FG Targets ₦39trn Negative Net Assets with Legacy Asset Audit by 2024
By Patience Ikpeme
The federal government’s consolidated financial statements for 2021 have revealed a staggering negative net asset position of ₦39 trillion.
A negative net asset position of ₦39 trillion means that the federal government’s liabilities exceed its assets by ₦39 trillion.
This significant financial gap is attributed to the failure to recognize, measure, and record many legacy assets, despite Nigeria’s adoption of International Public Sector Accounting Standards (IPSAS) accrual accounting since January 1, 2016.
The transition to IPSAS has been fraught with challenges, including inadequate asset documentation and the need for improved accounting infrastructure across public entities.
This was disclosed by Dr. (Mrs.) Oluwatoyin Sakirat Madein, the Accountant General of the Federation (AGF), during a sensitization retreat with the Directorate of Finance and Accounts (DFAs) and the Directorate of Internal Audit (DIAs) in Abuja.
Dr. Madein stated, “We still have huge negative net assets in our 2021 consolidated financial statements, which stood at ₦39 trillion.” She emphasized the urgency of addressing this financial discrepancy, instructing all Ministries, Departments, and Agencies (MDAs) to submit a comprehensive inventory of their assets for evaluation and inclusion in the financial statement by December 31, 2024.
Dr. Madein underscored the strategic importance of accurately reporting legacy assets, noting that the slow pace of submissions from MDAs has delayed the timely and accurate preparation of consolidated financial statements. “Assets are the real bedrock of the nation. The nation has been spending money daily on acquiring, constructing, and providing assets. These assets represent the nation’s worth,” she remarked.
Effective legacy asset management, she explained, is essential for enhancing fiscal stability and reducing budgetary pressures. By systematically cataloging and valuing these long-term resources, MDAs can unlock significant value, which has been overlooked.
Dr. Madein highlighted the potential benefits of this initiative: “By evaluating the usage and condition of existing assets, we can identify opportunities for better utilization or liquidation, generating much-needed revenue. Proceeds from monetizing underperforming assets can be redirected towards debt servicing, easing fiscal pressure. Moreover, effective asset management fosters a culture of responsibility among public officials, ensuring that assets are maintained and utilized in the public interest. This can stimulate economic activity and create job opportunities, contributing to national growth.”
To ensure adherence to this directive, the AGF’s office will implement measures to enforce compliance among MDAs, with sanctions for those that fail to meet the submission deadlines. “By following these directives, MDAs can contribute significantly to the national interest while avoiding penalties for non-compliance,” Dr. Madein warned.
Speaking at the workshop, Mrs. Kemi Owonuni, an Executive Director at the Ministry of Finance Incorporated (MoFI), addressed the inadequacy of asset representation in the federal government’s accounts. She pointed out that the over ₦33 trillion negative net asset liability is not adequately reflected on the asset side of the balance sheet.
“While the liability side is well-documented and verifiable through the Debt Management Office and the Ministry of Finance, the asset side remains lacking. This gap is one of the reasons for today’s engagement,” she explained.
Mrs. Owonuni highlighted MoFI’s mandate to identify, enumerate, and establish the federal government’s investment assets. The collaboration between MoFI and the Accountant General’s office aims to create a comprehensive asset register for the federal government. This register will serve as a centralized inventory, enabling accurate tracking of asset conditions and assigning market values, thereby enhancing the asset side of the balance sheet.
The ultimate goal is to develop a national assets register, which will significantly improve the strategic oversight and management of Nigeria’s public wealth. This centralized inventory will provide a clear and comprehensive view of all federal government assets, supporting better fiscal management and contributing to national economic growth.
By addressing the negative net assets through rigorous legacy asset management, the federal government aims to bolster its financial position, improve accountability, and ensure that public resources are utilized effectively for the nation’s benefit.
