Audit Failure: Nigeria Loses $4m World Bank Loan Over Poor Reporting Standards

 

World Bank

Firstsitenews-Nigeria is set to forfeit $4 million from a World Bank loan after failing to meet international auditing standards for a key revenue reform involving the Federal Inland Revenue Service (FIRS) and the Nigeria Customs Service.

The amount was part of the $103 million Fiscal Governance and Institutions Project, a public financial management programme funded by a credit facility from the International Development Association (IDA).

According to a World Bank restructuring document dated June 2025, the revenue assurance audit of the FIRS and Customs covering the 2018–2021 financial years was deemed unsatisfactory. The Independent Verification Agent concluded that the audit reports submitted by the Office of the Auditor-General of the Federation did not meet required international standards.

The World Bank document stated:

 “Revenue assurance audit of Main Income Generating Agencies, including the Federal Inland Revenue Service and the Nigeria Customs Service for FY 2018–2021 with an allocation of $4m. These Intermediate Results... were assessed as not achieved... because the reports... did not meet the requisite international auditing standards.”

This audit failure is one of ten Performance-Based Conditions (PBCs) under the project that the Nigerian government failed to meet before the project's closing date of June 30, 2025. Consequently, the Federal Ministry of Finance has requested the cancellation of $10.4 million in project funds.

The cancelled funds include $0.9 million in unused technical assistance funds and $9.5 million allocated to the unmet PBCs. Among these, $4.5 million was earmarked for a yet-to-be-completed Revenue Assurance and Billing System, while $1 million had been designated for the creation of a National Budget Portal. However, the Budget Office of the Federation reportedly provided no evidence of progress on the portal.

The World Bank document explained:

 “The proposed change is to cancel the $10.4m, constituting $9.5m for PBCs that will not be achieved and verified by the closing date, and $0.9m uncommitted funds from the technical assistance component.”

This marks the second funding reduction for the project. In June 2024, the World Bank had already shaved $22 million off the original $125 million allocation, reducing the total to $103 million. With the current cancellation, the project’s budget has now been further reduced to $92.6 million.

Launched in June 2018 and becoming effective in May 2019, the Fiscal Governance and Institutions Project aimed to enhance the credibility of Nigeria’s public finances and national statistics through reforms in revenue collection, budget transparency, and data management.

Despite the missed targets, the World Bank acknowledged some positive outcomes. Notably, non-oil revenue in 2024 reached 153% of the projected target, compared to just 64.9% in 2018. This progress was credited to exchange rate unification, improvements in tax administration through the TaxProMax platform, and automated revenue remittances by federal ministries and agencies.