The Senate Public Accounts Committee on Wednesday issued a one-week ultimatum to the external auditors of the Nigerian National Petroleum Company Limited (NNPC Ltd.) to provide a comprehensive breakdown of more than N210 trillion recorded as receivables and payables in the company’s audited financial statements, insisting that the figures remain unexplained and cannot be left unreconciled.
The committee, chaired by Senator Ibrahim Dankwambo, ruled that the auditors must produce the schedules, working papers and supporting documentation used in certifying the accounts, stressing that they could not shift responsibility to NNPC after endorsing the financial statements.
The disputed figures comprise about N107 trillion classified as receivables and another N103 trillion recorded as payables in the company’s audited accounts.
The hearing became tense after representatives of the external audit firm informed lawmakers that the detailed schedules requested formed part of their working papers and that they would require about two weeks to retrieve the documents.
The request was firmly rejected by the committee.
Dankwambo questioned why the auditors could not immediately produce documents supporting 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?” he asked.
The auditors argued that NNPC Ltd. remained their client and that explanations regarding the figures should ordinarily come from the company.
They recalled that during an earlier appearance before the committee, it had been agreed that NNPC officials would explain the entries contained in the financial statements.
The lawmakers, however, rejected the position, maintaining that the auditors were before the Senate in their independent professional capacity and were obligated to defend the audit opinions they issued.
Senator Abdul Ningi cited Sections 88 and 89 of the 1999 Constitution (as amended), saying the National Assembly possesses extensive investigative powers to summon individuals and organisations and compel the production of documents relevant to its inquiries.
“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,” Ningi said.
Also speaking, Senator Adams Oshiomhole reminded the auditors that the controversy over the figures arose directly from the audit they conducted.
“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,” he said.
Another lawmaker warned that the inability of the auditors to produce supporting schedules cast doubt on the integrity of the audit exercise.
The Senator said, “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 senator said.
The committee also faulted the continued inability of both NNPC Ltd. and its auditors to reconcile the receivables and payables.
Dankwambo noted that although NNPC officials had repeatedly claimed that the figures related largely to joint venture cash calls and payments, they had failed to identify the specific transactions or counterparties involved.
According to him, if both entries related to the same transactions, they should be capable of reconciliation.
Dankwambo said, “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 N210 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,” Dankwambo said.
Lawmakers equally dismissed the auditors’ reliance on confidentiality obligations.
Oshiomhole argued that NNPC, being wholly owned by the Federal Government on behalf of Nigerians, could not invoke commercial secrecy to withhold information from Parliament during a constitutional investigation.
He said, “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,” he said.
Senator Babangida Useni also maintained that professional ethics and confidentiality agreements could not override the constitutional investigative powers of the National Assembly.
He added that the committee’s Standing Orders empower it to summon any person, demand documents and scrutinise the accounts of government-owned corporations.
Drawing from international experience, Dankwambo cautioned the auditors against failing to defend financial statements they had certified, citing the collapse of Arthur Andersen after the Enron scandal as a reminder of the reputational consequences of audit failures.
The committee consequently directed the auditors to return within one week with a comprehensive schedule identifying every component of the N107 trillion receivables and N103 trillion payables, together with the supporting documentation and the basis upon which the figures were certified.
Before adjourning the hearing, Dankwambo reiterated that the Senate was not alleging that any money had been stolen.
He said, “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 N210 trillion as unexplained. That is the issue before us.”
The committee thereafter discharged the auditors and ordered them to reappear within one week with the requested documents.
Sunday Aborisade
Follow us on: