the nigerian accountant 2014

THE NIGERIAN ACCOUNTANT January/March, 20141

Contents

The Nigerian ACCOUNTANT(ISSN: 0048 – 0371) is published quarterly for N400 by THE INSTITUTE OF CHARTERED ACCOUNTANTS OF NIGERIA HEAD OFFICE:Plot 16, Idowu Taylor Street, Victoria Island, Lagos.P.O. Box 1580, Lagos.Telephone: (01) 7642294, 7642295 Fax: (01) 4627048E-mail: [email protected] Website: www.ican-ngr.org

ANNEXE OFFICE:82, Murtala Mohammed Way, Ebute Metta, Lagos. Telephone: (01) 7642297, 7642298

ICAN CENTRE:Plot 12, Kofo Kasumu Street, Amuwo Odofin, Lagos.

* The views expressed by correspondents or contributors in this journal are not necessarily those of the Institute.

* The Institute reserves the right to refuse, cancel, amend or suspend an advertisement or insertion and no liability can be accepted for loss arising from non-publication or late publication of any advertisement or insertion. All articles are subject to editing.

* © No part of this publication may be reproduced without the prior written permission of the publishers.

JANUARY / MARCH, 2014 Vol.47, No.1

4 OPINION * Seeking Knowledge of IFRS is the Beginning of Wisdom for Accountants * Sarbanes-Oxley Act: Evolving a Corporate Conscience

5 LEGAL MATTERS * ICAN Disciplinary Tribunal Re-Instates Sonubi as Member of The Institute

6 COVER * Imperatives of Value-for-Money Internal Auditing in Nigerian Universities

26 TECHNICAL * Social Media Marketing May Be the Key to Practice Profitability * Seven Tips for Accountants on Supporting the Globalisation of Small Business

29 DEVELOPMENT * An Appraisal of the Fiscal Federalism in Nigeria

* The ICPC, EFCC, Money Laundering, Code of Conduct Bureau, Fiscal Responsibility and Public Procurement Acts: An Overview

49 NEWS/EVENTS

62 HEALTH * Leukemia


THE INSTITUTE OF CHARTERED ACCOUNTANTS OF NIGERIA(Established by Act of Parliament No.15 of 1965)

Officers & Council Members 2013-2014Vision

StatementTo be a leading global

professional body.

Mission StatementTo produce

world-class chartered accountants, regulate and continually enhance their

ethical standards and technical competence in

the public interest.

ICAN LIAISON OFFICES

Abuja Liaison Office:Akintola Williams HousePlot 2048, Michael Okpara Way,Zone 7, Wuse District, Abuja.Tel: 09 – 8722302, 07034520270E-mail: [email protected], [email protected] Person: Mr. Gabriel Arinze

Kaduna Liaison Office:3, Kanta Road, Ali Turaki House,Kaduna.Tel: 08036788275E-mail: [email protected], [email protected] Person: Mrs. A.A. Adegoke

Kano Liaison Office:Murtala Mohammed Library ComplexAhmadu Bello Way,P.O. Box 11283, Kano.Tel: 08035900399 Email: [email protected], [email protected] Contact Person: Mr. A.H. Umaru

PresidentKabir Alkali MOHAMMED (Alhaji), mni, FCIS, FCMA, FCA

Vice PresidentChidi Onyeukwu AJAEGBU, MBF, ACS, FCA

1st Deputy Vice President

Samuel Olufemi DERU (Otunba), FCA

2nd Deputy Vice President Titus Alao SOETAN (Deacon), FCA

Immediate Past President

Adedoyin Idowu OWOLABI, BSc, MILR, MNIM, FCA

Honorary TreasurerOnome Joy OLAOLU (Mrs.), BSc, MSc, ACPIN, FCIB, FCA

MembersSolomon Oluwole ADELEKE (Deacon), FCA

Afolabi Abiodun AJOMALE (Chief), FCAOye Clement AKINSULIRE (Chief), FCA

Davidson Chizuoke ALARIBE (Chief), MA, CFA, MIMC, MNIM, FCAShakirat Adepeju BABATUNDE (Alhaja), BSc (Hons), MBA, MSc, FCA

Sunday Abayomi BAMMEKE, BSc, FCAAdaku Chilaka CHIDUME-OKORO (HRH), BSc, MSc, FCA

Uchenna Ifesinachi EROBU (Mrs.), MBA, FCAComfort Olujumoke EYITAYO (Mrs.), mni, CFA, FCA

