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Tag: KPMG

  • Court dismisses Stanbic IBTC, KPMG’s suits against FRC

    Court dismisses Stanbic IBTC, KPMG’s suits against FRC

    The Federal High Court in Lagos on yesterday dismissed separate suits filed by Stanbic IBTC Holdings Plc and KPMG Professional Services challenging the sanctions imposed on them by the Financial Reporting Council of Nigeria (FRC).

    Stanbic IBTC had filed its suit following the suspension of its chairman, Mr. Atedo Peterside, and three directors by FRC, over alleged irregularities in their financial statements for 2013 and 2014.

    KPMG and its partner Ayodele Othihiwa challenged FRC’s ‘regulatory decision’ against them following their role in the controversial financial statements.

    They challenged the suspension of Othihiwa by FRC for alleged complicity of KPMG in the financial statements.

    Justice Ibrahim Buba dismissed the N100m fundamental rights enforcement suit filed against the council and its Executive Secretary, Mr. Jim Obazee, by KPMG.

    Justice Buba resolved all the issues raised by Stanbic IBTC in its suit in favour of FRC and dismissed the suit for lacking in merit.

    The judge said it was up to the court to protect Nigeria and non-Nigerian investors when capital flight was becoming a problem.

    “This court is unable to answer all the questions set by the plaintiff in favour of the plaintiff; rather against the plaintiff in favour of the defendants.

    “All the issues argued are resolved against the plaintiff. This court must purposely, through judicial creativity, interpret our legislation meaningfully in these days of gross capital flight.

    “Nigerian courts must protect Nigerian and non-Nigerian investors. This court is unable to agree with the plaintiff’s position” the judge held.

    Before the main suit was heard, Justice Buba had restrained FRC from obstructing the operations of Stanbic IBTC.

    The judge barred FRC from preventing the plaintiff or its subsidiaries “from carrying on their lawful businesses.”

    Justice Buba ruled on an motion on notice for orders of injunction against FRCN and the National Office for Technology Acquisition and Promotion (NOTAP).

    The plaintiff said FRC, since August 3, had been investigating its audited accounts for the year ended December 2014.

    The investigations concern liabilities accrued in the plaintiff’s 2014 accounts in respect of franchise fees owed to Standard Bank of South Africa, the registration of which it said has been pending before NOTAP since 2011.

  • FRC sanctioned us illegally, KPMG alleges

    FRC sanctioned us illegally, KPMG alleges

    An accounting firm, KPMG Professional Services and its Partner, Ayodele Othihiwa, yesterday alleged that the Financial Reporting Council of Nigeria (FRC) imposed sanctions on them without due process.

    Arguing a suit they filed at the Federal High Court in Lagos against FRC and its Executive Secretary, Mr. Jim Obazee, their lawyer Mr. Babatunde Fagbohunlu (SAN) said the respondents did not comply with the law.

    FRC, in an October 30 letter, conveyed its ‘regulatory decision’ to the applicants, following their role in the controversial financial statements of Stanbic IBTC Holdings Plc for 2013 and 2014.

    The council said it had suspended Othihiwa “until the investigation as to the extent of the negligence of KPMG Professional Services is ascertained.”

    But Fagbohunlu said FRC came to a damaging conclusion against his clients and imposed punishment on them without fair hearing.

    According to the lawyer, Section 62 of the FRC Act provides that where a complaint is made against an accounting professional, and where the council investigates the complaint, it must notify the professional.

    “There was no complaint, no notification and no summons. They have not tendered one single shred of evidence to show that we were invited,” he said.

    But FRC’s lawyer, Norrisson Quakers (SAN) urged the court to strike out the suit for lack of jurisdiction.

    He said Obazee was not a necessary party to the suit, adding that “the matter can be determined without his presence.”

    Besides, he said there was no evidence that the Executive Secretary acted in bad faith towards the applicants.

    Quakers urged the court to strike out the suit on the basis that FRC merely performed its statutory duties.

