Audit-Report-on-NNPC

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Investigative Forensic audit of crude oil revenues and remittances by NNPC (January 2012 – July 2013) 4.1.5. Summary of findings Summary of findings 70 60 50 40 30 20 10 0 $69.34 bn Value $2.34 bn $67 bn Increase Reconciliation Committee Section Adjustm ent ($bn) 4.1.4.3 1.00 4.1.4.3 0.82 4.1.4.3 0.43 4.1.4.3 0.29 4.1.4.3 0.22 4.1.4.3 (0.42) T otal 2.34 Vanguardngr Confidential information for the sole benefit and use of the <strong>Audit</strong>or-General for the Federation. PwC 50
Investigative Forensic audit of crude oil revenues and remittances by NNPC (January 2012 – July 2013) 4.1.6. Other findings 4.1.6.1. Data collation and single point accountability The data gathered by the various Agencies and sub-units are kept within the custody of the respective Agencies/SBUs. There is no single reliable data repository that can provide a holistic overview of the crude oil sales process from end to end. As such, variances in the records which would flag issues may be missed. Also, the opportunity to take informed decisions based on robust underlying data is limited. We observed that the same data obtained from different sources contained discrepancies which had not been reconciled as at the time of this review. An example would be the details of all crude oil cargoes lifted; information from the DPR, Pre-shipment Inspection Agencies and the NNPC COMD had not been reconciled as at the time of review. More so, the various Agencies and sub-units administering the crude oil sales process work in silos and there is no single point accountability. This is characterized by record duplications, reconciling items, opacity regarding the activities of certain Agencies/SBUs and inefficiencies. Reconciliation was particularly challenging as we needed an independent source to verify the lifting records provided by COMD. The data obtained from DPR and the PIAs were incomplete, duplicated or difficult to interpret. The reports generated by the Agencies/SBUs have different formats and classifications which creates difficulties in comparison of similar data sets from different Agencies/SBUs. For example, the export data as captured by the PIAs and DPR does not break down the crude oil exports per category like Tax Oil, Royalty oil, Export crude etc. 4.1.6.2. NNPC business model The current NNPC business model in relation to the usage of the domestic crude is inadequate as can be seen from the foregoing. The business model that informed the creation of NNPC is a subsidy minded model. This model is responsible for several of the weaknesses and lapses that have already been outlined and the net effect is an erosion of value to the Federation. Furthermore, the accounting and reconciliation system for crude oil revenues used by all Government agencies appears to be inaccurate and weak. We noted significant discrepancies in data from different sources. The lack of independent audit and reconciliation led to over reliance on data produced from NNPC which may not necessarily be accurate. This matter is further compounded by the lack of independence within NNPC as the business has conflicting interests of being a stand-alone selffunding entity and also the main source of revenue to the Federation account. Vanguardngr Confidential information for the sole benefit and use of the <strong>Audit</strong>or-General for the Federation. PwC 51
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