Emele Onu
30 March 2009
Lagos — It is feared that lack of adequate information about the true position of banks, as expressed in some quarters, as well as the presumed lack of capacity of the nation's auditors to foster full disclosure in corporate financial reports may prolong the time Nigeria has to grapple with the global financial crisis.
A fellow of the Institute of Chartered Accountants of Nigeria (ICAN) and Managing Consultant, EDP Audit and Security Associates based in Lagos, Mr. Christian Ekeigwe, said frequent audit failure may mean that Nigeria is not ready to face the global realities.
Speaking on "Financial Reporting Integrity" in Lagos, he told a forum of financial experts that given the fact that the global meltdown was caused by the failure of auditors to disclose the full exposure of the big corporations that have today crumbled, countries that fail to streamline their financial reporting system and align it to the truth stand to be entangled in the crisis for a long time.
As a way of rekindling investor confidence in Nigeria, the Federal Government is promoting full disclosure, a move that has led banks to commence the alignment of their financial reports to the International Financial Reporting Standards (IFRS) and the adoption of a common accounting year- end.
The Nigerian Accounting Standards Board (NASB) on its part is advocating quick passage of the Financial Reporting Council (FRC) bill currently before the National Assembly. This, according to the NASB, will prepare the country for the integration of its accounts in whole or in part, as the case may be, to the IFRS - considered the globally accepted accounting standards practices.
Ekeigwe said local auditors must be ready in terms of capacity, competence and ethical standards to bring the country's financial reports to the level of truth to be able to help in the time of crisis.
He identified the factors responsible for accounting failures in Nigeria as the failure of the field auditors to gather sufficient audit evidence to clarify controversial accounting issues; field auditors using mainly enquiry or conversational auditing as a form of evidence; not recognising or disclosing key related parties during the audit practice and over reliance on internal controls, among others.
Nigeria had in the past witnessed the publication of fictitious financial reports that not only killed the confidence of local investors but sent the wrong signals to the international investing community. Some of the notable cases were Lever Brothers Plc (Now Unilever), which overvalued its stocks to the tune of several billions of naira in 1998; the case of African Petroleum (AP) Plc in which the company's board concealed indebtedness to the tune of about N22 billion in its year 2000 offer- for-sale and that involving Cadbury Nigeria PLC's overstatement.
The financial expert noted that accounting practices in Nigeria suffer from institutional weaknesses in regulation, compliance and enforcement of standards and rules.
He called for stakeholder collaboration to deal with the challenge.
"Financial reporting is the cornerstone on which the markets rests. As a cornerstone, it rests on governance ballast that involves everyone in the society to enable it work," he added.
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No country can be a stand alone and be so shameless like beloved Nigeria. Remember that all Nations are established on the principles of the rule of law and order. No where in the world except Nigeria is the reverse the case. The love of money and laziness have permeated through the society at large and have produced no net growth and progress for this nation. Even the corrupt ones have not change from humans to angels with their ill-gotten wealth. It is only in Nigeria that people can be so unpatriotic as to maul down the very fabric that hold society together without any repercursion. Nigeria really need thorough re-examination and complete rebuild, right from the foundation. The image laundring move recently by the Federal Government is a strive against the wind and a fruitless, if not wasteful, excercise if those in power could not own-up and declare the need for a sovereign national conference to redesign the contraption called Nigeria in order to give it a rebirth and reveance to all citizens. Otherwise the patching work-that all these greedy, money, loving doubious, corrupt,lying politicians; will one day give way totally. This time of Global financial melt down should have been our moment of emancipation but instead years of undiscribable corruption and greed have withered our collective pride and strenght turning us all into visa seeking freaks(Andrews). Our people shameless ransack embassies running away from themselves,their conscience and their identity and Government doing the honours of not showing any concern what-so-ever. How pathetic when the Government itself is not elected by the the people but looks like a daylight robber.How will it answer or care about the the welfare of the people. What a shame!