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Tag: FRC

  • FRC: Fed Govt, states’ debts hit  N11.84tr

    FRC: Fed Govt, states’ debts hit  N11.84tr

    About N11.84 trillion – that is what states and the Federal Government are owing.
    The Fiscal Responsibility Commission(FRC) says the debts include domestic debt (N9.73 trillion or 82.20%) and external debt (N2.11 trillion or 17.80%).
    Of the debt stock,  the Federal Government has about  N10.29 trillion, comprising domestic debt of N8.84 trillion or 85.96% and external debt of N1.44 trillion or 14.04%.
    All the 36 states and the Federal Capital Territory (FCT) as at the end of 2015 were owing N1.55 trillion.
    Only Anambra State did not borrow from either commercial banks or the capital market.
    There are “no clear indications” that the debtors got the approvals of the appropriate legislative bodies before acquiring the debts.
    Besides, there was no evidence of compliance with the provisions of the Fiscal Responsibility Act 2007, according to the FRC.
    It accused banks of  lending to all tiers of government, their agencies and corporations  in breach of the Fiscal Responsibility Act 2007.
    These are contained in the 2015 Annual Report of the Fiscal Responsibility Commission (FRC), which was obtained by The Nation in Abuja.
    The report said: “The capital market borrowing component of FGN debt stock stood at N8.84 trillion, representing 85.88% of the total debt stock and almost the entire domestic borrowing (99.99%) as only N8.00 billion was raised through commercial banks.
    “The debt stock of all the 36 states, including FCT, as at the end of 2015 totaled N1.55 trillion. This is made up of domestic debt of N887.22 billion or 57.24% of total debt and external debt of N662.75 billion or 42.76% of total debt. The component of domestic debt was; N60.95 billion (6.87%) for capital market borrowing and N826.27 billion (93.13%) borrowing from commercial banks.
    “Analysis of the total domestic debt of the Federal Government, states and FCT amounting to N9.73 trillion revealed the Federal Government component of N8.84 trillion representing 90.85%. The States and FCT on the other hand accounted for N887.22 billion or 9.15%.
    “Further analysis revealed that the N8.90 trillion domestic debts raised from the capital market was in the ratio of 93.71% and 6.29% for the States and FCT. Conversely, the proportion of borrowings from commercial banks weigh heavily in favour of the States and FCT at N826.27 billion or 99.01% while the FG accounted for the N8.00 billion representing 0.91%.
    “The bulk of the total domestic debt was contracted by the FG which was 90.88% as against 9.12% for the states and FCT. The composition of the domestic debt indicated that the greater part was obtained from the capital market.
    “The fact that the bulk of FG borrowing was from the capital market apparently suggests that it mobilised resources towards financing long term capital projects aimed at providing critical infrastructure. The FG capital borrowings in 2015 consist of 65.73% raised through the issuance of Bonds, 31.38% Treasury bills and 2.90% Treasury bonds.
    “The debt profile of the states and FCT was similar to that of the FG in that there were more of domestic debts than external debts. The states and FCT borrowed from commercial banks.
    “Seven states borrowed from the capital market along with the FG, namely Benue, Cross River, Gombe, Kogi, Oyo, Plateau and Zamfara. These States, in addition to borrowing from the capital market borrowed from commercial banks as well.
    “Only Anambra State borrowed neither from commercial bank nor the capital market. In 2014, all states and FCT borrowed from commercial banks with only Bauchi State borrowing from capital market in addition to commercial banks.”
    But the Fiscal Responsibility Commission faulted states for not complying with the laws on borrowing.
    The commission said there were “no clear indications” that all tiers of government  were borrowing with the approvals of the appropriate legislative body.
    It also said there was no evidence of compliance with the provisions of the Fiscal Responsibilty Act 2007.
    The report added: “Analysis of the borrowings of both the FGN and states revealed that all outstanding external debts as at 31 December, 2015 were for capital expenditure and human development in line with the provisions of FRA 2007.
    “However, there was no clear evidence that the loans were obtained on concessional interest rate of 3% or less. Similarly, it could be ascertained that all the loans were on reasonably long amortisation periods of not less than 10 years.
    “The categories of the external debt are multilateral agencies 70.54%, bilateral agencies 1.47% and commercial loans 27.99%. Loans from multilateral agencies were largely within the 3% concessional interest rates while the commercial loans are well above 3% interest rate.
    “For domestic debt, there were no clear indications that all tiers of government were borrowing for only capital expenditure and human development at 3% interest rate with the approvals of the appropriate legislative body and in compliance with the provisions of FRA, 2017.
    “In order to keep the domestic debt within reasonable control, it is desirable for domestic borrowing to be rationalised.
    “As in previous years, most of the domestic loans in 2015 have maturity period of between five to 20 years with most of the loans having no specified purpose for which they were meant.”
    The commission said that despite several letters and reminders, some banks continued to lend to state governments/agencies without obtaining proof of compliance with FRA as clearly stipulated.
    “It was noted that such lending are indeed contractual arrangement with the banks for repayment via deductions from the States Statutory allocations. This is contrary to Section 45 (2) of the FRA, 2007 which stipulates that ‘all lending by banks and financial institutions in contravention of this Part (Part X) shall be unlawful,” it said, adding:
    “Against this backdrop, any contractual arrangement undertaken as debt transaction(s) between states/ their agencies with any bank(s) without compliance with section 45 (2) is unlawful.
    “In effect, all commercial banks still lending to governments in the Federation, their agencies and corporations are not only in breach of the FRA 2007, but such lending are clearly unlawful and may be irrecoverable.”

