NSITF stinks in N62.5bn fraud – FG Panel

-Says no operational manual for Fund’s activities
-Queries dressing, DSTV subscription, generator fuelling allowanc The administrative panel of inquiry into the finances of the Nigeria Social Insurance Trust Fund (NSITF) and Matters Ancillary, has indicted the Fund of financial misappropriation totalling N62.5billion.
This formed the major findings of a federal government panel which probed activities of the organisation in over the years.
Minister of Labour and Employment, Dr. Chris Ngige, on 15th February, 2017, constituted the panel to among others, investigate and render report on the accounting procedures of NSITF in order to ensure proper accounting and management of funds.
Panel’s mandate The panel, in specific terms, was mandated to probe how the internal audit mechanism of the establishment broke down, thus allowing for such colossal loss of funds.
Findings Submitting its report yesterday to the minister, Chairman of the panel, Mr.
Ishaya Awotu, said they established that the external auditors audited the account for the period 2011 to 2015, but were not signed.
He said: “The audited financial statements and the management letters for year 2011, 2012, 2013 and 2014 were submitted to the Management.
As at the time of forwarding this report, none of the years’ audited accounts has been concluded, while the audit reports remained unsigned.
The basis for Management’s re-appointment of the External Auditors for the auditing of 2015 account could not be ascertained.
“The Fund does not have Financial Operational Manual to guide its financial activities while compliance with the provisions of the Financial Regulations in carrying out their financial transactions was very weak.
“Bank reconciliation of most of the bank accounts of the Fund was not carried out.
Without the reconciliation of the bank statements, irregular payments and fraud committed on the accounts cannot be detected.
“Furthermore, financial statements prepared from unreconciled accounts cannot be reliable.
Non-reconciliation of bank accounts violates section 716 of the Financial Regulations.” According to the panel, “the internal audit function of the Fund was ineffective.
“The panel observed that for the period 2013 to 2017, the internal Audit Department did not audit the cashbooks of the various bank accounts at the Headquarters of the Fund, books and records of Investments and Treasury Department, Procurement Processes, Registration of Employers and payment of contributions by the Employers, Enforcement and Inspection activities, Fixed Assets etc.
The lack of effective auditing of the Fund’s accounts and records violates section 1701 of the Financial Regulations.
“It was observed that the Fund was operating with incomplete books of accounts.
Several bank statements of the various bank accounts, cashbooks, etc.
were not submitted for audit examination and sighting.
Financial statements (accounts) produced from such accounting system cannot be reliable.” How monies were spent In a chronicle of how monies were allegedly looted, the panel further submitted that “there were several transfers of funds in between bank accounts without authorisation and approvals.
The sum of N15,737,757,697.91 (Fifteen Billion, Seven Hundred and Thirty Seven Million, Seven Hundred and Fifty Seven Thousand, Six Hundred and Ninety Seven Naira, Ninety One Kobo), was transferred from one account to another.
Evidences to show the approvals and payment vouchers authorising the transfers were not presented to the Panel.
“The Panel observed that the sum of N2, 990,184,262.77 was expended on computerisation and other related lCT equipment.
Despite this expenditure, not much was achieved on computerization of the Fund defeating the purpose of the expenditure.
“It was also observed that Oversea Tours and Trainings were undertaken by the Fund without the approval of the Secretary to the Government of the Federation.
“Contrary to the provisions of Financial Regulation 402, the Fund does not maintain Expenditure Vote Control Books required for the monitoring and control of the various sub-heads.
Non-maintenance of the vote-books made it impossible for the Fund to control extra-budgetary spending.
“The sum of N2,650,731,225.93 (Two Billion, Six Hundred and Fifty Million, Seven Hundred and Thirty One Thousand, Two Hundred and Twenty Five Naira, Ninety Three Kobo) deducted from various payments in respect of Withholding Tax, Pay-As-You-Earn (PAVE), Value Added Tax, Pension and National Housing Fund were no remitted to the relevant authorities.
“Irregular allowances totalling N5, 744,968,834.13 were paid to Staff and Management of the Fund.
These allowances were paid without the approval of National Salary, Incomes and Wages Commission for allowances being paid to its staff and management.
Some of the allowances such as Management Staff Allowance, Staff Education Allowance.
DSTV Subscription Allowance, Dressing Allowance, Generator and Motor Vehicle Fuelling Allowance paid to staff and management were not provided for in the Condition of Service of the Fund.
“Payment vouchers in the sum of N27,056,598,053.92 (Twenty Seven Billion, Fifty Six Million, Five Hundred and Ninety Eight Thousand, Fifty Three Naira, Ninety Two Kobo) were not presented to the Panel for audit examination and sighting.
“Payment vouchers in the sum of N8,376,083,789.72 (Eight Billion, Three Hundred and Seventy Six Million, Eighty Three Thousand, Seven Hundred and Eighty Nine Naira, Seventy Two Kobo) were without adequate supporting documents.” Recommendations The panel however recommended that “the Management of the Fund should, without further delay, conclude the External Auditors’ Reports for the period 2011 to 2015.
Furthermore, External Auditors should be appointed with immediate effect to audit the accounts of 2016 and 2017 financial years, as audited accounts for 2017 financial year ought to have been submitted on 30th May, 2018 in accordance with the Financial Regulations.
“The Fund should carry out full reconciliation of assets acquired and recorded in the cashbooks against the Fixed Assets Register.
Schedules to the Fixed Assets should be updated to correspond with fixed assets balances in the general ledger.
Henceforth, the Fund should endeavour to update their Fixed Assets Register and schedules as the assets are acquired.” It added that “the Fund should ensure that Accounting Operational Manual is prepared to guide in carrying out its financial activities.
In the interim (before the Accounting Operational Manual is put in place), the Fund should be guided by the relevant sections of the Financial Regulations.” The panel further recommended that “the staff’s condition of service should be reviewed, with immediate effect, to correct lapses contained therein.
There is also the need to review the investment Policy Document of the Fund.”