The Federation Account Allocation Committee (FAAC) has initiated the recovery of over ₦101 billion from the Nigeria Customs Service (NCS) following the discovery of massive revenue misclassification and delayed remittances. The revelations stem from a forensic audit report submitted by OOM Professional Services, a financial consultancy commissioned by the Forum of Commissioners of Finance to investigate customs remittances between 2022 and 2023.

According to internal documents obtained from FAAC reconciliation meetings, the audit uncovered significant discrepancies, including the misposting of ₦82.03 billion meant for the Value Added Tax (VAT) Pool Account as Import Duty into the Federation Account. This error, committed by four commercial banks—Guaranty Trust Bank, Globus Bank, Taj Bank, and Nova Merchant Bank—effectively reduced the statutory allocation due to states and local governments.

Unlike Import Duty, which is distributed using the vertical sharing formula that favours the Federal Government, VAT revenue is shared in a manner that gives a larger proportion to sub-national governments. This misclassification resulted in states and local councils receiving less than their rightful share of the national revenue.

In addition to the ₦82 billion VAT discrepancy, the audit also revealed that another ₦19.13 billion was erroneously transferred to the Consolidated Revenue Fund (CRF) of the Federal Government instead of the Federation Account. Only ₦2.91 billion of the remitted amount actually belonged in the CRF.

Combined, these two errors amounted to a staggering ₦101.17 billion in funds misapplied due to financial reporting flaws and procedural breaches by commercial banks and revenue-collecting agencies.

A stakeholders’ meeting held on July 10, 2025, at the Brick Wall Hotel in Asokoro, Abuja, brought together key government institutions including the NCS, Federal Inland Revenue Service (FIRS), Office of the Accountant-General of the Federation (OAGF), and the Central Bank of Nigeria (CBN). The consultant’s findings were unanimously accepted, with all agencies agreeing on the need for immediate remedial actions.



The FAAC Post Mortem Sub-Committee recommended the immediate recovery and redistribution of the ₦82 billion VAT misclassified as Import Duty. This amount will be recalculated using the VAT sharing formula, ensuring that state and local governments receive their correct allocations.

Similarly, the ₦19.13 billion wrongly remitted to the CRF is to be recovered and distributed to the proper beneficiaries using the Federation Account’s vertical formula. The OAGF has been tasked with overseeing the recalculations and ensuring that all adjustments are reflected in subsequent disbursements.

In its report, the committee emphasized the need for fairness and accountability, particularly since the misclassification financially disadvantaged lower-tier governments. It also recommended a recalculation of the statutory cost of collection, which affects the commissions paid to agencies like the FIRS, NCS, and the North-East Development Commission (NEDC).

Beyond misclassification, the audit flagged serious concerns about delayed remittances by commercial banks acting on behalf of the NCS. In some cases, funds collected were held for weeks or even months before being transferred into the Federation Account, in violation of public finance regulations. These delays contributed to cash flow disruptions for sub-national governments already grappling with budgetary constraints.



When contacted, NCS spokesperson Abdullahi Maiwada declined to comment on the issue, stating he was unaware of the audit findings. However, records show that the Nigeria Customs Service remitted ₦359.42 billion to the Federation Account in May 2025, accounting for 16.56% of total revenue for that month. In comparison, the FIRS contributed ₦1.14 trillion (52.73%) and the NUPRC/MPR contributed ₦615.13 billion (28.33%).



The FAAC committee has also recommended prompt payment of professional fees to OOM Professional Services for its critical role in exposing systemic revenue leakages and ensuring transparency in government finance.