NNPC Limited Delegated Financial Authority
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Questions and Answers

What function is responsible for ensuring consistent user profiles and automation of the Delegation of Authority (DFA)?

  • IT Function (correct)
  • F&A Function
  • Governance Risk & Compliance (GRC)
  • Legal & HR Functions

    • Which group ensures consistent adherence to the segregation of duties principle and risk mitigation?

  • Legal & HR Functions
  • Supply Chain Management (SCM)
  • Governance Risk & Compliance (GRC) (correct)
  • Internal Audit (IA)

    • Who is responsible for ensuring value-added procurement, whole life cycle cost consideration, and publication of quarterly spending reports?

  • IT Function
  • Supply Chain Management (SCM) (correct)
  • Internal Audit (IA)
  • F&A Function

    • Which entity outlines authorities for operating and capital expenditures, contract variation limits, and sub-delegation rules?

    <p>Delegation of Authority (DFA)</p> Signup and view all the answers

    What is responsible for maintaining custody of the DFA and ensuring payment order preparation and suspension if necessary?

    <p>F&amp;A Function</p> Signup and view all the answers

    Who must act according to NNPC Limited's governance environment, seek interpretation from higher levels in case of doubt, and comply with regulatory provisions?

    <p>Individuals with authority</p> Signup and view all the answers

    What prevails in case of inconsistency between the DFA and other policies unless it leads to non-compliance with regulatory provisions or the NNPC Limited Code of Conduct and Business Ethics Policy?

    <p>Delegation of Authority (DFA)</p> Signup and view all the answers

    Who ensures strict enforcement of the NNPC Code of Ethics and Business Conduct, authority derivation, and consideration of organizational and legal structure changes?

    <p>Legal &amp; HR Functions</p> Signup and view all the answers

    Who includes DFA review in audit programs?

    <p>Internal Audit (IA)</p> Signup and view all the answers

    Who are expected to act in accordance with their defined roles and responsibilities according to NNPC Limited and its subsidiaries?

    <p>Recognized positions</p> Signup and view all the answers

    What is the main objective of Delegated Financial Authorities within NNPC Limited?

    <p>To promote financial discipline within the Company by balancing efficiency with financial controls</p> Signup and view all the answers

    Which act is mentioned as a relevant regulation for the delegated financial authorities?

    <p>Petroleum Industry Act 2021</p> Signup and view all the answers

    What is the purpose of the scope of Delegated Financial Authorities?

    <p>To form part of the internal control processes for the Company and its subsidiaries</p> Signup and view all the answers

    What document should be applied in conjunction with the Delegated Financial Authorities to ensure total compliance?

    <p>The contracting and procurement policies</p> Signup and view all the answers

    Which act is not mentioned as a relevant regulation for the delegated financial authorities?

    <p>Nigerian Oil and Gas Industry Content Development Act</p> Signup and view all the answers

    What is one of the objectives of the Delegated Financial Authorities?

    <p>To establish rules on sub-delegation</p> Signup and view all the answers

    What is intended to be consistent with the delegated financial authorities?

    <p>Relevant policy documents including but not limited to the contracting and procurement policies</p> Signup and view all the answers

    What is the scope of Delegated Financial Authorities intended to be consistent with?

    <p>The Nigerian Code of Corporate Governance 2018</p> Signup and view all the answers

    In addition to relevant regulations, what else should the Delegated Financial Authorities be consistent with?

    <p>Leading practices</p> Signup and view all the answers

    What does the Objective of Delegated Financial Authorities aim to promote within NNPC Limited and its subsidiaries?

    <p>Efficient financial controls</p> Signup and view all the answers

    What is the purpose of the Delegated Financial Authorities (DFA) within NNPC Limited and its subsidiaries?

    <p>To outline authorities for operating and capital expenditures</p> Signup and view all the answers

    What is responsible for maintaining custody of the DFA and ensuring payment order preparation and suspension if necessary?

    <p>The CFO for NNPC Limited and ED Finance for Subsidiaries</p> Signup and view all the answers

    Which entity ensures consistent adherence to the segregation of duties principle and risk mitigation?

