Strengthening financial accounting standards
several banks routinely exploit loopholes in the nation’s accounting and auditing standards, and the weak capacity of the regulatory bodies, to falsify figures on their balance. The intention of that dubious practice is to give the public a robust financial status the financial institutions have not attained.Chairman of the board of the Securities and Exchange […]
several banks routinely exploit loopholes in the nation’s accounting and auditing standards, and the weak capacity of the regulatory bodies, to falsify figures on their balance. The intention of that dubious practice is to give the public a robust financial status the financial institutions have not attained.
Chairman of the board of the Securities and Exchange Commission (SEC), Dr Suleyman Ndanusa estimated that Nigeria loses between N1.5 trillion and N2.5 trillion to such sharp practices. Speaking at the 2014 Annual Conference of the Association of National Accountants of Nigeria (ANAN), Ndanusa said that since 2009, the Central Bank of Nigeria (CBN), SEC and other regulatory bodies have taken some steps to improve financial reporting and disclosures of which a major milestone was the enactment of the Financial Reporting Council of Nigeria (FRCN) Act No 6 of 2011. These have apparently not entirely curtailed the trend. He called on the accounting profession to seize the abundant growth opportunities in the country by meeting emerging business needs and also fighting corruption, in order to play its full potentials in the nation’s economy.
Ndanusa’s observation comes as recent developments that impinge on the integrity of the operations in the sector leave much to be desired. Financial transactions cannot be facilitated in the dark and require mandatory, accurate and reliable data capture and sharing, to guarantee the health and soundness of the economy. This would require the endowment with relevant skills of designated professionals that the accounting profession does not lack. The FRCN Act provides the framework for identifying and accrediting the professionals as well as the expedients of practice in the sector.
In spite of this, reports indicate a trend of fraudulent and corrupt practices that are carried out brazenly in private and public institutions, often involving the avoidable loss of huge sums of money. Coupled with a general laxness in the fight against corruption in the country, this presents a serious challenge that has to be addressed. Weakness in compliance with the provisions of the FRCN Act would be a starting point.
A disturbing aspect of the problem is the state of accounting practice in the nation’s public sector across all the three tiers of government, federal, state and local. Some public officers handling finance-related schedules in the ministries, departments and agencies in the various tiers of governance are quacks not qualified to serve in such positions. Their continued stay in office creates the loophole through which public funds are easily wasted or stolen.
Section 41 of the FRCN Act states that only trained professionals registered under its provisions are authorised to render services for remuneration, including in the public sector. This mandatory requirement makes it imperative for the FRCN to address itself to the challenge of bringing accounting practice in the public sector in line with the provisions of the law.
Several factors make this vitally important, one of which is that the public sector, which controls a preponderance of flow of funds, cannot in its present state of depressed skills endowment, yield to a rigorous administration of the provisions of the law. Moreover, without taming the outages in the public sector, the gains of administration of the law in the private sector that Ndanusa referred to may be lost.
Indeed, if the fight against corruption is to be meaningful, it should start with aligning the management of public funds in line with the statute as outlined in the Financial Reporting Standards.