₦206.9m Osun Government Funds Tied to Liquidated Heritage Bank as Auditor-General Questions Cash Records
Auditor-General identifies discrepancies between MDA bank balances and independent audit findings, declaring that the state's reported cash position “can never be correct”.
The financial accountability of the Osun State Government has come under scrutiny following revelations that ₦206,939,439.58 recorded as belonging to the state remained associated with Heritage Bank, whose operating licence was revoked by the Central Bank of Nigeria (CBN) on June 3, 2024.
The disclosure, contained in the Osun State Auditor-General's Report for the 2025 financial year, raises questions about the status of public funds held in the failed financial institution and the accuracy of the state's reported cash and bank balances.
The CBN revoked Heritage Bank's licence after determining that the institution had persistently failed to meet its financial obligations and had no reasonable prospects of recovery. The Nigeria Deposit Insurance Corporation (NDIC) was subsequently appointed as liquidator.
However, the Auditor-General, Kolapo Idris, reportedly identified ₦206,939,439.58 as a balance previously reported in the state's financial records and requested clarification on its current status.
The disclosure raises a fundamental question: has the Osun State Government recovered the money, received any liquidation dividend or continued to carry the original balance in its financial statements without adequately establishing how much remains recoverable?
The distinction is important because a balance recorded in a failed bank cannot automatically be regarded as cash readily available to the government.
Auditor-General questions reliability of cash balances
Beyond the Heritage Bank exposure, the Auditor-General's report identifies significant inconsistencies between the cash and bank balances disclosed in the financial statements of ministries, departments and agencies (MDAs) and the figures independently obtained by his office during its year-end cash survey.
According to the reported findings, balances extracted from MDAs and incorporated into the notes to the financial statements differed substantially from those obtained through the audit team's independent verification.
More concerning, the Auditor-General reportedly observed that several balances appearing in the financial statements were absent from the hard-copy records submitted by the Office of the Accountant-General for audit examination.
The discrepancies prompted questions about the effectiveness of financial controls and the ability of the Accountant-General's office to maintain an accurate and comprehensive record of government bank accounts.
In a particularly strong observation, the Auditor-General reportedly concluded that the Office of the Accountant-General lacked adequate control over accounts operated by the various MDAs.
He further declared that, in view of the discrepancies identified, the cash position disclosed in the state's financial statements “can never be correct”.
The observation goes beyond an ordinary accounting disagreement. It raises questions about the completeness, accuracy and reliability of the financial information used to communicate the state's fiscal position to the public.
Unqualified audit opinion presents an apparent contradiction
The report also presents an issue requiring further clarification.
Despite the critical observations concerning cash and bank balances, the Auditor-General reportedly issued an unqualified opinion on the state's 2025 financial statements, stating that they presented a true and fair view of the government's financial position as at December 31, 2025.
The report also indicates that the financial statements were certified after the observations and comments raised during the audit exercise had been addressed.
This raises important questions about the extent to which the identified discrepancies were resolved before certification and whether the final financial statements accurately reflected the reconciled balances.
An unqualified audit opinion does not mean that every individual transaction or account is necessarily free from error. However, where an Auditor-General identifies substantial differences between reported balances and independently obtained figures, the basis for the final opinion deserves careful public scrutiny.
The relevant authorities should explain whether the discrepancies were fully reconciled, whether adjustments were made and whether the outstanding Heritage Bank balance was appropriately classified in the final accounts.
What happened to the Heritage Bank deposit?
The Heritage Bank issue deserves particular attention because the NDIC's liquidation process does not automatically guarantee the recovery of every deposit in full.
On April 25, 2025, the NDIC announced the commencement of a first tranche of liquidation dividends totalling ₦46.6 billion for eligible depositors whose balances exceeded the statutory insured limit.
The initial distribution was calculated at 9.2 kobo per naira on a pro-rata basis, based on funds recovered from the failed bank's assets and debts.
Consequently, the Osun Government's reported ₦206.9 million exposure requires a detailed reconciliation showing the original deposit, any liquidation payments received, the outstanding claim and the amount still considered recoverable.
Without such information, the public cannot determine whether the figure represents the original bank balance, an outstanding liquidation claim or a balance that has already been partially recovered.
The government should also explain why the amount continued to feature in its financial records and how it was treated in determining the state's closing cash position.
Public accountability demands answers
The findings raise several questions that the Osun State Government and relevant financial institutions should address.
The Office of the Accountant-General should explain the discrepancies between the balances submitted by MDAs and those independently obtained by the Auditor-General.
The NDIC should clarify the status of the state's claim against Heritage Bank, including any payments already made and the outstanding amount, if established.
The Auditor-General's office should also provide clarification on how the identified discrepancies were addressed before the issuance of the unqualified audit opinion.
Above all, the Osun State Government should publish a reconciliation of the Heritage Bank balance and provide documentary evidence of any recovery or outstanding liquidation claim.
Beyond accounting figures
The significance of the findings extends beyond the ₦206.9 million associated with Heritage Bank.
Government financial statements are fundamental instruments of public accountability. They enable citizens, legislators, oversight institutions and development partners to assess how public resources are managed and whether reported financial positions reflect verifiable realities.
Where discrepancies emerge between official financial statements and independent audit findings, the responsibility of the relevant authorities is to provide transparent explanations supported by documentary evidence.
Public money must be accounted for regardless of whether it is held in operational bank accounts, investments or claims against institutions undergoing liquidation.
The people of Osun State deserve to know where their money is, how much remains recoverable and whether the government's reported financial position accurately reflects the resources actually available to it.
An audit opinion is important, but public confidence ultimately depends on the accuracy of the figures, the integrity of the records and the willingness of public officials to answer legitimate questions about public funds.
The Analyst will continue to examine the state's financial records and welcomes documentary responses from the Osun State Government, the Office of the Accountant-General, the Auditor-General and the NDIC.