Senate gives NNPC auditors seven days to defend N210tn unexplained entries

The Senate Public Accounts Committee has given the external auditors of the Nigerian National Petroleum Company Limited (NNPC Ltd.) one week to submit detailed schedules supporting more than N210 trillion contained in the company’s audited financial statements.

The committee said the auditors, having certified the accounts, must provide the working papers and breakdown of the figures instead of directing lawmakers back to NNPC Ltd.

The disputed amount consists of about N107 trillion recorded as receivables and another N103 trillion listed as payables in the company’s audited accounts.

Lawmakers said repeated interactions with NNPC Ltd. had failed to provide satisfactory explanations for the entries.

When asked to produce the supporting schedules, representatives of the external audit firm said the documents formed part of their working papers and requested about two weeks to retrieve them.

The request was rejected by members of the committee.

Ibrahim Dankwambo, chairman of the committee, questioned why the auditors could not immediately produce documents backing figures they had already certified.

“When you have figures in the financial statements, there must be supporting schedules showing how those figures were arrived at. If you already have them in your working papers, why do you need to go back before presenting them to this committee?”

The auditors maintained that, in line with professional practice, NNPC Ltd. remained their client and that explanations relating to the figures should ordinarily come from the company.

They also recalled that during an earlier appearance before the committee, it had been agreed that officials of NNPC Ltd. would explain the figures contained in the audited accounts.

However, lawmakers dismissed the explanation.

Abdul Ningi cited Sections 88 and 89 of the 1999 Constitution (as amended), saying the National Assembly has the authority to summon individuals and organisations and compel the production of documents required for investigations.

“The Constitution empowers this committee to invite any person and request any document necessary for our investigation. You are before this committee as independent auditors. Do not tell us you must first seek permission from your client before complying with the lawful request of Parliament.”

Members of the committee stressed that the auditors were appearing in their own capacity and were responsible for defending the audit opinion they issued on the NNPC financial statements.

Adams Oshiomhole reminded the auditors that the controversial figures originated from their audit exercise.

“The alarms were raised because of the work you people performed. These figures came from your audit. Therefore, you cannot tell this committee that you must consult your principal before responding. You are responsible for your audit work and must answer questions arising from it.”

Another lawmaker questioned whether the audit had been properly conducted.

“If you cannot produce the detailed schedules supporting these figures, then it raises serious questions about whether the audit work was actually done.

“If it was done, the supporting documentation should already exist. We believe 48 hours should even be sufficient, but certainly not an indefinite period.”

The committee also criticised the inability of both NNPC Ltd. and its auditors to reconcile the receivables and payables.

Dankwambo said NNPC officials had repeatedly explained that the figures were largely linked to joint venture cash calls and payments, yet had failed to identify the specific transactions or counterparties involved.

According to him, if both entries related to the same transactions, they should be reconciled and netted off.

“We have repeatedly been told these amounts relate to joint venture cash calls and joint venture payments. If that is the case, the company should be able to identify whose receivables and whose payables they are and reconcile them accordingly.

“The inability to identify the components of both figures is precisely why this committee considers the combined amount of over ₦210 trillion as unexplained.

“We are not saying the money is missing. We are saying the figures remain unexplained. For amounts of this magnitude to remain unreconciled in audited financial statements is deeply concerning.”

Lawmakers also objected to the auditors’ reliance on confidentiality obligations to their client.

Oshiomhole argued that NNPC Ltd., as a company wholly owned by the Federal Government on behalf of Nigerians, could not shield information from Parliament under the guise of commercial confidentiality.

“NNPC is not a private family business. It belongs to the Nigerian people. We represent those people, and we are entitled to know how every kobo is accounted for.

“There can be no secrecy between an auditor and a wholly government-owned company when Parliament is carrying out a constitutional investigation.”

Babangida Useni added that professional ethics and confidentiality agreements could not supersede the constitutional investigative powers of the National Assembly.

He also reminded the auditors that the committee’s Standing Orders empower it to summon individuals, demand documents and examine the accounts of government-owned corporations.

Drawing on international precedent, Dankwambo warned the auditors of the reputational consequences of failing to defend audited financial statements, citing the collapse of Arthur Andersen after the Enron scandal.

At the end of the session, the committee directed the auditors to return within one week with a comprehensive schedule showing the composition of the ₦107 trillion receivables and N103 trillion payables, including the basis on which the figures were certified in the audited financial statements.

Before adjourning, Dankwambo reiterated that the committee was not alleging that the money had disappeared.

“We have never said the money is missing. What we have consistently maintained is that these figures remain unexplained. One represents receivables and the other represents payables.

“Because neither has been adequately explained, the committee refers to the combined amount of about ₦210 trillion as unexplained. That is the issue before us.”

The auditors were subsequently discharged and directed to reappear before the committee in one week with the requested documentation.