17th July, 2014
The Fiscal Responsibility Commission (FRC) on Wednesday directed the National Agency for Food and Drug Administration and Control (NAFDAC) to pay N1.4 billion it was owing the Federal Government.
Acting Chairman of the commission, Mr. Victor Muruako, gave the directive during a meeting of the commission and NAFDAC management in Abuja
He said that the debt arose from failure of the agency to remit its correct operating surplus to the government for 2007, 2008 and 2009 and from some discrepancies in its audited accounts for the years.
He explained that the agency remitted incorrect figures during the period and directed it to pay the money into the Federation Account.
“Based on the Financial Statements submitted to us, NAFDAC was to remit N491 million in 2007, N857 million in 2008, and N607.6 million in 2009 as operating surplus.
“However, your record has shown that you only remitted N64 million in 2007, N93.5 million in 2008 and N105 million in 2009.
“In total, NAFDAC was to pay a surplus of N1.9 billion but instead it paid N516 million. This shows an outstanding balance of N1.4 billion,” he said.
Muruako also said that the FRC was dissatisfied with some expenses incurred by NAFDAC, stating that the expenses were high.
“There are some unusual increases in the cost of maintenance declared in the 2010 audited accounts.
“Building repairs and maintenance increased from N93.65 million in 2009 to N315.6 million in 2010.
“Also, repairs and maintenance of other equipment also jumped from N58.99 million to N203.5 million during the period, showing an increase of 244.9 percent.
“You need to provide us with plausible explanations for these increases. This looks like ‘creative accounting’ because even with inflation, the figures shouldn’t change this much,” he said.
Muruako therefore directed NAFDAC management to produce evidence of the expenses, adding that the agency’s Director-General should be at the next meeting between both organizations “to guarantee payment of the outstanding amount.”
In his reaction, the Director of Finance and Accounts of NAFDAC, Mr. Ademola Mogbojuri, said that FRC made mistake in its calculation of indebtedness of the agency to the government.
He said that the two agencies applied different accounting methods in their calculations, explaining that while NAFDAC based its report on cash collection, FRC calculated on accruals.
According to him, the accruals could have been wrongly translated as income.
“These transactions happened when we were not well informed about the FRC act and because of that, we may not be able to comply with the verdict for 2007, 2008.
“However, we will try and pay what we owe for 2009, using the cash basis accounting,” he added.
On the unusual increase in the agency’s expenses, Mogbojuri said that it was due to inflation and expansion in its activities and personnel.
He also said that the agency had more facilities to maintain during the period.