Mustapha Bulu IBRAHIM (Alhaji), BSc, MBA, FCATijjani Musa ISA (Alhaji), BSc, FCA

Razak JAIYEOLA (Alhaji), BSc, CRISC, FCAMonica Ngozi OKONKWO, MSc, ACIB, CFA, CFE, FCANnamdi Anthony OKWUADIGBO (Mazi), BSc, FCA

Innocent OKWUOSA, MSc, ACIB, FCAAdedoyin Idowu OWOLABI, BSc, MILR, MNIM, FCA

Hart Wahab Odafen OZOYA (Rev.), MBA, ACIS, ACS, FCATayo PHILLIPS, MBA, CFA, FCA

Josephine Oluseyi WILLIAMS (Mrs.), BSc, FCAHaruna Nma YAHAYA (Alhaji), BSc, MBA, FCA

Isma’ila Muhammadu ZAKARI (Alhaji), mni, BSc, FCA

Registrar/Chief ExecutiveRotimi A. OMOTOSO, MBA, FCIB, FCA

AuditorAyorinde THOMAS & Co. (Chartered Accountants)


From The EditorEditorial Board MembersSUNDAY ABAYOMI BAMMEKE, BSc, FCAFREDERICK I. OGUNJUBOUN, FCADEJI MUSTAPHA (Alhaji), MBA, FCAOYE AKINSULIRE (Chief), BSc, MSc, MBA, FCARASAKI MURITALA (Alhaji), BSc, FCANWADIKE GODWIN, HND, MBA, FCAANI O. AMOGE, MBA, FCAMOSES O. ADEBOYE, BSc, FCANDUBUISI MGBOKO, BSc, MBA, ACTI, FCADARLINGTON I. ONWUBIKO, BSc, ACAJOSEPH K. ACHUA, PhD, FCAYOHANNA G. JUGU, MBA, PhD, ACAPETER AJIBADE, BSc, MBA, FCAIJEOMA SAM-OBURU, BSc, MBA, ACIB, FCANKECHI UDEH, BSc, ANIM, ACA

EditorCLAUDIA BINITIE

Assistant EditorMUYIWA DARE

Staff WriterHAKEEM KOFOWOROLA

ReporterRUTH IDUMUEKWU

Adverts ManagerORHUE GUOBADIA

Correspondence should be addressed to:-Corporate Communication and Marketing DepartmentTHE INSTITUTE OF CHARTERED ACCOUNTANTS OF NIGERIA Plot 16, Professional Centre Layout, Idowu Taylor Street, Victoria Island. P.O. Box 1580, Lagos.

Tel: (01) 7642294, 7642295

Fax: (01) 4627048

E-mail: [email protected]

ICAN Website: www.ican-ngr.org

Your comments on this edition are welcome. Please write to:

[email protected] or [email protected]

The recently suspended strike action by the Academic Staff Union of Universities, ASUU has brought many fundamental issues to the fore, for discussion and public scrutiny. One of such issues

is internal auditing in Nigerian Universities. As it is all over the world, there is no gain saying the fact that internal auditing is important in public universities, if the reforms of the educational sector being canvassed by ASUU are to realise set objectives.

Our lead article in this edition entitled “Imperatives of Value-for-money Internal Auditing in Nigerian Universities” identifies and discusses why internal auditing is germane to the development of public universities in Nigeria. The authors explained that with the ongoing reforms, pressed by ASUU, there is urgent need for the Directorates of Internal Audit in Nigerian Universities to rise up to the challenge of ensuring that right values of the system are delivered at the right costs and right time.

Obviously, stakeholders in the educational sector would be expecting commensurate value for the injected funds into the system and government’s searchlight and oversight activities would definitely focus on these institutions, to ensure more efficiency and better service delivery.

Towards the twilight of 2013, the Institute organised a workshop on enhancing economic growth through anti-corruption measures in Lokoja, Kogi State. Various scholars and seasoned resource persons delivered thought-provoking papers which are of great importance to the topic. As usual, one of the interesting papers with the title “The ICPC, EFCC, Money Laundering, Code of Conduct Bureau, Fiscal Responsibility and Public Procurement Acts: An Overview” is also published in this edition for readers’ delight. The paper delves into general overview of the anti-corruption bodies’ enabling Acts as they relate to curbing corrupt practices.

