Audit Uncovers N101.17bn Revenue Misclassification by Customs, FAAC Demands Immediate Recovery
A financial audit has uncovered over ₦101.17 billion in misclassified and erroneously remitted revenues by the Nigeria Customs Service (NCS), sparking concerns over fiscal transparency and fairness in federal revenue sharing.
The revelations were contained in a post-mortem report by OOM Professional Services, an audit firm commissioned by the Forum of Commissioners of Finance, which conducted a thorough review of Customs remittances for the 2022–2023 fiscal period.
The audit findings, presented at the FAAC plenary session on May 16, 2025, revealed that commercial banks, including Guaranty Trust Bank, Globus Bank, Nova Merchant Bank, and Taj Bank, wrongly posted ₦82.04 billion worth of Import VAT as Import Duty. This misclassification led to the funds being paid into the Federation Account instead of the VAT Pool Account—a move that shortchanged state and local governments which depend on the VAT sharing formula.
“The remittance of Import VAT into the Federation Account as Import Duty significantly reduced the share of the sub-nationals,” the FAAC sub-committee report stated.
In addition, another ₦19.13 billion was erroneously remitted to the Consolidated Revenue Fund (CRF) of the Federal Government.
Of the ₦22.05 billion originally thought to belong to the CRF, only ₦2.92 billion was accurately attributed there, comprising levies like CISS, ETLS, and Port Levy. The remainder, ₦19.13 billion, should have been remitted to the Federation Account.
The audit report was validated at a stakeholders’ meeting on July 10, 2025, in Abuja, attended by representatives from the Nigeria Customs Service, Federal Inland Revenue Service (FIRS), Office of the Accountant-General of the Federation (OAGF), Central Bank of Nigeria, and the FAAC Secretariat. The relevant agencies agreed with the consultant’s findings.
Altogether, the total misclassified and misremitted funds stood at ₦101.17 billion, prompting FAAC to recommend a full recovery and redistribution based on the correct revenue sharing formulas.
The sub-committee directed that; the ₦82.03 billion misclassified as Import Duty be recovered and recomputed using the VAT sharing formula, the ₦19.13 billion wrongly remitted to the CRF be redirected from the Federation Account and shared using the vertical formula, the cost of collection paid to agencies such as the FIRS, NCS, and the North-East Development Commission be recalculated to reflect corrected revenue classifications.
The report also flagged delays by commercial banks in remitting Customs collections, with some funds held for weeks or months—violating financial regulations and causing revenue uncertainties for sub-national governments.
“The revenues collected by NCS through commercial banks were delayed for weeks and, in some cases, months before being remitted into the Federation Account, which is a breach of lawful provisions,” the report said.
The FAAC sub-committee called on the Accountant-General of the Federation to urgently calculate and disburse the correct amounts to the rightful beneficiaries, ensuring fairness and transparency in revenue allocation.
The committee also recommended the payment of the consultant’s fees, recognizing the pivotal role played in uncovering the discrepancies.
Meanwhile, findings revealed that in May 2025, the Nigeria Customs Service remitted ₦359.42 billion to the Federation Account, accounting for 16.56% of the total revenue collected that month. The Federal Inland Revenue Service (FIRS) led with ₦1.14 trillion, followed by the Nigerian Upstream Petroleum Regulatory Commission (NUPRC) and the Ministry of Petroleum Resources, which jointly contributed ₦615.13 billion.
When contacted for comments, NCS spokesperson Abdullahi Maiwada said he was unaware of the matter and declined to speak further.
