Another Perspective Of NNPC’s Audited Reports




NNPC releases 2020 audited financial statements – The Sun Nigeria



The NNPC has released its audited reports to the public. It did so by publishing the details on the company’s website. The process is not new nor should it attract attention but because the act was done by the NNPC, it is attracting loads of attention. For starters it is the first time in her more than half a century of existence that such a thing would happen on the website.  However it should be understood that NNPC is not the only public organization that has such a history with the audit routine neither are the private businesses immune to it. In point of fact the western world does have their share of tales. Those old enough would remember the saga of the Eron Corporation and the consequent demise of Authur Anderson. So one begins to wonder, what is it really complicated about the auditing?

We are made to understand that the word “AUDIT” has Latin roots. It was derived from the word audire, which means listening. The thinking here is that it is used as a synonym for words liketo control, check, inspect, revise, etc. In those early days, auditing existed principally as a method to maintain corporate governance with record-keeping as its backbone.

It is a fact of history that the ancient Egyptians, Greeks, and Romans all had the culture of auditing the accounts of public institutions. At the time, checking clerks were appointed to check the public accounts, to locate frauds as well as to find out whether the receipts and payments are properly recorded by the person(s) responsible. Those were the functions of the auditing at the time.

The only thing that is constant is change and so in the course of time, some changes were noticed. Notable among which were the developments at the advent of the Industrial Revolution (circa 1750 to 1850). It was then that auditing grew its teeth and began its evolution into the field of fraud detection and financial accountability. As we all know, businesses expanded during this period and brought in large scale production, steam power, improved facilities and better means of communication. So it’s easy to imply that proper accounting helped to develop big businesses and organizations.

What’s more, as interests of owners of businesses diversified, management was hired to operate businesses in the owners’ absences. In the wake of these major changes in business, we discovered that the shareholders who may have invested their money were naturally interested in knowing the financial position of the company. Keeping in view that these shareholders may be discrete individuals, groups of persons or the people (as a rewording for the commonwealth). This is the case of government institutions like the NNPC.

So the stakeholders found an increasing need to monitor the managers’ financial activities both for accuracy and fraud prevention. Talk about practical issues! In the passage of time, they realized that there was wisdom in getting an independent person who would check the accounts and report to the shareholders on the accuracy of the accounts and of course, the safety of their investment. And so it was that in the early 20th century, the reporting practice of auditors, which involved submitting reports of their findings, was standardized as the “Independent Auditor’s Report.” It is this report that NNPC published on their website.

This is the third consecutive published annual audit by the NNPC group but the first to be posted on the website. You will recall that the current set of management team for the NNPC resumed work in mid-2019 making it a reality that the public presentation of the audited works is something that had only happened during the tenure of the current executives.  One of NNPC executive in the person of Umar Ajiya was on TV to emphasize that the publishing of the accounts were consistent with their management vision of:

–          Transparency

–          Accountability &

–          Performance Excellence.

In simple terms, the nascent activities and profits of the NNPC are not incidental but resultant effects of the three mentioned principles above.  The Group Executive Director (GED) of Finance & Accounts went on to emphasize that the aforesaid factors are part of the reasons that the corporation is on the board of NEITI as well as the parent body the EITI. However is it possible that these principles of governance (or principles of corporate vision) were lost to the listening public? For analysis of the audited statements had gone into overdrive long before the audited figures themselves were released. It is important to note that its common practice among multinational companies (including the IOCs) to have a communications plan for dissemination of information ahead of major announcements including the announcements regarding financials. Typically that communication plan is anchored on the overall strategy of the company. As NNPC becomes a limited liability company and as it seeks to compete in the global energy marketplace, that is one skill that is incumbent upon her to master. It’s called the art and science of strategic communication based on key messages.

In speaking specifically to the profit figures, one of the key issues that impacted the positive results was that of the revenues that were not recognized the year before owing to International Financial Reporting protocols. As fate would have it, these figures subsequently qualified for the books in the year under review. This is about the disputed revenue of circa $1.5 billion which was duly refunded to the company after a forensic audit of their books. Talk about a wind fall! There were other factors that bode well for the profit announcements of the NNPC and such included the old fashioned financial prudence and operational excellence. In practical terms, these meant things like greater scrutiny of approvals, reduction in travels, etc. In the words of the NNPC themselves, operational excellence was founded on four key points; Cost Optimization, Renegotiation of Contracts with contractors where discounts were sought, automation of their business processes and the liquidation of joint ventures that were deemed unprofitable. One of which is the OK LNG!

What’s more, there was little or no interference from the executive arm of government. That is a euphemism for the presidency.  That means doing jobs became easier! In conclusion, the NNPC made the listening public to realize that the Nation still owes them money. They are laying claim to about 285 Billion naira from the seemingly intractable gas-to-power value chain. So if this body language is anything to go by, NNPC expects to be profitable from now henceforth. …Or are we wrong in the analysis?


Well, the answer to that is not and should not be a conjecture or an opinion. It should be based on further work from others who are stakeholders. It means that the media and civil society have to review the reports and come up with statements either to commend the NNPC or point to other infractions that have not been noticed. Whichever way, they have to do something for we are all stakeholders in these matters and it is something that’s going to be based on old fashioned hard work and thoughts from a position of knowledge.


SOWUNMI Olabode is SLA to the Senate President, Consultant to the Committee of Gas of the National Assembly, Vice- Chair of the Gas-to-Power study group of the NGA and CEO of an Energy Consultancy firm; CABTREE.

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