This edition is packed with other interesting articles and news-stories put together for your reading and learning pleasure.


Health

62

myelogenous leukemia (AML) and other myeloid leukemias, such as chronic myelogenous leukemia (CML) and juvenile myelomonocytic leukemia (JMML).

There are less common leukemias, such as hairy cell leukemia. There are also subtypes of leukemia, such as acute promyelocytic leukemia (a subtype of AML).

What causes leukemia?Experts don’t know what causes leukemia. But some things are

known to increase the risk of some kinds of leukemia. These things are called risk factors. You are more likely to get leukemia if you:

►Were exposed to large amounts of radiation.►Were exposed to certain chemicals at work, such as benzene.►Had some types of chemotherapy to treat another cancer.►Have Down syndrome or some other genetic problems.► Smoke.But most people who have these risk factors don’t get leukemia.

And most people who get leukemia do not have any known risk factors.

What are the symptoms?Symptoms may depend on what type of leukemia you have, but

What is leukemia?Leukemia is cancer

of the blood cells. It starts in the bone

marrow, the soft tissue inside most bones. Bone marrow is where blood cells are made.

When you are healthy, your bone marrow makes:

►White blood cells, which help your body fight infection.

►Red blood cells, which carry oxygen to all parts of your body.

► P l a te l e t s , wh i c h h e l p your blood clot.

When you have leukemia, the bone marrow starts to make a lot of abnormal white blood cells called leukemia cells. They don’t do the work of normal white blood cells, they grow faster than normal cells, and they don’t stop growing when they should.

Over time, leukemia cells can crowd out the normal blood cells. This can lead to serious problems such as anemia, bleeding, and infections. Leukemia cells can also spread to the lymph nodes or other organs and cause swelling or pain.

Are there different types of leukemia?There are several different types of leukemia. In general, leukemia

is grouped by how fast it gets worse and what kind of white blood cell it affects.

► It may be acute or chronic. Acute leukemia gets worse very fast and may make you feel sick right away. Chronic leukemia gets worse slowly and may not cause symptoms for years.

► It may be lymphocytic or myelogenous. Lymphocytic (or lymphoblastic) leukemia affects white blood cells called lymphocytes. Myelogenous leukemia affects white blood cells called myelocytes.

The four main types of leukemia are:►Acute lymphoblastic leukemia, or ALL.►Acute myelogenous leukemia, or AML.► Chronic lymphocytic leukemia, or CLL.► Chronic myelogenous leukemia, or CML.In adults, chronic lymphocytic leukemia (CLL) and acute

myelogenous leukemia (AML) are the most common leukemias. In children, the most common leukemia is acute lymphoblastic leukemia (ALL). Childhood leukemias also include acute

Leukemia


Health

63

* Culled from www.health.com

common symptoms include:► Fever and night sweats.►Headaches.►Bruising or bleeding easily.►Bone or joint pain.►A swollen or painful belly from an enlarged spleen.► Swollen lymph nodes in the armpit, neck, or groin.►Getting a lot of infections.► Feeling very tired or weak.► Losing weight and not feeling hungry.

To find out if you have leukemia, a doctor will:►Ask questions about your past health and symptoms.►Do a physical exam. The doctor will look for swollen lymph

nodes and check to see if your spleen or liver is enlarged.►Order blood tests. Leukemia causes a high level of white blood

cells and low levels of other types of blood cells.If your blood tests are not normal, the doctor may want to do

a bone marrow biopsy. This test lets the doctor look at cells from inside your bone. This can give key information about what type of leukemia it is so you can get the right treatment.

How is it treated?What type of treatment you need will depend on many things,

including what kind of leukemia you have, how far along it is, and your age and overall health.

► If you have acute leukemia, you will need quick treatment to stop the rapid growth of leukemia cells. In many cases, treatment makes acute leukemia go into remission. Some doctors prefer the term “remission” to “cure,” because there is a chance the cancer could come back.

► Chronic leukemia can rarely be cured, but treatment can help control the disease. If you have chronic lymphocytic leukemia, you may not need to be treated until you have symptoms. But chronic myelogenous leukemia will probably be treated right away.

Treatments for leukemia include:► Chemotherapy, which uses powerful medicines to kill cancer

cells. This is the main treatment for most types of leukemia.►Radiation treatments. Radiation therapy uses high-

dose X-rays to destroy cancer cells and shrink swollen lymph nodes or an enlarged spleen. It may also be used before a stem cell transplant.

