For effective and full implementation of Audit Regulations 2020, Executive Secretary/Chief Executive Officer of the Financial Reporting Council (FRC) of Nigeria, Dr Rabiu Olowo, said the Council would commence quality control review and inspection of auditors of public interest entities in January 2024.
Olowo, who disclosed that at a roundtable in Lagos yesterday, said the council, in its bid to strengthen audit regulation, enhance audit quality and ensure that audit opinion issued by auditors in Nigeria is acceptable globally, is on the verge of concluding its membership registration with the International Forum of Independent Audit Regulators (IFIAR).
Olowo said the FRC has witnessed concerning evidence that numerous entities and government institutions are falling short of the high standards expected of them under the FRC Act 2011.
He said the council’s task is to transform the FRC into a new, robust, independent, and high-performing regulator comparable globally.
Olowo said Section 60 of the FRC Act 2011 (as amended) mandates the council to carry out practice reviews of professional accountants in a bid to enhance audit quality
He said the council issued Audit Regulations 2020, which was signed by the former Minister of Industry, Trade and Investment, Adeniyi Adebayo, and became effective in 2022.
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.
“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.
According to him, the council is currently in collaboration with the United Nations Conference on Trade and Development (UNCTAD) on the implementation of accounting development tools (ADT) in Nigeria.
He said 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.
Olowo further noted that the country will ensure enforcement and compliance of accounting and financial reporting standards and corporate governance codes.
He said the purpose is to ensure that entities comply with financial reporting standards, corporate governance codes and other corporate requirements in Nigeria.
According to him, this will be achieved through the council’s inspection specialist programme (ISP), which aims to drive the effective monitoring and inspection of annual reports and financial statements of Public Interest Entities to ensure accuracy, transparency and reliability.
He said through the ISP, the council will critically scrutinise and analyse a substantial amount of the corporate reports in Nigeria to engender investor confidence in financial statements.
“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.