    “Essentially, they are asking the court to apply shackles to our hands,” he said.

    The senior advocate said contrary to KPMG’s claim, the applicants were given fair hearing, documents having been requested from them to aid investigation.

    On KPMG and Othihiwa’s suspension, Quakers said: “A body has a right to suspend a member until investigation is concluded. They were invited but never showed up after some shareholders complained about infractions in Stanbic IBTC’s accounts which they prepared.”

    The council is contending that the applicants’ Originating Motion discloses no cause of action against it.

    FRC said it merely performed its statutory functions and duties and cannot be stopped from doing so.Justice Buba adjourned till December 14 for ruling.

  • FRC urges court to dismiss KPMG’s suit

    FRC urges court to dismiss KPMG’s suit

    • Case to be heard Monday

    The Financial Reporting Council of Nigeria (FRC) has urged the Federal High Court in Lagos to dismiss a suit filed against it by KPMG Professional Services.

    The firm and a partner, Ayodele Othihiwa, are praying the court to stop FRC from sanctioning them over their role in the financial statements of Stanbic IBTC Holdings.

    Hearing in the suit could not go on yesterday after the plaintiffs’ lawyer Mr. Babatunde Fagbohunlu (SAN) informed Justice Ibrahim Buba that he filed a new application.

    The application, he said, is a further affidavit opposing FRC’s Notice of Preliminary Objection.

    The respondent’s lawyer, Mr Norrison Quakers (SAN), said he needed time to respond.

    “I’ve just been served. I’ll not be opposing the application,” he said.

    FRC is praying the court to dismiss the suit in its entirety because the court lacks jurisdiction to entertain it.

    The council is contending that the applicants’ Originating Motion discloses no cause of action against it.

    FRC said it merely performed its statutory functions and duties and cannot be stopped from doing so.

    The council said the plaintiffs did not appeal to FRC’s Technical and Oversight Committee or exhaust laid down procedures for resolution of disputes before filing the suit.

    In effect, it said the plaintiffs did not comply with “a condition precedent before initiating, instituting or commencing legal action.”

    Besides, FRC said the applicants’ right to fair hearing was not infringed on because KPMG was “given the opportunity for fair hearing.”

    Justice Buba had on November 6 restrained FRC from imposing any sanction on KPMG until the firm’s suit was determined.

    He barred FRC’s Executive Secretary Mr. Jim Obazee from sanctioning Othihiwa.

    FRC, in an October 30 letter, conveyed its ‘regulatory decision’ to the applicants, following their role in the financial statements of Stanbic IBTC Holdings Plc for 2013 and 2014.

    The council said it had suspended Othihiwa “until the investigation as to the extent of the negligence of KPMG Professional Services is ascertained.”

    KPMG and Othihiwa said the FRC’s decision was published and issued without informing or notifying them of the nature of the allegations made against them, nor were they invited to respond to the allegations.

  • KPMG, PWC to audit NNPC, others

    KPMG, PWC to audit NNPC, others

    TWO international audit firms – KPMG and PricewaterhouseCooper (PwC) – were yesterday appointed by the Federal Government to examine the books of the Nigerian National Petroleum Corporation (NNPC) and other revenue generating agencies.

    They are to forensically audit the accounts of the NNPC, Federal Inland Revenue Service (FIRS), Nigerian Customs Service (NCS) and other revenue generating agencies.

    Edo State Governor Adams Oshiomhole made the disclosure after the meeting of the committee of five set up by the Vice President Yemi Osinbajo-led National Economic Council (NEC).

    The committee, which has Oshiomhole as its chair, has governors Ibrahim Dakwambo (Gombe), Nasiru El-Rufai (Kaduna) and Udom Emmanuel (Akwa Ibom) as members.

    Oshiomhole said appointment of the firms was to allow for professionalism.

    He said that the revenue generating agencies were supposed to remit their revenues to the Federation Account in line with Sections 80 and 162 of the 1999 Constitution.

