NIMC DRAFT REPORT
AUDIT ISSUE 1: UNSUBSTANTIATED REFUNDS OF OUT OF
POCKET EXPENSES: ₦7,406,857.00
Area of coverage and summary of work done by the auditor
Payment vouchers relevant to refunds of Out of Pocket Expenses
(OPE) to members of staff of NIMC were examined to ascertain
whether, or not, the refunds were regular and supported with concrete
evidence of expenditure in line with the requirement of Financial
Regulation 603. (i) Which states that “All vouchers shall contain full
particulars of each service. Such as dates, numbers, quantities,
distances and rates. so as to enable them to be checked without
reference to any other documents and will invariably be supported by
relevant documents such as local purchase orders, invoices, special
letters of authority, time sheets etc”.
OUR FINDING(S)
The following observations relates to a sum of ₦7,406,857.00 paid to
some members of staff as refunds of out of pocket expenses
purportedly incurred on behalf of the NIMC during the period under
consideration:
a) Expenditure were not supported by management’s prior approval
which implies that expenses were incurred at the discretion of
concerned officers without management’s authorization.
b) There were no controls over OPE transactions. The process
usually begins and end with claimants. That is, the claimants of
OPE usually identifies the need for the expenditure, incurred the
expenditure, utilized or consumed the goods or services claimed
to have been purchased without confirmation by any other
officer.
c) Requests for Refunds are usually attached with claim forms
without the support of concrete evidence of expenditure such as
schedules, invoice, receipt, Store Receipt Vouchers (SRVs) etc. as
applicable.
In view of lack of concrete evidence of expenditure, these refunds are
baseless and cannot be accepted as legitimate charges against Public
Funds. See appendix ….. For more details.
THE KEY RISKS
Due process was not followed in processing these payments
It also means that there were no controls over payment
processes
The above payments might have been made fraudulently without
Director General Knowledge.
INITIAL RESPONSE FROM THE AUDITEE:
OUR RECOMMENDATION
I. The Director General is requested to explain the lack of control
over OPE transactions.
II. The Director General is also requested to recover and refund the
amount from affected members of staff for lack of merit while
evidence of recovery should be forwarded for audit confirmation.
Final Response from Management:
Response to Findings and Recommendations: Management to include
specific actions to be taken in response to accepted recommendations
Action Owners: Management to insert names of officers responsible
for implementation of stated actions
Proposed Completion Date: Management to insert the target dates for
the completion of the actions
AUDIT ISSUE 2: CIRCUMVENTION OF REGULATION
RESULTING IN DIRECT PAYMENTS FOR PURCHASES AND
SERVICES: ₦ 18,595,900
Area of coverage and summary of work done by the auditor
Payment Vouchers presented for verifications was examined and
checked to ensure that payments are in compliance with the
appropriation, are valid payment and that the amounts indicated are
accurate and there was value for money from the transactions for
which payments are made thereof
Furthermore, the payment vouchers presented for audit checks were
posted to the cashbooks/Ledgers to confirm the completeness of
entries in the cashbooks/Ledgers as well as the completeness of
Payment vouchers presented for audit checks.
Federal Treasury Government Circular Ref. No. TRY/A2 and B2/2013
OAGF/CAD/026/V.1/188 dated 9 April, 2013 states “All Accounting
Officers and Officers controlling expenditure are to ensure that all
local procurement of stores and services costing above ₦200,000.00
shall be made only through award of contracts, except as provided by
the Public Procurement Act, 2007”.
Our Finding(s)
Audit observed that:
I. The sum of ₦18,595,900 (Eighteen Million Five Hundred and
Nineteen Five Thousand Nine Hundred Naira Only) was granted as
direct payments for purchases and services by staff of the
Commission for the period under review.
II. As a result of the above transaction, the Commission denied
government relevant taxes in the sum of ₦2,510,446.50 (Two
Million Five Hundred and Ten Thousand Four Hundred and Forty
Six Naira Fifty Kobo Only) that would have accrued as revenue to
the Government.
Please see Appendix…. For more details
The key risks
i. Diversion of government funds.
ii. Loss of government revenue.
