Financial Reporting Council of Nigeria (FRCN)

Ibrahim Apekhade Yusuf in this report examines the operations of the Jim Obazee-led Financial Reporting Council of Nigeria (FRCN)

FROM being a mere paper tiger, the Financial Reporting Council of Nigeria (FRCN) has since assume the role of a financial watchdog of sorts ensuring that public interest entities are mandated to file in financial report, as prepared by competent independent auditors.

Thankfully, under its outgoing Executive Secretary/Chief Executive, Mr. Jim Obazee, the Council has also courted a number of controversies just as it has welcomed a couple of innovations.

Among such innovations includes the codes for National Code of Corporate Governance for the Private Sector, Code of Corporate Governance for the Not- For-Profit Entities and Code of Corporate Governance for the Public Sector.

Section 50 of the Financial Reporting Council Act, 2011, among other things requires the Directorate of Corporate Governance to develop the principles and practices of Corporate Governance applicable in Nigeria.

It is however instructive to note that under the Jim Obazee-led FRC, nonprofits and faith-based organisatiosn have come under serious scrutiny in recent times, as the Council has tried to enforce its financial reporting standard rules on religious organisations in the country, especially those venturing into non-charity ventures.

As Obazee revealed at a public forum recently, only 89 out of the 23,216 registered churches in the country have complied till date. He however said the Council is determined to ensure compliance by all.

Checks on the FRC’s website revealed that the Council has since set a corporate governance template for nonprofit, nongovernmental organisations including churches, mosques, civil societies among others, in terms of duties, functions, tenures and general rules of engagements.

Specifically, the Not-For-Profit Organisations Governance Code 2016, which became effective last October provides that the Founder or Leader of a NFPO occupies a special position in the organisation and is committed to the success and longevity of the NFPO.

Accordingly, a Founder or Leader should not take on too many responsibilities in the organisation or have an indefinite term in the running of the organisation.

Where for any reason, a Founder or Leader of NFPO also occupies any of the three governance positions of Chairmanship of the Board of Trustees, the Governing Board or Council, and the Headship of the Executive Management (or their governance equivalents), the following provisions shall apply before the end of the organisation’s financial year in which this Code takes effect.

While section 9.2.1 of the code states that the Founder or Leader shall cease to occupy these three governance positions simultaneously, section 9.3 provides that where the Founder or Leader has occupied all or any of these three governance positions for more than 20years, or is aged 70years or above, the choice in section 9.2.2 above should only relate to the Board of Trustees as in section 9.4(c) below, except the constitution of the organisation otherwise provides.

In the case of religious or cultural organisations, nothing in this code is intended to change the spiritual leadership and responsibilities of Founders, General Overseers, Pastors, Imams and Muslim Clerics, Presidents, Bishops, Apostles, Prophets, etc. which are distinguishable from purely corporate governance and management responsibilities and accountabilities of the entities.

The FRCN, formerly the Nigerian Accounting Standards Board (NASB), was established in 1982 as a private sector initiative closely associated with the Institute of Chartered Accountants of Nigeria (ICAN).

However, NASB became a government agency in 1992, reporting to the Federal Minister of Commerce. The Nigerian Accounting Standards Board Act of 2003 thus provided the legal framework under which NASB set accounting standards. Membership includes representatives of government and other interest groups. Both ICAN and the Association of National Accountants of Nigeria (ANAN) nominate two members to the board.

The primary functions as defined in the act of July 10, 2003 were to develop, publish and update Statements of Accounting Standards to be followed by companies when they prepare their financial statement, and to promote and enforce compliance with the standards.

IASB had published many of the earlier standards prepared by the International Accounting Standards Committee and its successor the International Accounting Standards Board, but was more involved in enforcement than in updating to the more modern International Financial Reporting Standards (IFRS).

On May 18, 2011 the Senate passed the Financial Reporting Council of Nigeria Bill, which repealed the Nigerian Accounting Standards Board Act and replaced it with a new set of rules. The decision was in line with a report submitted by Senator Ahmed Makarfi Chairman of the Senate committee on Finance.

The Financial Reporting Council Bill was thus signed into law on July 20, 2011.

Some corporate members of the FRCN include: Central Bank of Nigeria, Corporate Affairs Commission, Federal Inland Revenue Service, Federal Ministry of Trades and Investment, Federal Ministry of Finance, Auditor-General for the Federation, Accountant-General of the Federation, Securities and Exchange Commission, Nigerian Accounting Association and National Insurance Commission.

Others are the Nigerian Association of Chambers of Commerce, Industry, Mines and Agriculture, Nigeria Deposit Insurance Corporation, Institute of Chartered Accountants of Nigeria, Nigerian Institution of Estate Surveyors and Valuers, Association of National Accountants of Nigeria, Chartered institute of Taxation of Nigeria, Corporate Affairs Commission, National Pension Commission, Chartered Institute of Stockbrokers, Nigerian Stock Exchange.

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