The Auditor-General of the Federation has uncovered N118.75 million in undocumented spending by the Corporate Affairs Commission (CAC) in 2022, raising questions about the agency’s internal controls and the integrity of public finance management.
CAC tried to justify the splurge, saying much of the money was paid to federal lawmakers for their oversight visits to the commission’s offices nationwide that year. But the auditor-general rejected the explanation, declaring that the lack of documentation for the spending amounted to a violation of Nigeria’s financial regulations.
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The findings, contained in an 808-page audit report of the Auditor-General of the Federation, covering January to December 2022, show systemic breaches of financial regulations, weak accountability mechanisms, and unexplained expenditures pushed through under controversial circumstances.
The report was submitted to the National Assembly in September as required by law.
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No documentation for N118.75 million spending
According to the audit, sampled payment vouchers totalling N118,752,826 were processed by CAC with no supporting invoices, local purchase orders, memos, or any of the documentation required by the Financial Regulations (2009).
The agency noted that CAC breached the Financial Regulations (FR) 2009 in paragraph 603(i), which requires full documentation for every payment, with details sufficient for independent verification.
Additionally, paragraph 415 cautions that government funds should not be spent simply because they are budgeted.
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“The federal government requires all officers responsible for expenditure to exercise due economy. Money must not be spent merely because it has been voted,” the regulation, quoted in the report, reads.
The auditor-general found that CAC processed payments without fulfilling these basic requirements.
The report explained that such omissions open the door to two major risks of diversion of public funds and payment for services never rendered.
‘We paid National Assembly members’
According to the report, the CAC did not dispute the undocumented spending. Instead, it attributed a “considerable portion” of the payments to requests from National Assembly committees for oversight visits to CAC offices nationwide.
CAC said it merely responded to lawmakers’ demands and claimed that the reports from these visits were not handed over to it because they were meant for National Assembly use.
This revelation sheds light on a longstanding but rarely documented practice in Abuja: ministries and agencies funding the oversight activities of the lawmakers meant to scrutinise them. Anti-corruption experts warn that the practice weakens legislative independence and fuels conflicts of interest that compromise accountability.
The audit acknowledged the CAC’s response but concluded that it was not satisfactory. Consequently, the findings remain valid until the commission fully implements all recommended corrective actions.
Recommendations
The auditor-general advised that CAC’s registrar-General should appear before the Public Accounts Committees of the National Assembly to account for the N118,75 million paid without adequate supporting documents.
It mandated the commission to recover the entire amount and remit it to the treasury, and thereafter forward evidence of the remittance to the Public Accounts Committees.
However, it said that should the CAC fail to comply, the sanctions for irregular payments outlined in Paragraph 3106 of the Financial Regulations (2009) are to be enforced.
Paragraph 3106 of the regulations prescribes that a public officer who makes an irregular payment from public Irregular or funds, “shall be given 21 days notice to offer an explanation.” It adds that where no satisfactory explanation is given, “the amount involved shall be recovered from the officer and such officer shall be removed from the schedule.”
Other findings: Six CAC vehicles unaccounted for amid supervising ministry interference.
The auditor-general’s report revealed that six official vehicles belonging to the CAC were found in the custody of the supervising ministry – the Federal Ministry of Industry, Trade and Investment (FMITI).
The report noted that five of these vehicles were reportedly in the personal use of the minister, while one was traced to the Special Assistant to the Permanent Secretary. Adeniyi Adebayo was the minister in 2022, the year under review in the report.
The report said no official documentation existed to justify the transfer or use of the vehicles, suggesting that FMITI may have leveraged its supervisory powers to appropriate the assets without due process.
It explained that the act contravened multiple federal directives. Paragraph 2001 of the 2009 Financial Regulations (FR) mandates that accounting officers ensure effective controls over government vehicles, while paragraph 112(i) requires them to safeguard and maintain all government assets under their care.
Also, the Establishment Circular Ref. No. SGF.19/S.52/V/720 (2017) reinforces that retiring officers must return all government property, and Circular Ref. No. SGF.6/VIII (2008) explicitly prohibits ministries from requesting or accepting vehicles or financial support from the agencies they supervise.
Despite these clear rules, FMITI’s actions appear to have disregarded statutory obligations, raising serious questions about ministerial overreach and institutional autonomy.
Audit analysis linked these anomalies to weaknesses in CAC’s internal control system. The risks identified include potential diversion of public property and undue ministerial interference, both of which compromise transparency and accountability within the agency.
In response, CAC management claimed that the six vehicles were deployed temporarily to FMITI as “project vehicles.”
However, the auditor-general found this explanation unsatisfactory, noting that the commission provided no supporting documentation or approval records to validate the arrangement.
Consequently, the findings remain valid until CAC fully implements corrective measures.
The audit recommends that the registrar-general of CAC account to the Public Accounts Committees of the National Assembly for the vehicles’ whereabouts, justify why the ministry’s activities—already covered by its own budget—were financed through CAC resources, and recover the six vehicles to the Commission.
It said evidence of the recovery must be forwarded to the committees, and failure to comply should trigger the sanctions specified under Paragraph 3106 of the Financial Regulations for irregular payments and ministerial interference.
Engagement of external solicitors approval
The report identified that the CAC paid N123.94 million (N123,941,739.14) in legal fees to external solicitors for representation in various court cases, without obtaining the mandatory prior approval of the Attorney-General of the Federation.
The report said, according to Establishment Circular Ref. No. SGF/PS/CIR/625/1 (16 July 2003), any engagement of external legal practitioners by ministries or agencies must be cleared by the attorney-general, with all claims for professional fees accompanied by a letter of instruction, a comprehensive report on services rendered, and relevant court process documents.
The audit observed that no such documentation or approval was provided for these payments.
The anomalies were attributed to weaknesses in CAC’s internal control system by the report. It noted that the risks identified include the potential engagement of unqualified or inexperienced solicitors, overpayment for legal services, and outright loss of public funds.
But CAC management defended the expenditure, citing the Companies and Allied Matters Act (CAMA) 2020, which empowers the Registrar-General as the accounting officer responsible for controlling and disbursing all funds of the Commission.
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The agency also referenced provisions of the Financial Regulations and Public Service Rules allowing statutory bodies to develop their own operational policies in the absence of internal rules.
The CAC argued that, under these statutes, the engagement of solicitors without attorney-general approval was permissible.
The auditor-general, however, deemed the response unsatisfactory. It stated that its findings remain valid until CAC implements corrective measures.
The audit directs CAC’s registrar-general to account to the Public Accounts Committees of the National Assembly for the N123.94 million spent on external solicitors, recover and remit the funds to the treasury, and provide evidence of such remittance to the Committees.
It further said failure to comply would trigger sanctions for irregular payments as prescribed under Paragraph 3106 of the Financial Regulations (2009).
A bigger picture of systemic breakdown
Taken together, the audit findings suggest an institution battling internal administrative decay at a time when it is expected to uphold corporate governance standards nationally. The involvement of its supervising ministry in the disappearance of vehicles adds political complexity and indicates that the weaknesses may extend beyond CAC’s internal management.
If a regulatory agency cannot maintain control over its assets, spending, or procurement processes, its ability to enforce corporate compliance becomes questionable. And if a supervising ministry can informally seize vehicles from its agency, it raises uncomfortable questions about how widespread such practices may be in Nigeria’s public sector.
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