► Stem cell transplant. Stem cells can rebuild your supply of normal blood cells and boost your immune system. Before the transplant, radiation or chemotherapy may be given to destroy cells in the bone marrow and make room for the new stem cells. Or it may be given to weaken your immune system so the new stem cells can get established.

►Biological therapy. This is the use of special medicines that improve your body’s natural defenses against cancer.

For some people, clinical trials are a treatment option. Clinical trials are research projects to test new medicines and other treatments. Often people with leukemia take part in these studies.

Some treatments for leukemia can cause side effects. Your doctor can tell you what problems are common and help you find ways to manage them.

Finding out that you or your child has leukemia can be a terrible

shock. It may help to:→ Learn all you can about the type of leukemia you have and its treatment. This will help you make the best choices and know what to expect.→ Stay as strong and well as possible. A healthy diet, plenty of rest, and regular exercise can help.→ Talk to other people or families who have faced this disease. Ask your doctor about support groups in your area. You can also go on the Internet and find stories of people who have leukemia.

PreventionThere is no known way to prevent most types of leukemia. Most

people with leukemia do not have known risk factors. A risk factor is anything that raises your chances of getting a disease.

Some types of leukemia may be prevented by avoiding high doses of radiation, exposure to the chemical benzene, smoking and other tobacco use, or certain types of chemotherapy used to treat other types of cancer.

Leukemia – MedicationsChemotherapy is the standard treatment for many types of

leukemia. Even when a cure is not possible, chemotherapy may help you live longer and feel better.

Chemotherapy for leukemia is usually a combination of drugs. This is because different drugs attack leukemia cells in different ways. The combination also helps keep the leukemia cells from becoming resistant to any one drug. Other drugs used to treat leukemia help prevent infection and help your body grow new blood cells (such as epoetin and hematopoietic stimulants).

Nausea and vomiting are the most common side effects of chemotherapy for leukemia. But having chemotherapy does not mean that you have to suffer with nausea and vomiting. Your doctor may prescribe medicines to control nausea and vomiting. There are also things you can do at home.

Other TreatmentsThe following other treatments may be used to treat leukemia:►Radiation therapy to destroy cancer cells and shrink tumors.

Radiation can be applied to one area or to the whole body. Sometimes it is used to treat leukemia that has spread to the brain and central nervous system or to prevent this spread. It also may be used to shrink swollen lymph nodes or to prepare your body for a bone marrow transplant.

► Stem cell transplant. Transplants usually come from bone marrow or from blood. Some transplants are autologous, meaning the stem cells come from your own body. Some transplants are allogeneic, meaning the stem cells are donated by someone else. The goal of a transplant is to destroy all the cells in your bone marrow, including the leukemia cells, and replace them with new, normal cells.

► Clinical trials. Clinical trials investigate new ways to treat leukemia. Many leukemia patients are referred to clinical trials, and many trials have helped people to live longer. Ask your doctor whether you are a candidate for a trial. He or she may be able to answer your questions about a certain clinical trial and help you decide if it is right for you.


News/Events

IFAC Elects Owuama to Its Board

The Institute of Chartered Accountants of Nigeria (ICAN) added another feather to its cap as one of its Past Presidents, Major-

General Sebastian Achulike Owuama (rtd.) was elected to serve on the Board of the International Federation of Accountants (IFAC). His election was confirmed at the IFAC Council meeting held in Seoul, South Korea on November 13 and 14, 2013 following the approval of his recommendation by the IFAC Board and Public Interest Oversight Board.

According to Alhaji Kabir Alkali Mohammed, President of the Institute of Chartered Accountants of Nigeria, “Owuama’s election to the membership of IFAC Board came as a result of hard work, dedication, integrity and level of experience; qualities he exhibited during his tenure as the President of ICAN in 2009/2010”. Owuama was also President of Accountancy Bodies in West Africa (ABWA) and the first President of the Pan African Federation of Accountants, the umbrella body for Accountants in Africa from May 2011 to May 2013. As ICAN President, he was widely acclaimed as the first retired Army General to lead a professional accountancy body.

