Brief History of Financial Reporting Council of Nigeria (FRC)

The FRC started as Nigerian Accounting Standards Board (NASB) which was established in 1982 as a private sector initiative closely associated with the Institute of Chartered Accountants of Nigeria (ICAN). NASB became a government agency in 1992, reporting to the Federal Minister of Commerce. The Nigerian Accounting Standards Board Act of 2003 came into force to modify it and 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.
On 18th May 2011 the Senate passed the Financial Reporting Council of Nigeria Bill, which repealed the Nigerian Accounting Standards Board Act. The decision was in line with a report submitted by Senator Ahmed Makarfi, Chairman of the Senate Committee on Finance. Need I remind anyone that it was DR GOODLUCK EBELE JONATHAN, GCFR, that was the President of Nigeria then? The Executive Secretary of NASB, Jim Osayande Obazee, had strongly supported the passage of the bill, which he said would align Nigeria with other countries and improve investor confidence. Thus, the instant law on this old body that was given birth to as far back as 1982, is the FINANCIAL REPORTING COUNCIL OF NIGERIA ACT, 2011. This should put to rest any claim from any group or person that the FRC is a recent law passed by the National Assembly.

Now Let Us See How A Body That Was Set Up Primarily To Set Accounting Standards Suddenly Became A Law Making And Enforcement Agency For All Businesses And Corporate Bodies, Including “Not For Profit Organisations”.

I will limit my concern to the “Not For Profit Organisations” (NFPOs). Upon the passage of the 2011 Act, the body, led by its Executive Secretary, which was more interested in making laws for corporate bodies and businesses in Nigeria like the National Assembly by whatever guise (be it by way of rules, guidelines, codes or regulations) came up with a proposed code of Corporate governance for NFPOs in 2014. The belief of FRC in venturing into this nationwide law making exercise reserved to the National Assembly by the 1999 Constitution is informed by how the FRC construed its powers as provided for in Sections 7 of the Act.

Section 7 of the Act provides:
“(1) The Council shall have powers to do all things necessary for or in connection with the performance of its functions.
(2) Without prejudice to the generality of sub-section (1) of this section,
but subject to the provisions of this Act, the Council shall have the power to :
(a) enforce and approve enforcement of compliance with accounting,
auditing, corporate governance and financial reporting standards in
Nigeria ;
(b) enter into such contracts as may be necessary or expedient for the
purpose of discharging its functions ;
(c) borrow such sums of money or raise such loans as it may require for
the purpose of discharging its functions ;
(d) co-operate with, or become a member or an affiliate of any similar
international body the objects or functions of which are similar to, or
connected with those of the Council ;
(e) exercise such powers as are necessary or expedient for giving effect
to the provisions of the Act ;
(f ) require management assessment of internal controls, including
Information Systems controls with independent attestation;
(g) require code of ethics for financial officers and certification of financial
statement by Chief Executive Officer and Chief Financial Officer ;
(h) require entities to provide real time disclosures on material changes
in financial conditions or operations ; and
(i) pronounce forfeiture, by Chief Executive Officers and Chief Financial
Officers, of certain bonuses received from the company and profits realized
from the sale of company shares owned by them, where the company is
required to prepare an accounting restatement.”

I deliberately reproduced the Section of the Act on powers of FRC so that we can all draw necessary conclusions on it by ourselves. I am less concerned with the functions of FRC which is provided for in Section 8 thereof for the simple reason that one cannot even start functioning on any area it has no power to. Power comes before function. Except you want to perform miracles, that is only when you can start doing what you lack powers to do. The question from the aforementioned section 7 of the Act is that if anyone sees where FRC is clothed with powers to make laws or codes for businesses and corporate bodies, including NFPOs, please point it out for me.
However, Section 73 of the same Act gives the Honourable Minister in charge of Commerce (which is now the Minister of Industry, Trade and Investment) powers to make regulations that will ‘give full effect to the provisions of this Act’. I reproduce the said Section hereunder:

“73. The Minister may, on the advice of the Council, make such regulations as in
his opinion are necessary or expedient for giving full effect to the provisions of
this Act and for the due administration of its provisions.”

As difficult as it may be for one to swallow, that provision is clear. The powers to make laws by whatever guise and in furtherance of the cause of the Act doesn’t reside with FRC but with the Minister who is to do same on the advice of the FRC. I understand that the 2014 proposed code for NFPOs did not see the light of day until 2016 (just last year) that FRC succeeded in making a supposedly substantive code for NFPOs which is known as “NOT-FOR-PROFIT ORGANISATIONS: GOVERNANCE CODE 2016” with effective date from 17th October 2016.

The unusual sidelining of the Minister of Industry, Trade and Investment in the making of the instant code for NFPOs can be easily seen in the introductory paragraphs of the code, as follows:

“This Code, to be referred to as the Not-For-Profit Organisations Governance Code 2016, is the outcome of an additional directive given to the Steering Committee on the National Code of Corporate Governance on 29th November 2013 by the Honourable Minister of Trade and Investment. The remit of the committee is to extend Corporate governance to Not-For-Profit Organisations (NFPOs) in Nigeria. The need for extension was informed by the fact that Corporate governance is currently very high on the economic agenda of many countries and it encompasses three sectors: the private, the public and not-for-profit. The not-for-profit sector is sometimes referred to as the Benevolent Sector, the Third Sector or the Civil Society Sector.”

From the above it can be seen that FRC’s code is the making of a “Steering Committee on National Code of Corporate Governance” which was acting on a directive issued to it as far back as 2013 by the then Minister of ‘Trade and Investment’. It is important to note that the Honourable Minister whom the Act empowers to make regulations and on whose authority the Committee was purportedly constituted and mandated did not eventually sign the Code, and there is no evidence that the current Minister of Industry, Trade and Investment signed the code for one to now impute that he is the maker of the code. It is also imperative to note that there is no evidence that the said code was gazetted by FRC as mandated of it by section 72 of the Act.


I shall at this stage allow you to draw your conclusions on the subject matter. I believe that when we are all empowered with the right information, we may no longer require further guidance. I reserve my comment on those who advised Daddy Adeboye of RCCG on the basis of the vexed and controversial code to relinquish power of the Nigerian churches of RCCG and take up whatever nomenclature or title they feel will not offend the code.

I by no means claim no infallible, superior or monopoly of knowledge on this vexed subject. In fact, I by this article put myself forward to be corrected. Remember, I speak as a layman here.

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