  • Fed Govt records late passage of budget in six years, says FRC

    Fed Govt records late passage of budget in six years, says FRC

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    The consistent delay in the passage of budget by the National Assembly is slowing down growth, the Fiscal Responsibility Commission (FRC) has said.
    The agency’s report indicates a pattern of five months between the budget presentation by the President and its passage by the lawmakers in the last six years.
    It said the lateness “messes up budget tracking and contributes to poor implementation of capital budgets.”
    It also claimed that the delay in managing the Appropriation Bill had been stifling national development
    The commission stated this in its 2015 Annual Report and Audited Accounts, obtained by The Nation last night.
    The FRC recommended the adoption of a “strict budget timetable to be incorporated in the Fiscal Responsibility Act (FRA).”
    The commission suggested a January to December fiscal year to enable successive budgets to have meaningful impact on the nation’s development.
    The report said in part: “It will be observed that there have been perennial delays in the presentation of the budget to the NASS. There has been an average of five (5) months between the time of presentation to the National Assembly and assent by the President.
    “Though the Fiscal Responsibility Act, 2007 does not specify a time-limit for the submission and passage of the annual budget into law, it stands to reason that the budget instrument should be ready for execution from the beginning of the fiscal year.
    “The case for years where a new fiscal year’s budget is being awaited months into the fiscal year owing to the late passage of the budget messes up budget tracking and contributes to poor implementation of capital budgets thereby stifling national development.”
    The report added: “There is therefore a need for a strict budget timetable to be incorporated in the FRA. This way, relevant agencies will be committed to specific tasks, timelines and deadlines which if enforced will go a long way towards solving the perennial problem of late preparation and passage of annual budget well as the uncertainty in delimiting the budget cycle.
    “In the prevailing circumstances, it is pertinent to reiterate the Commission’s earlier recommendation that the Nigerian budget preparation should begin in July and be signed into law as the Appropriation Act in December.”
    On why budget implementation has failed over the years, the FRC attributed it to lack of Annual Cash Plan and Disbursement Schedule.
    It said the development had led to “arbitrariness in the execution of the budget as continuously witnessed over the years.”
    The report said: “Section 25 requires that an annual cash plan is prepared in advance by the Accountant-General of the Federation and shows projected monthly cash flows for the financial year. The plan is to be revised periodically to reflect actual cash flows.
    “Section 26 on the other hand requires that a Disbursement Schedule shall be prepared by the Finance Minister within 30 days of the Appropriation Act and must be derived from the Annual Cash Plan.”
    “The import of sections 25 & 26 underscore the need to ensure efficient and effective management of revenue and expenditure across all MDAs towards the achievement of budget targets.”
    “In the course of implementing the 2015 budget, the Office of the Accountant General of the Federation prepared and submitted a combined statement of annual cash plan and disbursement schedule. While this was an improvement over the previous year, compliance with FRA 2007 was still not observed. Section 25 and 26 requires the preparation submission of two separate statements.
    “The annual cash plan is to be prepared in advance of the year or at the time the appropriation bill is being presented to the National Assembly. The disbursement schedule on the other hand is expected to be prepared within one month of the budget being signed into law.”
    “It is pertinent to state here that the implication of operation the Appropriation Acts without a Cash Plan and Disbursement schedule in the manner prescribed by FRA 2007 invariably results in arbitrariness in the execution of the budget as continuously witnessed over the years.”
    The FRC also alleged that the Budget Office (BOF) has been violating Section 30(1) & (2) of FRA 2007.
    It claimed that BOF has not been submitting Quarterly Budget Implementation Reports to the Fiscal Responsibility Commission and the joint finance Committee of the National Assembly.
    The FRC report said: “Section 30(1) & (2) of FRA 2007 makes it mandatory for the preparation and submission of Quarterly Budget Implementation Reports to the Fiscal Responsibility Commission and the joint finance Committee of the National Assembly not later than 30 days after the end of each quarter.
    “Similarly, Section 50 requires a Consolidated Budget Execution Report to be prepared for the entire budget year not later than six months after the end of the fiscal year.
    “These reports are also required to be published in the print and electronic media and on the website of the Ministry of Budget and National Planning for ease of access by the public.”
    “In spite of several requests and reminders for the preparation and submission of BIRs, the reports were still being submitted behind schedule thereby limiting their use as effective tools in budget implementation.