Initial response from the auditee
Our recommendation
The Director – General is requested to:
i. Explain why payments were made without evidence of purchase
and performance.
ii. Account for the sum of ₦2,510,446.50 (Two Million Five Hundred
and Ten Thousand Four Hundred and Forty Six Naira Fifty Kobo
Only) that would have accrued as revenue to the Government.
iii. Recover and remit to the Treasury the sum of ₦2,510,446.50
(Two Million Five Hundred and Ten Thousand Four Hundred and
Forty Six Naira Fifty Kobo Only), forwarding evidence of
remittance to my office for audit verification.
iv. Otherwise apply sanctions relating to irregular payment specified
in paragraph 3106 of the Financial Regulations.
Final Response from Management:
Response to Findings and Recommendations: Management to include
specific actions to be taken in response to accepted recommendations
Action Owners: Management to insert names of officers responsible
for implementation of stated actions
Proposed Completion Date: Management to insert the target dates
for the completion of the actions
AUDIT ISSUE 3:PAYMENT WITHOUT SUPPORTING DOCUMENTS
₦ 11,944,600
Area of coverage and summary of work done by the auditor
Payment Vouchers presented for verifications was examined and
checked to ensure that payments are in compliance with the
appropriation, are valid payment and that the amounts indicated are
accurate and there was value for money from the transactions for
which payments are made thereof
Furthermore, the payment vouchers presented for audit checks were
posted to the cashbooks/Ledgers to confirm the completeness of
entries in the cashbooks/Ledgers as well as the completeness of
Payment vouchers presented for audit checks.
Our Finding(s)
Paragraph 603 (i) of the Financial Regulations (2009) states “All
vouchers shall contain full particulars of each service, such as dates,
numbers, quantities, distances and rates, so as to enable them to be
checked without reference to any other documents and invariably be
supported by relevant documents such as local purchase orders,
invoices, special letters of authority, time sheets, etc.”
Audit observed that:
i. The sum of ₦11,944,600 (Eleven Million Nine Hundred and Forty
Four Thousand Six Hundred Naira Only) in Nine (9) Payment
Vouchers were spent for various transactions by officers of the
Commission.
ii. The payment vouchers were without relevant supporting
documents as required by extant regulations.
iii. Payments were made without attaching the relevant supporting
documents such as official purchase receipts, list and evidence of
attendance, participation certificate, minutes of meeting and
Pictures.
The key risks
i. The risk that payments for services not rendered cannot be ruled
out.
ii. Loss of government funds.
Initial response from the auditee
Our recommendation
The Director – General is requested to:
i. Provide reasons why payments were made without relevant
supporting documents attached to payment voucher.
ii. Recover and remit to the Treasury for the sum of ₦11,944,600
(Eleven Million Nine Hundred and Forty Four Thousand Six
Hundred Naira Only), forward evidence of remittance to my
office for audit verification.
iii. Otherwise, apply sanctions relating to irregular payments
specified in paragraph 3106 of the Financial Regulations.
Final Response from Management:
Response to Findings and Recommendations: Management to include
specific actions to be taken in response to accepted recommendations
Action Owners: Management to insert names of officers responsible
for implementation of stated actions
Proposed Completion Date: Management to insert the target dates
for the completion of the actions
AUDIT ISSUES 4: CREATION AND IMPLEMENTATION OF
CERTAIN ALLOWANCE WITHOUT RECOURSE TO RELEVANT
AUTHORITY: ₦ 15,739,863
Area of coverage and summary of work done by the auditor
As part of our review, we assessed the extent to which Salaries and
Allowances paid to members of staff during the period under review
complied with the understated criteria:
Section 3 of the National Salaries Incomes and Wages Commission
(NSIWC) Act No. 99 of 1993 which stipulates that all decisions to
create a new remuneration structure, to change any element of it or to
review existing rates for any establishments in the Public Service, is
subject to the approval of the Government through NSIWC. Such
elements of remuneration may include salaries, regular allowances,
occasional allowances and other individual entitlements with financial
implication
Section 33 (2) of Personal Income Tax Act, 2011 which defined gross
emoluments, for the purpose of ascertaining taxable income, as “wages,
salaries, allowances (including benefits in kind), gratuities,
superannuation and any other incomes derived solely by reason of
employment.”
Our Finding(s)
It observed that a total of ₦15,739,863 (Fifteen Million Seven
Hundred and Thirty Nine Thousand Eight Hundred and Sixty Three
Naira Only) was paid to staff of the commission as “Weekend
allowances and other Allowances” for years 2021, without evidence to
prove that those allowances were approved by the National Salaries,
Income and Wages Commission. See appendix …. For more details.
a) The above allowances were created and implemented without
Government’s approval. That is, implementation was done without
recourse to National Salaries Incomes and Wages Commission in
contravention of Section 63 of NSIWC Act.
b) These allowances were paid without being subjected to Pay As
You Earn (PAYE) tax deductions in contravention of Personal
Income Tax Act, 2011.
