[Download full report]– How University of Ibadan incapacitated its audit department to strengthen its financial recklessness and other red points

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[Report]–OS Professional services (OSP) in an external financial auditing of the University of Ibadan has revealed fraudulent practices in different styles and shapes in the University of Ibadan.

FCA, MMP, ACTI, MNIM, B.Sc(Accounting).
Director Of Audit

We have earlier reported of how an over funding of 5.1 billion naira was spent by the University management without relevant government approval as well as execution of various projects that are at variance with relevant laws guiding the university to ensure transparency and accountability.

We also published a report on how University of Ibadan awarded contracts to unregistered companies, perpetrate illegal contract splitting, bid rigging and other administrative malpractices relating to public procurement, tender and award of contracts.

It all started last year December, when the Federal Government sought the prosecution of 33 of its agencies over non-remittance of N450 billion revenue generated between 2010 and 2015.

Listed amongst the 33 agencies are University College Hospital, Ibadan, (UCH) and the University of Ibadan.

Mrs. Kemi Adeosun, the finance minister had said that some of the audit reports  that stirred the intention to prosecute had been sent to the Economic and Financial Crimes Commission, EFCC.

“The financial regulations are very clear, where audit reports have indicted some of the officers, some of these audit reports are going to the EFCC.

“Some of the audit findings were so serious that the decision was taken that some of those particular reports must go to the EFCC.

“Remember that we are not a prosecuting agency, ours is to investigate and then we hand it over to the relevant agencies,” she had said.

According to Adeosun, the audit revealed that there was a lot of non-remittances and under-remittances of operating surpluses and that some agencies were operating without an approved budget.

The minister added that there were overstating of budget, spending above budgeted amount, failure to reconcile accounts and existence of irreconcilable differences. “The audit also showed that there was under-reporting of revenues, failure to submit audited financial statements, payroll fraud and exaggeration of payroll costs, over-payment of staff salaries and abuse of personnel grants,” she said.

“What was consistent was non-remittance or under-remittance of revenues due to the Consolidated Revenue Fund. Many agencies have been operating without any approved budget and where there were budgets, they were not complied with. They were spending in excess of the budgeted amounts.

“We found under-reporting of revenues. Payments were made without vouchers and payment receipts in certain cases. Cash advances were given to staff without retirements. Loans and grants were given to parent ministries and other entities without approval.

“There was failure to reconcile accounts. There were irreconcilable differences in a number of agencies. There was no fixed assets register in many agencies and we found evidence of assets being purchased and then sold to staff at significant discounts. There were purchase of fixed assets direct from IGR (Internally Generated Revenue), inadequate internal audit and weak internal controls. Many agencies have no audited Financial Statements. We found exaggerated payroll costs. Also we found excess staff salaries- salaries being paid in excess of approved salaries by the National Salaries, Incomes and Wages Commission.

“We found unapproved monetization of medical allowances including foreign medicals for some board members. Staff advances to staff and board members were in excess of approved limits. Non-compliance with the Public Procurement Act.”

I. O. Aponmade
Bursar (2010-2015)

As a follow up on our earlier reports, the audit report prepared by OS Professional services (OSP) has also revealed how University of Ibadan has incapacitated its own Audit Department by deliberately underfunding it to make it less efficient in discharging its duties of ensuring responsible financial administration.

OS Professionals Auditors stated that “there are inadequacies in the effectiveness of the Audit Department. We noted that there are no Audit Manuals, Audit time table to ensure completeness of coverage of the University activities. In addition, there are no strategies put in place to identify areas of high risk and concentrate audit efforts”.

“Currently the  Acting Director of Audit   (DOA) reports to the Vice Chancellor (VC) and also to the Finance and General Purpose Committee (FGPC) of the Council through the VC. We noted that the Auditor is not allowed to report to the FGPC which is in this instance serving as the audit committee of the University. It is noted that a constraint is created on the independence of the auditor,” the report added.

The report also revealed that the budget for the Audit Department is dependent on the availability of funds to be approved by the same management which has made the Auditor dependent on the Bursar for the running of his Department thus impacting on the independence of the Auditor.

The report equally lamented that the Audit Department does not have such tools as Audit software and equipment to ensure Internal Audit process and also to preserve the confidentiality of its documents.