He was educated at St. John’s (RIMI) College, Kaduna from 1961 to 1965; Holy Ghost College, Owerri, Imo State from 1966/67 to 1970 for his Higher School Certificate; University of Nigeria, Enugu Campus from 1971 to 1975 for his BSc. Accounting; Norwich City College of Further & Higher Education Norwich Norfolk, England from 1980 to 1982 for his ACCA Professional Examinations; London School of Accountancy & Emile Woolf College, London from 1982 to 1984 also for ACCA; as well as London Business School (for the Senior Executive Programme).

His professional training afforded him the opportunity to acquire rich professional experience and his career spanned over three decades. He was at the East Central State Audit Department from 1972 to 1974). He was also Audit Trainee, Benue Plateau State Audit Department (1975 – 1976); Accounts Supervisor, Central Bank of Nigeria, Enugu Branch (July – Dec. 1976) Audit Officer, (UCA) Command Finance Office, Apapa, Lagos (1978 – 1980); Head of Department, Professional Accountancy, Nigerian Army School of Finance & Administration, Apapa, Lagos; Staff Officer, (Grade 2) – Command Finance Office, Apapa, Lagos (1987 – 1990); Managing Director, Nigerian Welfare Insurance Scheme (1991 – 1995); Assistant Director, Nigerian Army Finance & Accounts – Hq 2 Mechanised Division, Ibadan (1996–1998); Acting Commandant, Nigerian Army School of Finance & Administration (NASFA), Apapa (January – July 1999); Deputy Commander, Command Finance Office, Apapa (July 1999 – July 2001); Commander, Command Finance Office, Apapa (July 2001 – June 2003); and Director, Army Finance and Accounts (July 2003 to December 2005).

Not only was General Owuama decorated with the Corps Medal of Honour, which is the highest Medal for any officer who has risen to the top to command his corps, he was also, in retirement, on July 5, 2010, decorated with the Distinguished Post Service Medal, the highest medal given to any army personnel, who after retirement has distinguished himself in other fields of human endeavour.

It would be recalled that ICAN is a founding member of IFAC, the global organisation for the accountancy profession dedicated to serving the public by strengthening the profession and contributing to the development of strong international economies. IFAC is comprises 173 members and associates in 129 countries and jurisdictions, representing approximately 2.5 million accountants in practice, education, government service, industry and commerce.

NANS Honours ICAN President with Award

The 49th President of the Institute of Chartered Accountants of Nigeria (ICAN), Alhaji Kabir Alkali Mohammed was the cynosure

of all eyes as he was awarded the “Epitome of Good Leadership of the Year” by the National Association of Nigerian Students (NANS).

President of the Institute of Chartered Accountants of Nigeria, Alhaji Kabir Mohammed (left); President of the International Federation of Accountants (IFAC), Mr. Warren Allen; and ICAN Past President, Major-General Sebastian Owuama (rtd.), after

Owuama’s election to IFAC’s Board

ICAN President, Alhaji Kabir Mohammed being supported by Alhaji Razak Jaiyeola as he receives his award from the

National Association of Nigerian Students (NANS)


News/Events

The representatives of NANS, drawn from Uthman Dan Fodio University, Sokoto; Kebbi State University; Ibrahim Badamasi Babangida University, Niger State; University of Maiduguri, Borno State; Gombe State University; and Yar’Adua University, Katsina State, presented the award to the ICAN President on Tuesday, October 10, 2013 at the Ebute Metta office of the Institute in Lagos.

The students-body explained that it believed in honouring deserving personalities who have distinguished themselves in their chosen profession, adding that it picked on Alhaji Mohammed as a second recipient of such award in the history of the union after thorough screening of the many nominations received. The Union claimed to have been following Alhaji Mohammed through his work life where he began as a University Bursar, Secretary, Accountant, Banker and Director of Finance in the former National Electric Power Authority (NEPA).

The highlight of the event was the presentation of a cheque for the sum of two hundred and fifty thousand naira (N250,000.00) to support the union effort at helping the physically challenged students.

The ICAN boss, who was also conferred with a “Five-star General of the students body,” thanked the union for the award and promised to continue to do what he knows best – touching the lives of people with a view to making it better and protect the rights of women so that they can continue to contribute to the development of the society.

ICAN Council Member Becomes SWAN Chairperson

Mrs Onome Joy Olaolu, the Honorary Treasurer of the Institute of Chartered Accountants of Nigeria (ICAN) has been invested

as Chairperson of the Society of Women Accountants of Nigeria (SWAN), a chapter of the Institute. Her investiture and swearing-in ceremonies took place on Tuesday, December 2 at Muson centre, Lagos. Also to serve along with her are the Executive members elected to different offices.

