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A single line in Note 35 of the audited financial statements of Osun State for the year ended 31 December 2025 records an asset that did not exist twelve months earlier. The line reads Loans to Local Governments, and the figure against it is N30,014,951,152.58.
The local loans book of the state stood at N1,111,848,196.76 at the end of 2024. By the end of 2025 it had risen to N32,068,085,602.63, driven almost entirely by the new line. Against the whole book, the statements record principal repayments of N16,286,336.38 for the year. The statements examined by SecretsReporters do not name the councils that received the loans, do not state the terms on which the money was lent, and do not state a purpose beyond a generic sentence about soft loans for agriculture, small businesses and general administration.
The Auditor-General for Osun State, Kolapo Idris, took the matter up in his own report on the 2025 accounts, and his findings go further than the note. In the cash flow statement, loans to local governments appear at a different figure, N27,001,703,770.94, and they appear in the wrong place, under operating activities. The Auditor-General directs that they belong under investing activities, and records that the cash flow figure is N3,013,247,381.64 below the figure in Note 35. He further records that funds released for the payment of local government staff during the year were not reported in the statements at all, and demands to know the amount and whether it was a loan or a grant.
Management’s published response concedes the substance. The payments for local government staff, the response states, were reported in the financial statements as Loan to the Local Government. Money spent by the administration of Governor Ademola Adeleke paying the wages of council staff was therefore carried on the books of Osun State as an asset, a loan receivable from the same councils whose staff the state had paid. No council is named as owing any part of the N30,014,951,152.58, and no repayment schedule is published.
In the same year, the grant route to the councils was opened on paper and left unused. Note 17 of the statements shows Local Grants and Contributions revised in-year from an original budget of N6,937,939,220 to a final budget of N27,064,639,140, an increase of N20,126,699,920, and the revision introduced a new Grant to Local Governments line of N22,194,849,920. Actual grants paid in the year came to N1,347,525,692.15 in total, and the grant to local governments line itself shows nil paid. The statements offer no reconciliation between the grant that was budgeted and paid nothing and the loan that absorbed N30,014,951,152.58.
The Auditor-General’s report carries a wider finding on the statements themselves. The budget figures against which the audited performance of Osun State is measured are not the figures the House of Assembly passed. Capital expenditure appears in the statements at a budget of N167,030,716,412, against N191,549,142,270 in the Appropriation Law. Personnel cost appears at N96,601,480,074 against N102,895,821,010 in the law. The Auditor-General invokes IPSAS 24, the standard governing the presentation of budget information in financial statements. Management’s response states that the statements were tailored toward the revised budget of the state as presented by the Ministry of Budget and Economic Planning. The effect is that the performance percentages certified for 2025 are measured against a budget the Assembly never approved.
The same exchange produced a further admission by management. On queries over employee benefit deductions, management responded that deduction at source is disclosed as part of state liabilities in the form of off-balance sheet items, and named the item in its own words: Undisclosed loan. The Auditor-General had already recorded that the liability figure appears not to reflect the true state of the deducted amount. An undisclosed loan, held off the balance sheet by the government’s own description, sits outside the disclosure discipline of IPSAS, on whose accrual basis the statements claim to be prepared, and outside the Fiscal Responsibility framework that governs how the state reports what it owes.
The statements were nevertheless certified with an unqualified opinion. The Auditor-General’s opinion, bound into the statements, holds that they show a true and fair view of the financial state of account of Osun State as at 31 December 2025, and closes with the words, based on available documents.
Source: …Secretsreporters