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Enhancing the Office of the Auditor General for the Federation 10 May 2024

The Office of the Auditor-General for the Federation (OAuGF) is one of the oldest offices in Nigeria, yet the impact of its work has hardly made big public impressions. The institution is also relatively unknown to the citizens.

The audit of public accounts in Nigeria started during the colonial era with the establishment of the Colonial Audit Service in 1910. Over the years, the OAuGF has been entrusted with the crucial responsibility of ensuring probity in public financial management and accountability. However, despite its important responsibility, the office faces numerous challenges that hinder its ability to fulfill its mandate effectively.

The Nigerian constitution grants the OAuGF the mandate to audit public accounts, ministries, agencies, and commissions. However, statutory corporations and bodies established by an Act of the National Assembly are exempt from audit, which limits the scope of the oversight by the office. Section 85(6) of the 1999 Constitution stipulates that "in the exercise of his function under the Constitution, the Auditor-General shall not be subject to the direction or control of any other authority or person." However, the lack of independence remains a major obstacle to the effective discharge of the office's duties.

Nigeria stands at a crucial juncture where the role of the Auditor-General, both at the federal and subnational levels, demands renewed attention. Recent revelations by former Auditor-General Adolphus Aghughu exposed significant discrepancies in the financial statements of Ministries, Departments, and Agencies (MDAs), with billions of naira unaccounted for in 2019. It was not the first time the OAuGF has brought to light disturbing findings regarding the mismanagement of resources by MDAs. For instance, data extracted from the 2017 federal audit report revealed that approximately N9.7 billion allocated for the execution of 32 projects across 17 states and the Federal Capital Territory was unaccounted for out of a total of N17 billion earmarked for the projects.

Auditor-Generals serve as the watchdog of public expenditures, meticulously scrutinising government accounts and ensuring compliance with financial regulations and standards. Their independence from political interference is paramount, which allows them to operate with impartiality and integrity, thereby fostering public trust in the governance framework. Drawing insights from developed nations, this article delves into the imperative of bolstering Nigeria's OAuGF.

My first exposure to the importance of the report of the Auditor-General (AG) in Canada occurred in 2004. In the AG’s report that year was the notorious sponsorship scandal, which revealed mismanagement and misuse of funds in the federal sponsorship programme. The financial impropriety led to multiple investigations, including by the Gomery Commission. While the report did not directly result in convictions, it played a significant role in the decline of the Liberal Party's popularity. Several individuals faced legal consequences, including Chuck Guité, a public servant, who was convicted on charges related to the scandal. The Liberal Party subsequently lost general elections.

In Canada, the office of the Auditor-General operates independently of the government and the parliament. Its functions include financial auditing, performance auditing, and special examinations. Reports submitted to parliament by the AG contribute to accountability and transparency by identifying areas for improvement and informing decision-making. The role of the institution in promoting efficient resource allocation, preventing fraud and corruption, and enhancing public confidence underscores the significance of independent oversight in fostering economic development.  

There are several examples of how the AG’s reports have contributed to improvement and accountability in the Canadian public financial management. The Phoenix Pay System Issues (2018) exposed systemic discrepancies in the payment of federal public servants, featuring over-payments, under-payments, and non-payments. This prompted discussions on the need for reform in public payroll systems. The National Shipbuilding Procurement Strategy (2015) highlighted concerns regarding transparency and fairness, leading to improvements in the procurement process. And the 2018 report on the Alberta health care system shined light on issues related to wait times, access to care, and overall system efficiency. The report contributed to discussions on healthcare reforms, influencing policy decisions and actions to address identified shortcomings.

These examples and many more showcase how AG reports at both the federal and provincial levels have historically served as tools for identifying areas of improvement on public financial governance, prompting corrective actions, and contributing to discussions on policy reforms.

The United States has an equivalent oversight institution called the Government Accountability Office (GAO), often referred to as the "congressional watchdog." While it is not called an Auditor General, the GAO performs similar functions in providing independent and nonpartisan oversight of federal government programmes and expenditures. The GAO operates under the legislative branch of the U.S. government and reports directly to Congress.

