Paper as Presented by the Auditor General Local Government Mrs Abolarin Adesumbo at L G News Academy seminar.
LOCAL GOVERNMENT COMPLIANCE WITH PROVISIONS OF THE PUBLIC ACCOUNTS COMMITTEE, THE AUDITOR GENERAL PERSPECTIVE
MRS. ABOLARIN A. I.
FOR LOCAL GOVERNMENTS, LAGOS STATE.
The Local Governments are established in this country and elsewhere to encourage local participation in politics, provide training ground for citizens to learn the art of governance, preserve local traditions, history, culture and bring Government closer to the people. Other reasons for their creation are to administer justice at the local level, provide machinery which may enable traditional rulers to give effective leadership in national affairs through administration and to also provide social services and infrastructural facilities at the Local level.
The 1976 Guidelines on Reform of Local Governments in Nigeria defined Local Government as Government at local level exercised through representative councils established by law to exercise specific power within defined areas.
By the Guidelines, the principal aims of Local Government are:-
1. To make appropriate services and development activities responsive to local wishes and initiatives by devolving or delegating them to local representative bodies.
2. To facilitate the exercise of democratic self-government close to the local levels of our society and to encourage initiative and leadership potential
3. To mobilise human and material resources through the involvement of members of the public in their local government
4. To provide a two-way channel of communication between Local communities and Government (both State and Federal).
THE PUBLIC ACCOUNTS COMMITTEE (PAC)
The Public Accounts Committee refers to a committee in the legislature that must study public audit reports, invite Accounting Oﬃcers and Staff of Ministries, Departments and Agencies MDAs to defend the audit reports for their ministries, departments and agencies and issue a report of their ﬁndings for the consideration of the entire legislature
The Public Accounts Committee Act Number 8 of 1987 was promulgated on 3rd April, 1987 with the following Sections
1. Establishment of the Public Accounts Committee
2. Membership of the Committee
3. Tenure of oﬃce
4. Functions of the Committee
5. Powers of the Committee
6. Proceedings of the Committee
7. Reports of the Committee
9. Short title
The Public Account Committee (PAC) is a legal institution. The law on the establishment, functions and constitution of the PAC in Lagos State was first promulgated by Edict No. 2 of 1976.
The provisions of Sections 58, 82, 83, 97, 120, and 121 of the 1979 Constitution and provisions of Sections 60, 86, 87, 101, 126 of the 1989 Constitution require the constitution of a committee by the House that will be charged with the responsibility of investigating into the conduct of affairs of any person, authority, ministry or department charged or intended to be charged with the duty of a responsibility for disbursing or administering money appropriated by the House.
This committee is invariably known as Public Accounts Committee. The purpose of the provision of the constitution and the establishment of the PAC vide section 82 and Sub-Section 2(b) is to expose corruption, inefficiency or waste in the execution, disbursement or administration of funds appropriated by it.
The Functions of the Committee as stated in the act are
(a) Examine such audited accounts of the Federation and of all
Oﬃces and Courts of the Federation and the Auditor General’s
report thereon as may from time to time, be referred to it by
(i) The Accounts and reports of Ministries and departments of the
(ii) The audited accounts of statutory corporations, boards
and other such Government bodies as may from time to
time, be referred to it by the President
(c) Determine the causes which led or might have led to any
excesses over approved appropriations; and
(d) Perform such other functions as may be assigned to it from time
to time by the National Assembly or the President, as the case
Section Five (5) of the Act spelt out the Powers of the Committee
The Committee shall have power to –
(a) Procure all such evidence, oral or written, and examine such
persons as it may deem necessary or desirable;
(b) require any person to produce any books, documents or
records as it may deem it necessary and desirable; an(c) Do such other things as are necessary and expedient for the full
discharge of its functions under this Act.
IMPACT OF THE PUBLIC ACCOUNTS COMMITTEE ON THE LOCAL GOVERNMENTS ADMINISTRATION
Lagos State is a State where the dynamics of democratic governance are at work. The State records true separation of power in the administration of the affairs of the state. Over the years, the sittings of the Public Accounts Committee (Local) have been very thorough and effective. It is on record that three (3) Local Governments/Local Councils have had their Chairmen relieved or removed from oﬃces by the Committee through the consideration of the audit reports of the Auditor General for Local Governments. No doubt, the fear of the Public Accounts Committee (PAC) is the beginning of wisdom to the management and staff of Local Governments in Lagos State. This certainly has translated to better ﬁnancial activities, transparency and accountability at the Local Government level in the state.