  • FRC and sundry reform matters

    It is no longer news that the Financial Regulatory Council of Nigeria (FRCN), through its executive secretary, unilaterally implemented a certain clause in the Corporate Governance Code, especially for Not-For-Profit-Organisations (NFPO), which necessitated fixing the tenure of the general overseers of religious organisations in Nigeria. One of the major consequences of that decision was the resignation of Pastor E. A. Adeboye as the General Overseer of the Redeemed Christian Church of God (RCCG) in Nigeria. The justification of the FRCN executive secretary was that he was upholding the relevant parts of the corporate governance code. If that were the case, then it would be within the legal purview of the organisation to do so. And this has nothing whatsoever to do with the fact that the executive secretary, now relieved of his duty, was a former pastor at RCCG. But, as with most things legal, social and religious in Nigeria, the reality is much more complex than what we are presented. The outcry that has trailed the FRCN’s move and the reactions from several quarters, especially on the resignation of Pastor Adeboye, not only points at a complex situation, but also calls for a cautious but critical attention to some key issues concerning corporate governance, religious matters and the democratic functionality of institutions in Nigeria.

    Permit a caveat that should address all hints of prejudice. This is critical because I am aware of the enormous anxiety and anger that attend the perceived misadventure of religion in Nigeria. I am a Christian with strong conviction that the church is one and will best achieve its earthly mission if it remains one in spite of inescapable denominational imperative. Consequently, whereas I am a Baptist by birth and orientation, I was largely groomed into spiritual maturity by the RCCG as a full-fledged member. I, indeed like millions of others, holds Pastor E. A. Adeboye in the highest esteem for the tremendous grace upon his ministry of which I am direct beneficiary in a classical sense and for the achievements that the RCCG has garnered since he became the general overseer many years ago.

