Katsina builds, improves capacity of its legislators for better service delivery

Public Accounts and Audit strategies for effective oversight functions of Legislators

The paper presented by Abubakar D Umar at a 3 day retreat fo members of Katrina State House of Assembly held  between Monday and Wednesday 10 12 December 2025  at Bafra Hotel, Kaduna

INTRODUCTION

The need for a compact system for probity, accountability, and transparency is the fundamental principle of developed societies for efficient, effective and economic delivery of public services and usage of funds by the government officials as appropriated by the legislators. When this is done, the people’s desire for proper governance and crusade against corruption would be a reality.

The society is filled with stories of wrong practices such as stories of ghost workers on the pay roll of Ministries, Extra-ministerial Departments and parastatals, frauds, embezzlements and setting ablaze of offices housing sensitive documents and corruption are found everywhere in the country. Huge amount of money is lost through one financial malpractice or the other in Nigeria, which to say the least, drains the nation’s merger resources through fraudulent means with far-reaching and attendant consequences on the development or even socio-economic or political programs of the nation. Billions of Naira is lost in the public sector every year through fraudulent means. This represents only the amount that is ferreted out and made public. Indeed much more substantial or huge sums are lost in undetected frauds or those that are for one reason or the hushed up.

There is a global trend towards greater openness in government finances. This is based on a belief that transparent budgetary practices can ensure that funds raised by the state for public purposes will be spent as promised by the government, while maximising the benefits derived from spending. One crucial component of a transparent system of resource allocation involves an independent assurance of the integrity of public budgeting through an audit process, and the scrutiny of its outcomes by the representatives of the people, in the form of State Assembly.

THE OVERSIGHT FUNCTION OF THE LEGISLATORS IN GOVERNMENT SPENDING

The Legislature mostly perform this function through the Public Accounts Committee. The committee does its oversight functions using such mechanisms as committee investigative hearings, public hearings, hearings in plenary sittings and public petitions. Much of its work is based on the Auditor-General’s Report. The Committees hold public sittings to review Audit findings. These public sittings are usually attended by the Auditor-General and his team as well as the Accounting Officer (Permanent secretary) of the audited Ministry or Office. The Ministry or Office is expected to defend itself on issue reported on and explain what they have done in respect to the Report.

Consideration and scrutinizing the Auditor General’s reports and stating recommendations to the relevant authorities in the MDA’s (Ministries, Agencies and Departments) on actions or sanctions to hold on erring government office holders found culpable.

Ensure follow up on the recommendations they issued and see that they were properly implemented.

Review whether public money was spent for the approved purpose and with due regard to efficiency, economy and effectiveness.

The purpose of the functions above is to identify irregularities, encourage proper financial mismanagement, hold public officials accountable, ensure compliance with relevant laws, promote good governance practices, identify systemic weakness, and collaborate with other Committees and Report.

When it comes to legislative oversight of government spending, the PAC tends to be viewed as the reliable last resort committee for keeping an eye on government spending. PACs are viewed as the ‘final stop’ in the public financial management (PFM) cycle. PACs are essentially the last line of defense in the end-to-end public financial management process.

Typically, the government is required to report back to the legislatures on PAC recommendations within a specified period, usually two to six months. More often than not, opposition members should chair PACs. Based on their findings, PACs often make recommendations to government ministries requiring that they change certain policies and procedures to improve their operations.

The PAC also expects the Office of State Auditor General to prepare a user friendly, timely presented audit reports and form opinions that are defensible based on sufficient, objective, relevant, timely, verifiable and reliable evidence and also monitor its performance and report against key performance indicators.

Ex post scrutiny function. Legislature’s engagement with the budget normally has several stages. First, legislature vote public funds, then monitor budget execution. Finally, it has to consider whether budget implementation complied with its wishes. The audit of accounts has statutorily been performed by a body distinct from the legislature, in most cases by the Auditor-General. But it is the legislature that is tasked with considering the results of such an audit. While some legislatures do not have a dedicated committee to perform this function, many legislatures have established PACs for this purpose.

The status of the PAC. The PAC has traditionally occupied a heightened status over other committees in the legislature. In many countries, it is the oldest parliamentary committee. The Gladstonian reforms in Britain gave rise to the creation of a PAC in 1861, and many other Commonwealth countries followed this model from there on. The historical fact that the PAC tends to be one of the oldest of all committees indicates that its importance as the legislative apex for financial oversight and scrutiny has long been recognized.

