Osun Auditor-General: Recommends MDA Funding Stoppage for Non-Compliance

• The Osun State Auditor-General, Kolapo Idris, recommended stopping overhead funding for ministries failing to render proper accounts, as detailed in the 2025 audit report.
• The report identified issues including internal auditor negligence, improper accounting documents, fictitious expenditures, and abuse of approval processes.
• Recommendations include training for financial staff, strict adherence to accounting standards, and strengthening the Accountant-General's Inspectorate and Management Services Department.
• Idris called for an aggressive revenue drive targeting the informal sector, citing motor park operators who retain 100% of revenue despite a 70/30 split mandated by law.
• The 2025 financial report showed total revenue inflow at N363.6 billion and total expenditure at N385.7 billion, with a closing balance of N38.1 billion.

The Osun Auditor-General recommends MDA funding stoppage as a direct consequence for non-compliance, aiming to enforce stricter adherence to financial regulations and proper accounting practices across all government entities.

The Osun State Auditor-General, Kolapo Idris, has put forward a significant recommendation: the immediate cessation of overhead funding for ministries that fail to provide adequate financial accounts. This pivotal recommendation is detailed within the comprehensive Osun audit report on the state government's financial activities for the year concluding December 31, 2025.

The report, unveiled at an audit forum held in Osogbo on Monday, brought together a diverse group of stakeholders, including leaders from various Ministries, Departments, and Agencies (MDAs), representatives from civil society organizations, and professional bodies. During the presentation, Idris underscored that the audit queries and observations documented in the report stemmed directly from identified audit issues across both ministerial and non-ministerial accounts, emphasizing the critical need for improved Osun State financial accountability.

This move signals a heightened focus on fiscal discipline and transparency within the state's public sector. The Osun Auditor-General recommends MDA funding stoppage as a direct consequence for non-compliance, aiming to enforce stricter adherence to financial regulations and proper accounting practices across all government entities.

A closer examination of the audit findings revealed several critical deficiencies in financial management and internal controls. Among the issues highlighted were instances of negligence by certain internal auditors, the absence or improper preparation of essential accounting documents, the recording of fictitious expenditures, inaccuracies in the computation of statutory deductions, and widespread abuse of established approval and payment processes. These findings point to systemic Osun State internal audit issues that require urgent attention.

To mitigate these challenges and bolster service delivery, the Auditor-General proposed targeted training initiatives for accountants, account officers, and internal auditors. Furthermore, the report specifically recommended a direct halt to the release of overhead funds for ministries demonstrating a lack of proper accountability. It also called for unwavering adherence to the prescribed standards governing the preparation of accounting books and records, alongside a strategic strengthening of the Inspectorate and Management Services Department within the Accountant-General's office to enhance its overall efficiency and effectiveness in overseeing Osun State MDA overhead controls.

Beyond the immediate concerns of expenditure control, the Auditor-General also addressed the state's revenue generation efforts. While acknowledging a notable increase in revenue derived from the Federation Account, Idris advocated for a more assertive and comprehensive revenue drive, particularly targeting the vast informal sector. This strategy aims to significantly bolster the state's financial foundation by expanding the tax base.

Idris highlighted the substantial untapped potential within thousands of informal sector entities that currently remain outside the formal revenue collection framework. He provided a specific example concerning motor parks across the state: despite legal provisions stipulating that 70% of accrued revenue should go to the government and 30% to operators, these operators consistently retain 100% of the funds. The state government, which is responsible for printing receipts and providing essential amenities like security, toilets, and lighting to ensure habitability, is currently deprived of its rightful share. The Auditor-General urged all stakeholders to collaborate actively in generating more robust Osun IGR informal sector revenue.

The Osun State 2025 financial report provided a detailed overview of the state's fiscal position. Total revenue inflow for the year, encompassing receipts from the Federation Account Allocation Committee (FAAC), Value Added Tax (VAT), Internally Generated Revenue (IGR), capital receipts, and funds from development partners, amounted to N363,628,291,927.66. Conversely, total expenditure, which included personnel, overhead, other recurrent, and capital expenses, reached N385,682,554,674.77.

The report further indicated that Osun State commenced 2025 with an opening balance of N60,205,607,471.63, concluding the year with a closing balance of N38,151,344,724.52. This financial context is complemented by previous reports indicating a significant surge in Osun's Internally Generated Revenue, which more than doubled in 2024 to N54.7 billion from N25.3 billion in 2023. Despite the identified challenges, Idris acknowledged that Osun State has historically demonstrated commendable adherence to necessary financial regulations and appropriation laws over the years, setting a positive precedent for future compliance.

Compliance officers and lawyers advising Osun State MDAs should review internal financial controls and accounting practices to ensure strict adherence to regulations, as the Auditor-General's recommendations signal increased scrutiny and potential stoppage of overhead funding for non-compliance.

Source: Original reporting via PUNCH Online