    But the issues at stake in this matter transcend my RCCG connection. It’s especially critical given the extent to which the legion of charlatans in the cloak of Levitical priesthood have infiltrated Christendom with diabolic and commercial mission and are daily denigrating the faith because they are provided umbrage by the absence of corporate governance codes and their enforcement.    These are issues of democratic surveillance, organisational integrity, institutional capacity and reform. In this regard, the FRCN constitutes a significant dimension of the ensemble of democratic institutions in Nigeria. And this is more so with regard to the monitoring of corporate governance matters. On its website, the FRCN outlines its mission as simply as possible: “To bring utmost confidence to investors, reputation to oversight and ensure quality in accounting, auditing, actuarial, valuation and corporate governance standards and non-financial reporting issues.” This is seriously commendable because corporate governance is a very significant aspect of democratic governance in Nigeria. Ensuring good corporate governance practices is a sine qua non for laying the foundation of an accountability principle in the national economy that will eventually devolve on the well-being of Nigerians. The Not-For-Profit-Organisations (NFPO) are equally part of this corporate governance accountability concern because they equally impact on the financial profile of the nation and of individuals and organisations.

    First thing first, every institution must react to its context and environment. With regard to the idea of corporate governance, the FRCN ought to have known that it was walking a very tight rope in its attempt to monitor a corporate atmosphere charged with complex practices. Religion is a crucial issue in Nigeria. And its mismanagement has led to critical losses for the Nigerian state. The Boko Haram insurgency that has cost many lives could be traced, in a significant sense, to some badly managed military and administrative policies. Stakeholders’ ownership is very critical in policy implementation success, and that translates into a due and meticulous diligence in ensuring that each policy issue makes the round of relevant stakeholders. The implication of this is simple: any policy arising from corporate governance issue ought to have gone through the entire stretch of policy assessment and even more. Of course, no policy is impeccable. But then the ripples and revelations trailing the corporate governance code, especially for NFPO, seem to demonstrate a sloppiness bordering on lack of professionalism and institutional hastiness. Suspending a policy in itself speaks volume about the appropriateness of such a policy for its intended purpose. Thus, as a commentator rightly notes, not properly deducing the intricate nature of this issue of applying corporate governance code to, say, churches amount to an overkill, an institutional excessiveness that poses the danger of heating up the society unnecessarily.

    But then, there is another side to the issue. And this involves the churches and other religious organisations themselves. While the FRCN is undergoing reconstitution, and the corporate governance code, hopefully, will be re-evaluated and reviewed, there is also a need for churches to look inward in the face of weak gate keeping that is undermining the Christian brand as the salt and the light of the world through the activities of charlatans in the guise of prophets-entrepreneurs riding on prosperity theology popular tendencies and vulnerabilities of a poverty-ridden and superstitious society and pervasive miracle mentality. The Federal Government has the right to instigate any policy that affects its citizens, and religion plays a huge role in this regard because whatever happens in the religious realms have extensive impact on the way people relate with themselves in the public spaces. Beyond this, the FRCN is right about the critical nature of corporate governance and why not even churches and mosques can be excused. Religious organisations owe the government an adequate compliance with regulations that probes accountability. This is even more so in a state that is attempting to increase its profile of democratic governance. A church or mosque may be theocratic but that does not preclude its legal response to certain democratic imperatives concerning structures and rules.

    On the other hand, the religious organisations owe their members a firm adherence to strict codes of accountability and other institutional structures that ensure not only spiritual adequacy but also financial openness. It would not be a sin if the financial transactions of a religious organisation are open within the bounds of regulation and best practices. Since the church or mosque is a custodian of morality, this institutional reform of its structures should not a big deal. Religious organisations are agents of development, especially within the environment of institutional incapacitation in Nigeria. From the Catholic Church to the RCCG and even several Islamic organisations, religious organisations play a dominant role in bringing the dividends of democracy to the doorsteps of members and other people alike.

