FRC begins compliance monitoring with new Act from January 2024 – Secretary

Nigeria’s Financial Reporting Council (FRC) said it would commence “effective and comprehensive” compliance monitoring with its new Act from January 1, 2024.

In a notice released on Wednesday, December 20, the council said its 2023 Act, which replaced its 2011 Act had become operational.

The ICIR reports that former President Muhammadu Buhari signed the 2023 amended Act into law in May.

The council’s statement signed by its Executive Secretary/Chief Executive Officer, Rabiu Olowo, FRC said the new legislation marked a significant milestone in the ongoing efforts to promote transparency, accountability, and good governance in Nigeria’s economy.

The amendment introduced several critical changes to regulations and standards governing financial reporting in Nigeria, which the FRC identified as bottlenecks to global best practices.

According to FRC, the amendment clarifies observed ambiguities, especially regarding the definition of public interest entities. It mandates the council to maintain a national repository for financial statements by public interest entities.

It also streamlines the membership of the governing board to eliminate conflicts of interest, strengthens the council’s regulatory responsibilities on financial reporting and corporate governance in Nigeria, and reinforces the council’s enforcement powers to ensure compliance with reporting requirements.

“These changes are anticipated to positively impact businesses and the economy by enhancing the quality and reliability of financial reporting, improving corporate disclosures, boosting investor confidence, and fostering sustainable development.

“Among numerous amendments, section 77 of the Financial Reporting council of Nigeria (FRC) Act 2011 (as amended) is the revised definition of Public Interest Entities (PIEs),” FRC stated.

It said categorically that public interest entities meant governments and government organisations, listed entities on any recognised exchange in Nigeria, non-listed entities that are regulated, public limited companies, and private companies that are holding companies of public or regulated entities.  

It also includes concession entities, privatised entities in which the government retains an interest, entities engaged by any tier of government in public works with an annual contract sum of N1 billion and above, and settled from public funds, licensees of government, and all other entities with an annual turnover of N30 billion and above.

On July 5, The ICIR reported that the FRC needed to do its job professionally to be healthier for financial reporting in Nigeria.

In a recent disclosure, the FRC said it had suspended the 2018 audited financial statement of the Nigerian Maritime Administration and Safety Agency (NIMASA) for noncompliance with financial reporting standards, imposed a penalty of N500 million and asked the agency to file a restatement for the 2018 account within 60 days of the notice.

The restatement forms the basis for which NIMASA must prepare and submit its audited financial statements for 2020, 2021, and 2022, which it failed to file as statutorily required.

Also, in a recent report, the FRC was indicted for over N401.75 million the Central Bank of Nigeria (CBN) allegedly paid to the International Financial Reporting Standards (IFRS) Academy for the guidelines the apex bank used to produced its 2016 to 2022 financial statements released amid ongoing probe of the regulator.






     

     

    The FRC further stated in the notification that organisations that were hitherto not identified as “PIE” but are covered by the amendment were required to ensure that they take steps to register with the council immediately and thoroughly comply with applicable standards, regulations, and rules of the council.

    For the avoidance of doubt, FRC said non-listed entities that are regulated by but not limited to the following sectorial regulators include the Central Bank of Nigeria, National Insurance Commission, National Pension Commission, Nigerian Upstream Regulatory Commission, Nigerian Midstream and Downstream Petroleum Authority, and National Health Insurance Authority.

    Others are the Nigerian Communications Commission, National Broadcasting Commission, National Universities Commission, National Board of Technical Education, National Commission for Colleges of Education, Nigerian Electricity Regulatory Commission, Securities and Exchange Commission, Nigerian Civil Aviation Authority, and National Agency for Food and Drug Administration and Control.

    It also listed the National Automotive Design and Development Council, Nigeria Shippers Council, Nigeria Port Authority, Infrastructure Concession Regulatory Commission, Estate Surveyors and Valuers Registration Board of Nigeria, and Nigerian Tourism Development Corporation.

     

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