A recent review of the 2019 Auditor General’s report by Dataphyte reveals that there was an unexplained net change of N668.162 billion in reserves of the consolidated statement of changes in net assets and equity.
The consolidated statement of changes in net assets and equity serves as a reconciliation between the closing balance and opening balances of the consolidated financial statement, explaining the changes in reserves, share capital and retained earnings of the government over the reporting period.
From the auditor general’s report, the opening balance of the consolidated statement was N22.670 trillion and the closing balance was N23.338 trillion. The 668.162 billion total net change in reserves is unexplained, a clear breach of paragraphs 17 and 127 of IPSAS 1.
Paragraph 17 of the IPSAS 1 provides that information about an entity’s assets, liabilities, net assets, revenue, expenses, changes in net assets, and equity and cash flows should be provided in order to meet the objectives of the general-purpose financial statement and paragraph 127 of IPSAS 1 states that information needed to understand a document but not included in the financial statement should be disclosed. These accounting standards are put in place in order to ensure the understandability, comparability, and transparency of financial statements from year to year.
One of the implications of not disclosing necessary information in regards to these changes is the misstatement of the federal government of Nigeria’s consolidated financial statement.
Misstatements such as this make it difficult to detect irregularities in the consolidated financial statements which may be in the form of fraud, intentional omissions, or errors.
Another implication of not disclosing necessary information about changes in the consolidated financial statements is the inability of the users of the federal government’s consolidated financial statement to understand what comprises the changes in reserves.
According to the auditor’s general report, the accountant general has been asked to provide details regarding the net changes in reserves in the consolidated statement of changes in net changes of assets and equities and if not done, sanctions according to paragraph 3129 of financial regulations will be applied.