    <p>Company policies and procedures</p> Signup and view all the answers

    What does the annual budget approval process involve?

    <p>Approval by the Board before the start of the financial year</p> Signup and view all the answers

    Who must escalate decisions not covered by the DFA to the CEO for action and report to the Board?

    <p>Budget Owners</p> Signup and view all the answers

    What are required for Level 4 committees and new Subsidiary Level 2 and 3 committees?

    <p>Business cases</p> Signup and view all the answers

    What is one of the key requirements for the procurement plan under the Delegation of Authority Framework?

    <p>The procurement plan should be submitted annually</p> Signup and view all the answers

    What is the responsibility of the Budget Department/Planning under the Delegation of Authority Framework?

    <p>Reviewing and revising the department's budget as needed</p> Signup and view all the answers

    What is a requirement for payment under the F&A section of the Delegation of Authority Framework?

    <p>Only valid invoices duly supported and approved are paid</p> Signup and view all the answers

    When should the procurement plan be submitted according to the Delegation of Authority Framework?

    <p>Annually</p> Signup and view all the answers

    What does the Budget Department/Planning ensure in relation to expenditure against contracts?

    <p>Monitoring monthly expenditure to ensure contractual commitments are not exceeded</p> Signup and view all the answers

    What is the role of the CFO or his nominee in relation to procurement budgeting?

    <p>Confirming budget availability prior to contract award</p> Signup and view all the answers

    What is a key requirement for payment under the F&A section of the Delegation of Authority Framework?

    <p>Ensure adequate approval and authorization before payment</p> Signup and view all the answers

    When is single sourcing allowed in the NNPC Limited Delegation of Authority Framework?

    <p>When the work or service is of a specialized proposal with strong justification</p> Signup and view all the answers

    Who must authorize emergency expenditures in NNPC Limited or its subsidiaries?

    <p>Company or Subsidiary CEOs</p> Signup and view all the answers

    What action is required from the CEOs after emergency expenditure in NNPC Limited or its subsidiaries?

    <p>Inform the Head of Legal within a week</p> Signup and view all the answers

    What happens if a delegate or substitute circumvents controls and violates policies according to NNPC Limited?

    <p>They are exempt from any consequences</p> Signup and view all the answers

    Which departments are responsible for registering individual signatures of delegates and substitutes in NNPC Limited?

    <p>Legal, F&amp;A, and Company’s assurance and audit functions</p> Signup and view all the answers

    In NNPC Limited, what should IT access rights of staff be in accordance with?

    <p>Delegated Financial Authorities (DFA)</p> Signup and view all the answers

    What happens during temporary transfers of authority to substitutes in NNPC Limited?

    <p>The substitutes are limited to the authorities specifically delegated to them</p> Signup and view all the answers

    Who is required to approve borrowing funds under existing credit facilities and issuing guarantees or letters of credit?

    <p>The CEO and CFO</p> Signup and view all the answers

    What is the approval process for real estate purchases and sales, as outlined in the text?

    <p>Joint approval from the CEO and Head of Legal Services</p> Signup and view all the answers

    Who must approve foreign business travel for the CEO, MDs, members of SMT, and heads of CSUs?

    <p>The Board of Directors</p> Signup and view all the answers

    What is required for asset disposals exceeding $10,000 according to the text?

    <p>Approval from the Board and GRC notification</p> Signup and view all the answers

    Who is authorized to execute severance agreements according to the text?

    <p>CEO only</p> Signup and view all the answers

    What level of approval is required for foreign business travel not falling within the specified personnel categories?

    <p>Internal Audit function</p> Signup and view all the answers

    Who approves single sourcing contracts according to the text?

    <p>Business owner or budget holder and the NNPC Board</p> Signup and view all the answers

    In the context of NNPC Limited's Delegation of Authority Framework, what is the first step for the activation of Level 4 or new subsidiary Level 2 & 3 tenders committee?

    <p>The Level 3 heading the relevant division documents a business case</p> Signup and view all the answers

    When a subsidiary identifies that it may need more flexibility to purchase cost of goods and generate revenue, what does it seek for?