    Oshiomhole said: “Having looked at the size of the assignment and the issues that have been raised, we are convinced that we need a professional approach. And so, we have decided to appoint two audit firms including KPMG and PWC to carry out a forensic audit of all the agencies under reference and to establish all the facts that we need.

    “And at the end of the exercise, government will decide what to do with the findings of the audit firms. Like we said last week, we are doing this first because we are sitting governors. Even if we are not sitting governors, some of us are not professional accountants.

    “We expect that the audit firms will carry out a professional work. We are convinced they have what it takes to do it and their findings will help government first to lay out new rules to ensure that the laws of the land are complied with. And if anything has gone wrong, identify who has done what. And then we take it from there.”

    A time-frame was not given for the auditors’ assignment but Oshiomhole said they had been told to be fast and thorough in the discharge of their duties without compromising standards.

    While disclosing that KPMG declined to do the auditing when approached by the administration of former President Goodluck Jonathan as the political environment was not conducive, he said PwC which agreed to do the job then confirmed that some organisations refused to open their books.

    “There is room now to do a more thorough audit because we now have a completely new political environment. We have a president that is absolutely committed to transparency and one that has demonstrated enormous political will to ensure that these public institutions are run, not only in compliance with the laws of the land, but they are run on the basis of international best practices.

    “I think the audit companies, this time around, will have no excuse. We expect all those involved to cooperate. This is not about finding out what is right, or wrong, it is about making Nigeria work for the benefit of Nigeria.

    “And we have to bear in mind in other climes governments are not run on the basis of collections from crude oil, government regardless of their colour, or political affiliation. They are funded exclusively through taxes.

    “And so if you have tax generating agencies that are not remitting money, government can’t run like that. So, on the long run, Nigeria has to live on taxes.

    “First, it is not about yesterday, it is more about tomorrow. Nigeria can’t continue with business as usual. And that is why ‘change’ is the word in President Buhari’s promise to Nigerians.”

    On whether his committee has the power to appoint the two audit firms, he said, it derives its powers from the mandate given to it by the NEC.

    The government agencies at the committee’s session yesterday included: the Nigerian Maritime Administration and Safety Agency (NIMASA), Central Bank of Nigeria (CBN), Department of Petroleum Resources (DPR), FIRS, Security and Exchange Commission (SEC), NCS, Ministry of Finance and the Office of the Accountant-General of the Federation.

  • FG appoints KPMG, PWC to audit NNPC, other agencies

    The Federal Government on Thursday appointed international audit firms, KPMG and PriceWaterhouse Cooper to conduct comprehensive audit of the accounts of the Nigerian National Petroleum Corporation (NNPC) and other revenue generating agencies.

    The appointment was disclosed to State House correspondents by Edo State Governor, Adams Oshiomhole at the end of the second meeting of the four man panel set up by the National Economic Council (NEC).

    The decision to appoint the two audit firms, he said, was taken to allow for professionalism.

    DETAILS LATER

  • What Transition Committee, KPMG recommended to Buhari, by report

    What Transition Committee, KPMG recommended to Buhari, by report

    A report in yesterday’s Financial Times has revealed that the Muhammadu Buhari administration plans to plug leakages in the Nigerian National Petroleum Corporation (NNPC) as part of its short-term remedies.

    The administration also plans to implement quick fixes to curb electricity blackouts, fuel shortages and salary arrears.

    The report said: “The action plan for the president’s first months in office was drafted by an APC transition team with the help of consultants KPMG, and makes priorities of short-term remedies for electricity blackouts, fuel shortages and salary arrears.

    “It also suggests that a new government will move quickly to plug leakages at the state-owned Nigerian National Petroleum Corporation. Under former President Goodluck Jonathan, these allegedly cost the treasury billions of dollars in potential savings against an eventual fall in the price of oil, on which the state depends for about two-thirds of earnings.