It was also noted that there are instances in which the  necessary information to equip the internal Audit Department to carry out routine check on the payroll before payment are made gets to the department late , therefore , unable to effect the controls required. All these have contributed to successfully ensure that the Audited Financial statement of the University was only up to June 2012! Even though as THE PAGE had discovered that the Audit Department has 39 staff.

Bursar (2015 till date)
Deputy Bursar (2010-2015)

Even at that, audited financial statements for  June 2009/2010  and June 2010/2011 financial year were signed and dated 30/11/2012 and 11/12/2014 respectively.

What led to the establishment of UI Audit department

According to the University of Ibadan’s website, the “Internal Audit was formally set up as unit and part of checking processes of the then Finance Department {now Bursary Department} in 1960’s. The Unit examined payment vouchers before they were paid. It also carried out some accounting functions like checking monthly salaries, rending of various returns and stock taking exercise.

“After the Council enquiry by Professor Ola’s Committee into the losses of stock of various rations especially of Jerry and Mammalade which resulted into loss of colossal sum of money in the Catering Department of the University of Ibadan, the council at its meeting of 18th and 19th November 1974 decided to establish an Independent Audit Department. The Governing Council therefore accepted the recommendation of Professor Ola’s Committee on Internal Audit Unit which include the following;

“That a complete Independent Internal Audit Unit should be set up with immediate effect. Its duty would be to audit regularly and without prior notice, the account of all the spending departments and unit in the University.

“That the unit should be independent of the Bursar and be responsible to Vice-Chancellor. It should be submitting reports to the Vice-Chancellor at least once in a quarter. However, the reports are now being forwarded to the Council through the Vice-Chancellor and this confers greater level of Independence on Audit Department.

“That the head of the Internal Audit department should be a well qualified accountant,” it adds.

It was further stated that the functions of the Audit Department include:

I. the maintenance of an adequate check against fraud and misappropriation;
II. the verification of assets and liabilities at regular intervals;
III. the examination and constant scrutiny of all system of authorization of payment to ensure an adequate control of expenditure;
IV. concerned with measuring and evaluating the continuous effectiveness of internal control system;
V. ensure that various policies as put in place by the management are strictly adhered to;
VI. that the information required by the management to manage effectively is reliable and complete;
VII. periodic examination of internal checks to ensure the highest possible standards of accuracy and efficiency;
VIII. Review of accounting system and related internal controls;
IX. Examination of financial and operational information for management, including detailed testing of transactions and balances;
X. Review of the economy, efficiency and effectiveness of operations and the functioning of non-financial controls;
XI. Review of the implementation of corporate polices, plans and procedures;
XII. Special investigations.

But it is obvious that the above stated functions are just good on paper and the real Audit Department of the University of Ibadan which has not less than 39 staff on its payroll is a complete shadow of what it could have been.

Other red points

Deficient System Security and Data Access
It was observed that the university does not have adequate control over its accounting system(Admon Bursary) to  protect data from unauthorized alteration or improper use. There is no  information technology security policy in place  for access control, change management and data recovery for Admon Bursary Application.

Manual Preparation and Manipulation of  Accounts
It was equally noted that the university uses computerized system to  post transactions at main bursary and college of medicine, the final trial balances  for Main Bursary and College of Medicine  are   manually extracted from the accounting system and manipulated them in a spread sheet to produce the final trial balance.

Distortions in External Grant Income Receipts
The Memorandum of Understandings (MOUs) for  major grants  such as Macarthur Foundation and Pan African University Grants require a distinct bank opened for the grants, while minor grant income require joint accounts to be maintained. The review of FBN External  Grants Naira Cashbook revealed miscellaneous revenue income  receipts such as Hall of residence fine,  Hall  rents, donations etc were being paid into the Grant Account!

While the audit firm had observed that, 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 and which was done without documented valid approvals, it has been revealed that several  major grants bank Accounts were involved in the N1.25billion written off and not less than Ten (10) Grant Bank Accounts involved in the cash differences were  from College of Medicine.

Revenue Omission from  TSA Income Receipt Platform and continuos Cash Collections with DMBs
“Detailed review of  the UI TSA  e-collection on Remita Platform shows  that several  revenue  items were  omitted especially under student related fees and Internally Generated Revenue categories. We observed several instances where  cash was still being collected after the university has been migrated to TSA e-collection platform.”

It should be noted that despite the order by the Federal Government to migrate all cash collections to the TSA e-collection platform, the University of Ibadan still continues to maintain various illegal accounts with Deposit Money Banks (DMBs) an example was contained in an earlier story we reported where a particular account with First Bank was used to collect ‘bench fees’ from medical students.