Addressing guests at the occasion, the 49th President of ICAN, Alhaji Kabir Mohammed extolled the virtues of Olaolu who is also a member of the Governing Council of the Institute that have earned her this enviable position. He said she brought a lot of positive changes to the Council and has contributed meaningfully to its proceedings. He charged the newly elected Chairperson to ensure that under her leadership young women are groomed in a better perspective and that some social vices plaguing the society such as sexual harassment of young women especially at tertiary institutions are highlighted and proffered solution to for the betterment of the nation.

Accepting the mantle of leadership, Olaolu said “having accepted the mantle of leadership together with its attendant responsibilities, while at the same time acknowledging the aims and objectives of the body and its role as the Corporate Social Responsibility arm of ICAN, this EXCO has lined up a couple of Projects that will move SWAN forward over the next two years.”

She mentioned, among other things, the proposed programmes of the Society which include to assist ICAN in the protection of

her Charter, stimulate the interest of Women in the Accountancy Profession, give support to every ICAN President towards the achievement of established goals as well as providing support and encouragement to as many indigent and intelligent females who want pursue a career in Accountancy and support the Institute in preparing for its 50th anniversary celebration.

Inculcate Reading Culture in Youngsters – Mohammed

The President of the Institute of Chartered Accountants of Nigeria, Alhaji Kabir Mohammed has called on parents, teachers, and

corporate bodies to invest in promoting the reading culture and bringing back the glory of this fast waning practice.

Mohammed made this call at the Grand Finale of UBA Foundation National Essay Competition held in Lagos where he delivered a lecture as Guest Speaker. While congratulating the 12 finalists, particularly the winner Ezenwa Okonkwo and the two runner-ups Toluwase Adeagbo and Korie Ijeoma Jennifer, he said it was time to revive the reading culture especially now when the internet and the social media had taken first place in the minds of young ones.

His words: “As we celebrate these young ones, there is need for all persons and corporate bodies interested in the future of this nation to deliberately invest in and promote reading culture which is fast declining in this country. What we experience today is a culture of short messages (SMS) and pinging on blackberry telephones, facebook, twitters, watching home videos, etc.”

He said further that “the entrapment of television, social media and everything electronic is so strong and pervasive. Hardly can you find a youth reading novels or text books or listening to news on television or radio. No wonder the written and spoken English

President of the Institute of Chartered Accountants of Nigeria (ICAN), Alhaji Kabir Mohammed (left); Deputy Governor of Lagos State, Mrs Adejoke

Orelope-Adefulire; and Council Member and Honorary Treasurer, ICAN, Mrs Onome Olaolu at the occasion of Olaolu’s investiture as the Chairperson

of the Society of Women Accountants of Nigeria (SWAN)


News/Events

of our youths have become greatly challenged.” The Managing Director/Chief Executive Officer of the UBA

Foundation, Ijeoma Aso said the foundation was set up as part of social responsibility of the Bank to give back to the society and provide better lives for people wherever the bank is present nationwide. She mentioned education, environment as well as special project among others as part of what the foundation is particularly set up for.

The Deputy General Manager of the Bank and Chairman of the Foundation, Kenedy Uzoka reiterated the bank’s interest in the progress of young ones that is why one of the things it is resolved to tackle is the poor habit of writing, observed in recent times among youths. He also said that the winner and runner-ups of the essay completion would receive grants to support them in their higher education.

Embrace Team Work, ICAN President Advises Ikorodu District Chairman

The President of the Institute of Chartered Accountants of Nigeria (ICAN), Alhaji Kabir

Mohammed has appealed to the newly invested Chairman of Ikorodu and District Society of ICAN, Mr Suleimon Olajide Shitta to embrace team work if he really wants to succeed.

The ICAN President, who was represented at the occasion by the 2nd Deputy Vice President, Deacon Titus Alao Soetan, explained that nobody can succeed in a corporate setting if he does not garner the support of his colleagues to work together as a team.

He pointed out that his predecessor was able to record milestone achievements because of the

of Chartered Accountants of Nigeria (ICAN) to the stability of the economic development of the nation. He made this statement in Lokoja recently during the courtesy call by the ICAN President Alhaji Kabir Mohammed, who led a delegation of some members of the Institute’s governing council and other members in Kogi State, on official visit to the governor in government house.