    <p>Unlimited significant recurring OPEX</p> Signup and view all the answers

    Who is responsible for reviewing the feedback of GRC and budget functions before making a recommendation to the NNPC Limited CEO for significant recurring OPEX in subsidiaries?

    <p>CFO</p> Signup and view all the answers

    In the context of NNPC Limited's Delegation of Authority Framework, who initiates a memo when the delegate is unable to personally initiate it?

    <p>Sub-Delegate</p> Signup and view all the answers

    In the context of NNPC Limited's Delegation of Authority Framework, what does the NNPC Limited CEO review before making a recommendation for significant recurring OPEX in subsidiaries?

    <p>Business case itemising significant recurring OPEX, risks, and controls</p> Signup and view all the answers

    What is required when NNPC Limited or subsidiary division identifies that it can only operate efficiently by having a Level 4 or new subsidiary Level 2 & 3 tenders committee take ownership of some expenditure?

    <p>Creation of the committee</p> Signup and view all the answers

    What does the Level 1 in the case of subsidiary require to do with the business case for Level 4 or new subsidiary Level 2 & 3 tenders committee?

    <p>Pass the business case to the subsidiary Board for its Pre-Approval</p> Signup and view all the answers

    What does the MD require to do with the business case itemising significant recurring OPEX for seeking its unlimited nature in subsidiaries?

    <p>Pass it to the subsidiary Board for Pre-Approval</p> Signup and view all the answers

    What is the main responsibility of the Budget Department/Planning under the Delegation of Authority Framework?

    <p>Ensuring alignment with the annual budget approval process</p> Signup and view all the answers

    Who is responsible for reviewing GRC and budget functions feedback before making a recommendation to the NNPC Limited CEO for significant recurring OPEX in subsidiaries?

    <p>MD</p> Signup and view all the answers

    What is intended to be consistent with the Delegated Financial Authorities within NNPC Limited and its subsidiaries?

    <p>Annual budget approval process</p> Signup and view all the answers

    What is one of the functions of NNPC?

    <p>Regulating and operating in the oil and gas sector</p> Signup and view all the answers

    What has NNPC outlined plans to establish?

    <p>A security advisory council</p> Signup and view all the answers

    What has been a challenge for NNPC in enforcing?

    <p>Joint venture (JV) obligations</p> Signup and view all the answers

    What has the Nigerian government been diversifying out from, with the potential help of NNPC's economic reforms?

    <p>Oil</p> Signup and view all the answers

    What is one of the significant challenges for NNPC?

    <p>Enforcing JV obligations</p> Signup and view all the answers

    What is NNPC embracing in terms of governance reforms?

    <p>Governance reforms</p> Signup and view all the answers

    What does NNPC aim to establish to address security challenges?

    <p>A security advisory council</p> Signup and view all the answers

    What sector does NNPC primarily regulate and operate in?

    <p>Oil and gas</p> Signup and view all the answers

    What is NNPC's role in economic development?

    <p>Regulating and operating in the oil and gas sector</p> Signup and view all the answers

    Study Notes

    • NNPC Limited Delegation of Authority outlines authorities for the company's operating and capital expenditures, contract variation limits, emergency or extra-budgetary expenditure rules, and sub-delegation rules.

    • Individuals with authority must act according to NNPC Limited's governance environment, seek interpretation from higher levels in case of doubt, and comply with regulatory provisions.

    • In case of inconsistency between DFA and other policies, DFA prevails unless it leads to non-compliance with regulatory provisions or the NNPC Limited Code of Conduct and Business Ethics Policy.

    • NNPC Limited's recognized levels of authority include the Board of Directors, various Tenders Committees, CEO, Heads of Operating Segments, Divisions, and Departments, as well as the Board of Directors and MDs at the subsidiary level.

    • F&A Function is responsible for maintaining custody of the DFA, ensuring payment order preparation and suspension if necessary.

    • IT Function is responsible for ensuring consistent user profiles and automation of the DFA.

