, some of which have become conduits for public fund embezzlement and corruption.
- Operational implication of the oath of secrecy sworn by the AGF which entrenches the culture of secrecy in public service in light of the Freedom of Information Act and tenets of open government.
- Budgetary Process; the Office of the AGF goes through its budgetary process just like any other MDA or parastatal. Its annual budget is submitted to the National Assembly through the Ministry of Budget and National Planning. Once agreed, the annual budget of the Office is then controlled by the Ministry of Finance and funds are only released by the Accountant General once a warrant has been issued by the Budget Office, similar to other ministries, departments agencies. As a result, the Accountant General, one of the main offices subject to audit is able to exert significant influence over the funding of the Office and has, in recent financial years, not released the full annual budget to the Office. The Bill does not address this.
- Silence on operational coordination between the AGF office and Anti-graft agencies.
- Pursuant to the litany of criminal provisions of the Bill, it is silent as to whose duty it is to prosecute defaulting persons and bodies.
- The Bill gives broad adjudicatory and executive powers to the AGF with regards to arrest, summons and giving evidence on oath but is silent as to whether such adjudicatory powers/decision is subject to appeal to ultimate adjudicatory powers of a particular court (since the office is protected from civil or criminal litigation). Hence, this power(s) may be abused.
- Currently, the aforementioned adjudicatory powers are the constitutional responsibility of both Houses of the National Assembly, by virtue of Section 89. Hence, with the passage of the Bill, both the AGF and the National Assembly would wield this power and there would be likelihood of a clash or conflict (of interest).
- The AGF still lacks power to audit beneficiaries of statutory transfers: the National Assembly, National Judicial Council, Independent National Electoral Commission, Niger Delta Development Commission, North East Development Commission, Universal Basic Education Commission, Public Complaints Commission, and so forth.
- Repeal of Section 85(3) of the Constitution which prohibits the AGF’s power to audit statutory corporations and bodies.
- Subject the Office of the AGF and the Audit Commission to the Freedom of Information Act except in matters specifically precluded under Sections 11 - 17 of the Act.
- Review of the budgetary process of the office of the AGF to enhance its independence and functionality.
- A detailed and comprehensive operational coordination section to be included in the Bill; or in a different regulation or MoU pursuant to the Bill/Act.
- Express mention of whose duty it is to prosecute defaulters and violators of the Bill/Act.
- Review of the broad adjudicatory powers of the AGF which clashes with that of the National Assembly.
- Empowering the AGF to audit beneficiaries of statutory transfers. The AGF should have unfettered powers to audit all public accounts or private accounts with public funds.
Charles E. Uche ESQ.