The Financial Reporting Council of Nigeria (FRC) has reiterated its unwavering commitment to strengthening audit oversight and eradicating audit failures within the nation’s financial reporting landscape. This resolve was articulated by the Executive Secretary and Chief Executive Officer of the FRC, Rabiu Olowo, during the Leadership Summit for Auditors and Other Assurance Providers held in Lagos recently.
Central to the FRC’s strategy is a robust, four-pronged approach known as “DOSE”—Digitisation, Operational Excellence, Stakeholder Engagement, and Enforcement. This initiative is designed to elevate regulatory standards and ensure stringent compliance among auditors and assurance providers across Nigeria.
Olowo emphasised that the council’s ongoing digitization efforts are pivotal in enhancing its oversight capabilities, enabling the early detection of potential risks and audit deficiencies. These advancements are integral to fostering an environment where transparency and accountability are paramount.
Reflecting on the severe repercussions of past audit failures, both in Nigeria and globally, Olowo underscored the significant financial losses and diminished investor confidence that resulted from auditors’ inability to detect fraudulent activities. He referenced the collapse of AfriBank Plc and the Cadbury saga as prominent examples where auditors failed to address critical red flags, leading to catastrophic outcomes.
Olowo identified several key factors contributing to audit failures, including inadequate audit procedures, a lack of industry-specific knowledge, and management’s ability to override internal controls.
“We are the last line of defense. If we don’t allow it, nothing bad can go wrong. We are the gatekeepers”, Olowo stated, affirming the FRC’s determination to eliminate audit failures that undermine public trust and confidence in Nigeria’s financial systems.
In his keynote address, titled “Proactive Regulation: A Catalyst for Preventing Audit Failure”, the Auditor-General for the Federation, Shaakaa Chira echoed the concerns raised by Olowo. Chira highlighted that Nigeria has experienced its own significant audit failures, noting that between 1990 and 1994, the country lost approximately N6 billion to fraud in the banking sector alone.
Chira affirmed the federation’s awareness of the rising incidents of audit failures and expressed its intent to overhaul the country’s financial system to usher in a new era of financial probity. He issued a stern warning against non-compliance, stating that any financial statement submitted to his office that fails to adhere to the FRC’s established reporting framework would be summarily rejected.
Chira also provided updates on the federation’s progress in addressing audit backlogs, revealing that audits for 2020 and 2021 have been completed, with the 2022 report nearing completion. He called on industry practitioners and stakeholders to collaborate closely with his office to ensure that financial reports are submitted within the stipulated timelines.
As the FRC moves forward with its DOSE initiative, the council’s efforts are expected to play a critical role in restoring public confidence in Nigeria’s financial reporting sector, reinforcing the importance of transparency, accountability, and rigorous audit practices.
