ERP Audit Consultant, Nigeria

When a Nigerian ERP stops earning its keep

An ERP in Nigeria often carries a large share of the company's technology spend, frequently with license and support fees priced in dollars. When it is live but not delivering control, the cost is felt twice: once in the fees and again in the manual effort that surrounds the system.

The symptoms that justify a review tend to look like this:

• Withholding tax deducted by customers is recorded, but nobody can quickly list which credit notes are still outstanding.
• Unidentified receipts accumulate across several bank accounts, and bank reconciliations run weeks behind.
• Staff choose the exchange rate on each transaction, so the same day's purchases carry different rates.
• Depot stock and head office stock disagree, and transfers between depots are confirmed late or not at all.
• Board and lender reports are rebuilt in Excel from system exports.
• Nobody is sure when the last backup was restored successfully.

Each symptom has a cause, and most causes can be fixed through configuration, rules, master data and training rather than a new platform. The audit identifies them and ranks them, using my ERP health check method adapted to Nigerian conditions.

A word on boundaries. Nothing in this review amounts to a tax examination or substitutes for the annual audit, and it offers no prediction of how any transaction would be viewed by the tax authority. Where a finding has a tax dimension, I describe what the system does and refer the question to your tax advisor.

VAT, withholding tax and invoice data quality

Finance teams in Nigeria juggle output and input VAT, deductions customers make at source and withholding applied when suppliers are paid, each with its own documents and timing. An ERP that is set up loosely in any of these areas pushes the work back into spreadsheets before every return.

I review the tax codes on items, customers, suppliers and payment types, then test a sample of real documents. The questions are practical: does the system apply the right code without someone overriding it, are exempt and zero-rated items flagged consistently, and does withholding on supplier payments calculate and post where your accountant expects? Anything that looks inconsistent goes on a list for your tax advisor, who confirms the correct treatment. I do not set rates or interpret tax law.

Withholding credits from customers get a separate trace. For a sample of receipts where a deduction was made, I follow the trail to the credit note received from the customer and check whether the system shows which credits are still outstanding and for how long.

Tax administration in Nigeria has been moving toward electronic invoicing in stages, and reforms are changing how it is organized. Whatever the final requirements for your company, they will depend on complete invoice data. So the audit checks master data quality: customer tax identification numbers, addresses, item descriptions and tax breakdowns on each invoice. Gaps here are worth closing early. For writing these needs into a fresh specification, see business analysis in Nigeria.

Receipts across several banks and payment channels

Many Nigerian companies hold accounts with several banks and collect money through transfers, checks, card terminals and other channels at once. Each channel produces a different kind of statement line, and an ERP that is not set up for that variety leaves finance matching receipts by hand.

The audit follows receipts from each channel into the system. I look at how bank statements arrive, whether by file import, bank connection or manual entry, and how often. I check how transfers with free-text narrations are matched to customers, how card terminal settlements are recorded when they arrive net of charges and batched across many sales, and how a customer paying into a different bank account than usual is handled.

Then I take the unidentified and unallocated balances, age them and trace a sample to their cause. Common findings include:

• No agreed reference for customers to quote on transfers.
• Card settlements posted as one lump sum with charges never separated.
• Bank accounts added over time without matching rules or an owner.
• Receipts at depots recorded only when paperwork reaches head office.

The fix is usually a combination of payment references, matching rules, statement import and clear ownership of each account, which falls under ERP optimization. The result is faster reconciliations and debtor balances that customers will not dispute.

Exchange rates: who sets them, and can directors trust the result?

For Nigerian companies that import goods, pay foreign suppliers, service dollar loans or bill some customers in dollars, exchange rates are not a technical setting. They decide the reported cost of stock, the margin on sales and the size of exchange gains and losses. When rates are entered loosely, every report built on them inherits the problem.

The audit looks at the rate trail in detail:

1. Where the rates in the system come from, and whether that source matches what management and your accountant agreed.
2. Who can enter or override a rate on a transaction, and whether overrides need approval or leave a record.
3. How imported goods are costed, including how freight, duties and clearing charges in different currencies reach the item cost.
4. How dollar bank accounts, debtors, creditors and loans are revalued, and whether the same rate is used consistently.
5. Whether management reports show realized and unrealized exchange differences separately and in a way the board can follow.

I compare a sample of transactions with the documented rate for the same day and list the differences and their causes. Which rate source should apply for accounting purposes is a decision for your accountant; my part is showing whether the system follows it. For the design side of this topic, see multi-currency ERP.

Access, payroll postings, backups and the findings report

The final area covers control and continuity. On access, I compare user roles with the authority management intended, looking for one person holding conflicting powers, such as setting up a vendor and editing its bank account, or approving a bill and then releasing its payment. Shared logins at depots and dormant accounts of former staff or consultants are listed for action. Where full separation is unrealistic, I suggest compensating checks.

Payroll in Nigeria is often processed outside the ERP, in a payroll system or by a provider who handles statutory deductions. I do not review the calculations, but I check that the posting file brings salaries, deductions and employer costs into the right accounts and cost centers without manual repair.

Power and connectivity make continuity a real question. I ask where the system is hosted, how backups are taken, where they are stored and whether a restore has been tested recently. Personal data is noted for whoever handles data protection obligations. Licenses are compared with actual use, which matters more when fees are priced in dollars.

The report gives management a short summary, then each finding with its cause, business effect and recommended fix, rated by impact and urgency. Tax observations sit in their own section for your tax advisor. Where the review uncovers an implementation that was never properly completed, the ERP rescue page for Nigeria explains the next step. See also the Nigeria overview and the ERP consultant page for Nigeria.