2004年-世界发展银行全球_Nigeria_-_State_of_Lagos___State_Financial_Accountability_Assessment_79页_407kb

Nigeria: Lagos State Financial Accountability Assessment Summary

Core Content

The State Financial Accountability Assessment (SFAA) for Lagos State, conducted in April 2003, evaluates the financial management systems and accountability mechanisms of the state. It is part of the World Bank's broader efforts to support financial accountability in federal systems, particularly in states where the Bank engages in development projects.

Main Report Highlights

Chapter I: Background

• Lagos State Overview:
  • Occupies 3,577 square kilometers of coastal wetland in southern Nigeria.
  • The largest and most concentrated urban area in Nigeria.
  • Center of financial services, industrial output, and trade.
  • Population growth has led to challenges in infrastructure and social services.
• World Bank Lending:
  • The Bank has a strategic interest in Lagos due to its role in revitalizing the Nigerian private sector.
• Relationship to CFAA:
  • The SFAA is similar to the Country Financial Accountability Assessment (CFAA), but focuses on state-level financial management.
  • The assessment was conducted in accordance with CFAA guidelines and in collaboration with a State Procurement Assessment Report (SPAR).

Chapter II: Public Finance Framework

• Overview of Fiscal Arrangements:
  • The state has a budgeting, internal control, accounting, and auditing framework in place.
• Legal Framework:
  • Includes the Financial Control and Management Law (1973), Audit Law (1968), and Federal Financial Regulations (1976).
  • These laws are outdated and not intended for state financial management.
• Institutional Relationships:
  • The Ministry of Finance and the Office of the Auditor-General (OAG) play key roles.
• Financial Management Staffing:
  • Staffing levels are generally adequate, but professional qualifications vary.
• Recommendations:
  • Enact modern financial management laws and regulations.
  • Establish a financial management reform steering committee.

Chapter III: Revenue and Debt Management

• Revenue Management:
  • Revenue collection is managed by a contractor, which increases revenue flow but at a high cost.
  • Approximately 15% of internally generated revenue (IGR) is paid as fees to consultants.
  • There is no formal plan to transfer skills and responsibilities to in-house revenue staff.
• Debt Management:
  • The state borrows primarily for capital projects.
  • Borrowing limits are not formally defined and cannot be tested against historical records.
  • Debt management is manual and inadequate.
• Recommendations:
  • Review revenue management arrangements for cost-effectiveness and sustainability.
  • Develop and implement debt management policies and an information system.

Chapter IV: Expenditure Management

• Budget Preparation:
  • The budget calendar leaves insufficient time for the House of Assembly to review and approve the budget.
  • Budgets are not realistic, with significant discrepancies between planned and actual expenditures.
• Budget Execution and Control:
  • Budgetary control systems are weak and often ineffective.
  • Excess expenditures occur without censure.
• Personnel Cost Controls:
  • There is a lack of strict control over personnel costs.
• Overhead Controls:
  • Overhead costs are not adequately controlled.
• Capital Expenditure Controls:
  • Capital expenditure is not effectively managed.
• Recommendations:
  • Implement a more realistic budget preparation calendar.
  • Introduce a Medium Term Expenditure Framework (MTEF).
  • Enforce budgetary controls with appropriate rewards and penalties.

Chapter V: Treasury Operations, Accounting, and Reporting

• Treasury Operations:
  • The state has a complex cash management system with many bank accounts.
  • No single Treasury account exists, complicating integration of debt and cash management.
• Accounting Systems and Procedures:
  • The accounting system is outdated and inefficient.
  • Financial statements contain unexplained historical figures and lack clarity.
• Financial Reporting:
  • Financial reports are not well adapted to the needs of readers.
  • The system does not provide reliable information on budget execution.
• Records Management:
  • Many procedures are lacking, and access to past records is difficult.
• Recommendations:
  • Improve internal control and internal audit.
  • Strengthen external audit arrangements.
  • Ensure compliance with financial reporting guidelines and accounting standards.