Generally, it is the primary duty of the PAC to examine the reports of the Auditor General. But the committee differs from most other committees in the sense that it is prevented from questioning the wisdom of the underlying policy that informs public spending. The Committee does not seek to concern itself with Policy; its interest is in whether policy is carried out efficiently, effectively and economically. Its main functions are to see that public moneys are applied for the purposes prescribed, that extravagance and waste are minimized and that sound financial practices are encouraged in estimating and contracting, and in administration, generally.

The relationship with the Auditor General. The PAC is the primary audience of the auditor general, and it is vital that a cordial relationship is maintained between the two. While the PAC depends on high quality audit reporting to be effective, the auditor general in turn requires an effective PAC to ensure that departments take audit outcomes seriously.

The relationship with the executive. The fact that the PAC is not to question the policy underlying spending decisions impacts on who the committee holds to account. The normal legal construction is that a Commissioner is the political head of a ministry, whereas a Permanent Secretary or Director General is the administrative head of a Unit. While the former requires policy direction, the latter function includes responsibility for day to day administrative and financial matters.

The administrative head of a Unit normally signs the accounts of the entity in her or his function as accounting officer. One practical consequence of this is that the work of PACs traditionally focuses on interrogating the administrative head instead of the Commissioner, as the task is not to scrutinize the political direction and leadership of the Department in question.

The relationship with other committees. This is an evolving area. Traditionally, there has been limited interaction between the PAC and other committees. Some recommend that sectoral committees should scrutinize audit reports that directly relate to their portfolios, and in particular value for money reports. This would, it is argued, inject subject relevant expertise into the audit process, which the PAC is often lacking. In turn, sectoral committees might benefit from more intimate knowledge of the audit outcomes with regard to their respective departments, especially when they are also involved in the ex ante consideration of spending proposals. Proponents also argue that scrutiny can be enhanced by involving sectoral committees, as audit reports would get more attention than the PAC, by itself, can give.

THE CONTENT OF OVERSIGHT WORK

The exact content of the work of the PAC depends largely on what it receives from the Auditor General. A first determinant is the material audit jurisdiction of the Auditor General, which refers to what types of audit are performed. The traditional focus of public sector management has been on compliance. But the past years have seen a reorientation to a more performance-oriented outlook, which is increasingly reflected in the reporting content of auditors. What is their role in the financial oversight of publicly owned companies and other non-departmental public bodies?

Financial audit. This term summarizes the traditional focus of public sector auditing. One output is usually a certification whether the figures in the accounts are properly stated, the money was used as intended by the legislature, and that payments and receipts accord with relevant legislation and regulations. This involves a judgement of expenditure and receipts, as represented in the accounts, against key benchmarks such as regularity and propriety. Regularity refers to the requirement for items of expenditure and receipts to be dealt with in accordance with the legal and regulatory framework, such as the relevant appropriation act and any applicable permanent legislation.

Expenditure must also have been duly authorized. Propriety is concerned with the expectations of Legislature as to the way in which public business should be conducted, such as the avoidance of personal gain, even-handedness, open competition, and the avoidance of waste.

STRATEGIES FOR EFFECTIVE OVERSIGHT FUNCTIONS USING VALUE FOR MONEY (VFM)

A key theme in contemporary performance management is that organizations need to measure, and manage, non-financial aspects of performance, rather than focusing solely on financial aspects. However, in profit-seeking organizations, there remains an underlying financial objective: typically, to maximise profit in order to maximise value for shareholders.

By definition though not-for-profit organizations do not have this underlying objective. Nonetheless, financial performance remains important in not-for-profit organizations (for example, comparing actual expenditure against budget, or comparing the surplus (or deficit) of income over expenditure.

However, these organizations also need to monitor how efficiently they are using the resources available to them, and how well they are performing in relation to their key objectives. For example, for hospitals and medical centres, how effectively they are providing health care to their patients; for schools and universities, the quality of education they are providing to their students.

In this respect, three important aspects of performance to measure are: economy, efficiency and effectiveness; the so-called ‘three Es’. Achieving these three Es will help an organization to ensure it is delivering good value for money.