Similarly, the auditors raised concern that several IGR revenue receipts for various  income heads  were lumped- up in external grants accounts and Revenue paid into  FBN External Grants.  The FBN External Grant Accounts was not transferred to TSA , therefore, IGR receipts in the Bank may not be fully accounted for.

Unremitted Profit/ Dividend by Commercial  Venture Entities
The auditors further noted that U.I  income generating entities such as UI Ventures Ltd, UI Bookshop Ltd,  UI Microfinance Ltd and UI Water  which are thriving businesses have not been paying Dividend to the University.

And in addition, the management refused to make audited financial Statements of these business entities available for the auditors.

It may not be entirely out of place to doubt if all these ventures have even been ever audited.

“The  university does not  have policy on securing its interest revenues from short-term deposits and other short-term monetary investments,” the report declared.

Quoted investment Income are also stated to have not reflected in the  account for the period under consideration

Dividend Income  for Quoted Investment Worth N77 million not Available
The university and its components faculties invested  over N77million in  equities of several companies, however, dividend income were not reflected in the Audited financial Statement for June 2009-  June 2011. The auditors were unable to review subsequent periods  since documentary evidence and relevant accounting details  were not provided by the bursary management.

Unrecorded Grants Assets, Lack of Policy guidelines and lack of Fixed Asset  Register  for Capital Asset  spends of Over N12 billion
The University does have clear policy and guidelines for accounting treatment of  Grant/Project Assets. Several Assets running into  several billion of Naira were  acquired for research projects but were not properly accounted for in the university books of Accounts after the expiration of the projects.

When there is no proper account, there are risks that several assets that are procured for the various researches/projects which are in custody of researchers might not be handed over to the university at expiry.

The report noted that “fixed assets register were not kept for Grants/ project Assets in the various faculties and bursary”.

“We observed the University spent over of N12.5b from 2010-2015 on capital  Assets finance  through FGN budgetary allocations, Tetfunds and IGR. However, there is no Fixed Assets register maintained by the University to monitor its assets.

“Besides, these Fixed Assets do not bear identification marks/ serial numbers to establish ownership, accountability and location. Similar items acquired at different prices and periods can not be separated from each other.

“We noted that the physical conditions of the assets can not be monitored as there are no records tying specific assets to the physical asset  locations except for Land and Buildings and Motor Vehicle,” it adds.

Loan of N125m to UI Endowment Fund and other Unrecovered Loans from Subsidiaries
According to the report, the International Conference Centre was constructed at a cost of N1.4 billion while the university provided N125 million in 2012. The loan agreement stipulated that Loan repayment should be recovered from rental fee earned by ICC. The project had been completed since 2013 and loan recovery  payment from ICC could not be  traced to the university records.

Similarly, “loan granted to  various Income generating subsidiaries and units  are interest free and principal amounts not recovered.

“Loan of N3m was granted to College of medicine, Otunba Tunwase Paediatric  Centre in Ijebu-Ode from UI Account Code 3/500/420 to purchase laboratory Equipment.

“There was no terms and conditions specified. Loan of  N5,000,000 and N1,579,350 granted to  U.I Bookshop Ltd and U.I Ventures Ltd respectively prior to 2009 are yet to be recovered.

“Appointed Investment consultants  performance are not reviewed periodically.

“Cashflow forecast were not in place before funds  are placed  in fixed deposit accounts and sometimes this places the university in serious liquidity position.

Non–Compliance with Constitutional Provision on Audited Financial Accounts

“UI accounting policies and procedures are not consistent with current business processes in the university. The  university  council and  management  has failed to produce and submit Audited Financial Statement since June 2012 in flagrant  disobedience to section  85 (3) of the constitution of Federal republic of Nigeria 1999  (as amended)  which states, among others that  accounts of bodies established by an act of parliament must be audited by an external auditor.

“Section 85(3b)  of the same constitution further requires that “their accounts and auditor’s report thereon” should be forwarded to the Auditor General  of the Federation for comments.

“Our review revealed that audited financial statement for years ended 31st  Dec. 2012 -31st  Dec.2015  are yet to be audited by the external auditor as at the  time of writing this report,” it states.


Copyright 2017 The Page. Permission to use quotations from this article is granted subject to appropriate credit being given to www.thepageng.com as the source.



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