In response to the lack of clarity surrounding compliance with the provisions of the FRC Act, 2011, Deloitte Corporate Services Limited hosted a Roundtable on Tuesday, June 4, 2013 at the Protea Hotel, Isaac John, G.R.A. Ikeja. Lagos.
The event created a forum for frank and engaging dialogue regarding some of the issues that have come up since the enactment of the Act and the challenges posed by some of its provisions. Criticism of the Act range from its applicability to practically every business structure (and indeed not-for-profit entities), far reaching powers granted to the Financial Reporting Council of Nigeria (FRCN) and the stiff sanctions attached to non-compliance.
A panel of subject-matter specialists chaired by Fabian Ajogwu (SAN), discussed the implications of the Act. Other panelists were the Executive Secretary and Chief Executive Officer at the FRCN, Jim Osayande Obazee; Jibril Aku, Managing Director, Ecobank Nigeria Ltd; Haruna Jalo-Waziri, Executive Director, Business Development, Nigerian Stock Exchange; Sir. Chris Ogbechie, Director, Etisalat Corporate Social Responsibility Centre; , Oduware Uwadiae, Partner in charge of IFRS Implementation, Akintola Williams Deloitte and Osaretin Odaro-Oyewumi, a Corporate Governance Consultant and CEO of CLB-Sage.
Aku voiced the concern of the organized private sector, particularly the financial services sector with respect to the reporting requirements of the FRC Act. According to him, the primary industry regulator – the CBN – required Banks to submit their financials for approval before same were made public. Upon getting CBN approval, Banks now had to submit these accounts to the FRCN before publishing them. He however conceded that if the FRCN has the required resources to enable it achieve its objective of world-class financial reporting, it was a commendable development.
In her presentation Osaretin Odaro-Oyewumi raised the issue of the capacity of the Council to enforce compliance with financial reporting as well as good corporate governance practices in the public and private sectors of the Nigerian Economy. The key issues for consideration in the wake of a National Code of Corporate Governance, according her were the continued relevance of existing codes, particularly, industry specific codes and whether compliance with the National Code would be mandatory or voluntary – “comply or explain” or “apply or explain”.
During his presentation, Jim Obazee explained that the thrust of the Council’s mandate is to address current institutional weaknesses in regulatory compliance, the enforcement and development of a robust system of financial reporting standard in the country.
He emphasized that the implementation of the Act would lead to increased management credibility, more long-term investments, lower cost of capital and higher share values. For investors and lenders, better disclosure will provide relevant information for making sound investment decisions and risk assessment.
On the burning issue of the requirement of all professionals to be registered with the Council, Obazee explained that this requirement was premised on the need to ensure the integrity of financial statements and to hold those who prepare and sign them responsible and accountable. By the Act, all professionals not registered with the Council will not hold any appointment or offer services for remuneration as professionals to public interest entities. The Council therefore now has oversight and supervisory authority over all professionals in Nigeria.
To circumvent occasions of possible conflict between the provisions of existing laws and codes of corporate governance with provisions of the Act and the proposed National Code the Act contains provisions to the effect that the standards and guidelines adopted by the Council shall prevail to the extent of any inconsistency or conflict with any law or code.
Haruna Jalo-Waziri’s drew a clear distinction between the reporting requirements of the Act and the rules and regulations of the Nigerian Stock Exchange with the significant area of divergence being the timeline for submission of financial statements to the two regulatory authorities.
The Roundtable was well attended with participants from drawn from the major sectors of the economy including, Banking, Manufacturing, Construction, Oil & Gas, Insurance and the Professional Firms. According to Bisi Adeyemi, Managing Director of Deloitte Corporate Services Ltd, the Roundtable is a continuation of the company’s Corporate Governance Seminar Series, aimed at raising the bar of corporate governance practice in Nigeria.