A financial
audit of the University of Ibadan (UI) ordered by the Office of the
Accountant-General of the Federation (OAGF) has exhumed a welter of financial
misconduct and brazen disregard of fiscal regulations by the management of the
country’s first university.
The audit,
according to the its report dated 10 November 2016 and exclusively obtained by
SaharaReporters, spanned six financial years (2010-2015). Titled “University of
Ibadan Interim Process Audit Report,” the document is an anthology of
spectacular sharp practices. The scope of the audit, stated OS Professional
Services, the firm hired to conduct it, included a critical review of the
university between 2010 and 2015), confirmation of the sources and quantum of
the funding received from the Federal Government and reconciliation of same
with the OAGF records.
Also stated
as part of the scope is the identification of constraints and areas of
improvement, review of revenue sources to the university and the effectiveness
of revenue generation and accounting. The audit similarly set out to establish
the cost of income ratio of operations and make appropriate recommendations for
the management of the university.
OS
Professional Services stated that its work was impeded by, among other things,
shoddy book-keeping, which manifested in the non-availability of financial
statements for years ended 31 December 2013, 2014 and 2015, as they were yet to
be prepared at the time the audit was concluded.
The firm
also stated that the relevant books of accounts of the university were not
updated for the above stated period. Another impediment was the unwillingness
of the heads of the university’s bursary to release relevant information and
documents for review by the firm.
According to
the audit firm, the University of Ibadan did not produce monthly, quarterly or
yearly management accounts between 2010 and 2015 despite having over 300
accounting staff in its bursary department. This anomaly, said OS Professional
Services, entitles the bursary department to investigation by OAGF.
The audit
firm observed that, very curiously, cash balances of over N1.25 billion were
written off from the university’s bank balances after bank confirmation letters
were received in respect of bank balances for the 2010/2011 financial audit.
This was done without documented valid approvals.
In another
case, N36 million and N1 million got written off as petty cash in 2009 and
2010, respectively. The auditors also observed a major cash difference of N300
million between the Central Bank of Nigeria CBN capital account cashbook
position and the trial balance in 2011. Curiously, this was written off as cash
adjustment by the external auditor without adequate investigation.
On the basis
of its ropey book-keeping, the audit firm concluded that the University of
Ibadan is unprepared to adopt the International Public Sector Accounting
Standards (IPSAS) for its financial reporting process.
The auditors
reasoned that UI should have converted to cash basis IPSAS by 1 January 2014
and accrual basis IPSAS by 1 January 2016, as dictated by the time table of the
Federal Government.
A major
issue with the university, said the report, was that of inadequate control over
cash. In many instances, it stated, updating of cash books were found to be
many months in arrears. As a result, bank reconciliation statements were never
up to date, with many of the bank accounts yet unreconciled before the
introduction of the Treasury Single Account (TSA) in 2015. This also ensured
that the accuracy of the balances transferred could not be ascertained.
Another
symptom of the financial malaise was found to have manifested in flagrant
disregard for the banking procedures in the university’s approved accounting
manual. The university’s chief cashier serially failed to adhere to the rule of
daily banking of daily cash takings.
“For
instance, the sum of N760,000 for 11 June 2013 was banked on 12 June 2013. We also observed that there was an instance
of unbanked receipts (N24million) being carried forward from July 2009 to June
2011 on Miscellaneous Account – Wema Bank, Bodija Ibadan,” said OS Professional
Services.
Many revenue
heads were found to have been omitted from the TSA e-Collection Platform. The
omission was discovered during the auditors’ detailed review of Remita TSA
Online Platform. They further observed numerous instances where cash collections were undertaken by the bursary
instead of using the e-collection platform. This was in spite of the fact that
the university has been migrated to TSA e-collection platform.
Evidence of
the rot was similarly noticed in the university’s Grants Unit, which is said
not to maintain an up to date cash book, limiting prepared bank reconciliation
statement to the last update of the cash book. The auditors observed that
decreases and increases in the value of quoted investments were not captured in
the university’s books.
