REFLECTIONS: INSTITUTIONAL REFORMS FOR THE NBA (3) – PAUL USORO, SAN FCIArb

The fourth remediation step that I recommend is the constitution of a standing Audit Committee of the Association.  The functions of an Audit Committee in any institution include the following which I have adapted for the NBA:

1. Oversight of the NBA’s financial reporting process and the disclosure of its financial information, to ensure that the financial statements are true and accurate and provide sufficient information.
2. Reviewing, with the elected National Officers and the National Secretariat (which includes the finance and account unit), the annual financial statements before submission to NEC for approval, with particular reference, amongst others, to (a) changes, if any, in accounting policies and practices and the reasons therefor; (b) significant adjustments made in the financial statements arising out of audit findings; (c) disclosure of any related party transactions; (d) qualifications in the draft audit report.

• Reviewing the actions taken by the National Secretariat pursuant to the proceedings of the Audit Committee meetings.

1. Reviewing, with the elected National Officers and the National Secretariat, the NBA’s quarterly financial statements before submission by the elected National Officers to NEC for approval.
2. Reviewing, with the elected National Officers and the National Secretariat, the adequacy of internal control systems.
3. Reviewing the findings of any internal investigations by the National Secretariat into matters where there is suspected fraud or irregularity or a failure of internal control systems of a material nature and reporting the matter to the elected National Officers.

• Obtaining updates on the Risks Management Framework and the manner in which risks are being addressed by the Association.
• Reviewing the functioning of the Whistle Blower mechanism and the nature of complaints received by the Ombudsman when the same is implemented by the Association.

These functions are not at all exhaustive; they’re merely illustrative of the functions of an Audit Committee and the value which the Committee could add to the operations of the NBA vis-à-vis the monitoring of its finance management functions and internal control processes.  Some of our members are trained and skilled in finance and accounting while others have been exposed to and are well versed and experienced in the functions of audit committees by virtue of their membership of boards of established companies, institutions and organizations.  Such NBA members, if they’re sought out and encouraged to serve on this Committee, would add great value to the workings of the Committee and the operations of the Association. It remains for me to mention that the Committee, like all NBA Committees, should be constituted by the NBA President and would report to NEC through the elected National Officers.

My fifth and last (but by no means the least) non-exhaustive remediation suggestion is the institutionalization of a budget process in our Association.  I’m not aware that the NBA has established its budget year – January to December of each year, for example, or, alternatively, benchmarked from when new elected National Officers take office i.e. from September of each year to the succeeding year’s August.  I advocate for the former – i.e. aligning the budget year with the calendar year, January to December of each year – which is the current common practice with most organizations in Nigeria.

Most people understand budget in terms of expenditure budget only; in truth, budget encompasses both expenditure and income budgets.  Indeed, the expenditure budget needs to be benchmarked against the income budget.  The income budget traditionally captures the organization’s projected revenues or income for the budget year.  In other words, it must specify the organization’s revenue streams (sources of income/funds) and the projected amounts/funds that would accrue therefrom within the budget year.  In the case of the NBA, these would include all fees that are paid by members (e.g. practice fees, stamp/seal fees, conference registration fees etc.), events’ and other sponsorships and donations by members and/or third parties, income from the NBA’s investments including interest and rental incomes, if any etc.

The benefits to the Association from such institutionalized budget practice and exercise are unquantifiable.  It would impose discipline on persons and the Association as a whole apart from the fact that it would aid and indeed facilitate fact-based planning, forecasting and projections.  Generally, budgeting sets targets for organizations and inspires everyone to strive towards the attainment of those targets.  Internal quarterly and annual budget reviews by institutions help in highlighting the achievements of the organization and identifying areas for and/or of improvement in the operations of the establishment.  The exercise also aids the organization in building and preserving its historical records (e.g. budget items and numbers for the preceding years including the underlying assumptions and projections vis-a-vis the actuals both in respect of the organization’s income and expenditure); these historical records and patterns are invaluable for planning, control and forecasting purposes.

Budgeting and periodic budget reviews, given all of these benefits, is a practice that the NBA should imbibe and institutionalize.  These budgets would of course be prepared by the elected National Officers in conjunction with the National Secretariat, notably, the finance and accounts personnel.  The finance and accounts personnel will have primary responsibility for the preparation thereof given their professional training, experience and skills, but they would, of necessity, get inputs from the elected National Officers as well as from other relevant members of the National Secretariat.  The budget proposals, upon its preparation, would be submitted by the elected National Officers to NEC for NEC’s approval and thereafter, it would need to be publicized in the same manner as our Financial Statements to enhance transparency and accountability.

Overall Summary: The benefits that would accrue to the Association from the implementation of these remediation measures, all five of them – and such others as the NBA may be professionally advised upon – are immeasurable.  For one, discipline and efficiency in the running and operations of the Association would be greatly improved – think illustratively of the budgeting processes and the planning and forecasting benefits therefrom. Second, the confidence and trust of our members in the Association and its elected National Officers would be greatly boosted – think, illustratively, of the transparency, discipline and accountability principles that are inherent in the budget preparation, presentation and review processes and the periodic publication not only of the budget but also of the financial statements and quarterly budget reviews.

Third, by implementing these six non-exhaustive remediation measures, we would gradually transform the NBA into a sustainable institution. Needless pointing out that all sustainable institutions operate on the basis of these remediation principles and measures and in the process, not only are those institutions well run, their institutional memories are preserved (think, illustratively, of the comparative budget numbers for previous years and quarters which would aid accurate planning, forecasting and projections).  Fourth and not least, NBA will, by institutionalizing these practices and measures, thereby increase its moral equity and capital and stand on firm grounds in speaking out against financial mismanagement, misappropriations and/or malpractices by governments and their agencies.