    • Legal & HR Functions ensure strict enforcement of the NNPC Code of Ethics and Business Conduct, individual approving officers' authority derivation, and consideration of organizational and legal structure changes.

    • Governance Risk & Compliance (GRC) ensures consistent adherence to the segregation of duties principle and risk mitigation.

    • Internal Audit (IA) includes DFA review in audit programs.

    • Supply Chain Management (SCM) ensures value-added procurement, whole life cycle cost consideration, risk management, contract administrator assignment, and publication of quarterly spending reports.

    • Authority limits are detailed, applied with other control frameworks.

    • NNPC Limited and its subsidiaries' recognized positions are expected to act in accordance with their defined roles and responsibilities.

    • The DFA is a part of NNPC Limited's policies, guiding procurement and expenditure.

    • It applies to NNPC Limited and its subsidiaries.

    • Company policies and procedures must be adhered to before approving transactions.

    • Automated controls are implemented for the entire expenditure cycle.

    • Segregation of duties and conflicts of interest avoidance are necessary in procurement.

    • Expenditures must be within approved budgets, except for payroll and significant recurring OPEX.

    • Annual budgets must be approved by the Board before the start of the financial year.

    • Quarterly budget performance reports must be submitted to the Board.

    • Due diligence and proper categorization of projects are expected from Budget Owners.

    • Two-thirds of evaluation committee members must sign off on tender result validation.

    • No payments can be made without complying with contracting and procurement policies.

    • Decisions not covered by the DFA are to be escalated to the CEO for action and reported to the Board.

    • Subsidiary budgets require pre-approval from the NNPC Limited Board.

    • Quarterly subsidiary financial reviews are conducted by the NNPC Limited Board.

    • Approval limits for specific commitments (tenders and non-tendered expenditure) vary across NNPC Limited and subsidiaries.

    • All limits are defined in USD terms and converted to naira annually using the same exchange rate as the budget.

    • Significant recurring OPEX, such as crude handling costs, are excluded from budgeted amounts and are subject to CEO and MD approval, endorsed by the CFO for NNPC Limited and ED Finance for Subsidiaries.

    • Business cases are required for Level 4 committees and new Subsidiary Level 2 and 3 committees.

    • Subsidiaries are classified into three classes and their CAPEX approval limits are based on their classification.

    • The DFA outlines the approval limits for each level across NNPC Limited and subsidiaries for tenders and non-tendered expenditure.

    • The text discusses the controls and procedures for various financial and operational functions in NNPC Limited.

    • The Procurement and Contracting functions have restrictions on payments, with controls in place to ensure compliance with agreed milestones.

    • Independent Assurance Functions, such as Internal Audit, periodically audit contracts and confirm compliance with approved milestones.

    • The Procurement plan is created by NNPC Limited and subsidiaries, with similar items pooled together for synergy.

    • The CEO and CFO must approve borrowing funds under existing credit facilities and issuing guarantees or letters of credit.

    • Legal expenses within the CEO’s expenditure limit require joint approval by the CEO and Head of Legal Services.

    • Bids and bid contracts are reviewed according to NNPC’s procurement and contracting policies.

    • The Legal Department and Division HOD review real estate purchases and sales, with joint approval from the CEO and Head of Legal Services required.

    • Leases and rental agreements are reviewed by the Head of Legal Services, with a copy sent to the CFO.

    • All severance agreements require approval from the Legal function, with only the CEO authorized to execute them.

    • The CEO, MDs, members of SMT, and heads of CSUs approve foreign business travel, while all other levels go to the next level in the hierarchy.

    • All asset disposals require Board approval, with the legal department and GRC notified prior to sale if exceeding $10,000.

    • The Board approves all write-offs and impairments.

    • Board approval is necessary for all borrowing and financing.

    • Subsidiaries must align with NNPC Limited’s procurement and treasury policies, with annual work programs and budgets pre-approved by the NNPC Limited Board.

    • Single sourcing, where the contract is awarded without considering multiple tenders or bids and controlled solely by a vendor, requires approval by the business owner or budget holder and the NNPC Board.

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