For
instance, the report said, a quoted investment made at N77 million still
appeared in the account at the cost of purchase despite a dip in its market
value.
The
institution’s bursary favored cash collections and deposits into various bank
accounts with Deposit Money Banks (DMBs) despite e-collection platform provided
by Federal Government. This was being done in contravention of directives that
all Federal Government parastatals and agencies must migrate revenue and cash
collections to e-collection platform on the TSA platform.
Many
instances of such were captured in the audit. The auditors observed that bank
accounts operated by the university with First Bank, Skye Bank, for example,
were operated up to March 2016 and in clear contravention of Federal Government
directives on TSA that all bank funds should be mopped up and all accounts
closed, with monies transferred to TSA account with CBN
“From the
schedules provided, it was confirmed that the balances over N2 billion from 22
bank accounts of deposit money banks (DMBs) were not credited by CBN. Although
there was no valid documentation from the authorities of UI protesting this
anomaly to the representative deposit money banks and CBN, we are, however,
circularizing the CBN and the DMB accounts involved to verify and confirm this
development,” the report said.
In addition,
the university management was found to have breached TSA documentation
procedures for transfer of funds to CBN. While these require notification to
the OAGF, the university management refused to follow them.
Deposit
account balances not transferred to the CBN were found not to have included
fixed deposit accounts and those related to accounts domiciled with the U.I
Micro Finance Bank Limited.
The closing
balance of the institution with CBN (TSA CBN Account 10034303000101),prior to
TSA transfer mandate, the auditors said, could not be determined. Neither could
the university management provide bank reconciliation of the account.
“We could
not validate the balances on this account at 15 September 2015. We are
circularizing for confirmation,” said OS Professional Services.
Unauthorized
overfunding was found to have been part of the repertoire of financial
misconduct of the University of Ibadan management. The university, noted the
auditors, received total budgetary personnel cost allocation of N60.53billion
and spent N55.10b on personnel emoluments.
The total
overfunding of N5.1billion was done for the period reviewed. The first four
years, noted the report, recorded an over funding of N1.50billion, N1.40
billion, N1.90billion and N1.16billion respectively. Two years, 2014 and 2015,
recorded underfunding of N.396 billion and N404 million, respectively.
The
overfunding of N5.95 billion for 2010-2013 was carried out by the university
management without relevant government approvals.
Relatedly,
the sum of N2.1billion on earned allowance was paid between 2013 and 2014
outside payroll system and the relevant Pay-As-You-Earn tax deductions were not
made before payments to the university staff.
A glaring
absence of senior management review of receivables, debtors and cash advances
was observed. The audit firm noted that these are neither reviewed by any
senior officer in the university’s bursary nor is there a designated officer
with the responsibility for the collection of overdue balances owed to the
university.
The audited
financial statement (AFS) as 30 June 2012, said OS Professional Services,
indicated that cash advances rose from N1.294 billion to N1.657 between July
2011- June 2012, an equivalent of 91.49% of debtors and advances balance for
the period.
Their report
also recorded that sum of N1.036billion in debt has been static since 2008. The
major constituent of this balance, said the report, are student departments,
salaries and wages control, bursary loan account and sundry deductions for
which the university respectively has N89 million, N432 million, N104 million
and N292 million as balances.
The
university equally has a static balance of N83.17 million since 2008.
Of this sum,
N40.9 million, it was noted, represents the difference on foreign exchange and
the balance of N42.2 million various internal accruals.
Yet another
item in the portfolio of rule breaches by the university management is
non-compliance with statutory payments. According to the audit report, total
creditors and accruals balances for Financial Year (FY) 2010, 2011 and FY2012
stood at N 0.848 billion, N1.4 billion and N1.5 billion respectively. Over 80% of the aggregate amount, said the
auditors, represents statutory deductions for Pay-As-You-Earn tax, Value Added
Tax, Withholding Tax, Industrial Training Fund and unified pension
contributions.