It has led to the improvement of the quality of record keeping at the Local Government level. The impact has also been felt in the reports of performance Audit carried out by the Office of the Auditor-General for Local Governments which has created a healthy competition, comparability and effectiveness of service among the Local Governments.
I am again happy to report that Lagos State Local Governments came ﬁrst in the report of the National Committee on the Evaluation of Compliance to the new International Public Sector Accounting Standard (IPSAS) Accrual Bases in the Federation as reported in her 2017 report.
The Local Governments/Local Councils have no choice but to promptly attend to audit queries in the audit inspection reports.
THE AUDITOR GENERAL
The Federal Government by the provision of Decree No.15 of 1989 as amended by decree 25 of 1990 (Basic Constitution and Transition Provision Amendment Act) created the office of the Auditor General for Local Governments to take over Duties and Responsibilities of auditing Local Governments Accounts and rendering financial advice.
In line with Section 85(2) of the 1999 constitution, the Auditor General is empowered to conduct audit tests on all aspect of
the accounts submitted by Accounting Officer which include: all offices, government business units and courts.
Subsection 5 states that, the Auditor General shall within 90 days of receipt of Accountant General’s Financial Statements, lay audited reports before the legislature who will consider them together with all queries raised through its committee Public Account Committee (PAC) responsible for public accounts.
The report should be submitted promptly and accurately to
enable Public Account Committee (PAC) ascertain how the programmes, functions and activities of the government are being conducted and entrenched accountability.
The Auditor General has always been constrained in the discharge of his responsibilities particularly with the issue of late submission of the annual financial statements by the Accounting Officers of the Local Government.
The activities of the Auditor General including his appointment, termination, mode of operation etc., are governed by the provisions of the Audit Act of 1956, the Nigerian Constitution, Financial Regulations of 1976 as amended etc.
The Auditor General checks all Government spending every year. This checking process is called AUDIT. By carrying out annual audits, the Auditor General assists the parliament to hold to account, all persons entrusted with management of public funds and resources.
FUNCTIONS OF THE AUDITOR GENERAL
The primary functions of the Auditor General are;
Ensure compliance with established internal control procedures by examining records, reports, operating practices and documentation.
Verify assets and liabilities by comparing items to documentation.
Completes audit work papers by documenting audit tests and findings.
Appraise adequacy of internal control systems by completing audit questionnaires.
Maintains internal control systems by updating audit programs and questionnaires; recommending new policies and procedures.
Communicates audit findings by preparing a final report; discussing findings with auditees.
Complies with Federal, State and Local security legal requirements by studying existing and new security legislation; enforcing adherence to requirements, advising management on needed actions.
Prepares special audit and control reports by collecting, analysing and summarizing operation information and trends.
In performing these functions, the Auditor General conducts different types of audit to ensure transparency and probity. The following are some of the audit conducted by the Auditor General.
TYPES OF AUDIT FINANCIAL AUDIT
This is to ensure that systems of accounting and financial control are efficient and operating properly and that financial transactions have been correctly authorised and accounted for.
COMPLIANCE AUDIT: Is that which verifies that expenditure has been incurred on approved services and accordance with statutory and other regulations and authorities governing them.
PERFORMANCE AUDIT: This is also called Economy and Efficiency Audit. According to Oshisami (1991), this audit is performed to determine whether an entity is acquiring, managing or utilising its resources (staff, building materials, space etc.) in an economical and efficient manner and the causes of any inefficiencies or uneconomical practices. Value for Money Audit is defined as an objective professional and systematic assessment of:
• The nature and functioning of authority’s managerial systems and procedures.
• The economy and efficiency with which its services are processed.
• The effectiveness of its performance in achieving objectives.
Value for money audit aims to identify ineffective procedure, duplicated processes, redundant work, uneconomical use of equipment and other resources etc.
