Central Bank of Nigeria (CBN) in the year ended December 31, 2022, advanced a N23.18 trillion loan to the Federal Government under its ‘Ways and Means’ policy.
According to the Bank’s recently released financial report, this level of loan advanced to the Federal Government exceeded the statutory limit by N22.9 trillion.
The Group and Bank’s profits for the year were N103.854 billion and N65.626 billion respectively (2021: N75.125 billion and N31.044 billion respectively).
The consolidated and separate financial statements of the Central Bank of Nigeria (‘the Group’) for the year ended December 31, 2022 were prepared based on accounting policies which are derived from the IFRS Standards, the recommended practices in the guidelines issued by the Financial Reporting Council of Nigeria (FRCN) titled “Accounting Guideline for Financial Reporting by Central Bank of Nigeria” (“the Guideline”) in February 2018, revised annually for reporting period up to December 31, 2022, the relevant provisions of the Central Bank of Nigeria Act No. 7, 2007 and the Financial Reporting Council of Nigeria Act No. 6, 2011.
In line with the provisions of the Fiscal Responsibility Act 2011, 20 percent of the Net Income of the Bank will be credited to retained earnings while the balance will be paid to the Federal Government of Nigeria.
The report shows that temporary advance balance of N23.18trillion is an overdraft facility granted by the CBN to the Federal
Government of Nigeria.
Section 38 of the CBN Act limits the advance that the Bank can grant to the Federal Government of Nigeria (FGN) in any year to 5 percent of the actual FGN revenue in the preceding year.
For the year ended December 31, 2021, the FGN recorded a total revenue of N5.045 trillion and 5percent of the fiscal year revenue amounts to a statutory limit of N252.272 billion.
Read also: CBN posts N103bn annual profit, highest since 2017
The CBN report was released barely two weeks after President Bola Tinubu appointed Jim Obazee, ex-CEO of FRC as special investigator to investigate the Central Bank of Nigeria (CBN) and related entities.
The board of directors in their report said, “We present the state of affairs of the Group and the Bank as at December 31, 2022, the results and cash flows of the Group and the Bank in accordance with the accounting policies set out on pages 18 to 49 which are derived from the IFRS Standards as issued by the International Accounting Standards Board (IFRS Standards), the recommended practices in the guidelines issued February 2018, revised annually for reporting period up to 31 December 2022 by the Financial Reporting Council of Nigeria (FRC), titled “Accounting Guideline for Financial Reporting by Central Bank of Nigeria” (the Guideline) as it affects Central Bank of Nigeria operations, the CBN Act of 2007 and the Financial Reporting Council of Nigeria Act No. 6 of 2011.
“The consolidated and separate financial statements of the Central Bank of Nigeria (‘the Group’) for the year ended 31 December 2022 were prepared based on accounting policies set out on pages 18 to 49 which are derived from the IFRS Standards, the recommended practices in the guidelines issued by the Financial Reporting Council of Nigeria (FRCN) titled “Accounting Guideline for Financial Reporting by Central Bank of Nigeria” (“the Guideline”) in February 2018 , revised annually for reporting period up to 31 December 2022, the relevant provisions of the Central Bank of Nigeria Act No. 7, 2007 and the Financial Reporting Council of Nigeria Act No. 6, 2011″.
The CBN is a public interest entity as defined by Section 77 of FRC Act and therefore is under Financial Reporting Council purview.
An informed source confirmed the FRC just received the report and normally will set up a committee to review such high profile entity.
It was also learnt that where non compliance with accounting standards and other corporate disclosures are identified, CBN will be invited for inspection meeting for opportunities to explain.
“Some issues may be resolved while non resolved issues are sanctioned and they will be directed to effect corrections if they are not misleading,” the source added.
“Where the non compliance issues are material and misleading they will be required to withdraw and reissue. Above is our general procedure. This can be found on our website under inspectorate guidelines,” a FRC source noted.