    Mr Buhari returned from meeting G7 leaders in Germany on Monday, having won international commitments to support his government in the fight against Islamist insurgents who stepped up a campaign of suicide bombings in his first days in office.”

    The report, however, feared that the outcome of the National Assembly election could work against the reforms the administration planned to implement.

    It reads: “Nigeria’s new president, Muhammadu Buhari, faced the first political storm since his inauguration when both the Senate and House of Assembly elected leaders on Tuesday in defiance of the ruling party’s choice of candidates.

    The vote for the nation’s number three and four positions followed weeks of festering division among newly elected legislators and officials within Mr Buhari’s All Progressive Congress and came as politicians jostle for influence over appointments to the new government.

    The 72-year-old former military ruler became the first opposition candidate in Nigeria’s history to unseat a sitting president in April elections, after pledging to stamp out corruption, spread wealth more evenly and defeat Boko Haram insurgents. Inaugurated on May 29, he is under pressure to take decisive action in his first weeks in office to head off the effects of the oil shock.

    “The fall in the price of crude has left state coffers depleted, fuel in short supply and the incoming government facing up to $20bn of short-term liabilities, including salary arrears, according to a draft action plan for the president’s first months in office seen by the Financial Times.

    Mr Buhari must quickly determine whether to maintain multibillion-dollar fuel subsidies that the state can no longer sustain or remove them and potentially stir popular unrest, the document advises.

    “But tension between newly elected legislators and APC officials have raised concern within the business community of a drawn-out process for approving cabinet appointments, which could in turn delay action on the fiscal front.

    “Bukola Saraki, a former state governor and flamboyant, at times controversial force in Nigerian politics, was elected as Senate president by just over half the chamber, with the majority of his support coming from the former ruling People’s Democratic Party, from which he defected only 18 months ago. The APC’s preferred candidate was not even presented for the vote because he was at a party meeting at another location.

    APC officials and advisers to Mr Buhari were still trying to make sense of the setback late on Tuesday. However, they played down its significance, pointing out that Mr Buhari had remained studiously neutral and had pledged to work with whoever came out on top.

    “‘The Senate has chosen their own person. That doesn’t mean they will oppose everything. It is something to celebrate. We are coming of age — we have proved we can change a sitting government, we can also allow the Senate to make its own choices. This is the separation of powers at work,” a close adviser to the president told the FT.

    Other political insiders pointed out that Mr Buhari’s ability to press forward with reform will be determined in part by his relations with members of the Senate and House of Representatives, where voting also went against the APC hierarchy’s choice.”

  • Fraud, forgery hit N20b, says KPMG report

    The Central Bank of Nigeria’s (CBN’s) report for the first  half of last year has shown that there were 2,478 fraud and forgery cases involving banks valued at over N20 billion, a report by KPMG has said.

    This, it said, represented an eight per cent increase over the previous year volume but a significant increase in value of over 200 per cent from 2012.

    The Banking Industry Customer Satisfaction Survey by KPMG obtained by The Nation said increasing frequency and magnitude of cybercrime incidents globally make it apparent that cybercrime is here to stay.

    It said with a yearly growth rate of three per cent over the past five years and $21 billion inflow of personal remittances last year, Nigeria is the fifth largest remittance receiver worldwide in terms of volume.

    It said remittance to Nigeria accounts for 65.6 per cent of total flows into sub-Saharan Africa.

    The feat, it said, presents some opportunity for banks who may want to tap into the opportunities created by this class of Nigerians who wish to transact banking business using their local bank accounts.

    In an online survey of 127 Nigerians resident across 12 countries who maintain local banking relationships, convenience was the overwhelming driver of value.

    According to the report, when asked for the most important factor in their banking relationships, 44 per cent of the customers selected the availability of internet banking. In particular, customers identified the ease of use of the internet banking platform as the most important factor followed closely by the quality of customer service.

    Interestingly, 77 per cent of those surveyed transfer money through formal channels – banks (48 per cent) or through other money transfer agencies (29 per cent) – compared to 19 per cent who said they typically send money home through less formal ways.

