Law News
Institute open judicial probe into NNPC

The forensic audit conducted by PWC on NNPC to ascertain the veracity of the alleged missing $20 billion from the Federation account is to say the least, very damaging to the already poor image of the officials of the out-going PDP-led Federal Government. The report was supposedly a fact-finding one but what came out was a smokescreen the government wanted to use to whitewash a very filthy cup for Nigerians to drink with.   PWC had qualified the audit saying it did not obtain needed information from NPDC, a subsidiary of NNPC. The qualification of the audit report has cast doubt on the reliability of the report.

nnpcThe auditors have tacitly put a disclaimer on the report saying it was for the use of the Auditor-General only. Interestingly, there are now denials from principal actors in the saga. Blame game has started as the Auditor-General is quoted as saying he did not act on the report as the Presidency has vested interest in it. The Minister of Finance has denied commissioning the firm to carry out the audit.

From the content of the report, the government briefed the auditors of what it needed and what it intended to achieve which was not to find out if the nation was losing resources by lack of adequate control in the oil and gas operation of NNPC and its subsidiary. In the real sense, the Minister of Finance who instituted the probe, the Auditor-General who received the report and the Minister of Petroleum resources have questions to answer. The Finance Minister must tell Nigerians details of the briefing she gave PWC even though she has denied setting up the audit. Did the firm of auditors meet her expectations? If yes, she is culpable of cover up. If no, who was she desperately trying to cover up?

The Auditor-General must explain to Nigerians when he received the report as an internal auditor, what recommendations he made to government knowing full well that by practice, the audit report was qualified. The Minister of Petroleum Resources must explain knowing full well that by the caveat the auditors put on the report, it was not useful for anything but the waste paper bin. She should also answer for the fact that lots of the nation’s scarce resources were wasted in a report that ab-initio was not meant to find out anything.

The fact that the auditors said “When you are given a job, there are procedures for doing the job based on agreement with the client, the out-going government must tell Nigerians what agreement it reached with PWC on the so- called forensic audit. The auditors, to excuse themselves from behind-the- scene scandals going on in government put a caveat on the audit so that others would not use  the so-called forensic audit of the NNPC account in search of the missing $20 billion or rely on it for decision-making. It is also to protect the company from any legal  action that may arise from the job.

PricewaterhouseCoopers in their introductory letter addressed to Nigeria’s Auditor-General, the audit firm said findings in its 199-page report were limited to available information and did not constitute a review in accordance with generally accepted standards. The report said: “The procedures we performed did not constitute an examination or a review in accordance with generally accepted auditing standards or attestation standards.

“Accordingly, we provide no opinion, attestation or other form of assurance with respect to our work or the information upon which our work was based”. PWC said that the report “was solely for the Office of the Auditor-General of the Federation, for their internal use and benefit and not intended to, nor may they be relied upon, by any other third party.

The report did not give strong and independent opinion of its findings despite government claim the investigation was carried out using forensic techniques.

Many Nigerians may not understand what a qualified account stands for.

A secondary school friend of mine, who had distinction in ICAN examinations and practised auditing before his appointment as a Commissioner in Nigerian Insurance Commission asked that I read the content of INTERNATIONAL STANDARD ON AUDITING 705 to understand why an auditor will qualify an audit report. The Audit guide 705 for auditing showed that an auditor’s report is a formal opinion, or disclaimer thereof, issued by an auditor as a result of evaluation performed on a legal entity. The Guideline said that an auditor’s report is considered an essential tool when reporting financial information to users, particularly in business. Since many third-party users prefer, or even require financial information to be certified by an independent external auditor, many auditees rely on auditor reports to certify their information in order to attract investors, obtain loans, and improve public appearance.

A qualified opinion report is issued when auditors encounter one of the two types of situations which do not comply with generally accepted accounting principle. The two types of situations which would cause an auditor to issue this opinion include Single deviation from GAAP when one or more areas of the financial statements do not conform to GAAP or are mis-stated and Limitation of scope when the auditor could not audit one or more areas of the financial statements. The auditors in this case did not agree with what the government wanted. The government had wanted a misrepresentation of facts to placate the Nigerian public. The NNPC cover up is a game that has been on for decades. There have always been double entry for subsidy claim, there have been crude oil lifting without records. What all of these mean is that NNPC is a rotten egg and a home of looters.

What is needed is an open judicial probe of the operations of NNPC right from inception.


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