CEM REPORT, FINANCE | In a bid to beef up standards and ensure that auditors keep to regulations, the Financial Reporting Council (FRC) of Nigeria, has revealed plans to commence quality control review and inspection of auditors of public interest entities in January 2024.
Rabiu Olowo
The council said it is currently in collaboration with the United Nations Conference on Trade and Development (UNCTAD) on the implementation of accounting development tools (ADT) in Nigeria.
According to the Executive Secretary/Chief Executive Officer of FRC, Rabiu Olowo, the council is set to implement the Audit Regulations 2020.
The Audit Regulations 2020, was signed by the former Minister of Industry, Trade and Investment, Adeniyi Adebayo, and became effective in 2022.
Elaborating on its planned quality control review and inspection, Olowo said the council has delegated the review of non-public interest entities (NPIEs) to the two Professional Accounting Organisations Association of National Accountants of Nigeria (ANAN) and the Institute of Chartered Accountants of Nigeria (ICAN) with the signing of an instrument of delegation.
He explained that the move is all in a bid to ensure that audit quality and audit opinion issued by auditors in Nigeria is acceptable globally. Adding that concerning evidence that numerous entities and government institutions are falling short of the high standards expected of them under the FRC Act 2011 is put to bed.
“The bedrock of the transformation agenda of the Council going forward is to ensure maximum compliance with the FRC Act 2011 (as amended), and other statutory instruments released by the Council. FRC intends to give full credibility to any financial statements coming out of Nigeria in a way that investors can rely on the information in the statements.
“A new FRC that will be firm and fair in carrying out its mandate; that will hold corporate entities and individuals accountable and that will restore confidence in corporate reports and governance in the Nigerian economy thereby enhancing the renewed hope of President Bola Ahmed Tinubu,” he said.
Furthermore, Olowo stressed that to ensure that entities comply with financial reporting standards, corporate governance codes and other corporate requirements in Nigeria, the council will press for compliance and enforcement of accounting and financial reporting standards and corporate governance codes.
He explained that the council’s inspection specialist programme (ISP) will be the key to achieving this goal, emphasizing that through the ISP, the council will thoroughly examine and analyze a significant number of corporate reports in Nigeria, with the intent of fostering investor trust in financial statements
He noted that ISP is designed to enhance the monitoring and inspection of annual reports and financial statements of Public Interest Entities, with the ultimate aim of ensuring accuracy, transparency, and reliability.
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“Over the years, the Council has through its inspections and monitoring activities observed a relative non-compliance with the FRC Act and applicable corporate reporting requirements. It has been observed that a significant number of entities claiming not to be PIEs do not file their financial statements with the Council.
“Also, the majority of government organisations do not prepare and file their financial statements at all or use inappropriate financial reporting frameworks. They claim to have adopted IFRS instead of IPSAS and vice versa. This unacceptable situation has to be corrected immediately during my tenure,” he added.
Furthermore, Olowo said the FRC is on the verge of concluding its membership registration with the International Forum of Independent Audit Regulators (IFIAR) as well as collaborating with the United Nations Conference on Trade and Development (UNCTAD) on the implementation of accounting development tools (ADT) in Nigeria.
The ADT is a technical aid, built on international consensus, to assess the legal, institutional and human resource requirements for a strong accounting and reporting infrastructure.
