ABUJA, August 5, 2025 – The Federation Account Allocation Committee (FAAC) has initiated the recovery of N101.17 billion from the Nigeria Customs Service (NCS) following the discovery of significant revenue misclassifications and delayed remittances, as revealed in an independent audit report.
The audit, conducted by OOM Professional Services—a financial consultancy firm formerly known as Lanre Ogunwale & Co—uncovered widespread discrepancies in the classification and remittance of revenues by NCS for the 2022–2023 fiscal period. The findings, presented during the FAAC plenary session on May 16, 2025, triggered a directive from the Federal Ministry of Finance for further verification and recommendations.
According to documents obtained the misclassification of N82.04 billion in Import VAT as Import Duty was a major concern. These funds, collected by four commercial banks—Guaranty Trust Bank, Globus Bank, Nova Merchant Bank, and Taj Bank—were incorrectly paid into the Federation Account instead of the VAT Pool Account. This error significantly skewed the statutory revenue sharing formula, to the detriment of state and local governments, which rely more heavily on VAT allocations.
Another N19.13 billion was also found to have been mistakenly paid into the Consolidated Revenue Fund (CRF) of the Federal Government. Of the N22.05 billion initially allocated to the CRF, only N2.92 billion was properly attributed, while the remaining amount was revenue meant for the Federation Account.
In total, the N101.17 billion in misclassified revenue was confirmed and validated during a stakeholders’ meeting held on July 10, 2025, in Asokoro, Abuja, attended by representatives from the NCS, Federal Inland Revenue Service (FIRS), Central Bank of Nigeria (CBN), Office of the Accountant-General of the Federation (OAGF), and the FAAC Secretariat.
FAAC’s Post Mortem Sub-Committee noted that the errors not only led to underpayment of sub-national governments but also distorted the cost of collection calculations used to compensate the NCS, FIRS, and the North-East Development Commission. It recommended a comprehensive recalculation of these entitlements to reflect accurate revenue shares.
Delays in the remittance of funds by commercial banks—sometimes lasting weeks or even months—were also highlighted as breaches of financial regulations. These delays compounded cash flow challenges for sub-national governments, already grappling with revenue shortfalls.
In response, the committee recommended:
- Immediate recovery of the N82.04bn wrongly posted as Import Duty and its reallocation using the VAT sharing formula.
- Refund and redistribution of the N19.13bn misallocated to the CRF using the vertical revenue formula.
- Recomputation of cost of collection to reflect accurate agency entitlements.
- Swift action by the Accountant-General to disburse corrected allocations and ensure fairness to affected sub-national governments.
The report concluded with a call for payment of the audit firm’s consultancy fees, recognising its role in uncovering the discrepancies.
Meanwhile, recent FAAC records show the NCS remitted N359.42 billion to the Federation Account in May 2025, representing 16.56% of the total monthly revenue of N2.17 trillion, behind the FIRS and the Nigerian Upstream Petroleum Regulatory Commission.
When contacted, Abdullahi Maiwada, spokesperson for the Nigeria Customs Service, said he was not aware of the development and declined to comment.
