THE forensic audit conducted by Price WaterhouseCoopers, PWC, on NNPC to ascertain the veracity of the alleged missing $20 billion from the Federation account is generating furore and counter claims among stakeholders. PWC had qualified the audit saying it did not obtain needed information from NPDC a subsidiary of NNPC.
The qualification of the audit report has cast doubt on the reliability of the report. A source who has a working knowledge of the audit report at PriceWaterhouse told Vanguard that what the auditors did was a review and not a forensic audit. He said “It is not an auditing job.
It is a review of what has happened and you are expected to present a report. The qualification in the audit report is a normal qualification. When you are given a job there are procedures for doing the job based on agreement with the client.
So you want to put a caveat so that others would not use it or rely on it for decision making. It is also to protect the company from any legal action that may arise from the job.”
President Institute of Chartered Accountants of Nigeria, ICAN, Mr. Chidi Onyeukwu Ajaegbu (FCA) told Vanguard that an account is qualified when the auditors do not agree with the auditee on some issues. He said there are two levels of qualifying an account: modification and actual qualification.
He said the qualification could be expressed on strong terms or mild terms, adding that a qualified account calls for further instigation. Ajaegbu said the NNPC case is that of material qualification where a unit being audited did not provide the needed material substance.
He said the reason given by PWC was enough to qualify the account, adding that auditors qualify accounts to shield themselves from blame by potential users of the account when they discovered some misstatement or representation in the account.
PricewaterhouseCoopers in their introductory letter addressed to Nigeria’s Auditor General, said findings in its 199-page report were limited to available information and did not constitute a review in accordance with generally accepted standards.
The report said “The procedures we performed did not constitute an examination or a review in accordance with generally accepted auditing standards or attestation standards.
“Accordingly, we provide no opinion, attestation or other form of assurance with respect to our work or the information upon which our work was based”. PWC said that the report “was solely for the Office of the Auditor-General for the Federation, for their internal use and benefit and not intended to, nor be relied upon, by any other third party.”
The firm concluded that the NNPC should refund to the government a minimum of $1.48 billion of missing oil funds, a figure many Nigerians believe is smaller than the likely actual figure. The report did not give strong and independent opinion of its findings despite saying the investigation was carried out using forensic techniques.
mation in order to attract investors, obtain loans, and improve public appearance. Some have even stated that financial information without an auditor’s report is “essentially worthless” for investing purposes It said that auditor’s reports on financial statements are neither evaluations nor any other similar determination used to evaluate entities in order to make a decision.
The report is only an opinion on whether the information presented is correct and free from material misstatements, whereas all other determinations are left for the user to decide.
According to the President of the Institute of Chartered Accountants of Nigeria Chidi Onyeukwu Ajaegbu a qualified opinion report is issued when the auditor encountered one of the two types of situations which do not comply with generally accepted accounting principle. The two types of situations which would cause an auditor to issue this opinion include
Single deviation from GAAP – this type of qualification occurs when one or more areas of the financial statements do not conform to GAAP (e.g. are misstated), but do not affect the rest of the financial statements from being fairly presented when taken as a whole.
Limitation of scope – this type of qualification occurs when the auditor could not audit one or more areas of the financial statements, and although they could not be verified, the rest of the financial statements were audited and they conform to GAAP.
is modified accordingly and an explanatory paragraph is added to explain the reason for the adverse opinion after the scope paragraph but before the opinion paragraph.
However, the most significant change in the adverse report from the qualified report is in the opinion paragraph, where the auditor clearly states that the financial statements are not in accordance with GAAP, which means that they, as a whole, are unreliable, inaccurate, and do not present a fair view of the auditee’s position and operations.