Chapter VI: Audit, Public Accountability, and Fiscal Transparency

• Internal Audit and Control:
  • Internal audit is focused on prepayment processes and lacks attention to risk management and governance.
  • Staff are not adequately trained, and independence is lacking.
• External Audit:
  • Audit reports are often delayed, with some being over five years old.
  • The Office of the Auditor-General (AudGen) is under-funded and under-staffed.
• Parliamentary Oversight:
  • The Public Accounts Committee (PAC) lacks technical support and effectiveness.
  • There is no formal mechanism to track the implementation of its recommendations.
• Fiscal Transparency:
  • Fiscal information is not released in a timely manner.
  • No comprehensive list of key fiscal documents is published.
• Recommendations:
  • Strengthen parliamentary oversight.
  • Improve the capacity of the Office of the Auditor-General.
  • Enhance fiscal transparency by publishing key documents and ensuring clarity.

Chapter VII: Parastatals

• Governance Model:
  • Governance of parastatals is weak, with no effective boards and high government intervention.
• Budgets:
  • Parastatals are not adequately monitored or held accountable.
• Accounting and Financial Reporting:
  • Financial performance is not transparent.
• Recommendations:
  • Improve governance and performance monitoring of parastatals.
  • Subject parastatals to uniform requirements and ensure transparency.

Chapter VIII: Local Governments

• Legal Framework:
  • Local governments lack a robust legal framework for financial management.
• Governance:
  • Poor governance and internal controls.
• Budgeting:
  • Budgeting is not realistic and lacks effective control.
• Financial Control and Budget Monitoring:
  • Weak financial control and monitoring.
• Accounting:
  • Inadequate accounting systems and procedures.
• External Audit:
  • External audit arrangements are weak and delayed.
• Recommendations:
  • Review financial memoranda (Fmemo).
  • Ensure transparency in financial transfers to local governments.

Chapter IX: Risk Assessment

• Risk Summary:
  • High risks of misuse of funds, waste, and inaccurate financial records.
  • Weak internal and external controls.
  • Poor fiscal transparency.
• Recommendations:
  • Strengthen public financial management arrangements.
  • Ensure continued funding and political support for the Global Computerization Project.
  • Improve governance and performance monitoring of parastatals.
  • Enhance financial management in local governments.

Key Information and Recommendations

Key Issues

• Weak Financial Accountability: Significant risks of misuse, waste, and inaccurate financial records.
• Outdated Legal Framework: Financial laws and regulations are not current and do not provide adequate guidance.
• Inefficient Budgeting and Execution: Budgets are unrealistic, and execution is delayed.
• Poor Cash Management: Many bank accounts and no single Treasury account.
• Inadequate Internal and External Audit: Internal auditors lack independence and skills; external audit reports are delayed.
• Weak Governance of Parastatals: No effective boards and high government intervention.
• Ineffective Parliamentary Oversight: Lack of technical support and follow-up on recommendations.

Recommendations

• Reform Implementation Arrangements: Establish a financial management reform steering committee.
• Legal Framework: Enact modern financial management laws and regulations.
• Budgeting: Improve the budget calendar and introduce MTEF.
• Budgetary Control: Enforce budgetary procedures with appropriate incentives.
• Debt Management: Create and implement debt management policies.
• Financial Reporting: Comply with accounting standards and transparency criteria.
• Internal Control: Improve internal audit and control mechanisms.
• External Audit: Strengthen the independence and capacity of the Office of the Auditor-General.
• Parliamentary Oversight: Enhance the effectiveness of the Public Accounts Committee.
• Global Computerization Project: Ensure continued funding and political support.
• Management of SOEs: Improve governance and performance monitoring of state-owned enterprises.
• Local Governments Financial Management: Review financial memoranda and ensure transparency in financial transfers.

Conclusion

The Lagos State Financial Accountability Assessment identifies significant weaknesses in the state's financial management systems, particularly in budgeting, revenue collection, debt management, and internal/external audit. Despite some progress, such as the procurement of an Oracle-based financial management system, the state still faces high risks of financial mismanagement and lack of transparency. The report recommends a range of actions to strengthen financial accountability and improve public financial management.