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.