A recent audit has revealed major discrepancies in the Nigeria Customs Service’s (NCS) remittances to the Federation Account, amounting to over N101 billion.
The findings were brought to light by OOM Professional Services, a financial audit firm, sparking widespread concerns over misclassified funds and delayed remittances that undermined fair revenue distribution among government tiers.
OOM Professional Services was engaged by the Forum of Commissioners of Finance to scrutinize the Customs’ remittances for the 2022–2023 fiscal period. The firm presented its findings at the May 16, 2025, plenary session of the Federation Account Allocation Committee (FAAC), prompting further verification by the FAAC Post Mortem Sub-Committee.
Following this, a follow-up meeting involving top financial and revenue institutions, including the NCS, FIRS, Central Bank of Nigeria, and Office of the Accountant-General, was held on July 10, 2025, in Abuja. During the session, all parties reportedly agreed with the consultant’s findings, lending credibility to the ₦101 billion discrepancy claim.
The most glaring misstep was the misclassification of ₦82.04 billion meant to be recorded as Import Value Added Tax (VAT). Instead, four commercial banks wrongly posted this amount into the Federation Account as Import Duty, skewing revenue sharing in favor of the Federal Government.
“The sum of ₦82,037,823,474.76 being Import VAT was wrongly posted into the Federation Account as Import Duty,” the FAAC document stated. This mistake had significant consequences, as VAT revenue is typically shared using a formula that heavily favors states and local governments.
Because of the misclassification, the affected sub-national governments received far less than they were entitled to under the VAT sharing model. “The remittance… significantly reduced the share of the sub-nationals,” the committee noted, highlighting how the error deprived these lower tiers of government of badly needed funds.
The report also identified another error involving ₦19.13 billion, which was mistakenly credited to the Federal Government’s Consolidated Revenue Fund (CRF) instead of the Federation Account. Only ₦2.92 billion of the ₦22.05 billion credited to the CRF was legitimately due there.
In total, both errors added up to ₦101.17 billion in wrongly posted funds. “The amounts posted in error were ₦82.04 billion as Import Duty and ₦19.13 billion to CRF,” the document noted, calling for full recovery and redistribution of these sums to their rightful beneficiaries.
These missteps also had implications for the cost of revenue collection paid to agencies such as the NCS, FIRS, and the North-East Development Commission. The committee recommended that all affected disbursements be recalculated to reflect accurate allocations.
Beyond misclassifications, the audit flagged delays in the remittance of funds by commercial banks. These lags—sometimes extending into months—violated financial protocols and worsened the liquidity challenges faced by state and local governments.
“The revenues collected by NCS through commercial banks were delayed for weeks and in some instances months,” the document observed. These delays added to the financial strain at sub-national levels, exacerbating funding gaps for critical public services.
The committee has since urged the immediate recovery of the ₦82.04 billion misclassified VAT and its redistribution using the proper VAT sharing formula. It also called for the ₦19.13 billion posted to the CRF to be recovered and distributed based on the vertical sharing formula.
The Office of the Accountant-General of the Federation was tasked with recalculating all affected allocations and ensuring accurate disbursement to the correct entities. “The OAGF should work out the appropriate percentages due to the beneficiaries,” the committee stated.
Emphasizing the need for transparency, the report underscored the importance of correcting the revenue misallocations to ensure fairness, especially to sub-national governments that were shortchanged. “This is to ensure fairness to the Sub-Nationals who were underpaid,” it added.
The committee also recommended that OOM Professional Services be paid its consulting fees, acknowledging the critical role the firm played in uncovering the misallocated revenues.
Meanwhile, the NCS recorded a total inflow of ₦359.42 billion to the Federation Account in May 2025, representing 16.56 percent of the ₦2.17 trillion total revenue generated by all federal revenue-collecting agencies that month.
When contacted for a response, NCS spokesperson Abdullahi Maiwada declined to comment, stating he was unaware of the matter.
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