Why the Federal Audit Service Bill Matters

About three weeks ago, my friend, Olusegun Elemo, and I spent an hour talking about Nigeria’s draft federal audit bill. Olusegun is the executive director of Paradigm Leadership Support Initiative (PLSI). His group is one of Nigeria's top voices on audit reforms. They have led many efforts to improve public audits and strengthen audit institutions.

Olusegun felt frustrated that Nigeria might miss another chance to update its audit law. The fight for a new audit law has been ongoing since 1999. There have been at least three attempts to pass the bill. Each time, the National Assembly approved it, but presidents Olusegun Obasanjo, Goodluck Jonathan, and Muhammadu Buhari did not sign it.

We both think the Federal Audit Service Bill needs more public attention. First, public audit is important for Nigeria’s growth and development. The Nigerian state struggles to provide for its people because it cannot account for its spending. A state that is good at spending but bad at accounting cannot change the country. Second, a good audit system is linked to government legitimacy and public trust in democracy. A recent report from Afrobarometer shows that about 70 percent of Nigerians are unhappy with how democracy is working. Strengthening audit systems can boost this trust and help the government deliver on its promises.

In 1999, Nigeria’s federal budget was around ₦305 billion. Today, it has grown to over ₦68 trillion. In less than thirty years, Nigeria has created a much larger fiscal state. The government collects more money, borrows more, runs more programs, and manages more public resources than ever before. But the accountability systems needed to turn these gains into real benefits for citizens have been neglected by past administrations.

Over the past twenty-five years, many administrations have updated Nigeria’s public financial management system. We set up the ICPC and the EFCC. We passed the Fiscal Responsibility Act and the Public Procurement Act. We introduced the Treasury Single Account, GIFMIS, and IPPIS. We improved tax collection and increased transparency in the extractive sector through NEITI. Recently, President Tinubu’s government has worked on tax reforms and economic restructuring. Yet, the federal audit system remains outdated and inconsistent, creating a dangerous gap in our laws.

There is agreement on the need for a new audit bill to replace the colonial Audit Ordinance of 1956. This law still governs public audits in Nigeria. The Constitution sets up the Auditor-General for the Federation (AuGF) and outlines its mandate and independence. But it does not explain the detailed processes, coverage, penalties, and protections needed for a good audit system. The Federal Audit Service Bill aims to fill this gap and turn constitutional principles into an effective audit system.

So, why has the audit rule, a key part of accountability, faced so many challenges in Nigeria’s elite politics?

Public audit is often misunderstood. It is not an anti-corruption agency. It does not prosecute wrongdoers. It is not just an accounting task done after money is spent. Instead, it is a key constitutional safeguard in democracy. It gives parliament and citizens independent assurance that public resources are managed according to the law. It is an essential part of the social contract in a democracy. It ensures that taxpayers get value for their money. Without a credible audit, budget appropriations can become personal allocations for private gain.

The Auditor-General’s report on the 2021 financial year raised questions about over ₦110 billion spent without lawful budget approval. It also found about ₦323.5 billion in unsupported spending that needs explanation. It does not matter if every questioned amount is fraud. When an audit report raises concerns, ministries and departments (MDAs) must explain. If they don’t, there should be penalties. This is what the Federal Audit Service Bill aims to tackle.

The situation is especially ironic for President Tinubu. He has always presented himself as an accountant and a reformer. His government has taken bold steps on reforms that previous governments avoided, like removing fuel subsidies and changing exchange rates. But every accountant knows that good public financial management relies on two key parts. First, raising public revenue. Second, ensuring that public spending is lawful and efficient. President Bola Tinubu understands this, so why is he hesitating about the Federal Audit Service Bill?

One major cost of a weak audit system is the normalisation of impunity. For years, the Auditor-General and the Public Accounts Committees have complained that many MDAs do not submit audited financial statements on time. They submit incomplete accounts, ignore audit questions, or refuse to attend parliamentary sessions to account for their allocations. Many Auditor-General reports have pointed out unsupported spending, procurement issues, unretired advances, abandoned projects, idle assets, and failures to remit public funds.

During a National Assembly workshop on audit compliance in 2021, Honourable Oluwole Oke, who chairs the House of Representatives Public Accounts Committee, revealed a shocking state of public accountability. He said that 65 federal agencies had never been audited since they were set up, and another 12 MDAs had not been audited between 1993 and 2010. Even more worrying was the decline in compliance with audit requirements. According to the Committee, 76 MDAs failed to submit audited accounts in 2011, 85 in 2012, 109 in 2013, 148 in 2014, 215 in 2015, and an astonishing 323 MDAs did not submit audited accounts in 2016. Civil society groups reviewing the report later urged the National Assembly to look into transactions worth trillions of naira. They asked a crucial question: should any MDA that has failed to submit audited accounts or ignored audit questions be eligible for new budget appropriations?