The key risks
Payment of allowances such as these may be a way of deliberately
syphoning public funds.
Initial response from the auditee
Our recommendation
I. The Director General should explain the contravention of
NSIWC Act by paying non approved allowance to staff.
II. The paid irregular allowances totaling ₦15,739,863 (Fifteen
Million Seven Hundred and Thirty Nine Thousand Eight
Hundred and Sixty Three Naira Only) should be recovered
from the payees while evidence of recovery should be
forwarded for audit confirmation.
Final Response from Management:
Response to Findings and Recommendations: Management to include
specific actions to be taken in response to accepted recommendations
Action Owners: Management to insert names of officers responsible
for implementation of stated actions
Proposed Completion Date: Management to insert the target dates
for the completion of the actions
AUDIT ISSUE 5: DISTRIBUTION OF PUBLIC FUND UNDER
THE GUISE OF HAMPERS FOR CORPORATE STAKEHOLDERS AT
CHRISTMAS/END OF YEAR THANKSGIVING AND LOGISTICS TO
BOOST COLLABORATION WITH STAKEHOLDER AGENCIES
N3,998,000
Area of coverage and summary of work done by the auditor
As part of our review, we examined the payments of monetized cost of
Sallah/ Christmas gift items and end of year gift or allowance to staff
and friends of the Commission to determine its level of compliance with
Circular Ref No. B.63304/XII/T.6/266 dated December 29, 1997
which states inter-alia that “government has therefore decided that
henceforth, no ministry, extra-ministerial department or agency should
give cash bonus”.
Federal Government Circular Ref. No: SGF/OP/1/S.3/11/256 provides
that this act is highly reprehensible as they violate extant financial
regulations and constitute a serious offence under the Independent
Corrupt practices and Other Related Offences Commission Act 2000.
Our Finding(s)
It was observed that the sum of N3,998,000 (Three Million Nine
Hundred and Ninety Eight Naira only) was paid to staff as hampers for
corporate stakeholders at Christmas/End of year thanksgiving and
logistics to boost collaboration with stakeholder Agencies, (See
Appendix …. for details). This act violates Circular, Ref. No.
B.63304/XII/T.6/266 dated December 29, 1997 which frowns at
payment of public fund as “cash bonus”
The key risks
(i) Risk of payment of public fund to staff as cash bonus
(ii) Risk of expending public fund for the purpose which is not
meantfor
(iii) High probability of Internal Control failure.
Initial response from the auditee
Our recommendations
(i) Management should justify the payments cost of hampers for
corporate stakeholders at Christmas/End of year thanksgiving
and logistics to boost collaboration with stakeholder Agencies
(ii) The amount should be recovered from officers involved
(iii) And forward such evidence to the Office of the Auditor-General
for the Federation for verification.
Final Response from Management:
Response to Findings and Recommendations: Management to include
specific actions to be taken in response to accepted recommendations
Action Owners: Management to insert names of officers responsible
for implementation of stated actions
Proposed Completion Date: Management to insert the target dates
for the completion of the actions
AUDIT ISSUE 6: CONSPIRACY/ COLLUSION IN THE AWARD OF
CONTRACTS TOTALLING ₦18,492,876
Area of coverage and summary of work done by the auditor
As part of our review, we checked the level of compliance with the
requirement of Section 58 (9) of the Public Procurement Act 2007
which states that ‘’ Collusion shall be presumed from a set of acts
from which it can be assumed that there was an understanding,
implicit, formal or informal, overt or covert under which each
person involved reasonably expected that the other would adopt a
particular course of action which would interfere with the faithful
and proper application of the provisions of this Act.
