The Corporate Affairs Commission (CAC) risks not having budgetary allocation as the House of Representatives Committee on Finance has directed the Budget Office to suspend the budgetary process for the agency pending an investigation into its books.
The Committee reached the resolution on Tuesday at the ongoing interactive session on the Medium Term Expenditure Framework (MTEF), after the Commission failed to defend its expenditures from 2016 to 2021.
It was discovered that the Commission had been spending the revenue it has been generating since 2016.
The Committee observed that though the Registrar of the CAC, Garba Abubakar, claimed that the agency had not recruited personnel for the past three years, the salary and allowances of the agency continued to increase.
The Chairman of the committee, James Faleke (APC, Lagos), raised questions on the trajectory of the expenditure of the agency.
In 2021, the agency has so far generated N3.19 billion but already spent N5.136 billion.
“Because I took a look at salary in 2016, your salary and allowances in 2016 was N7.7 billion. In 2017, it grew to N8.1billion, and in 2018 it grew to N8.985billion and in 2019, it grew to N10.27 billion.
“Suddenly in 2020, it came down to N9.3billion and in 2021, it is growing again to N10.96 billion. In 2022, you expect that it will grow to N12.9 billion again, and in 2023 N13.7billion, while in 2024, N14 billion. Yet, you have not recruited in the past three years. I wonder what the allowances are? How often do you increase salaries?
“When you pay yourself revenue and allowances that take away our revenue that you ought to have remitted to the government, it is not acceptable. Because, if you increase your salary every year, let us know that you increased it every year.
“2021 performance… if you go back to your revenue and expenditure, comparing the two, from 2016… I want to take you back. Your revenue was N8.74billion, you spent N11.275billion, that is about N3 billion. Again, in 2017, your revenue was N10.896billion and you spent N12.6billion, in 2018, N11.2billion, you spent N12.2billion. In 2019, revenue, N12.7billion, you spent N13.790billion. In 2020, surprisingly, revenue increased to N19.163bilion, your expenditure was N13.2billion and in 2021, your estimated revenue for the year is N20.74billion, and your estimated expenditure was N19.28billion. And in the first quarter of 2021, you have generated N3.19billion and spent N5.136billion. What is the meaning of this? First-quarter, that is the report you sent to us now.
“What is happening is that this increase in expenditure will reduce your surplus, that is just the simple arithmetic. Your finance people are putting figures together so that the money you will remit to the general account that will help Nigeria will not be there,” he said.
Mr Garba explained that part of the expenses was for outstanding liabilities, like staff housing and pension.
“Most of these expenditures were settlement of outstanding liabilities, we got the assessment for the 2018 and 2019 pension towards the end of last year,” Mr Garba said.
A member of the CAC team, Ibrahim Gano, responded to the query that it was the accounting system used by the agency that was creating the perception of discrepancy.
“It seems quite strange that we have spent more than we are generating. That is really not the case. It is because of the accounting system that we are operating,” Mr Gano said.
“Liabilities that are due for a given year were recognised and duly impacted on our account. Liabilities are recognised in our balance sheet.
“So, there was no cash outlay for such transactions, liabilities were recognised for a given year. For example, in 2019, it impacted on the P and L, but the payments were actually not done, and as such, liabilities were recognised as liabilities to be paid in the following year.
“For 2021, the possible explanation is apparently because there were payments that were done upfront. For example, housing of staff, staff housing allowances, payment were actually done, but we amortised them over a period of 12 years, so it will impact on your P and L,” Mr Gano said.
A member of the Committee, Sada Soli (APC, Katsina), accused the Commission of cooking the account to make it difficult for a layman to understand.
“Are you sure that you are not cooking your books? Because when you cook your books, it is always hard for a layman to understand. That is what we are facing now. If you say that you have generated this, but you have expended this…..”
Consequently, the committee ruled that the agency should provide it with its (CAC) full expenditures from 2016-2021.
While announcing the resolution, Mr Faleke said: “What you are doing is to borrow money in advance, you are paying upfront even when the money is not there. The committee has resolved that you will have to provide us with the details of the expenditures from 2018, line by line items. In 2018, bring the file, 2019, bring the file, in line with your budget.
“You will have to submit to us by Thursday this week, unfailingly. Budget Office, you are going to be inviting CAC to your office. You do not have any agreement with them until they are done with us. We are making this clear to you. There should be no budgetary approval for them until we finish with them. If we have to close that CAC to make money for Nigeria, let us do it.”
The 10-day hearing into the revenue performance is still ongoing, as the committee seeks to find extra revenue to bridge the deficit in the 2021 budget.
The MTEF proposed by the executive has a deficit of over N5 trillion for the 2022 fiscal year.
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