…to enhance accountability, investor confidence, and economic growth
By Theresa Moses
Nigeria is at a turning point in the constantly evolving global business-related and economic landscape. There has never been a greater need for the country’s audit law to undergo a thorough update. As a result, experts have stressed the urgency of new audit legislation as Nigeria seeks to boost investor trust, accountability, and transparency.
Ismaila Zakari, former president of the Institute of Chartered Accountants of Nigeria (ICAN), has therefore called on President Bola Tinubu to sign the Federal Audit Bill that guarantees the Auditor-General’s independence and transparency to replace the existing 67-year-old Audit Act.
Zakari stated this while addressing journalists during a two-day Audit Reporting Training, with the theme: X-raying State Government Audit Reports, organised by Front Foot Initiatives in Lagos recently.
“The Audit Act is outdated and must be thrown away. Our prayer is that the President will quickly assent to the bill so that the auditing standard will improve, particularly at the federal level,” he said.
No doubt, a review of the audit bill is long overdue, and there have been several calls for replacing the 1956 Audit Act, which had been in the public domain for decades, but successive administrations have turned a deaf ear.
A few months ago, the Central Bank of Nigeria released consolidated financial statements for the last seven years, making it the first time since 2015 that the apex bank will be making its books available for public scrutiny.
The statements are for the 2016, 2017, 2018, 2019, 2020, 2021, and 2022 financial periods. The action of the suspended CBN Governor, Mr Godwin Emefiele, is a gross violation of the CBN Act.
Since 2005, when the CBN started publishing details of its annual report on its website, it has never failed to release the report until 2016, when it stopped the publication of the crucial documents. According to the CBN Act 2007, the apex bank is expected to publish its report within two months after the end of each financial year.
The Constitution of the Federal Republic of Nigeria 1999 (as amended), in Section 85 (1) and (2) established the office of the Auditor -General of the Federation with the power to audit the public accounts of all offices and courts of the federation. The office is saddled with the responsibility of auditing the financial statements of all government ministries, departments, and agencies after expenditures in a fiscal year.
But the law governing public sector audit – the Audit Act – was enacted in 1956 and, so does not capture the current realities of modern audit practices as put together by the International Organisation of Supreme Audit Institutions, to which Nigeria is a party.
Therefore, new audit legislation in Nigeria is required for a number of reasons, such as improving financial reporting and auditing procedures, efficacy, accountability, and transparency. One may want to ask of justifications for a new audit law.
First, Nigerian companies can attract more foreign investors by enhancing the quality and dependability of their financial statements through the updating of audit legislations to conform to international auditing and accounting standards.
Secondly, by strengthening the regulatory framework and enabling more efficient enforcement and evaluation, a new audit law may help in avoiding the recurrence of financial fraud and irregularities.
For instance, the 2019 Audit Report by the Auditor-General of the Federation, Adolphus Aghughu, revealed cases of non-compliance with financial regulations by various agencies of government Notably, Ministry of the Federal Capital Territory (FCTA), Abuja, was implicated for making payments without evidence of project execution, a violation of Federal Government Financial Regulations (2009), paragraph 708.
In a specific instance, the ministry approved a payment of N73.064 million in December, 2019, to officers of the FCT Internal Revenue Service (FCT-IRS) for residency verification and the Taxpayer Identification Number (TIN) project. However, the audit uncovered that this payment was made without proof of project performance. Despite repeated requests, the project report, which would have confirmed whether the projects were indeed executed, was not provided during the audit.
This revelation raises concerns about financial accountability and transparency in government establishments, highlighting the need for stricter adherence to regulations to ensure that public funds are spent wisely and in accordance with established guidelines.
Ministries, departments and agencies (MDAs) of the Federal Government of Nigeria paid for projects without any proof of performance, leading to misapplication and loss of government funds. By emphasising the roles and obligations of directors, auditors, and other stakeholders, modern audit laws could promote excellent corporate governance.
Thirdly, the audit landscape has evolved with the introduction of digital technology and data analytics. These modifications may be addressed by new legislation that offers technological advances as guidelines for a comprehensive audit report. As the corporate world changes, new audit laws can take care of increasing obstacles, including environmental considerations in audit and sustainability reporting.
Again, a strong audit mechanism could boost investor confidence, encouraging greater investment and strengthening Nigeria’s economy. Strengthening audit regulations may help in fighting against financial irregularities and corruption, both of which can be detrimental to the economy.
Lastly, a new audit regulation may promote the training of qualified auditors and accounting specialists, raising the standard of audits executed in Nigeria. These and more strengthen the necessity of new audit legislation in Nigeria.
Share your story or I Witness Reports with us 24/7 via: SMS/ Whatsapp: +234(0)8072022024, Email: [email protected], follow us on our social media platform: Twitter, Instagram, Facebook:@Gatmash and Subscribe to our YouTube Channel: Gatmash TV.
Gatmash News is one of the most sought- afterb news portals, with increasing audience, exclusive breaking newsg and reports across the globe. Plus more. Website: https://gatmash.com
For advert placement, contact us today via email: [email protected] or call our hotlines on Tel: +234(0)8072022024
