Auditors frustrated over non-implementation of audit reports – Audu TGS’ CEO

Mr Tajudeen Audu is the Chief Executive Officer (CEO), TGS Nigeria, an audit and financial advisory firm based in Abuja. In this interview, he highlights the need to implement recommendations of audit reports, and the competitiveness of Nigerian auditing firms on the global stage

Can you highlight the importance and relevance of auditing?

Firstly, auditing provides a kind of certification for financial status. An audited financial statement will tell you that the statement has been vetted by a professional accountant who has given his opinion on the level of reliance you can place on that financial statement.

The statements that are not prepared by the auditor are usually by the management but the auditor’s opinion is required to give what the financial statement reflects from the true and fair value of the records of an organisation.

So, independent audited reports give confidence in the financial status of an organisation such that management and even investors can rely on.

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What challenges do auditors encounter in the discharge of their responsibilities?

One is getting adequate information, especially from public institutions. Two, auditors face more risks than in other professions. The risk could be in the form of a mis-statement, facing compromising situations.

Worthy of note is that auditors are becoming frustrating in terms of issues recurring over and over again in financial statements. Example is the oil and gas industry. If you go through the NEITI report, the issues are virtually the same that are reached at the end of the audit; the auditor gives the same advice but these issues keep recurring and they are not addressed.

A good example is the issue of oil subsidy. Over the years, there have been warnings and advice to government over oil subsidy but they kept cropping up every year, especially issues of accountability, and revenue accruable to government, which are still not being addressed by the relevant agency. As such, in such scenarios, you as a professional and auditor are frustrated at the end of it.

What is your take on non-implementation of audited reports, especially by the Auditor General’s Office?

I think it borders on the political will to implement our laws. Eg, the old NNPC operated for about 43 years but it only published audited reports for the last two years and the law is there making it mandatory for the reports to be published.

So, every Nigerian has a role to play in doing the right thing. The good thing is that with the Petroleum Industry Act, the new NNPC is operating as a private entity and therefore it is mandated under the Companies and Allied Matters Act to also be audited every year.

So, lack of implementation is just the absence of the political will to do so.

From the reports on oil and gas which you’ve audited, what would you advise the incoming government?

It is one of the issues I mentioned that keeps recurring. There is no other solution than the removal of oil subsidies. When this is done, the market will determine the price; meaning it is market-driven, and with higher price. But is it not better to suffer temporary hardship than for us to continue to delay the inevitable? The hardship is already here.

Another good thing is that we are going to have a new refinery, the Dangote Refinery, so we expect that with government having a 20% stake it will have a say and make sure we get optimal benefit from this new local refinery, and all the costs associated with importation would be done away with.

A lot of attention on auditing is put on the federal government, how about states and LGAs?

Truly, a lot of focus about the fiscal structure is on the federal government. I agree the other tiers of government need to be more accountable, and part of the way is by auditing their accounts. States and LGs have their auditors and external auditors are also appointed but we all have a responsibility to throw searchlight and create awareness in terms of accountability at those levels also, not only the federal government.

In terms of numbers, do we have enough auditors in Nigeria to do the job?

We have the numbers. By estimate, the number of qualified chartered accountants should be about 50,000, but not all though are registered as professionals to practice, a lot are in government while others are in the private sector. Even those that have license, not many are into public accounts, a lot are into tax practice. So, the capacity is there.

Are the profit and loss statements a true reflection of the books of any organisation?

Published financial statements are different. We have tax accounts, where statements are produced solely for tax purposes. Then there are the ones that show profit and loss but that does not mean that the figures are not the same; when you prepare to account for tax there are other considerations.

What would you say about preference for foreign audit firms and why the trend?

Yes, these so-called international firms are international brands but they also have Nigerian firms as their local partners. For example, Delliote in Nigeria is represented by Akintola Williams, my firm also belongs to an international firm, TGS Global and we are the partner here in Nigeria.

Some international firms, like the Big Four, and those you mentioned, have networks in several countries and other affiliates.  So, government agencies when their reports are needed for international engagements, they would want to use some of these international firms so that gives a sort of credibility or authority recognised outside our shores. NNPC has both foreign and local firms as joint auditors.

How can the government improve auditing practices in Nigeria?

My advice to the government is to take audit reports more seriously. The Office of the Auditor-General of the Federation should be further strengthened and if possible, to have the power to remove infractions where they exist.

Also, the relevant agencies should also rise to their responsibilities to properly look at audited reports of agencies, that is the only way that the effort put into the audit of public institutions will have meaning.