GAO ensures accountability and transparency in government operations. Through financial audits and performance assessments, it identifies inefficiencies and compliance issues. Notable reports of the GAO include multiple reports on defense contracting – highlighting issues such as cost overruns, contract mismanagement, and inefficiencies – and assessments of the response and preparedness for natural disasters, including hurricanes and wildfires, by the Federal Emergency Management Agency (FEMA). The GAO also assesses federal agencies' cybersecurity practices and policies.

Germany does not have an institution known as the office of "Auditor-General" in the same sense as some other countries, such as the United States or Canada. However, Germany has a federal audit institution called the "Bundesrechnungshof" (Federal Court of Auditors). The Bundesrechnungshof serves a similar function to an Auditor-General and is responsible for auditing the federal budget and financial management of federal government entities.

The Bundesrechnungshof primarily focuses on federal finances. However, individual German states (Länder) also have their own audit institutions responsible for overseeing state budgets and financial management.

The UK has a National Audit Office (NAO), which is the equivalent of an Auditor-General's office. The NAO is an independent body responsible for auditing the finances and performance of government departments and agencies. It plays a crucial role in ensuring transparency, accountability, and value for money in the use of public funds. The NAO operates independent of the government and reports directly to the legislature, and its financial audits aim to ensure public funds are spent in accordance with laws and regulations. This helps prevent financial mismanagement, fraud, and wasteful spending.

Instances of the contributions of the NAO reports to improvement and accountability in the country’s public financial governance include the 2019 report on defence procurement, which highlighted issues such as cost overruns and delays in major defence projects. The NAO report on HM Revenue & Customs (HMRC) assessed its handling of tax reliefs. Findings on Universal Credit led to adjustments and improvements in the welfare reform programme. And the NAO reports on foreign aid spending have contributed to discussions on the effectiveness of overseas development assistance and the need for robust monitoring and evaluation of aid programmes.

In contrast to their counterparts in developed nations, Auditor-General offices in Nigeria face numerous challenges, including inadequate funding, political interference, and limited enforcement powers. As a result, their effectiveness in ensuring accountability and transparency is compromised, undermining public trust and confidence in the governance system.

To be fair, there have been few instances where the AG's interventions have yielded positive outcomes. For example, audits conducted by the OAuGF uncovered billions of naira in unremitted revenue by government agencies, leading to the recovery of funds and disciplinary actions taken against erring officials. Similarly, at the subnational level, Auditor-General reports have exposed cases of financial mismanagement and embezzlement, prompting investigations and prosecutions. Sadly, these are not enough. More needs to be done.

To strengthen Nigeria's Auditor-General offices, several measures can be considered, including legislative enactments to strengthen the autonomy and effectiveness of the institutions, ensuring administrative and financial independence. Investment in technology can improve audit processes, enhance transparency, and facilitate timely and accurate reporting of audit findings. And enhanced oversight mechanisms by the parliamentary will ensure that audit reports are acted upon, fostering a culture of accountability within the government.

By addressing existing challenges and drawing lessons from international best practices, Nigeria can strengthen its auditing mechanisms and ensure the effective utilisation of public resources for the benefit of its citizens. Learning from developed countries, Nigeria can enhance transparency, accountability, and good governance, ultimately contributing to sustainable development and public trust in government institutions.

Olajide Olutuyi, a Financial Nigeria Columnist, holds first degrees in Computer Science from the Federal University of Technology Akure (FUTA) and Management from the University of Lethbridge, Canada; an MBA from the Australian Institute of Business; and a certificate in Social Impact Leadership from University of California, Berkeley, Haas School of Business. He is an Instructor at Bow Valley College's Chui School of Business, Calgary. He is also the Co-Founder/CEO Top-Olax Energy Limited and the Executive Director, Samuel Olutuyi Foundation. Email: Olajide@samuelolutuyifoundation.org.