The Central Bank of Nigeria (CBN) said it will impose appropriate penalties on Other Financial Institutions (OFIs) that fail to submit their 2021 Annual Financial Statement (AFS) in compliance with International Financial Reporting Standard (IFRS).
OFIs include Microfinance Banks, (MFBs) Development Finance Institutions (DFIs), Primary Mortgage Banks (PMBs) and Finance Companies (FCs).
On July 28, 2010, the Nigerian Federal Executive Council approved January 1, 2021, as the effective date for the adoption of IFRS standards in the country.
IFRS standards are required for the financial statements of all ‘public interest entities’, which include not only quoted and unquoted companies but also governments, government organisations, and not-for-profit entities that are required by law to file returns with regulatory authorities. All OFIs fall under this category by virtue of the requirements to file returns with the CBN.
In a letter to all OFIs, dated October 8, 2021, and signed by Nkiru Asiegbu, director, other financial institutions department, the submission AFS not in compliance with IFRS shall be regarded as non-submission and appropriate penalties imposed thereon.
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However, the letter said due to some implementation challenges, some concessions were granted to some entities to delay the adoption. Key amongst these challenges was the dearth of required skills by reporting entities and their external auditors.
Over time, the CBN explained that this knowledge gap has been bridged and more entities have joined the fold of others, who had adopted and prepared their accounts based on this set of Standards. Several efforts had also been made by the CBN to ensure that capacities were built and entities encouraged to do the same.
“Consequently, all OFIs are by this circular, required from the 2021 financial year, to prepare their annual financial statements (AFS) in accordance and full compliance with IFRS as the Other Financial Institutions Supervision Department of the Central Bank of Nigeria will no longer accept AFS that are not in compliance.
“OFIs that are just adopting the IFRS Standards for the first time should comply fully with IFRS 1, for first time adopters,” the letter reads.