    Also, on the effectiveness of the contact centre, the ease of complaints resolution was cited as a major area of dissatisfaction.

    It said more than 50 per cent of customers who have used their bank’s contact centre have been dissatisfied with the promptness of issues resolution and quality of feedback. It cited one bank’s  response to a customer facing some debit card challenges was for the customer to wait until his next visit home, for his query to be resolved.

    In this year’s survey, two per cent of retail customers indicated that they had experienced a fraud incident in the last year and while this number appears small today, it may signify the start of a potentially disturbing future trend.

    It said a survey by KPMG in the Netherlands showed 80 per cent of the respondents indicated that cybercrime is no hype and will continue to be a challenging topic.

    The survey showed that 49 per cent of organisations have experienced some form of cybercrime activity during the past 12 months, stressing that it is not to say the rest have not experienced an attack; they may not have the proper detection measures in place.

    Among the 49 per cent that have experienced an attack, 10 per cent indicated that they have been attacked more than 100 times within the past year. Inadequate detection procedures may conceal the real number of cybercrime attacks. Only 50 per cent of the respondents were able to detect attacks and only 44 per cent of the organisations felt comfortable that they were able to respond.

    It said organisations should ask themselves whether they are aware and capable of handling a cybercrime attack. The survey found that 35 per cent do not agree that their organisation is sufficiently aware of cybercrime, although the financial sector respondents score significantly lower. This would imply that financial institutions are more aware of cybercrime than other typologies.

    Attacks may come by various methods heavily on and correlate with the budgets that have been made available. The damage from cybercrime attacks and budgets allocated to cybercrime defence can be substantial.It said the way  cybercrime defence budgets are allocated for prevention, detection and response measures should be considered carefully.

  • Auditors kick against dominance by KPMG, Deloitte, others

    Auditors kick against dominance by KPMG, Deloitte, others

    Indigenous auditors are concerned about the rising level of control enjoyed by  KPMG,  Pricewaterhouse Coopers, Accenture, Deloitte and Ernst & Young  commonly referred to as the “big five” professional services firms.

    The Chairman, SIAO, an indigenous auditing firm, Robert Ade-Odiachi said the “big five” have corned top jobs from government parastatals, banks and other leading firms in the country.

    He said the relevance being given to the firms runs contrary to the Local Content Act, 2010, which stipulated that key jobs from government be done by local auditors, in partnership with international operators.

    Ade-Odiachi said the “big five” are parading themselves as indigenous Nigerian firms when what they are at best are franchises of foreign professional firms. “What we are witnessing presently, in the business sector of this country, is a blatant disregard for the provisions of the Nigerian Local Content Act, 2010. The “big five” professional services firms are parading themselves as indigenous Nigerian firms when what they are at best are franchises of foreign professional firms, he said.

    Continuing, he said the firms service all banks, most if not all most public quoted companies and Ministries, Departments and Agencies (MDAs), multinationals and other public interest companies to the utmost total exclusion of indigenous formed and owned firm.

    Managing Partner, SIAO, Itua Ighodalo said the “big five” have managed to do this because of the negligence and in very many cases, the support of government agencies. He said the local Content Act, 2010 is clear in its provisions and intent.

    He said the purpose of enacting the Local Content Act is to develop local skills, facilitate technology transfer, ensure optimum use of local manpower and local manufacturing in the Nigerian Oil and Gas sector.

    Ighodalo argued that even if foreign companies are registered in Nigeria, and can qualify as Nigerian firms, they are most certainly not indigenous or wholly Nigerian.

    “It is needless to state that the Local Content Act was enacted to cater for and provide protection for Nigerian indigenous companies that are in competition with foreign companies and foreign companies with subsidiaries in Nigeria,” he said.

  • KPMG chief warns on shale threats, poor investment in oil

    KPMG chief warns on shale threats, poor investment in oil

    Auditing giant KPMG has warned the Federal Government of the dangers of not investing in the upstream oil sector and the threat of shale oil to the country’s revenue drive.