The audit
firm, however, stated that it could not carry out further review for subsequent
years owing to absence of financial statements. It stated that it planned to
write to the statutory creditors to confirm outstanding liabilities.
One of such
creditors is the Oyo State Board of Inland Revenue (OYBIR), with which the
university is involved in a legal dispute over on outstanding tax liabilities
hovering between N3 and N4 billion.
Despite
spending N12.5billion between 2010 and 2015 on capital assets financed through
Federal Government budgetary allocations, Tertiary Education Fund and
internally generated revenue, the university could not boast of a fixed asset
register for its fixed assets.
What the
auditors found was the practice of over-insurance and under-insurance of assets
such as buildings, equipment, furniture and fittings.
An insurance
policy taken by the university on buildings, equipment, furniture and fittings
in 2010 cost N2.4 billion in 2010. Three years later, it rose to N6.8billion
and curiously had the same value in 2014, 2015 and 2016.
“The university’s asset register was not
updated. Neither was an assets revaluation carried out. Therefore, the sum
insured is very much lower in our estimation than the value of the items
insured,” explained OS Professional Services.
The lack of
transparency was visible in many of the Public Private Partnership (PPP)
agreements entered into by the University of Ibadan management, the auditors
further disclosed. They include the provision of private hostels and 10
Megawatts solar power generation capacity.
While the
auditors admit that the PPP agreements have the potential to impact on
student-related income and internally generated revenue of the institution,
they, however, said the management of the university’s bursary failed to make
available any of the PPP agreements for review. As such, they could not assess
and comment on the revenue sharing arrangements.
Touring
advances granted to university staff for local and overseas travel were found
to be the subject serious abuse. The grant process, the report said, lacks
proper accountability, as there is no effective expenditure retirements. Such
advances are said to have been used as sources of unauthorized staff
loans/credit because the unretired funds ended up being deducted over a long
time from staff salaries.
One Mr. A. O
Sokubi, a staff of the Animal Science
Department, was found to be having an outstanding balance of N2,611,500 since
24 November.
He was
subsequently granted an additional N600,000 and N2,000,000 on 11 July 2013 and
18 November 2013 despite carrying an unretired balance of N2,611,500 since
2012. He is said to be paying back the sum of N30, 000 from his monthly salary.
Similar lack
of fidelity was evident to the auditors in the university’s procurement
processes. The audit team, for instance, had no access to records for micro
supplies and services contracts. This, they noted, is contrary to Public
Procurement Framework and Guidelines issued by Bureau of Public Procurement
(BPP), which emphasize that procurement of goods and services must conform with
the public procurement guidelines.
“Micro
procurements at various academic units and service points were not in
compliance with BPP guidelines and documentations are not kept in line with
Public Procurement Act requirements for procurements falling within such
thresholds,” the report disclosed.
Closely
related to this are contract splitting and other contraventions of of Public
Procurement Act 2007.
The
university’s Public Procurement Committee and Tenders Board was found to have
engaged in contract splitting in a
number of major contracts, a breach of Section 58(4) of the Act, which
criminalizes the splitting of contract for goods and services in order to
remain within the approval thresholds of less than N250 million. The practice
also spills into bid rigging and tender evaluation manipulation.
The review
of the tender processes by the auditors showed that the same crop of
contractors has been winning bids and are engaged to execute projects for which
they have no expertise. According to the auditors, this puts a big question
mark on the transparency of the tender evaluation process.
Budget and
Variances not measured
Equally
deemed flawed is the university’s budgetary control mechanism, which was said
to be characterized by improper transactions recording and accounting entries
in the expenditure control cards. The auditors were unable to find actual
budget performance reports for 2010-2015 in the university.
What was
found during a review of financial information was overspending on a number of
vote items. OS Professional Services said it was informed by the bursary
management that this was due to re-allocations between vote items.
“Virement
without due government approval is prohibited in the Federal Government
financial regulations,” said the auditors.
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