POWERS OF AUDITOR-GENERAL
The Auditor General has the power to;
To carry out on regular basis the auditing of Local Governments Accounts and its Allied Agencies.
Sanction and surcharge any officer in accordance with the Financial Memorandum 39.3. However, appeals against such decisions shall lie with the Public Account Committee.
Notify the Public Account Committee (PAC) and the Local Government’s Council of Audit Alarm of significant importance and pre-payment audit queries for which the Accounting Officer of the Local Government is liable or responsible.
In addition, any other sensitive issue which because of its urgency cannot wait until the committee is convened shall be dealt with by the Auditor General
Carry out Pre-audit of gratuities and pensions of Local Government Officers
Head the Audit Alarm Committee through which he can notify the Public Account Committee and the Governor in writing where a Local Government Officer does not respond within the stipulated time to a query that affects his office.
AUDIT QUERIES AND ALARMS
Audit queries are observations raised by the Auditor about missing link in a particular transaction. Those raised by the Internal Auditor are Pre-audit queries while those raised by the Auditor-General are post-audit queries.
Queries serve as an important part of the mechanism of financial control as well as valuable means of detecting and preventing errors, fraud and ensuring compliance to established regulations.
The guidelines on Civil Service Reforms gave prominence to queries by specifying time limit for replying audit queries and possible sanctions for failure to respond.
Offences on which queries may be raised are classified into three by the Reforms:-
Irregularities resulting in losses to the government due to either fraudulent activities of the functionaries or their negligence or incompetence.
Irregularities not directly or immediately resulting in losses to government but which infringe upon budgetary and proper financial management.
Irregularities arising through poor or inefficient management and accounting which may lead to losses to the government.
CONTEMPORARY ISSUES ON POLITICAL INTERFERENCE ON LOCAL GOVERNMENT ADMINISTRATION
The efficiency and effectiveness of the Local Government administration have been greatly hampered by the activities of the political class through aiding and abetting of corrupt public officials and illegal political appointment.
The preference for democratically elected government is not without its positive impact and interference on the Public Service Administration in the following areas:-
i. Appointment of brilliant and experienced technocrats into the public service.
ii. Enhanced working environment for efficient performance.
iii. Consistent policies of government due to stable political atmosphere
iv. Fast growing economy through creation of conducive atmosphere for business to strive.
Holistically, the appraisal of Political interference on Revenue Generation Performances (internally Generated Revenue) of the Local Government cannot be overemphasized in view of its negative effect on the overall expected performance. As we all know, the internal revenue sources of any government formed the bedrock for effective budgeting. This is because; the Local Governments are not expected to base their expenditures only on Allocations from the Federation Account which are not under their control.
On the contrary, the influences of the political class have eroded the budgeted internally generated revenue orchestrated from the following actions.
1. Overriding influence on collectable rates levied on revenue items.
2. Illegal arrogation of power on ownership of some Local Government revenue items such as market
3. Unauthorized conversion/privatization of revenue generating Assets of the Local Government consequently resulting to loss of revenue.
4. Diversion of revenue arising from the appointment of political icon/members as revenue agents of Government.
5. Uncontrollable trend of cases of teaming and lading orchestrated by political God fatherism.
RECOMMENDATIONS AND CONCLUSION
The commendable state of books of accounts and records at the Local Government level in Lagos State is partly due to the work of the Public Accounts Committee (Local) of the State House of Assembly. This has also enhanced the effectiveness of the audit functions of Audit. The effectiveness of the Public Accounts Committee will certainly lead to rapid development and afford the citizenry the dividends of democracy.
It is therefore my recommendation that
1. Public Accounts Committees be headed by relevant professional as
specified by the act.
2. The reports of the Committee should be considered and laws or
motion arising there on be faithfully implemented.
3. The Committee must ensure prompt implementation of
Sanctions as recommended in the Auditor-General’s report.
4. To ensure consistency in the application of Sanctions.
5. The Committee should strengthen its mechanism to ensure compliance
with decisions taken.
6. The Office of Auditor-General like any professional Office cannot
overemphasize the need for training and retraining of its staff to enable
them to measure up to international Best practice.
7. The Audit Bill must be passed to strengthen the Audit Institutions and
independence of Auditors.