    KPMG’s Global Chairman, Energy and Natural Resources Sector, Michael Soeting, told reporters in Lagos, that the government should be concerned with lack of investments in the oil and gas exploration and production, which is resulting in depletion in oil reserves and revenues.

    He said the United States (US), which used to be Nigeria’s biggest market, is becoming dependent in oil and gas and marketing. The US he said, would by the end of this decade be producing about six million barrels of oil per day, adding that one third of gas production in the US is related to shale.

    He said although, Nigeria has found alternative markets in Asia, noting that it may depend only in the short term because many countries including China, South Africa and Argentina have huge reserves of shale gas and oil. Other countries, he added, have discovered conventional oil and gas. The implication is that the multinational oil firms have choices to make in terms of where to invest their money.

    He said: “The Nigerian economy depends on crude oil export and there is need for the country to do it right. Non-passage of the Petroleum Industry Bill (PIB) has resulted into investment apathy in the sector. The International Oil Companies (IOCs) are uncertain about what the fiscal terms in the PIB would become after passage and they have refused to invest.

    “Unfortunately, more countries are becoming energy players across the world, creating alternative markets for the IOCs to channel their investment. After discussion on PIB was introduced about 10 years ago, countries such as Ghana, Mozambique Angola and others have discovered oil and already attracting investment from IOCs.”

    He also drew attention to the undue long contracting cycle in Nigeria, which he said, is three to five times what it takes in other countries.

    KPMG partner in Risk Consulting, Dimeji Salaudeen, who also is Head, Africa Oil and Gas sector, said between January 2011 and January 2012, crude oil exports to US reduced from 600,000 bpd to 150,000 barrels per day(bpd).

    “Assuming a barrel of crude oil was $100 throughout that period, it means Nigeria lost $45million per day due to shale gas discovery in the US,” he said.

    He argued that Nigeria has slipped from being the third to the sixth supplier of crude oil to US. “This means the US. is importing more from other suppliers than Nigeria. The implication of this in the long term is that the country may be faced with inability to finance its budget and build oil reserves in the future.

  • Banks may grow assets to $168b, says KPMG

    Banks may grow assets to $168b, says KPMG

    Nigeria’s banking sector is expected to grow to over $168 billion by 2015, a KPMG report has said. The sector was worth $117 billion in 2011, a Customer Service report by the global auditing firm said.

    The report said that while Nigeria may be Africa’s most populous country, only about 20 per cent of the population is banked and two-thirds have never been banked at all.

    KPMG said the sector has recently experienced a number of regulatory changes including a repeal of universal banking licences and the promulgation of more stringent regulations by the Central Bank of Nigeria (CBN) which was aimed at reducing soaring books of non-performing loans and stamp out severe breaches of corporate governance.

    “However, with the establishment of the Asset Management Company of Nigeria (AMCON) to purchase toxic assets of banks and recapitalise troubled banks, some stability has returned to the sector,” it said.

    This development made the leading rating agency Standard & Poor’s (S&P), to upgrade the sector in 2012 to a positive outlook due to the country’s improved asset quality, capitalisation and corporate governance.

    The report posted on the firm’s website said with Automated Teller Machines (ATMs) becoming almost ubiquitous in the cities, it was not surprising that it had become the fastest growing channel in recent years. “Almost eight in 10 customers surveyed use the ATM and nearly two thirds of these people visit an ATM on a weekly basis with cash withdrawal and balance enquiry amongst the most common transactions customers perform via the ATM,” it said.

    However, it said that despite the proliferation of new channels in recent years, adoption of other alternate channels is still comparatively low.

    It also said very few respondents saying they use internet banking (seven per cent), Point of Sale (six per cent), telephone banking (five per cent) and mobile payments (two per cent). Of the respondents that had used internet banking, one- third were private sector employees and 15 per cent, were students.