The Senate Public Accounts Committee has given the external auditors of the Nigerian National Petroleum Company Limited (NNPC Ltd.) one week to provide a detailed explanation for over ₦210 trillion in unreconciled entries contained in the company’s audited financial statements, insisting that firms that certify public accounts must also defend them.
The directive was issued on Wednesday after a heated session chaired by Senator Ibrahim Dankwambo, during which lawmakers rejected repeated attempts by the auditors to shift responsibility to NNPC Ltd. for explaining the figures.
At the centre of the probe are ₦107 trillion recorded as receivables and ₦103 trillion listed as payables in the company’s audited accounts. Senators said neither NNPC Ltd. nor its auditors had produced the schedules showing the transactions, counterparties and calculations underpinning the figures.
The auditors told the committee that the supporting schedules formed part of their working papers and requested two weeks to retrieve them.
The committee declined the request, granting only one week.
Senator Dankwambo questioned why auditors who had certified the financial statements could not immediately produce documents backing the figures.
“When you have figures in audited financial statements, there must be schedules showing exactly how those figures were derived. If those schedules already exist in your working papers, why do you need additional time before presenting them to this committee?” he asked.
The audit firm maintained that NNPC Ltd. remained its client and argued that detailed explanations should ordinarily come from the company, recalling that lawmakers had earlier agreed that NNPC officials would clarify the entries.
The committee rejected the argument.
Relying on Sections 88 and 89 of the 1999 Constitution, lawmakers said the National Assembly has the constitutional authority to summon individuals and organisations and compel the production of documents relevant to its investigations.
“You are before this committee as independent auditors. Do not tell us you need permission from your client before complying with a lawful request from Parliament,” one senator said.
The committee stressed that the auditors appeared before it in their professional capacity and could not distance themselves from accounts they had certified.
“The public concern arose because of the audit you carried out. These figures came from your certified financial statements. You cannot now distance yourselves from the very work you signed,” another lawmaker stated.
Some senators also questioned whether the audit had been properly conducted.
“If you cannot produce the schedules supporting these figures, serious questions arise about whether the audit work was actually done. Those documents should already exist,” one member observed.
Lawmakers further faulted the inability of both NNPC Ltd. and its auditors to reconcile the receivables and payables.
According to the committee, NNPC officials had repeatedly explained that the amounts largely related to joint venture cash calls and payments but had failed to identify the individual transactions or counterparties involved.
“If both figures relate to the same joint venture arrangements, they should be capable of reconciliation. The inability to identify their individual components is precisely why this committee considers the combined amount of over ₦210 trillion as unexplained.
“We are not saying the money is missing. We are saying the figures remain unexplained, and for amounts of this magnitude to remain unreconciled in audited financial statements is unacceptable,” a senator said.
The committee also dismissed suggestions that professional confidentiality prevented the auditors from releasing the requested documents.
Lawmakers argued that NNPC Ltd., as a company wholly owned by the Federal Government on behalf of Nigerians, could not rely on commercial secrecy to withhold information from Parliament.
“NNPC belongs to the Nigerian people, not to private shareholders. Parliament has every constitutional right to examine its accounts, and no confidentiality agreement can override that responsibility,” another senator said.
Drawing lessons from global corporate failures, one lawmaker warned the auditors of the reputational consequences of failing to stand behind certified accounts, citing the collapse of Arthur Andersen following the Enron scandal.
The committee consequently directed the auditors to return within one week with a comprehensive breakdown of the ₦107 trillion receivables and ₦103 trillion payables, including detailed schedules identifying every component of the figures and the basis on which they were certified.
Before adjourning the hearing, Senator Dankwambo clarified that the committee was not alleging that the funds had been stolen.
“We have never said the money is missing,” he said.
“What we have consistently maintained is that these figures remain unexplained. One represents receivables and the other represents payables. Because neither has been adequately explained, the committee refers to the combined amount of about ₦210 trillion as unexplained. That is the issue before us.”
The auditors were thereafter excused and ordered to reappear before the committee within one week with the requested documentation.