Continues from yesterday
FAAN should deploy software tools especially those that are web-based to enable effective  budget planning, monitoring and forecasting. This software   can be easily made available to the managers within each Directorate and Airports to enable them better contribute to the budgetary planning and implementation process.

Additionally, the development  of budgets at FAAN could be enhanced by requiring that the basis and criteria for arriving at the budget numbers be included in the budget estimates developed by the Airports and various Directorates. This will ensure the development of right budget estimates resulting in the elimination of virement or augmentation of votes.

Budget performance report

Moreover, budget performance reports should be submitted to each Directorate for the purpose of review;  and be made available to management and the Board which will review and come up with appropriate control measures to ensure the realisation of the budget targets.

FAAN should take proactive measures to ensure the timely receipt of the annual budget guidelines from the Federal Ministry of Aviation.

The guidelines and the internal Budget Call Circulars should be forwarded to the various Directorates and Airports to enable them prepare their budget estimates. To ensure the achievement of the above, FAAN should come up with an agreed timeline to support the Budget Cycle.

109. FAAN should revise its procurement system in line with Government Due Process Regulations. FAAN would need to train its staff to understand government policies affecting the award and payments for contracts. Contract documents should be reviewed by internal audit to ensure that due process requirements have been met before payments are made.

A policy should be put in place requiring finance department to only effect payments for contracts that have been issued with a Due Process Certificate. Moreover, there is need to maintain a list of contracts. New contracts should be verified and checked against this list to ensure they have not been previously awarded.

The Resident Due Process Team should check all contracts and ensure that Due Process Certificates are obtained prior to the award of contracts. Internal Audit should also carry out an independent check to confirm compliance with due process especially compliance with the advertisement rule. FAAN would also need to maintain contractors’ fees with appropriate references and tags. There should be regular and independent review of contract awards. Single files should be maintained by all contractors. In cases where a file is full, contractor file should indicate a closure slip that maps it to another file.

110. FAAN should review its accounting and financial system.

FAAN would need to develop detailed and comprehensive process documentations and process manuals to support the accounting and financial reporting process. Preferably, FAAN should implement an end-to-head system to automate the entire accounting and financial reporting process.

Introduction of automated system

The introduction of this automated system will ensue the capture of transactions into the system at source. This will make data capture more efficient  as well as remove the risks of error associated with data recapture using the returns from the outstations. Additionally, FAAN should set up an independent function for the regular and intermittent audit and review of transactions captured into the system to ensue their propriety. An initial measure should also be implemented to ensue that data capture and preparation of various financial reports are independently reviewed to ensure that integrity of such postings and the financial reports. FAAN would also need to carry out an immediate identification  and recording of all its fixed assets, and define policies for fixed assets accounting especially as it affects recognition and depreciation.

111. FAAN should enhance access security to its main business application package.

The measure should include the following:

(I) Password rule should be defined and configured in the system.

(II) The system should be enabled to force password change for new users at the point of first logon to the system.

(III)                          Users on the system should be trained on IT security to enable the adoption of good IT security practices.

(iv) User groups with various access levels should be created on the application to ensure segregation of duties. Each staff with systems access should be assigned to specific group.

(v)  A function should be established within Internal Audit for the regular and intermittent review of the systems, access authority levels and transactions logs to ensure integrity of the system, access leevls and transaction processing.

112. NAMA should review its Master Plan to include revenue and service level targets and other performance measures.

Proactive management

This will ensure that management is proactive in all aspects of the operation and that the annual budgets are derived from and are consistent with the Agency’s Master Plan. The Master Plan objectives will also guide in selection of priorities.

113. NAMA should review its contract award system.

NAMA would need to develop and enforce a structured procedure for evaluation and selection of contractors before registration and ensure that contracts are awarded to only registered contractors and within the approved registration limit. It should also require that contractors’ company letter-head specifies board of directors, contact phone numbers, company registration number with Corporate Affairs Commission (CAC). These details should be verified during assessment to ascertain their validity.

114. NAMA should review its financial and accounting system.

NAMA would need to automate and integrate its entire business processes to provide a single  local point for transactions processing, data storage, archiving and report generation. The automation should provide online real-time functionality for debtors and creditor classification and ageing profile. It should also invest operating surpluses in short term financial instruments rather than being tied down in current accounts; while customers should be categorised based on net worth. NAMA would also need to establish a procedure to enforce staff to retire advances collected promptly. Staff should not be allowed to collect new advances without retiring the previous ones collected.

115. Government should revisit the Aviation Network Project with a view to kick-starting it and ensuring its early completion.

Seamless services

The project is to provide information and communications Technology (ICT) infrastructure upoon which to run seamless services by all the agencies of the industry, on-line and in real-time with Lagos, Kano, Abuja, and Port Harcourt Airports. Currently, the project is not receiving due attention as some of the agencies seem to desire a separate network. The sum of N24 million has already been spent on consultancy alone; so it would be desirable to complete the project.

