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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Via SaharaReporters