    And development in this context of underdevelopment becomes a moral imperative which would not permit the organisations to champion a good cause while they are in themselves an emblem of institutional incoherence. A strong case can be made for the autonomy of religious organisations given that, for instance, some of their founding constitution sits incongruously with the legal requirements of the federal constitution of Nigeria. However, just as religious institutions have modified the way we think and rethink secularity in Nigeria, they must equally be modified by the imperatives of secularity and democracy. It will therefore be an act of good faith for religious organisations to firm up their institutional deficits in ways that will add to their credibility, spiritually and administratively. In many quarters, churches and mosques do not enjoy good public reputation. In fact, the reason why many lash out at them is the attempt to hide corruption behind the cloak of godliness to deceive the innocent.

    On the other side, and this is even more critical, it is high time Nigeria (and religious leaders would do posterity great service if they provide a lead in this rethinking and reform) commenced a deep institutional and administrative reassessment of religion and its corporate dynamics in a manner that will put to rest the debate around whether religious organisations ought to answer to corporate regulations. The review of the corporate governance code that jumpstarted the problem in the first place could be a wonderful opportunity to resolve it finally.

     

    • Dr. Olaopa is executive vice-chairman, Ibadan School of Government and Public Policy (ISGPP)

  • The FRC: Its powers, limitations

    The Financial Reporting Council (FRC), formerly the Nigerian Accounting Standards Board (NASB), was established in 1982 as a private sector initiative closely associated with the Institute of Chartered Accountants of Nigeria (ICAN).

    However, NASB became a government agency in 1992, reporting to the Federal Minister of Commerce. The Nigerian Accounting Standards Board Act of 2003 thus provided the legal framework under which NASB set accounting standards. Membership includes representatives of government and other interest groups. Both ICAN and the Association of National Accountants of Nigeria (ANAN) nominate two members to the board.

    The primary functions as defined in the act of July 10, 2003 were to develop, publish and update Statements of Accounting Standards to be followed by companies when they prepare their financial statement, and to promote and enforce compliance with the standards.

    IASB had published many of the earlier standards prepared by the International Accounting Standards Committee and its successor the International Accounting Standards Board, but was more involved in enforcement than in updating to the more modern International Financial Reporting Standards (IFRS).

    On May 18, 2011 the Senate passed the Financial Reporting Council of Nigeria Bill, which repealed the Nigerian Accounting Standards Board Act and replaced it with a new set of rules. The decision was in line with a report submitted by Senator Ahmed Makarfi Chairman of the Senate committee on Finance.

    The Financial Reporting Council Bill was thus signed into law on July 20, 2011.

    Some corporate members of the FRCN include: Central Bank of Nigeria, Corporate Affairs Commission, Federal Inland Revenue Service, Federal Ministry of Trades and Investment, Federal Ministry of Finance, Auditor-General for the Federation, Accountant-General of the Federation, Securities and Exchange Commission, Nigerian Accounting Association and National Insurance Commission.

    Others are the Nigerian Association of Chambers of Commerce, Industry, Mines and Agriculture, Nigeria Deposit Insurance Corporation, Institute of Chartered Accountants of Nigeria, Nigerian Institution of Estate Surveyors and Valuers, Association of National Accountants of Nigeria, Chartered institute of Taxation of Nigeria, Corporate Affairs Commission, National Pension Commission, Chartered Institute of Stockbrokers, Nigerian Stock Exchange.

     

  • FRC CEO wins African Leader of Integrity Merit award

    The Executive Secretary of the Financial Reporting Council of Nigeria (FRC), Jim Obazee, has won African Leader of Integrity Merit Award for exemplary leadership and Economic Development in Africa.

    In a statement by FRC’s Media/Communications Consultant, Mack Ogbamosa, said the award was bestowed on Obazee in recognition of his enormous contributions to the nation’s economy, through his resolved efforts in entrenching transparency and accountability in financial reporting. The award ceremony held at  the University of Ghana, Legon.