116. NIMET should review its financial and accounting system. NIMET would need to devise a comprehensive set of procurement a procedures and communicate them to all staff and implement them accordingly. The DG NIMET should enforce the recording of transactions in the appropriate ledgers.

There is also need to carry out  a full assessment of staff training needs and an adequate investment made on training in ACCPAC accounting Package before the software is implemented. Furthermore, NIMET would need to evaluate its staff mix and recruit qualified staff to perform audit and finance functions. Furthermore, the agency should clear all nu-reconciled items on bank conciliation statements.

Cheques whose lives have expired should be canceled an and reissued to beneficiaries if need be.

117. Nigerian airlines should be encouraged to undergo IATA Oversight Safety Audit (IOSA).

IATA has set an international standard for commercial airlines and regularly carries out audit on its members based on those standards. It is necessary that Nigerian airlines register with IATA to enjoy more international recognition, confidence and access to other tangible benefits such as technical assistance, which are consequent on successful audit.

118. Government should provide funds for the implementation of the …………..  of the new Communications Navigation Surveillance (CNS)/Air Traffic Management (ATM) systems by NAMA in accordance with the ICAO/AFI Implementation Plan. Airlines should equip their aircraft over the next five years to be able to operate into new CNS/ATM environment.

Navigation system

The CNS/ATM is the latest satellite based navigation system recommended for the industry. ICAO regulations require Governments and airlines to use the new system. This is to provide for safe operations and expeditions flow of air traffic.

119. Government should encourage private sector participation in building standard aircraft maintenance hangars. NCAA should also remove any existing impediment to third party use of available maintenance facilities.

The lack of well-equipped and properly manned hangar facilities is a major problem in Nigeria. In line with Government’s economic reform programme, interested investors could be assisted through tax waivers, land concessions by FAAN and access to funds to set up modern hangars.

To facilitate synergy in the industry, NCAA should remove any existing obstacles to third party use of available maintenance facilities. This would also encourage airlines to more effectively deploy or pool available engineering manpower and other resources for the benefit of the sector as a whole.

120. All existing BASA should be reviewed at their expiration. All future BASA should be guided by the principle of reciprocity.

Most of the commercial agreements were entered into at a time when the national carrier – Nigerian Airways- was not functional. Most of the domestic airlines then lacked capacity to compete internationally. However, it is noted that most domestic airlines have matured over the years and should be allowed to fly international routes. This would in turn give them access to foreign currency which is necessary to help boost their financial base for safer operations. All such agreements should adhere to the principle reciprocity in order to ensure fair and equal  opportunity for all carriers in the industry.

121. Government should upgrade the infrastructure at NIMET, preparatory to its full commercialization.

Available resources

NIMET provides essential service to several sectors of the nation, not just for aviation; and it has within available resource discharged its duties creditably well. However, most of its equip0ment are obsolete or unserviceable. The Task Force believes that if Government upgrades the facilities of NIMET, it could commercialise services.

122. NIMET should step up its effort to modernise weather observation equipment at the airports. It should also strengthen its Quality Control Unit to draw up standards, monitor job performance and functionality equipment. This is to ensure standard of equipment, services and personnel necessary for NCAA to provide oversight. It will also improve reliability and accuracy of weather reports.

CHAPTER 3
Causes of derelictin in the Nigerian Aviation Industry: An Overview:

3.1 Introduction:

3.1.1 The spate of airline accidents which claimed many lives in Nigeria in the last quarter of 2005 and the huge public outcry and disenchantment with the aviation industry which followed, were symptomatic of serious structural deficiencies. For an industry whose modus operandi is policing and enforcement of an internationally stringent safety and security standards, t have recorded several accidents within such a short space of time, is an indication of serious system failure.

3.1.2 Reacting to recent air disasters, an aviation analyst, David Learmount, pointed out, that globally, airline crashes in 2005, were a reversal of a much improved aviation safety standard of over a decade. In 2004, for example, with 28 fatal accidents and only 466 fatalities, the year had an all-time best safety performance. However, in 2005, the number of fatal (airline) accidents increased to 34, with 1,050 fatalities.

The Analyst goes on to point out that almost all the air accidents that occurred in 2005 involved smaller carriers, using older generation aircraft, in poor countries that already had a mediocre safety record in their air industry. The same report points out also that none of the aircraft types involved in the accidents were of the newer generation (i.e.) basically, post-1990). This, he concluded, is consistent with the established facts that each generation of aircraft has brought improved safety performance. Another useful conclusion in the same article which is relevant here is that there were no fatal accidents involving major airlines, for the period in question.