Value for money is seen as an appropriate framework for measuring performance in not-for-profit organisations, because value for money reflects not only the cost of providing a service but also the benefits achieved by providing it. In the absence of an underlying profit motive, assessing the benefits provided by a service is a particularly important part of evaluating its performance.

Importantly also, value for money is not simply about minimising cost. To use the UK National Audit Office’s definition: “Good value for money is the optimal use of resources to achieve the intended outcomes” where ‘optimal’ means “the most desirable possible given expressed or implied restrictions or constraints”.

The Drivers of the Value for money – the three Es

Economy: obtaining the appropriate quantity and quality of resources at the lowest cost possible; optimising the resources (inputs) which an organisation has.

Efficiency:  maximising the output generated from units of resource used; optimising the process by which inputs are turned into outputs. Efficiency can often be measured in terms of the cost of providing a service per unit of resource used, per unit of output, or per beneficiary served (in the context of a service). For example, if the number of teachers employed by two schools is the same, but the first school has twice as many pupils as the second, we could say the first school is more efficient, because the staff costs per pupil will be lower.

Effectiveness: the relationship between the organisation’s intended and actual results (outputs); the extent to which it achieves its objectives.

For example, one of the indicators which is often used to measure schools’ performance is exam results, and this provides a measure of effectiveness. Is the tuition which pupils receive building their knowledge and, in turn, helping them to pass their exams?

Potential conflicts between the three Es

Although the aim of value for money is to achieve an appropriate balance between the three Es, this can often be difficult to achieve. Each of the Es aims to achieve different – potentially conflicting – outcomes in an organisation.

For example, increasing the number of pupils in each class at a school could help to improve efficiency (by reducing staff costs per pupil), but the quality of the pupils’ learning experience might suffer as a result. So, in effect, increasing efficiency could be detrimental to effectiveness.

In recent years, there have been many stories in the news about cost savings or budget cuts in public sector services (health care; education; security). These suggest an emphasis on ‘economy’ – and potentially ‘efficiency’ – rather than the ‘effectiveness’ of the services.

However, it is very important to remember that the value for money framework highlights the importance of measuring (and managing) all three Es, rather than focusing just on one aspect of performance.

This also has implications in relation to choosing performance measures. Organisations will need data to assess how well they are achieving value for money, and therefore in order to assess value for money appropriately, the range of performance measures used will need to address all three Es, rather than, for example, focusing primarily on cost (economy) or efficiency.

Equity

Sometimes a fourth ‘E’ is also included when measuring value for money performance: equity. This reflects the extent to which services are available to, and reach, the people they are intended for, and whether the benefits from the services are distributed fairly.

The importance of systematically embedding Value for Money evaluation throughout the policy cycle

Evaluation should not be left as an afterthought and is a crucial part of good governance. Whilst evaluation after an programme has ended is important, Value for Money can be enhanced if evaluation scrutiny is brought in at the design stage, by ensuring an intervention is underpinned by logically sound and evidence-backed impact pathways, and during delivery, to enable adaptive management and course correction. An independent evaluation further promotes VfM by providing a robust and impartial judgement on how well a programme is working through baseline, interim and endline assessments.

THE EFFECTIVENESS OF PAC

The PAC plays a crucial role in scrutinizing government expenditures, reviewing Auditor-General reports, and promoting financial transparency and accountability. However, several challenges have been identified that impede its ability to fulfill its mandate effectively.

The lack of responsiveness from the government, the varying quality of audit reporting, the evolving nature of audit content, and the increased institutional complexity of government have hindered the effectiveness of the PAC in achieving its oversight functions.

Political interference and influence within the State Assembly often compromise the independence of the PAC, leading to delays in implementing its recommendations and undermining its credibility.

Inadequate resources, both financial and technical, limit the PAC’s capacity to conduct thorough audits and investigations into government expenditures. These resource constraints hinder the committee from performing its oversight duties comprehensively.

Institutional weaknesses within Nigeria’s public procurement system contribute to procedural abuses and lack of transparency in government financial transactions. This not only complicates the PAC’s efforts but also perpetuates opportunities for corruption and mismanagement of public funds.

Abubakar Danasabe Umar is a staff Kaduna Polytechnic