    While Conferring the award on the FRC chief, who was represented by Adeshola Amao of the Directorate of Corporate Governance of the Council at the 13th Africa Leadership Development Conference and Awards Gala Night, the President of Proven Integrity Communications Network Limited, the organisers of the award, Onwordi Onichabor, said the award was for those Distinguished and Notable Personalities who have excelled greatly in their respective businesses and professional endeavours.

    He also said Obazee was particularly recognized because of his relentless efforts at sanitizing the financial sector of the country through formulation and enforcement of financial standards.

    The recipient, while receiving the award, thanked the organisers for the recognition and dedicated the award to members of staff of the FRC, adding that the honour was not only in recognition of his personal efforts, but also that of the entire staff of the Council.

    The FRC boss noted that the impact of the Council’s enforcement of accounting, auditing, actuarial and valuation standards as well as entrenchment of good corporate governance is already manifesting in this era of adherence to rules, regulations and standards as the hallmark of the administration of President Muhammadu Buhari.

    Obazee has won many awards both within and outside the shores of the country for his doggedness and ground-breaking achievements with the Council in ensuring that businesses are conducted in the country in accordance with laid down rules.

    These awards include among others, African Par Excellence Award 2015, Public Administrator of the Year award, Lifetime Achievement Award for Competency/Distinctiveness in Public Service by Nigeria Media Nite-out Award 2015, CEO of the Year by Ikeja City Award 2016 as well as Crime Reporters Association of Nigeria, CRAN Award of Excellence for service.

    Established under the Financial Reporting Council Act No 6, 2011, the FRC is charged with regulating accounting, auditing, actuarial and valuation standards as well as development, issuance and enforcement of code of corporate governance to ensure transparency, probity and accountability in both public and private sectors of the nation’s economy.

  • FRC, OPS dialogue on corporate governance

    The  Organised Private Sector (OPS)  has pledged to collaborate with the Financial Reporting Council of Nigeria (FRC) in fine-tuning the recently released National Code of Corporate Governance.

    Its membership, comprising the Nigeria Employers’ Consultative Association (NECA), Nigerian Association of Chambers of Commerce, Industry, Mines and Agriculture (NACCIMA) and Manufacturers Association of Nigeria (MAN), said they would  colaborate with FRC to ensure that the code becomes the guiding rules for businesses in the country

    In a statement, the Media/Communications Consultant of the FRC, Mack Ogbamosa, said the OPS  pledged its support to the Council on NCCG while on a courtesy visit to the Council’s corporate headquarters in Lagos to seek clarifications on certain areas of the code over the weekend.

    Speaking at the Council’s office, the Director-General  of NECA, Mr. Olusegun Oshinowo, who led the delegation said the body was in support of the NCCG which is to ensure transparency, accountability and fairness to all stakeholders in the business sector of the economy.

  • NECA hails govt decision on FRC’s policy

    The Nigeria Employers’ Consultative Association (NECA) has praised the Federal Government on its decision to suspend the Financial Reporting Council (FRCN)’s recently released Code of Corporate Governance.

    NECA considered the action appropriate in view of the failure of FRC to secure the buy-in of the Organised Private Sector (OPS) on such important guideline.

    Commenting on the development, the Director-General of NECA, Olusegun Oshinowo, said it was disheartening that the FRC went ahead to release the code without respect to the outcome of social dialogue and engagement with stakeholders.

    Oshinowo said:”The timely intervention by the Honourable Minister of Labour and Employment is a testimony of the avowed commitment of the Federal Government to work with the Private Sector in the resuscitation of the economy.

    “NECA is hopeful that other agencies of government will pick learning points from the development in seeing the private sector as critical stakeholders and partners in progress with major stakes in the progress of the economy and country as a whole.”

    Last week, NECA faulted the new Code of Corporate Governance of the Financial Reporting Council (FRCN) which prohibits the chief executive officer of an establishment from becoming the chairman until seven years on the position.

    The provision called “Cool off period” has generated mixed feeling among stakeholders.

