Section 3.3: Store Administration and Auditing Procedures

Government Store Administration and Control

Government stores refer to all public property, materials, plant, and equipment purchased with public funds. The administration of stores is governed by Chapters 22 to 29 of the Financial Regulations, which outline procedures for procurement, receipt, custody, issue, and disposal of stores.

Stores are broadly classified into two categories:

1. Allocated Stores: Stores purchased for direct use of specific projects, works, or votes, and charged directly as expenditure against those votes. Once issued, their value is written off from the ledger, though custody records are maintained.
2. Unallocated Stores: Stores purchased for general stock and not immediately charged to any specific expenditure sub-head. Their cost is debited to a stores suspense account. They are only charged to expenditure heads when they are issued to using departments. Unallocated stores are subject to strict inventory controls, and their total value must not exceed the approved stock limit.

Under FR 2601, a Board of Survey must be appointed at the end of each financial year (or as needed) to examine and verify the physical stock of stores in all government departments. The Board checks for discrepancies, damage, deterioration, or surplus, and submits reports to the Treasury and the Auditor-General.

Procedure for the Reporting and Write-off of Losses

The loss of public funds, stamps, or stores is a serious matter. Chapter 31 of the Financial Regulations outlines the exact procedures that must be followed upon discovery of any loss of public funds or property.

Under FR 3101 and FR 3102, the officer who discovers a loss must immediately take the following steps:

• Immediate Notification: Verbally report to the head of the division or section, followed by a formal written report.
• Submit Treasury Form 146: Within 24 hours, the Head of Department must send a report on Treasury Form 146 to the Accounting Officer, the Accountant-General of the Federation (AGF), and the Auditor-General for the Federation (AuGF).
• Police Report: If the loss involves theft, fraud, or burglary, a formal report must be lodged with the Nigeria Police Force immediately, and a copy of the police report must be attached to Treasury Form 146.
• Setting up a Board of Inquiry: The Accounting Officer must constitute a Board of Inquiry to investigate the circumstances of the loss, determine the liability, and recommend measures to prevent a recurrence. The Board must submit its report to the Accounting Officer.

Under FR 3110, if the loss is approved for write-off, the authority is determined by the financial limit: the Accounting Officer has a limited write-off power for small losses, while larger losses must be referred to the Minister of Finance, who has the final authority to approve write-offs from public accounts.

Internal Audit Functions and Reporting Lines

To ensure continuous oversight, FR 1701 mandates that every Ministry, Extra-Ministerial Department, and Agency (MDA) must establish an Internal Audit Unit. The Internal Audit is a managerial control tool that operates as an independent appraisal function within the MDA.

The functions of the Internal Audit under FR 1702 include:

• Continuous audit of all receipts and expenditure.
• Reviewing accounting systems and internal controls for adequacy and efficiency.
• Conducting physical checks of stores and assets.
• Ensuring compliance with the Financial Regulations, Treasury Circulars, and Board of Survey recommendations.

Critical Reporting Line: In terms of hierarchy, the head of the Internal Audit unit reports directly to the Accounting Officer (Permanent Secretary) of the MDA. The Auditor must submit a monthly audit report to the Accounting Officer, with copies sent directly to the Accountant-General of the Federation and the Auditor-General for the Federation (FR 1704). This ensures that while the internal auditor helps the Accounting Officer manage the ministry, they also feed information to the external watchdogs.

Modern PFM Reforms: IPPIS and GIFMIS

In recent years, the Federal Government has introduced modern Public Financial Management (PFM) reforms to automate procedures and enhance fiscal discipline. The two most prominent reforms are:

1. Integrated Personnel and Payroll Information System (IPPIS): IPPIS is a centralized IT platform managed by the Office of the Accountant-General of the Federation. It maintains a database of all federal public servants, calculates salaries, pays taxes and pensions, and pays staff directly into their bank accounts. IPPIS has eliminated "ghost workers," controlled personnel costs, and ensured that employees cannot draw multiple salaries from different MDAs.
2. Government Integrated Financial Management Information System (GIFMIS): GIFMIS is an IT-based budget execution and accounting system. It connects all federal MDAs to a single centralized system for budget preparation, execution (warrant release), procurement, payment processing (linked to TSA), and financial reporting. GIFMIS ensures that an MDA cannot spend money unless it has an approved budget, has received a warrant, and has available funds, thereby stopping over-spending and unapproved commitments.