Bank Of Agric Distressed Over Bad Loans, Others – Auditor Ceneral
The Office of the Auditor-General of the Federation has said the Bank of Agriculture may have become distressed as a result of its inability to meet its obligations and provide meaningful service to the public.
According to the auditor-general, developments within the BOA are a major threat to the bank’s continuation as a growing concern, saying they could lead to loss of stakeholders’ funds and investments.
The office also queried the high turnover of chief executive officers in the BOA and the non-composition of a governing board to oversee the affairs of the bank.
These are part of the eight audit queries issued against the BOA in the ‘Auditor-General for the Federation’s Annual Report on Non-Compliance/Internal Control Weaknesses Issues in Ministries, Departments and Agencies of the Federal Government of Nigeria for the Year Ended 31st December, 2019.’
The Acting Auditor-General of the Federation, Adolphus Aghughu, had presented the report to the Clerk to the National Assembly, Ojo Amos, on September 15, 2021, while the Senate and House Committees on Public Accounts launched investigation into the queries.
The queries against the BOA include rising non-performing loan amounting to N75.595bn; indication of going concern problem due to continuous loss-making decision amounting to N49.582bn; and non-payment of outstanding equity by shareholders (Central Bank of Nigeria and Ministry of Finance Incorporated) amounting to N16.391bn.
Others include an unrecoverable loan from the Federal Ministry of Water Resources amounting to N2.411bn, non-rendition of 2019 audited financial statements to the Office of the Auditor-General to the Federation, overdue tenure of external auditors, non-composition of the governing board, and high turnover of managing directors of the bank.
According to the office, the practices within the bank violate the provisions of Article 8.3.2 of the Regulatory and Supervisory Guidelines for Development Finance Institutions in Nigeria 2015 and Article 12.3 of the Prudential Guidelines for Licensed Banks in Nigeria 2010.
The queries partly read, “Audit review of reports from Risk Asset Management Department of BOA Limited on non-performing loans observed that the non-performing loan, as of 31 December 2019, stood at N75,595,161,603.91.”
They also said the statement of comprehensive income of the bank showed a consistent loss of revenue by the bank between December 31, 2017 and 2019, amounting to about N49.582bn over the three-year period.
The queries further said that the capital adequacy ratio of the BOA was below the regulatory minimum of 10 per cent, which indicates the existence of material uncertainty that casts significant doubt on the bank’s ability to continue as a going concern.
The report further said stakeholders in the BOA still have about N16.391bn to be paid as outstanding equity in the bank, adding that the delay in paying the equity had led to inadequate capital base and difficulties in fulfilling its mandate.