    Oshinowo  said there is no justification for the restriction on MD/CEO becoming the chairman of the same company until after the cool off period of seven years as stated in Section 6 of the Code for Private Sector.”

    He said: “Some companies are formed by one or two shareholders with the vision of what they intend to achieve. What stops such investor that has served meritoriously as the MD/CEO from becoming the chairman upon retirement if so appointed by the board?”

  • FRC unveilsnew rule to strengthen audit reports

    The Financial Reporting Council of Nigeria (FRC) has released Rule 9 to guide independent auditors on the application of International Standard on Auditing (ISA) 701 in preparation of audit reports.

    The FRC said the move was part of its mandate to promote and ensure that financial statements prepared in the country conform to international standards.

    It said the rule nine hinges on the application of ISA 701 deals with the auditor’s responsibility to communicate key audit matters in the auditor’s report is intended to address both the auditor’s judgment as to what to communicate in the auditor’s report and the form and content of such communication.

    FRC’s Executive Secretary Jim Obazee said the Rule 9 was in accordance with sections 8 (2) and 53 (2) of the Financial Reporting Council of Nigeria, Act No. 6 2011, (FRC Act, 2011).

    According to him, the purpose of communicating key audit matters is to enhance the communicative value of the auditor’s report by providing greater transparency about the audit that was performed.

    He added that communicating Key Audit Matters (KAM) provides additional information to intended users of financial statements to assist them in understanding those matters that in the auditor’s professional judgment were of most significance in the audit of the financial statements of the period.

    He stressed that communicating KAM could also assist users in understanding the entity and areas of significant management judgment in the audited financial statements.

  • FRC releases National Code of Corporate Governance

    The Financial Reporting Council of Nigeria (FRCN) has released the National Code of Corporate  Governance. The exercise was done in accordance with Section 50 of the Financial Reporting Council of Nigeria Act, 2011.

    The new code, among other things, requires the Directorate of Corporate Governance to develop the principles and practices of Corporate Governance applicable in Nigeria.

    Details of code indicated that the Code of Corporate Governance for the private sector is mandatory while the Code of Governance for Not-for-Profit entities is  “Comply or Justify non-compliance”. It also stipulated that the Code of Governance for the Public Sector will not be applicable immediately until an executive directive is secured from the Federal Government of Nigeria.

    This, it said, was given that the enabling laws that set up most government establishments already carry some form of governance structure that will require an umbrella legislation to unify the different provisions of those laws to synchronise with this Code.

    Before the release of the code, the Federal High Court, Lagos had in a suit brought before it, challenging the code,  the court agreed with FRC’s preliminary objection and struck out the suit no: Fhc/L/Cs/672/15 – Chief Timothy Adesiyan & 9 Ors. V. the Honourable Minister of Trade and Investment & 3 Ors.

    “In its ruling, the court essentially held that the plaintiffs lack the locus standi to institute the suit as they are not within the purview of public interest entities, public companies or private companies as recognised under the Financial Reporting Council of Nigeria Act and the Draft/Proposed National Code of Corporate Governance,” it said.

    The plaintiffs had instituted this suit against the defendants by an originating summons dated May 11, 2015 essentially seeking declarative and injunctive reliefs against the Defendants. The crux of the Plaintiffs’ suit was to seek a declaration that it is ultra vires for the first, second and fourth defendants to promulgate, make or issue the proposed National Code of Corporate Governance 2015, same not falling within the power conferred on the first and second defendant by the Financial Reporting Council of Nigeria Act, 2011.

    “The ruling of the court delivered yesterday has brought the matter to an end, subject to the Plaintiffs’ right of appeal.  We have applied for the Certified True Copy (CTC) of the Ruling of the Court and shall forward same to you as soon as we obtain it,” it said.

  • ‘Why FRC should compel MDAs to publish accounts’

    ‘Why FRC should compel MDAs to publish accounts’

    the Fiscal Responsibility Commission (FRC), should compel Ministries Departments and Agencies (MDAs) to declare their revenues and expenditures in their published accounts not later than three months into the new year, Prof. Nasiru Yauri of Faculty of Management Sciences, Usman Danfodio University, Sokoto, has said.