Our Finding(s)
There was collusion in the award of the Commission 2021 contracts
totaling. ₦18,492,876
S/N CONTRACTOR NARATION AMOUNT DATE OF SRV DATE INVOICE
AWARD DATE
1 WOODS & SUPPLY OF 9,960,300 1/4/2022 28/3/2022 28/3/2022
FRAMES LTD OFFICE
FURNITURE
FOR THE
DG/CEO
OFFICE
2 INTERGLOBAL PROCUREMEN 8,532,576 11/2/2022 10/2/2022 10/2/2022
LTD T OF 32GB
MICRON
DDR4-2666
RDIMM PC 4-
21300V-R
DUAL RANK X4
MODULE
MEMORY FOR
NIMC
18,492,876
It was observed that some of the contracts was executed before the
contract was awarded to the contractors, which shows that there were
collusion between the procurement team and the contractors. See
details below
This simply means that the “CONTRACT DOCUMENT” were not
existing before the contract was executed as shown in the above
analysis, which shows that there was collusion between the NIMC
Management team and the contractors because;
I. From the document attached to the payment vouchers of
some of the contractors it shows that the contract was
accepted before the award of the contract by the
Commission
II. Also from the Invoice and Store receipt voucher dated
respectively shows that the contract was executed before
the two parties sign the contract documents/Award Letter
CAUSE
Weak internal control
Insider arrangement.
CONSEQUENCE:
Part XII Section 58 sub-section (9) of the Public Procurement
Act stipulates that “Collusion shall be presumed from a set of
acts from which it can be assumed that there was an
understanding, implicit, formal or informal, overt or covert under
which each person involved reasonably expected that the other
would adopt a particular course of action which would interfere
with the faithful and proper application of the provisions of this
Act”.
Initial response from the auditee
OUR RECOMMENDATION
Part XII Section 58 sub-section (1) of the Public Procurement Act
stipulates that any person who commits the offence of collusion is
liable on conviction to a term of imprisonment, not less than five (5)
calendar year without an option of fine.
The Director General and the tender’s board and the entire
procurement team should explain why they had collusive agreement
with contractors in awarding contracts and why actions should not be
taken to enforce the aforementioned sanction.
Final Response from Management:
Response to Findings and Recommendations: Management to include
specific actions to be taken in response to accepted recommendations
Action Owners: Management to insert names of officers responsible
for implementation of stated actions
Proposed Completion Date: Management to insert the target dates
for the completion of the actions
AUDIT ISSUE 7: OVERPAYMENT OF ₦1,297,525.93 TO
CONTRACTORS BEING 5% WITHHOLDING TAX ADDED TO
FINANCIAL BID (QUOTATION) BY THE CONTRACTORS
Area of coverage and summary of work done by the auditor
As part of our review, we checked the level of compliance with the
requirement of Federal Inland Revenue Services Information
Circular No: 9502(ii), dated 20th February, 1995 which says;
“Ministries, departments and agencies of government do not bear the
burden of WHT but they merely act as agents of collection of the
tax”. Also Financial Regulation 415 which says; “The federal
government requires all officers responsible for Expenditure to
exercise due economy. Money must not be spent merely because it has
been voted” is being violated.
Our Finding(s)
Audit examination of payment vouchers revealed that, there was an
overpayment of N1,297,525.93 to various contractors through addition
of 5% Withholding Tax (WHT) to the financial proposals
(QUOTATION) submitted by the Contractors to NIMC. See below
sample of quotation for more detail.
This addition of 5% Withholding Tax (WHT) to the financial proposal
submitted by the Contractors to the NIMC negates Federal Inland
Revenue Services Information Circular No: 9502(ii), dated 20th
February, 1995 which says; “Ministries, departments and agencies of
government do not bear the burden of WHT but they merely act as
agents of collection of the tax”. Also Financial Regulation 415 which
says; “The federal government requires all officers responsible for
Expenditure to exercise due economy. Money must not be spent merely
because it has been voted” is being violated.
CAUSE
Lack of following due process
Lack of internal control
The key risks
The situation where the Director General and his management connive
with contractor to bloat contract price is risky and shows abuse of
office, waste and mismanagement of public funds.
Initial response from the auditee
OUR RECOMMENDATION
The Director General is requested to recover the sum of
₦1,297,525.93, being 5% Withholding Tax (WHT) added to the
financial proposals(QUOTATION) submitted by the Contractors to
NIMC, and forward evidence of recovery of this sum to the office of
the Auditor – General for the Federation for audit confirmation.
Final Response from Management:
Response to Findings and Recommendations: Management to include
specific actions to be taken in response to accepted recommendations
Action Owners: Management to insert names of officers responsible
for implementation of stated actions
Proposed Completion Date: Management to insert the target dates
for the completion of the actions
