The steering committee constituted by the federal government to develop a National Code of Corporate Governance (NCCG) for the country has finalised work on the draft document.
To this end, the NCCG was on April 15th exposed for comments from stakeholders for 30 days.
The Executive Secretary/Chief Executive Officer, Financial Reporting Council (FRC), Mr. Jim Obazee, disclosed to journalists in Lagos yesterday. He was joined at the media briefing by the Head of the NCCG Steering Committee, Mr. Victor Odiase.
Obazee said the deadline for receiving comments on the draft NCCG is May 14th 2015, while a public hearing on the subject would be held on May 19th. The NCCG is in three parts: private sector, public sector and not-for-profit.
The FRC pointed out that the federal government is aware that the issuance of a national code of corporate governance is a very important deliverable that can be used to enhance the country’s national competitiveness and socioeconomic issues including corruption and lack of corporate independence.
According to him, the proposed code is also an opportunity to raise the bar in both public and private institutions and would also make directors personally accountable for their actions and in-actions.
“As you are well aware, our nation currently boasts of six different persuasive codes issued by six different regulators to meet the need of the entities they regulate. The six different persuasive codes were issued and are currently being applied by the Central Bank of Nigeria, the Nigeria Deposit Insurance Corporation, National Insurance Commission, National Pension Commission, the Securities and Exchange Commission, the Corporate Affairs Commission and the Nigerian Communications Commission.
“However, modern society believes that the era of very weak and persuasive corporate governance codes is long gone due to stiff competing environment for foreign direct INVESTMENT; of which binding regulation is a major factor being considered by investors and stakeholders,” he added.
Provisions were made for the development and enforcement of a National Code of Corporate Governance in the Financial Reporting Council of Nigeria Act No. 6, 2011. Precisely, Section 50 of the FRC Act, 2011 provides inter alia: the objectives of the Directorate of Corporate Governance shall be to— develop principles and practices of corporate governance; promote the highest standards of corporate governance; promote public awareness about corporate governance principles and practices ; on behalf of Council, act as the national coordinating body responsible for all matters pertaining to corporate governance; promote sound financial reporting and accountability based on true and fair financial statements duly audited by competent independent auditors.
Others include to encourage sound systems of internal control to safeguard stakeholders’ investment and assets of public interest entities; and ensure that audit committees of public interest entities keep under review the scope of the audit and its cost effectiveness, the independence and objectivity of the auditors.
Meanwhile, speaking on the sidelines of the event, the FRC boss revealed that financial institutions that misrepresent their financial statements would be made to pay fine of between N500 million and N5 billion, depending on the gravity of the offense. He also disclosed that certain types of offense may even attract jail terms.
Commenting on the type of penalties for banks that falsify their accounts, Obazee said: “The penalties are classified. Some of the institutions may bag fines. The external auditors may also bag fines and jail terms. Recently, a very well respected auditor bagged jail terms overseas for insider dealings. Apart from the institutions, we will deal with the external auditors. This is why FRC registration number of the auditors is usually under the financial statements.
“We will look at how banks and other reporting entities are complying with their primary regulators. The FRC will also be looking at the general purpose financial statements to look at how accurate and reliable they are. We will be reviewing both the 2013 and 2014 financial statements of the banks and other reporting entities,” he said.
He listed some areas the FRC is looking at to include revenue recognition, income classification, disclosures, measurement and recognition.
When asked how much banks paid as fine to the Council in 2014, the FRC boss said the financial institutions were given “a cool-off period of one year” in 2013, because of the adoption of the IFRS in 2012.
Courtesy: Thisday
To this end, the NCCG was on April 15th exposed for comments from stakeholders for 30 days.
The Executive Secretary/Chief Executive Officer, Financial Reporting Council (FRC), Mr. Jim Obazee, disclosed to journalists in Lagos yesterday. He was joined at the media briefing by the Head of the NCCG Steering Committee, Mr. Victor Odiase.
Obazee said the deadline for receiving comments on the draft NCCG is May 14th 2015, while a public hearing on the subject would be held on May 19th. The NCCG is in three parts: private sector, public sector and not-for-profit.
The FRC pointed out that the federal government is aware that the issuance of a national code of corporate governance is a very important deliverable that can be used to enhance the country’s national competitiveness and socioeconomic issues including corruption and lack of corporate independence.
According to him, the proposed code is also an opportunity to raise the bar in both public and private institutions and would also make directors personally accountable for their actions and in-actions.
“As you are well aware, our nation currently boasts of six different persuasive codes issued by six different regulators to meet the need of the entities they regulate. The six different persuasive codes were issued and are currently being applied by the Central Bank of Nigeria, the Nigeria Deposit Insurance Corporation, National Insurance Commission, National Pension Commission, the Securities and Exchange Commission, the Corporate Affairs Commission and the Nigerian Communications Commission.
“However, modern society believes that the era of very weak and persuasive corporate governance codes is long gone due to stiff competing environment for foreign direct INVESTMENT; of which binding regulation is a major factor being considered by investors and stakeholders,” he added.
Provisions were made for the development and enforcement of a National Code of Corporate Governance in the Financial Reporting Council of Nigeria Act No. 6, 2011. Precisely, Section 50 of the FRC Act, 2011 provides inter alia: the objectives of the Directorate of Corporate Governance shall be to— develop principles and practices of corporate governance; promote the highest standards of corporate governance; promote public awareness about corporate governance principles and practices ; on behalf of Council, act as the national coordinating body responsible for all matters pertaining to corporate governance; promote sound financial reporting and accountability based on true and fair financial statements duly audited by competent independent auditors.
Others include to encourage sound systems of internal control to safeguard stakeholders’ investment and assets of public interest entities; and ensure that audit committees of public interest entities keep under review the scope of the audit and its cost effectiveness, the independence and objectivity of the auditors.
Meanwhile, speaking on the sidelines of the event, the FRC boss revealed that financial institutions that misrepresent their financial statements would be made to pay fine of between N500 million and N5 billion, depending on the gravity of the offense. He also disclosed that certain types of offense may even attract jail terms.
Commenting on the type of penalties for banks that falsify their accounts, Obazee said: “The penalties are classified. Some of the institutions may bag fines. The external auditors may also bag fines and jail terms. Recently, a very well respected auditor bagged jail terms overseas for insider dealings. Apart from the institutions, we will deal with the external auditors. This is why FRC registration number of the auditors is usually under the financial statements.
“We will look at how banks and other reporting entities are complying with their primary regulators. The FRC will also be looking at the general purpose financial statements to look at how accurate and reliable they are. We will be reviewing both the 2013 and 2014 financial statements of the banks and other reporting entities,” he said.
He listed some areas the FRC is looking at to include revenue recognition, income classification, disclosures, measurement and recognition.
When asked how much banks paid as fine to the Council in 2014, the FRC boss said the financial institutions were given “a cool-off period of one year” in 2013, because of the adoption of the IFRS in 2012.
Courtesy: Thisday
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