Again, OAuGF indicts NPA over massive financial infractions in 2018

The Office of the Auditor General of the Federation (OAuGF) has again indicted the Management of the Nigerian Port Authority (NPA) of massive financial infractions uncovered in its 2018 financial statement.

The infractions running to several billions of Naira were contained in the comments of the Auditor General of the Federation, Adolphus Aghughu, on the consolidated and separate financial statements of the Nigeria Port Authority (NPA) for the 2018 financial year dated May 24, 2021, submitted to the both Chambers of the National Assembly.

According to the report sighted by Tribune Online in Abuja, on Sunday, the infractions include failure to remit about N44.207 in taxes to the Federal Inland Revenue Services and spending a whopping N88.229 billion as administrative expenses during the year.

The management of the NPA had already been summoned by the Public Accounts Committee of the House of Representatives being chaired by Hon Busayo Oluwole Oke (PDP-OSUN) to come and defend the AuGF comments on its audited account carried out by the firms of Messrs Muhtari Dangana & Co and SIAO (Chartered Accountants).

The firm of auditors according to the AuGF document was appointed by the Board of the Nigerian Ports Authority to audit the accounts for the year ended December 31, 2018.

According to the document, the management of the Nigeria Port Authority spent a whopping N409.172 billion on property, plant and equipment in 2018 without sufficient and appropriate audit evidence to confirm the completeness, existence and valuation of the assets.

Out of the money, the Authority was said to have made “provision for depreciation charged in the accounts that would appear to be understated by N12.486 billion

According to him, “It was observed during vetting that the provisions made against four (4) classes of Property, Plant and Equipment (PPE), namely: Roads & Sidings, Wharves, Vessels and Buoys did not correspond to the rates of depreciation reported in the financial statements. The depreciation rates that were charged on the assets were smaller than the rates arrived at during vetting

“The understatement of depreciation by N12,486,991,000.00 resulted in the apparent overstatement of the Net Book value of the Fixed Assets and understatement of the surplus for the year by the same amount. An explanation would be appreciated.”

The AuGF said further that Wharves were disposed by the management of the NPA at the cost of ₦254.827 billion without evidence of remittance to the Consolidated Revenue Fund while demanding that the number of wharves disposed of, the cost and evidence of remittance be provided.

Similarly, the AuGF pointed out that the Authority also reduced the sum of ₦126.629 billion in the period under review to arrive at trade receivable of ₦43.513 billion, saying “this showed very weak debt recovery efforts on the part of the management of Nigeria Ports Authority

“The minutes of the meeting where the group decided that these debts should be impaired should be provided. Detailed explanations should be given for the inability of the Authority to recover its huge outstanding receivables. Details schedule of all the parties involved should be furnished.”

The Management is also to provide a comprehensive financial report on how the N1.882 billion meant for the Staff Home Ownership Scheme was administered considering the fact that the NPA severed relationship with Aso Savings and Loans Plc, the company that served as an agent for the creation of mortgages and the subsequent collections of repayments on the same mortgages.

They also made an advance payment of N4.654 billion and are to furnish the lawmakers with a schedule showing the names of the individual contractor, nature of the contract, contract sum, the amount of advance granted, age analysis of each of the advance and the unconditional performance guaranty supplied by the contractors should be furnished.

The management is also to shed more details into the consolidated revenue fund, the sum of ₦2.334 billion being money collected from the disputed cargo tracking note by the Authority, the fund had been kept in a dedicated account until July 2017 when the Economic and Financial Crime Commission directed First City Monument Bank who has been the custodian of the fund to transfer the fund to its (EFCC) account.

He also demanded a breakdown of the ‘Trade payable’ and ‘Other Payables’, showing names of the individual creditors, nature of services rendered or goods supplied, gross amount, age analysis and comparative figures amounting to ₦345.678 billion.

The report accused the management of the NPA of not remitting ₦44.207m tax liability to the Federal Inland Revenue Service, in contravention of Financial Regulation 234(1) which states that “It is mandatory for Accounting Officers to ensure full compliance with the dual roles of making provision for the Value Added Tax (VAT) and Withholding Tax (WHT) due on supply and service contracts and actual remittance of same”

According to him, “the Authority should explain the reason for deferring the remittance of the statutory deductions, risking the associated penalty as stated in section 64 of CITA.

“The evidence of remittance and penalty paid for deferred tax should be provided for confirmation. Also, a detailed breakdown of the remittances should be provided, stating the reasons why the payment was not made to the relevant tax authority”.

The report is also demanding an explanation for the Onne Port and bullous project development which it said represents various ongoing projects being financed by Messrs. Deep Offshore Integrated Services Ltd, a related company to Intels Integrated Services Ltd at Onne and Lagos Port Complexes.

According to the report, “the Company is expected to recoup its funds (₦215,563,283,000) through the compulsory service boats pilotage fees being collected by Integrated Services Limited under a separate contract with the Authority

“The detailed value of projects undertaken by Deep Offshore Integrated Services Ltd should be provided. Also, the revenue generated through the compulsory service boats pilotage fees being collected by Integrated Services Limited should also be computed and be deducted from the value of the projects so that the outstanding balance can be ascertained at any point in time should be provided.

The two transactions above should be transparently documented.”

It said that the basis of about ₦57.784 billion being stated as Depreciation charge could not be ascertained from the notes to the Financial Statement obtained from the management and therefore demand an explanation for such.

The report queried the spending of N2.943 billion on professional charges asking the Management to “state the nature of the professional charges supported with evidence that due process was followed in the award of the contract stating the names of the consultant and including the report of the professional service rendered.

“It was stated in the Note 12.3 Page 59 of the Financial Statement that ₦5,230,000,000.00 were projects carried out in the 36 States of the Federation. The contract details of all the projects carried out in the 36 States of the Federation should be provided.

“A schedule showing the number and nature of transactions leading to the loss and stating the basis of calculation should be provided for audit scrutiny.

While also querying the payment of N20.057 billion on impairments, the report demand “a schedule showing the receivable and the items for impairment, the nature of the receivables and the reasons for the impairments as well as approval by the management for these impairments.”

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Again, OAuGF indicts NPA over massive financial infractions in 2018