The Central Bank of Nigeria (CBN) is lagging behind in the adoption of the International Financial Reporting System (IFRS) raising concerns it might not be morally justified to push ahead with its regulatory functions in the industry.
Nigeria is signatory to the IFRS which compels its public and special entities to adopt the new accounting regime, for which the Financial Reporting Council (FRC) on December 2, 2010 launched the roadmap for the implementation.
In compliance with the FRC road-map, banks in the country have transited to IFRS last year, signaling their adoption of the new accounting regime in the country.
The FRC sets implementation of IFRS in three phases. The first mandates publicly listed and significant public interest entities to prepare their financial statements using applicable IFRS by January 1, 2012 while other public interest entities are under obligation to adopt IFRS for statutory purposes by January 1, 2013.
The third phase however requires Small and Medium-Sized Entities (SMEs) to compulsorily adopt IFRS accounting standard by January 1, 2014. Going by this, SMEs in the country will statutorily be asked to issue IFRS-based financial statements for the year ended December 31, 2014.
BusinessDAY investigations revealed that the CBN is yet to comply with the IFRS and the apex bank had last year requested the FRC to extend its compliance with the new regime by seven years.
The FRC it was gathered, has refused to shift ground on the deadline and this has forced the apex bank to ask for one year grace, which the FRC has not also approved of.
Ugo Okorafor, the apex bank’s spokesperson, told BusinessDay that the CBN had been exempted from complying with the new accounting regime.
“We had an exemption from FRC”, Okorafor said in a text message to BusinessDay.
“Please enquire from FRC” he said in another text message, as he declined comment on the reasons for the exemption and the grace period for the apex bank to comply.
Inquiries from the FRC revealed however that there was no such exemption to the apex bank or any other institution in the country by the FRC.
According to a source in the FRC, who seeks anonymity because he is not competent to talk to the media, the council will not shift from its position on the implementation of the road map.
“We are not shifting position on the implementation road map and we did not approve any exemption for the CBN. It will be unfair on others that have complied if we are to approve exemption for the apex bank. Others will see it as policy summersault if a government institution finds it difficult to comply”.
The FRC is an improvement of the NASB, to be at par with the international community which has since a moved a step above Nigeria and has introduced a system of internationally accepted standards for preparing and issuing statements and general codes of corporate governance.
NASB Act 22 of 2003 was passed by the National Assembly at a time of major financial upheavals worldwide involving Enron, WorldCom and locally, African Petroleum, and in response to the need to protect investors who use financial statements to make decisions.
To come to this stage, Nigeria reviewed the operations of NASB in comparison with similar agencies in Mauritius, Malaysia, and the United Kingdom and concluded that the board was inadequate to generate investors’ confidence in the economy because of doubtful financial reports by companies.
By: BADEJO ADEMUYIWA