ICAN Index exposes 34 states’ audit standards compliance failings

Business a.m

Only three of Nigeria’s 36 states and the FCT scored an “Excellent” rating for their compliance with audit rules as of October 2023, according to the Institute of Chartered Accountants of Nigeria (ICAN) Accountability Index.

The index which aims to track the progress of states in their efforts to promote accountability and good governance  rated seven states as “Good,” while 26 states received a “Fair” rating.

The Nigerian Constitution requires states and local governments to submit audited accounts to the Auditor General after they are reviewed by the Accountant General. In 2014, the Institute of Chartered Accountants of Nigeria (ICAN) began rating the states of Nigeria based on their financial management and accountability.

Based on ICAN’s scoring system, only three states – Ekiti, Lagos, and Osun – achieved the highest rating of “Excellent.” Ogun, Kaduna, Edo, Delta, Kwara, Rivers, and Anambra states scored “Good.”

States with a “fair ” ranking are Abia, Adamawa, Bauchi, Bayelsa, Benue, Borno, and Cross River. Ebonyi, Gombe, Imo, Jigawa, Kano, Katsina and Kebbi are others. Also on the list are Kogi, Nassarawa, Niger, Plateau, Sokoto, Taraba, Yobe and Zamfara.

The ICAN assessment of state audits evaluates compliance with audit rules and regulations, as well as the quality and timeliness of audit reports, resulting in a rating of Excellent, Good, Fair, or Poor for each state.

Innocent Okwuosa, the 59th president of ICAN, said that the state rankings show a general trend of improved compliance with the constitutional requirement to audit state and LG accounts since the ICAN Accountability Index was introduced. However, the wide variation in compliance among states points to the need for further work to ensure consistent compliance and strengthen accountability practices across all states in Nigeria.

A “Fair” ranking indicates that the state government has some level of compliance with audit rules but may submit reports late, with limited quality. They may also fail to implement all audit recommendations.

The ICAN Accountability Index’s criteria include timeliness of reports, quality of audit reports, and implementation of audit reports. Assessing the quality of audit reports considers three factors:

–  The extent to which audit reports comply with relevant accounting and auditing standards.

–  Whether the reports are comprehensive and informative.

–  Whether the reports contain findings or recommendations.

The “implementation of audit recommendations” criterion measures the degree to which state governments follow through on recommendations made by auditors. This is a crucial indicator of a state’s commitment to improving accountability and transparency.

Other marks on the rating are:

Excellent: State government has high compliance with audit rules. Audit reports are timely, high-quality, and have effective recommendations.

Good: State government has good compliance with audit rules. Audit reports are generally timely and of good quality, with recommendations.

Poor: State government has poor compliance with audit rules. Audit reports may be late or missing. Audit reports may have poor quality and few or no recommendations.

The ICAN Accountability Index encourages states to comply with audit reporting requirements stipulated in the 1999 Nigerian constitution.

In addition to the Accountability Index, ICAN also produces a Performance by States ranking that assesses the overall performance of state governments in terms of economic growth, education, healthcare, and infrastructure. The ranking uses data from organisations such as the World Bank, the Mo Ibrahim Foundation, and the Centre for the Study of the Economies of Africa to produce a ranking of states from best to worst.

Ismaila M. Zakari, a former ICAN president and managing partner of Ahmed Zakari & Co, emphasised the importance of the Accountability Index at a workshop on effective public financial management systems in Lagos on 25-26 October 2023. Zakari stressed the connection between democracy and good governance, stating that accountability is key to ensuring good governance. He stated that audit reports are an important step in promoting accountability.

The audit reporting training featured presentations by Tilewa Adebayo, CEO of The CFG Advisory, and  Onawunmi Omobolanle, partner at Deloitte Consulting.

Emeka Izeze, director and partner at FrontFoot Media Initiative, explained that the purpose of the audit reporting training is to build media capacity and encourage accountability among state and local government officials. The training has been held in Benin, Awka, Abuja, and Lagos.