Only professional accountants can head audit committees, says FRC

Henceforth, only professional accountants, duly certified in the country, will assume roles of chairmen of audit committees of entities engaged in certifying accounts, financial statements, financial reports, returns and other documents of a financial nature in corporate Nigeria.

Besides, only accounting professionals trained with accounting bodies established by the Act of Parliament of Nigeria can sign accounts of companies. Those with foreign qualifications will have to domesticate them by taking membership of professional accounting bodies in the country to qualify for the purpose.

The Chief Executive Officer of Financial Reporting Council of Nigeria (FRC), Jim Obazee made these disclosures while on a courtesy visit, along with members of the National Steering Committee on the draft National Code of Corporate Governance (NCCG), to the Securities and Exchange Commission (SEC) in Abuja recently, in continuation of the council’s consultations with relevant stakeholders on the final draft of NCCG.

Obazee explained that the new rules were part of efforts to promote credible financial reporting and good corporate governance in the country.

According to him, rule two of FRC states that “any person attesting, as Chairman of Audit Committee, to annual report, financial statements, accounts, financial reports, returns and other documents of a financial nature, shall be a professional member of an accounting body established by Act of the National Assembly in Nigeria.”

Also, he quoted rule one of the council which states “person holding the position of Chief Executive Officers (CEO) and Chief Financial Officer (CFO) of an entity are required to certify the yearly report, financial statements, accounts, financial report, returns and other documents of a financial nature indicating their FRC registration numbers.”

Accordingly, “the CFO providing certification shall be a professional member of an accounting body established by Act of National Assembly in Nigeria.”

The FRC’s directive may however, pitch it against some shareholders who are already heading some audit committees without being professionally qualified accountants.

Indeed, some audit committee members, who spoke to The Guardian on condition of anonymity, disagreed with FRC position on qualification for audit committee chairmanship, saying that section 359 of CAMA did not provide for specific qualification for audit committee membership.

But FRC insisted that FRC Act is an improvement on the provisions of CAMA which are largely outdated.

Obazee explained that FRC believes that only a professional accountant can interpret complex financial statements, thus the Chairman of Audit Committees has to be a professional

According to him, “though rules above have been in existence, this is an opportunity to further enlighten the people of their existence so that as many as possible corporate entities and individuals can know or be reminded about them.”

The Director-General of SEC, Mounir Gwarzo pledged his commission’s support to the harmonisation of the draft NCCG and establishment of the national online account reporting platform.

He urged the FRC to continue to hold more of such consultations with all relevant stakeholders with a view to coming out with a final draft that is largely acceptable to all.