The Auditor-General’s report on the 2021 financial year raised concerns about over ₦110 billion spent without lawful budget approval. It also found approximately ₦323.5 billion in unsupported spending that needs explanation. It does not matter if every questioned amount is fraud. When an audit report raises issues, MDAs must explain. If not, there should be penalties. This is what the Federal Audit Service Bill aims to fix: turning audits from a frustrating report-writing task into a system where violations have real consequences.

Imagine a publicly listed company refusing to provide audited financial statements, ignoring its external auditors, and then asking shareholders to approve a bigger budget for the next year. No responsible board would accept that. The government should not be held to a lower standard than the private sector. Budget appropriations have become routine. Accountability is often negotiated by powerful agencies. They return year after year for more funds without explaining past allocations and ignore calls to come before legislative committees. It is a case of rewarding bad behavior with Nigeria’s resources.

This is why the Federal Audit Service Bill is so important. Its aim is to modernise an outdated legal framework, strengthen the independence of the Auditor-General, improve compliance with audit processes, and ensure that oversight does not depend solely on the goodwill of those being audited. At its core, the bill replaces the old 1956 Audit Ordinance and creates a new Federal Audit Service, a corporate body with lasting existence, guided by a Federal Audit Board that manages recruitment, promotion, discipline, and conditions for audit staff. This structure is meant to protect the AuGF from political interference and attract skilled professionals for a demanding role.

For the first time, the bill sets up a fair, transparent appointment process and clear qualifications for anyone wanting to be the Auditor-General. It adds fair-hearing protections for removal that include notice of intention to remove, reasons for removal, and a timeline for the AuGF to respond, either personally or through legal representation. This balance of independence and accountability meets global standards, like the Lima and Mexico Declarations on Supreme Audit Institutions.

Importantly, the bill expands the role and powers of the Auditor-General beyond just financial audits. It requires value-for-money and performance audits, forensic audits, audits of special funds, classified spending, donor grants and loans, disaster funds, subsidies, counterpart-funded projects, and public-private partnerships. It gives the AuGF unrestricted access to information, documents, property, and people needed to perform these duties. The power to summon and take evidence under oath, to investigate when there is evidence of wrongdoing, to surcharge unlawful spending, and to withhold pay from any official who does not respond to audit queries within 30 days is also included. These powers aim to ensure that audit findings are not ignored without consequences. The bill is both transformative and innovative.

The bill also updates how audits interact with other parts of the system. Internal auditors across federal offices and courts will need to submit regular reports to the AuGF, creating a steady flow of information instead of sporadic updates. Audit reports will have to be public documents and uploaded online after being submitted to the National Assembly. This will allow the media, civil society, and citizens to scrutinise performance and track public funds. A mandatory exit conference between the AuGF and each auditee ensures that audit findings are shared clearly and that institutions have a final chance to respond before reports are finalised.

Timeliness, a long-standing weakness of Nigeria’s audit system, is directly addressed. Accounting officers of MDAs and federal corporations must submit their financial reports and audited statements within 90 days after the financial year ends. The Accountant-General of the Federation must submit the federal financial statements by June 30 of the following year. The National Assembly now has to publish its review of the Auditor-General’s report within set timelines (120, 150 days). MDAs have specific periods, 15 days for performance audit drafts and 30 days for other reports, to respond to audit concerns. These deadlines replace open-ended delays with a system where late reporting and non-response have consequences.

Under the current system, most penalties for audit issues have been administrative and stuck in bureaucratic processes that rarely lead to serious consequences. The new bill creates clear offences and penalties that align with constitutional fair-hearing requirements. This approach ensures that repeated financial crimes and misdemeanours are no longer without cost. It seeks to end the familiar cycle of the Auditor-General submitting a report, the Public Accounts Committees holding hearings, and MDAs acting as if nothing has happened.

President Tinubu now has a chance to finish one of the most important unfinished reforms of the Fourth Republic. Signing the Federal Audit Service Bill would strengthen the last part of public finance management, reduce revenue losses, improve public spending efficiency, enhance investor confidence, and give real power to Nigeria’s anti-corruption efforts. It would align Nigeria’s audit framework with international standards, close a 70-year legal gap, and give citizens timely, accessible information about how their shared resources are managed.

If the Federal Audit Service Bill has any constitutional or administrative issues, those should be shared with the National Assembly and the Nigerian people. They should be discussed openly and fixed through amendments. The worst outcome is silence: a continued refusal to sign the bill without public reasons, while impunity grows and the fiscal state remains weak.

As Nigeria approaches the 2027 elections, there is a real risk that important reforms, including the Federal Audit Bill, may be lost to politics. What does President Tinubu want his legacy to be when people talk about audit reform: a president who watched as impunity took over, leaving Nigeria to struggle with a weak audit system, or one who stood for a real and accountable democracy?

Why will the President not sign the Federal Audit Service Bill now and finally give the Auditor-General independence, powers, and a clear role to track public money without fear or favour?