Pressure mounts for restructuring of NNPC on PwC audit report

Pressures are mounting for the restructuring of the Nigerian National Petroleum Corporation (NNPC) especially as explanations from PricewaterhouseCoopers (PwC), which conducted the forensic audit on the state-owned oil company, indicate that the oil giant may refund in excess of the $1.4 billion reported.

According to PwC, one of the leading global network of ‘big four’ audit and assurance firms, “The use of the phrase minimum of $1.4 billion in the report is telling.”

“It implies that if the $2.8 billion is looked into and Nigerian Petroleum Development Company (NPDC) records made available the unremitted amounts, the unremitted amount could be well much higher”, PwC said yesterday.

With this clarification from PwC, the first of its kind from the international reputable organisation, analysts agree that the only way out for government is to restructure the NNPC that has become unwieldy and corrupt.

PwC clarification follows recent views that it faces grave reputation risks as Nigerians clinically scrutinise the report it submitted in the middle of the 2015 presidential election campaign.

It further said: “NNPC provided transaction documents for additional costs of $2.81 billion incurred not directly related to crude oil processing.”

PwC stated clearly in its report that the government needs to clarify if such deductions should be made by NNPC as a first line charge, before remitting the net proceeds of domestic crude to the federation accounts.

PwC stressed that if these are deemed not to be valid deductions, then the amount due from NNPC would be estimated at $2.07 billion (without considering expected known remittances from NNPC) or $4.29 billion (if expected known remittances from NPDC are considered).

According to PwC, “The procedures we performed did not constitute an examination or a review in accordance with generally accepted auditing standards (GAAS) or attestation standards. Accordingly, we provide no opinion, attestation upon which our work was based.”

Explaining further, PWC said, “This is the standard clause in any forensic audit report. GAAS audits are traditional financial statement audits, with the requirement for the auditor to provide an opinion or assurance on financial statement.

“A forensic audit on the other hand is specific to a matter for investigation. It does not require the forensic auditor to provide assurance or opinion on the financial status, but provide answers to specific matter being investigated”.

It also insisted that GAAS audit focuses on two key issues. First, independent auditors look for evidence that the statements conform to GASS principles.

“The auditor then decides if the statements fairly represent the company’s financial position in all material aspects.”