A Critical Literature Review: Reasons Why Illegal Extra-budgetary Expenditures Are Incurred by Government Ministries, Departments and Agencies (MDAs) in Nigeria

Abstract

Nigeria’s extra-budgetary or off-budget activities which did not pass through the usual legislative process of appropriation between 2006 and 2015 amounted to N21.8 trillion (about $109 billion)! In order to discover areas for further research, this study critically reviews the reasons why illegal or unauthorized extra-budgetary expenditures incessantly occur in Nigeria’s public sector. The findings from the literature show that the occurrence of illegal or unauthorized extra-budgetary expenditures in Nigeria is due to the following factors: insincerity, lack of knowledge and experience in budgeting and financial management, political considerations, lack of consistent legal framework, non-disclosure of extra-budgetary funds and audit failure. These findings consequently revealed the following critical areas in the existing literature that require further research: funding of the supreme audit institution, legislative oversight functions and use of government sanctions.

Key words: Illegal extra-budgetary expenditures, extra-budgetary expenditures, extra-budgetary funds, legislative process of appropriation, fraud triangle theory and agency theory.