FRCN Bars Foreign Audits, Accounting Firms from Signing off on Company Accounts

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By James Emejo in Abuja

The Executive Secretary, Financial Reporting Council of Nigeria (FRCN), Mr. Jim Obazee, has said going forward, overseas audit/accounting firms whose certificates have not been domesticated are barred from signing off on company accounts in the country.

He also said any member of a company’s audit committee who is not an accountant is no longer allowed to be part of such committees.

He said: “The rule now is that you have to be an accountant to be on an audit committee so that you’ll understand your accounts.”

Obazee said it would henceforth amount to a breach of the code of corporate governance as well as the FRC Act for firms with overseas qualification to approve financial accounts of Nigerian companies unless such accounting or audit firm have the Nigerian equivalent of their professional qualification.

The rule also applies to Nigerians who hold foreign certification without the Nigerian complement.

He said: “The accounts that they sign are not recognised unless they have Nigerian equivalent qualification.”

Speaking in Abuja during a courtesy visit to the Securities and Exchange Commission (SEC), he maintained that “It doesn’t matter how highly trained you are in England, those certificates are not recognised for the purposes of signing accounts in Nigeria until you have domesticated those certificates” adding that “These things have been happening but the people don’t know.”

However, the FRC boss said the visit to SEC was necessitated by the need to have the input of the Commission to the proposed National Code of Corporate Governance which would soon be operational. A public hearing on the subject is billed for June in Lagos.

He maintained that there was increasing need for companies to adhere to the details of the FRC Act to enhance transparency and eliminate lax corporate governance.

He said: “The protection of the investing public has hitherto focused primarily on the reporting of results. Entities are required to provide their financial reporting stakeholders with fair, transparent and reliable financial results, give information necessary to understand those results and secure the attestation of independent financial reporting experts in order to give comfort to the user of the information. Internationalisation is beginning to change all of these.

“The reporting of results alone is no longer sufficient. In addition to financial results, entities are now required to analyse and evaluate the quality of the processes and controls used to report the results. To achieve this objective, it is important for relevant institutions to collaborate sufficiently and in a timely manner.”

He said there was currently greater awareness by investors, directors, managers, and auditors on the urgency to improve compliance with financial reporting requirements by publicly traded companies largely through the efforts of various regulatory agencies.

He said: “Today, monitoring and enforcement mechanisms of accounting and auditing standards and codes have improved (although international audit standards have not been implemented); errant companies and auditors are now being sanctioned. The progress is an indication of government’s commitment to improving the quality of financial reporting/corporate governance, key contributors to enhancing investor confidence and economic growth.”