Captain Wada said: “In this ever-evolving economic climate, in which uncertainty is the order of the day, businesses and democratic governance are seeking better ways to become less reactive to short-term economic shocks. Hence, the importance of the Institute’s professional advice to the respective drivers of the economy becomes imperative.”

Responding to ICAN President’s earlier advice on the conversion

The Deputy Managing Director of UBA and Chairman of the UBA Foundation, Kenedy Uzoka (left) discussing with the ICAN President, Kabir Mohammed

at the Grand Finale of UBA Foundation National Essay Competition in Lagos while the MD/CEO of the Foundation, Ijeoma Aso watches

spirit of team work embraced, urging the new Chairman to follow suit and even surpass his predecessor.

“It is my candid opinion and advice that you can only record success when you embrace teamwork. Ensure that you carry your colleagues along in the scheme of things so that all of you will achieve success together,” he appealed.

In his response, the new Chairman assured the ICAN President of his readiness to embrace team work in discharging his duties and promised that his tenure would witness unprecedented success in the history of the district. He called on his professional colleagues not to leave him alone as this would not augur well for the district society.

ICAN’s Role is Critical to Stability of the Nation’s Economy – Idris Wada

The Kogi State governor, Captain Idris Wada has acknowledged the contributions of the Institute

The newly elected Chairman of Ikorodu and District Society of ICAN, Mr. Suleimon Olajide Shitta being decorated by the 2nd Deputy Vice President of ICAN, Deacon Titus Alao

Soetan, while the outgoing Chairman of the District, Rev. Samson Disu offers support


News/Events

and implementation of the state government accounting processes in conformity with IPSAS requirements, the governor informed Alhaji Mohammed and his entourage that he has mandated all government institutions in the state to adopt and implement the IPSAS templates for all their accounting operations on or before the deadline of its official take off date. The governor therefore called on the leadership of the Institute in the state to give the state government the required assistance towards achieving this task.

On the request for a piece of land in Lokoja for the construction of the Institute’s Students’ Centre, the governor assured of the assistance of the state government towards the Institute’s students’ special project and promised to facilitate the processing of its application on this matter.

NTA Boss Commends ICAN on Accounting Education

The General Manager of the Nigerian Television Authority, Lokoja, Kogi State, Hajia Hadiza

Abdul-Lawal has commended the Institute of Chartered Accountants of Nigeria (ICAN) over what she described as taking giant strides in the field of accounting education.

The NTA boss gave the commendation during a courtesy visit to her office by ICAN President, Alhaji Kabir Mohammed as part of his official visit to Lokoja & District Society of ICAN. She expressed appreciation to the ICAN President and his entourage for visiting her office, saying that the Institute’s positive strides in the field of accounting education in the country and within the West Africa sub region was unquantifiable.

She also applauded the Institute’s relationship with ANAN as a step in the positive direction towards the enthronement of total professionalism in the country.

The ICAN President had earlier told the NTA boss that the visit

to NTA Lokoja was part of the Institute’s efforts at making known to the public its Students’ Special Project (SSP) and the benefits accruable to indigenes of the state that are desirous of becoming chartered accountants

He also informed Hajia Abdul-Lawal of the readiness of the Institute’s governing council to build its study centre in Lokoja where indigenes of the state will be availed the opportunity of receiving world-class accountancy tuition and the opportunity of an examination centre in the state.

ICAN is a Professional Body that Cherishes Integrity – Atta Igala

The Atta of Igala, Kogi State, His Royal Majesty, Idakwu Ameh Oboni has described the Institute of Chartered Accountants of

Nigeria (ICAN) as number one when it comes to integrity in the nation’s comity of professional bodies.

The royal father stated this in his palace while welcoming the 49th President of ICAN, Alhaji Kabir Mohammed, who paid him courtesy visit. Speaking further, he acknowledged the Institute as a professional body that stands out amongst other professional bodies in the country as demonstrated by the positive conducts by its members either in the private or public sectors of the economy.

In his own address, the ICAN President reminisced about his early youthful life and relationship with some sons of the kingdom.

He also spoke admiringly about the traditional military prowess of the Igala kingdom in late 18th and early 19th centuries as expounded by history.

