Enhanced Audit Regulation to Boost FDIs, Says FRC

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By Obinna Chima

The Financial Reporting Council of Nigeria (FRC) at the weekend said its move to improve audit regulation in the country will help attract more foreign direct investments (FDIs).

The Deputy Director/Head, Directorate of Accounting Standards, Public Sector, FRC, Dr. Iheanyi Anyahara, said this in a keynote address he delivered at a webinar titled: “Strategic Assessment of Financial Reporting Council’s Draft Audit Regulation,” organised by Crown Height Consulting.

Anyahara represented the Executive Secretary/Chief Executive Officer, FRC, Mr. Daniel Asapokhai, at the webinar.

“Great civilisations are built with huge capital which in turn requires the certainty that the discipline and integrity of responsible accounting delivers.

“Responsible audit regulation will strengthen the market to attract more patient capital from the global market. It is our societal duty and privilege to do what we are doing today,” the FRC deputy director said.

He pointed out that the event was one of the steps towards finalising the audit regulation, which he described as a strategic tool to enhance investor confidence in the country.

Anyahara, said Nigeria joined the global trend of establishing independent public oversight system for audit by repealing the Nigerian Accounting Standards Board Act No.

22 of 2003 and enacting The Financial Reporting Council of Nigeria Act No. 6, 2011.

According to him, the audit regulation exposure draft was a culmination of concerted and deliberate efforts of the Council which started with the setting up of Audit Regulation Working Group (ARWG) on October 30th 2018, comprising 14 members drawn from stakeholders, some of which included the big four audit firms; medium size audit firms; forum of Small and Medium Size Practitioners (SMPs); Office of the Auditor General for the Federation; among others.

“The draft exposure draft of the ARWG was subjected to further scrutiny by the Technical and Oversight Committee and the Governing Board of the Council and is being subjected to more crucial scrutiny by the entire stakeholders after which I believe a more acceptable regulation will emerge,” he explained.

Anyahara, listed the objectives of the Audit Regulation 2020, to include the provision of legal and regulatory framework for minimum practice guideline for auditors in Nigeria and to give effect to the provisions of the FRC Act; ensuring that all activities of Registered Auditors and other professionals in the financial reporting process are regulated with a view to sustaining best ethical practices capable of promoting quality audit services; to regulate and ensure that all registered auditors carry out their professional duties in a manner to earn the trust of clients and promote the image of the profession and the country; among others.

“The applicability of this regulation is expected to be a source of concern to many at this auspicious time with the controversy being generated with CAMA 2020.

“However, we are mindful of the fact that the two pieces of legislations are intended to promote trade and investments in Nigeria. The Council appreciates President Mohammad Buhari for the landmark achievement.

“Audit regulation is applicable in the Federal Republic of Nigeria and regulates all statutory Auditors, other assurance providers and audit committees. It however does not apply to Auditors-General.

“The Office of the Auditor-General for the Federation (OAuGF) is a constitutional body and the Supreme Audit Institution of Nigeria by virtue of Section 85(6) and 125(6) of the Constitution,” he added.

He reminded participants at the webinar that the draft Audit regulation document had since been exposed for comments by the Council, adding that the comment period would remain open until September 25, 2020.

“The financial crisis has demonstrated that robust, transparent audit practices need to be embedded in all organisations. Obviously, the Audit Regulation is an enabler for re-establishing the much-needed trust in audit profession.

“There is, therefore, a clarion call for strict compliance with the regulation by all concerned. This will orchestrate the need for a re-evaluation of remuneration structures; board level expertise and training; risk management, sustainability, etc.

With the ongoing pandemic, this regulation, providing increased transparency for investors and other stakeholders, are expected to be in high demand. “However, assurance by independent qualified professionals to enhance the credibility of corporate reporting will need to be pursued with vigour by all affected stakeholders,” he said.