Oversight Mandate Puts CBN, Council On Collision Course

[TGD]

THERE are indications that some sections of the Reporting Council of Nigeria (FRC) Act may put the Council on a collision course with the Central Bank of Nigeria (CBN).

   The FRC Act (2011) makes it compulsory for the CBN to file its financial report with the Council, which now verifies the apex bank's compliance with the International Financial Reporting Standard (IFRS) and adopts necessary sanction where there are violations. But investigation reveals that the apex bank, which submits its statement directly to the President, is not comfortable with the new order.

   Apart from the accounting standard regulation, Section 11 of the Act empowers the Council to oversee the issuance of the National Code of Corporate Governance and its compliance.  The national code is expected to streamline corporate governance guidelines issued by CBN as well as other regulators such as the Exchange Commission (SEC) and the National Insurance Commission (NAICOM). This responsibility is also said to have unsettled the top echelon of the CBN.

   Meanwhile, the Bank, SEC and other relevant public entities are represented in the steering committee of the national code, which Jim Obazee, executive secretary/chief executive officer of FRC, said would be operational next year. The agencies are co-opted in the steering process to ensure broad-base views.  

  The cold war between the two public agencies, sources said, started recently when the Council, described in some quarters as a super regulator, was becoming relevance. Before then, CBN, at different meetings, was said to have offered to support activities of the Council to ensure proper regulation of the financial reporting.

   A source disclosed last week that CBN, indeed, was the brain behind the N500 million commercial banks (under the aegis of the Bankers' Committee) donated for the IFRS Academy, a project of the FRC, last year.  

  "It was the CBN's Governor himself that mobilised members of the Bankers' Committee. You know when people do something for an institution, they actually believe they are doing it for an individual. And when you take a decision against an organisation, it is presumed that it is targeted against an individual. That, I think, is the issue between the CBN and the FRC," continued the source.

Recently, a media report said the donors of the N500 million are grumbling that over a year after the money was released, there was nothing on ground to show for it. The report insinuated that the money might have been misappropriated.

  A source sympathetic to FRC said the chief executives of banks said to have started raising issue about the donation are incited by the CBN to get at FRC's boss. The aim, according to findings, is to taint Obazee-led management and portray it as team that cannot be entrusted with the task of deciding on financial statements of quoted and public utility companies.

   The whereabouts of the donations became an issue at a recent interactive session that the council had with the media in Lagos.

  Obazee disclosed that two accounts authorised by the Office of the Accountant General of the Federation were opened at Access Bank Plc and Guarantee Trust Bank Plc where the proceeds of the donation were lodged. He said the money would not be used until the Board of Trustees, which will include the contributors, is in place.

  In a telephone chat, spokesman of the apex bank, Mr. Ugochukwu Okoroafor, said there was no rift between the institutions over account verification. He was responding to speculation that FRC has queried 22 items in the 2012 CBN financial statement.

  In another telephone discussion, Okoroafor said the CBN has one-year grace on IFRS compliance, adding that Obazee, at the recent interaction with the media, answered other questions raised by The Guardian.

  Obazee did disclose at the interaction that FRC "has received financial statement from the CBN" like every other organisation. He also dismissed speculation that he is being used by certain interests to fight the CBN Governor, Sanusi Lamido Sanusi, adding that the basis of FRC's account verification is clearly spelt out by its Act.  

     Addressing newsmen, Obazee, refuted claims that the FRC is at loggerheads with the apex bank, stressing that the issue of query does not arise as only the board of the apex bank can approve its annual report while the Council also verifies compliance with IFRS.

  It was gathered that the rift between CBN and FRC stems from previous relationship between top management staff of the organisation. Information suggests that it was something personal. But that is gradually routing into official affairs of the agencies.  

The Guardian