    Yauri said this in a paper entitled: “The Fiscal Crisis and Management of Budget Deficits in Nigeria,’’ presented at the ongoing 21st Annual Conference of the Association of National Accountants of Nigeria (ANAN) in Abuja.

    He mentioned MDAs such as: Nigeria Customs Service (NCS); Federal Inland Revenue Service (FIRS); Nigerian Ports Authority (NPA); Central Bank of Nigeria (CBN); Nigeria Maritime Administration and Safety Agency (NIMASA), and Nigeria Liquefied Natural Gas Ltd. (NLNG).

    Yauri said the FRC should act on the provisions of the Fiscal Responsibility Act (FRA) 2007 to compel MDAs to declare their revenue and expenditure. “Recently, the erstwhile Governor of the Central Bank of Nigeria and Emir of Kano claimed that about 20 billion dollars was missing from Nigeria’s oil revenue. The amount, part of the 67 billion dollars worth of crude shipped by the Nigerian National Petroleum Corporation (NNPC) between January 2012 and July 2013, was not remitted to the Federation Account.

    “A report submitted to the Office of the Auditor-General of the Federation in 2015 by Price Waterhouse Coopers confirmed that 18.5 billion dollars in oil revenue was missing,’’ the don said.

    He said at various times, similar allegations were made against high-revenue yielding agencies like the NCS, FIRS, Nigerian Ports Authority, CBN, NIMASA, and the NLNG.

    According to him, high-flying and huge revenue generators such as the NNPC; NCS; NIMASA; Bureau of Public Entreprises (BPE); Nigeria Electricity Regulatory Commission (NRC); Federal Airports Authority of Nigeria (FAAN); Nigeria Immigration Service (NIS); and Nigerian Broadcasting Commission (NBC), spent three years without remitting a kobo to the Consolidated Revenue Fund (CRF).

    “In this regard, government and MDAs must be made to comply with the provisions of the Fiscal Responsibility Act 2007, which stipulates that they must pay the balance of their operating surpluses to Consolidated Revenue Fund (CRF).

     

    “Importantly, the implementation of the Treasury Single Account (TSA) by the current government should be sustained. All MDAs should be made to comply and appropriate sanctions meted on defaulting MDAs.  “Caution must be exercised in the granting of exemption to MDAs, if revenue leakages are to be fully blocked by government. “I have earlier suggested that the current stance of the Nigerian government on the TSA should be sustained and caution must be taken in granting some MDAs exemption,’’ Yauri said.

    The don also said that successive governments had failed to achieve meaningful implementation of annual budgets.

    According to him, Nigeria’s budget crisis is reflected in the country’s perpetual failure in budget implementation, largely explaining why the country has expended huge amounts of money, running into trillions of Naira but has remained unable to record the desired level of economic growth and development.

    “The budget crisis in more lucid terms refers to the mismanagement of both the revenue and expenditure aspects of the budget. “Nigeria’s budget crisis is reflected in the country’s perpetual failure in budget implementation. “Although it is common to assume that the budget crisis rests primarily in the mismanagement of budget outlays, the maladministration of revenue sources in Nigeria is an equally potent cause of Nigeria’s budget crisis.

    “The magnitude of corruption in the budget implementation and scams related to non-remittal of revenue by agencies to government accounts are clear manifestations of the budget crisis. The deficit trap, on the other hand, is an offshoot of the budget crisis. The budget crisis as denoted by poor budget implementation; mainly due to factors such as corruption,’’ he said.

    Yauri said that the most appropriate strategy to address the persistent budget deficit and overcome the debt trap is through expenditure cut. He said that the non-availability of accurate and reliable data; the lack of political will; the shortfall in executing capacity; and the challenges posed by political instability and insecurity; gives birth to another perspective of Nigeria’s fiscal dilemma – the persistent deficit trap.