President of the Nigerian Bar Association (NBA) Mr. Paul Usoro SAN has revealed that the main operational account of the NBA was overdrawn and had a debit balance of N42, 020, 950.27 as at 31st August, 2018.
Mr. Usoro made the revelation in a statement forwarding the NBA Financial Statement as at 31st August, 2018 and the Finance Diagnostic Report.
Other revelations made by the President in the statement is that the contrary to the cash and cash equivalent position stated to be N126, 113, 841.00 in the Financial Statement, NBA as at 31st August, 2018 had no such cash equivalent as indicated.
He also noted that the audit firm warns that further information may change some of the reports presently published. He also noted that the aim of the exercise is not to witch hunt but to institutionalize principles of governance, transparency and accountability in the NBA.
Below is his full statement:
NBA FINANCIAL STATEMENT AS AT 31 AUGUST 2018 AND FINANCE DIAGNOSTIC REPORT
1. In our published Statement of 06 October 2018, we had informed you, our dear colleagues, of the engagement of PricewaterhouseCoopers (“PwC”) for the twin assignment of preparing the NBA Financial Statement (“FS”) as at 31 August 2018 and a Finance Diagnostic Report. The detailed scope of work for the assignment was fully reproduced in our said Statement which, for ease of reference, can be found at the NBA’s website.
2. I am pleased to inform you that PwC has submitted the twin work products i.e. the Financial Statement as at 31 August 2018 and the Finance Diagnostic Report both of which are being circulated, with this my Statement, to our Members; these documents have also been posted and published on the NBA website. The Diagnostic Report is fairly straight-forward and speaks for itself. It essentially highlights in lucid detail and with complete clarity the fault-lines in our extant Finance Unit and makes fundamental recommendations on remediation steps that we must urgently take.
3 With regard to the Financial Statement, perhaps I need to highlight a few areas for the benefit of our Members, viz:
i. The NBA Admin Account which is the NBA’s main operational account was overdrawn and had a debit balance of N42,020,950.27 as at 31 August 2018 and this is reported as part of the Current Liabilities in the FS the breakdown of which is set out in Note 6 to the FS at page 7 thereof. Note in particular, the line item “Short-term borrowings” in Note 6. The FS however shows Cash and Cash equivalent’ position of N126,113,841.00 (see page 4 of the FS) as at 31 August 2018, the breakdown of which is provided in Note 5 to the FS at page 6
l “Cash equivalent” refers to instruments and holdings such as stocks and similar investment instruments that could easily be converted into cash. NBA as at 31 August 2018 however had no such cash equivalent as Note 5 to the FS bears out; what we had were only cash balances in Bank accounts.
thereof. Note 5 shows that most of the Cash were in dedicated accounts (e.g. MacArthur Foundation Accounts, Stamp and Seal Account, North East Account) the proceeds of which ought not be used for NBA operational activities. As we pointed out earlier, the NBA Admin Account is the NBA’s main operational account and it had an overdrawn balance of N42,020,950.27 as at the said date. The balances in the other, arguably, non-dedicated accounts (all of which are detailed along with the dedicated accounts in Note 5 to the FS) when tallied (i.e. having isolated and kept aside the funds in the dedicated accounts), was less than N20,000,000.00 as at the said date.
ii. On the liabilities side, the Total Current Liabilities, as at 31 August 2018, according to the FS, was N446,542,516.00 – see page 2 of the FS. In contemplating this amount, we must draw Members attention to the Caveat that is prominently entered at page 3 of the FS whereat PwC expressly forewarns the NBA of the possibility of a restatement or adjustment of this figure based on fresh information and data which may be unearthed sequel to the preparation of this Financial Statement.
In my discussions with PwC, any such Restatement or Adjustment would be reflected in the Q1 2018/2019 Financial Statement which is under preparation, in fulfilment of our commitment to consistently publish Quarterly Financial Statements. Q1 2018/2019, for Members information, covers the period August to October 2018, given the fact that the NBA’s current Financial Year end is 31 July 2018 of every year (a practice which, at the appropriate time, we would propose a change, for the reasons rightly highlighted at page 26 of the Diagnostic Report under the heading “Financial Planning and Budgeting”. The Q1 2018/2019 FS would be published, hopefully, in a fortnight and most definitely before the NEC meeting scheduled for 06 December 2018 where the two Financial Statements and the Diagnostic Report would be formally presented and deliberated upon.
iii. The Statement of Comprehensive Income which is a component of the Financial Statement as at 31 August 2018 shows that the NBA had a total income of N519,245,091 in the month of August 2018 (see page 3 of the FS). Notes 7 and 8 to the FS at pages 7 and 8 thereof provide the breakdown of this income and show that the bulk of the income – N499,661,339.00 – accrued from AGC activities (to wit, registration fees, donations, sponsorships, etc.).
inculcate these practices into the NBA DNA and make them irreversible by succeeding NBA administrations.
Paul Usoro, SAN, FCIArb
Copy of the Management Account: