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The Senate Public Accounts Committee on Wednesday gave external auditors of the Nigerian National Petroleum Company Limited (NNPC Ltd.) one week to produce documents explaining over N210 trillion recorded as receivables and payables in the company’s audited financial statements, warning that figures of such magnitude cannot remain unreconciled after being certified by independent auditors.
The chairman of the committee, Ibrahim Dankwambo, directed the auditors to submit detailed schedules and working papers supporting about N107 trillion listed as receivables and another N103 trillion recorded as payables in NNPC Ltd.’s audited accounts.
The directive followed the auditors’ request for two weeks to retrieve the documents during the committee’s sitting. They explained that the schedules formed part of their audit working papers, an explanation lawmakers rejected.
Questioning the request, Dankwambo said auditors who had already endorsed the financial statements ought to have immediate access to the documents supporting the figures.
“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.
Representatives of the auditors maintained that NNPC Ltd. remained their client and argued that explanations on the figures should ordinarily come from the company, recalling that it had earlier been agreed that NNPC officials would explain the entries in the accounts.
The committee, however, rejected the position, insisting that the auditors were before the Senate in their independent capacity and were accountable for the audit opinions they issued.
Citing Sections 88 and 89 of the 1999 Constitution (as amended), Abdul Ningi said the National Assembly has constitutional powers to summon any individual or organisation and compel the production of documents relevant to its investigation.
“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,” he said.
Lawmakers argued that the questions surrounding the figures arose directly from the auditors’ work and, therefore, they could not distance themselves from the financial statements they had certified.
In his remarks, Patrick Ndubueze questioned whether the audit exercise 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,” he said.
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The committee also expressed dissatisfaction that, despite previous appearances by NNPC officials, the receivables and payables had not been reconciled.
Dankwambo noted that the company had repeatedly claimed the figures related largely to joint venture cash calls and payments but had failed to identify the individual transactions or counterparties involved.
“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.
“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,” he said.
The committee also dismissed the auditors’ reliance on confidentiality obligations to NNPC Ltd. In his comments, Adams Oshiomhole argued that as a government-owned company, NNPC Ltd. could not hide behind commercial secrecy while Parliament was exercising its constitutional oversight powers.
“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.
Supporting Oshiomhole, Babangida Useni said professional ethics and confidentiality agreements could not override the constitutional powers of the National Assembly to investigate public institutions and demand relevant documents.
Drawing lessons from global corporate scandals, Dankwambo warned that auditors who fail to defend accounts they have certified risk undermining the credibility of their profession, citing the collapse of Arthur Andersen after the Enron scandal.
The committee subsequently directed the auditors to return within one week with comprehensive schedules showing the composition of the ₦107 trillion receivables and ₦103 trillion payables, including the basis upon which the figures were certified.
Before adjourning, Dankwambo stressed that the committee had never alleged that the funds were missing.
“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,” he said.
