Audit-Report-on-NNPC
Audit-Report-on-NNPC
Audit-Report-on-NNPC
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Investigative Forensic audit of crude oil revenues and remittances by <strong>NNPC</strong> (January 2012 – July 2013)<br />
4.1.6. Other findings<br />
4.1.6.1. Data collati<strong>on</strong> and single point accountability<br />
The data gathered by the various Agencies and sub-units are kept within the custody of the respective<br />
Agencies/SBUs. There is no single reliable data repository that can provide a holistic overview of the<br />
crude oil sales process from end to end. As such, variances in the records which would flag issues may<br />
be missed. Also, the opportunity to take informed decisi<strong>on</strong>s based <strong>on</strong> robust underlying data is<br />
limited.<br />
We observed that the same data obtained from different sources c<strong>on</strong>tained discrepancies which had<br />
not been rec<strong>on</strong>ciled as at the time of this review. An example would be the details of all crude oil<br />
cargoes lifted; informati<strong>on</strong> from the DPR, Pre-shipment Inspecti<strong>on</strong> Agencies and the <strong>NNPC</strong> COMD<br />
had not been rec<strong>on</strong>ciled as at the time of review.<br />
More so, the various Agencies and sub-units administering the crude oil sales process work in silos<br />
and there is no single point accountability. This is characterized by record duplicati<strong>on</strong>s, rec<strong>on</strong>ciling<br />
items, opacity regarding the activities of certain Agencies/SBUs and inefficiencies.<br />
Rec<strong>on</strong>ciliati<strong>on</strong> was particularly challenging as we needed an independent source to verify the lifting<br />
records provided by COMD. The data obtained from DPR and the PIAs were incomplete, duplicated<br />
or difficult to interpret.<br />
The reports generated by the Agencies/SBUs have different formats and classificati<strong>on</strong>s which creates<br />
difficulties in comparis<strong>on</strong> of similar data sets from different Agencies/SBUs. For example, the export<br />
data as captured by the PIAs and DPR does not break down the crude oil exports per category like Tax<br />
Oil, Royalty oil, Export crude etc.<br />
4.1.6.2. <strong>NNPC</strong> business model<br />
The current <strong>NNPC</strong> business model in relati<strong>on</strong> to the usage of the domestic crude is inadequate as can<br />
be seen from the foregoing. The business model that informed the creati<strong>on</strong> of <strong>NNPC</strong> is a subsidy<br />
minded model. This model is resp<strong>on</strong>sible for several of the weaknesses and lapses that have already<br />
been outlined and the net effect is an erosi<strong>on</strong> of value to the Federati<strong>on</strong>.<br />
Furthermore, the accounting and rec<strong>on</strong>ciliati<strong>on</strong> system for crude oil revenues used by all Government<br />
agencies appears to be inaccurate and weak. We noted significant discrepancies in data from different<br />
sources. The lack of independent audit and rec<strong>on</strong>ciliati<strong>on</strong> led to over reliance <strong>on</strong> data produced from<br />
<strong>NNPC</strong> which may not necessarily be accurate. This matter is further compounded by the lack of<br />
independence within <strong>NNPC</strong> as the business has c<strong>on</strong>flicting interests of being a stand-al<strong>on</strong>e selffunding<br />
entity and also the main source of revenue to the Federati<strong>on</strong> account.<br />
Vanguardngr<br />
C<strong>on</strong>fidential informati<strong>on</strong> for the sole benefit and use of the <str<strong>on</strong>g>Audit</str<strong>on</strong>g>or-General for the Federati<strong>on</strong>.<br />
PwC 51