He stated that his visit was to also bring the Institute and the profession to the Igala Kingdom and to acquaint the royal father with the services that chartered accountants could offer businesses irrespective of their sizes and capacities.

In same vein, he spoke on the Institute’s Students Special Projects (SSP) and its attendant benefits to Igala indigenes who are desirous of becoming chartered accountants.

Alhaji Kabir Mohammed, ICAN President presenting some of the Institute’s publications to Hajia Hadiza Abdul-Lawal, General Manager, NTA Lokoja

during his courtesy visit to the station

Alhaji Kabir Mohammed, ICAN President presenting some of the Institute’s publications to His Excellency, Captain Idris

Wada, the Executive Governor, Kogi State


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ICAN to Enhance Accounting Education in Kogi State University

The President of the Institute, Alhaji Kabir Mohammed has assured Kogi

State University of the Institute’s readiness to enhance accounting education in the university, in addition to working on the viability of collaborating with the institution on the adoption of the Institute’s syllabus for its accounting curriculum under the memorandum of understanding arrangement.

Mohammed gave the assurance in the school campus during his courtesy call on the Vice Chancellor of the University, Professor Hassan Isah. He spoke extensively on the ongoing collaboration between the Institute and some universities that have shown interest in its Memorandum of Understanding (MOU) on the issue of adopting the ICAN syllabus for their accounting programmes.

He expatiated on the benefits derivable by the institution if it decided to follow the footsteps of other institutions that had bought into its vision of training world-class chartered accountants.

Alhaji Mohammed spoke on the relationship between the Institute and ANAN, describing it as very cordial. He reeled out the successes recorded by the Institute regarding its Students Special Projects (SSP) in some states in the northern part of the country. The President also addressed accountancy students of the Institution, where he spoke on the plan by the Institute to approve the institution as an examination centre.

Mass Communication and Media Technology, among others.” “The university indeed, recognises the need to accommodate the time constraints of individuals and therefore, provides flexibility by allowing for a choice between part-time and full-time studies,” he concluded.

Lead City University, a private university located at Lagos-Ibadan Express Way, Ibadan got its approval from the Federal Government of Nigeria in 2005, and also has all its academic programmes accredited by the National Universities Commission (NUC) as well as having its Accounting department accredited by ICAN.

ICAN’s IGRC Beams Searchlight on Constraints to Nigeria’s Development

As part of the Institute's Corporate Social Responsibility, its Inter-Governmental Relations Committee organised a workshop on

anti-corruption with the theme: Corruption and Underdevelopment in Nigeria. The workshop was designed not only to beam a searchlight on the malaise that had negatively impacted on the pace of Nigeria’s development but also to re-affirm the Institute’s resolve at joining forces with the government at every level to fight sharp practices in low and high places.

In his welcome address at the seminar, the President of the Institute, Alhaji Kabir Mohammed expressed the genuine concern of the country’s senior citizens on the decadence in the value system such as hard-work, honesty and integrity.

He decried the frequent classification of Nigeria by Transparency International (TI) as one of the most corrupt countries in the world and said that the classification calls for serious concern and action

Mr. Emmanuel Onoja, Chairman, Lokoja & District Society (left); Ata Igala, HRM Idakwu M. Ameh Oboni; and Alhaji Kabir Mohammed, ICAN President posing for photograph with the

royal father during his courtesy visit to the Ata Igala

Lead City University Seeks Partnership With ICAN

Lead City University, Ibadan has offered to admit members of the Institute of Chartered Accountants of Nigeria (ICAN) who were

yet to obtain a degree, to commence from part three in its part-time programme. This offer was contained in a letter addressed to the Institute and signed by the Registrar of the University, Dr. (Mrs) Oyebola Ayeni.

The letter further stated that the University was set to fulfil its mandate to partner with relevant sectors of the Nigerian economy to further the progress of education, hence, its recognition of ICAN as a world class player in both local and global educational sector. The management of the University also offered to give a 20% rebate on tuition fees on this programme.

In a statement confirming the approval of NUC for the University to operate part-time, the Director, Corporate Affairs Commission, Dr. Ayobami Owolabi said, “It is gratifying to know that the NUC has granted approval for the university to run part-time mode in programmes like Accounting, Business Administration, Computer and Information Science, Politics and International Relation,


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by the entire citizenry and indeed professionals who represent the ideals of accountability and transparency.

Alhaji Mohammed stated further that as a responsive and responsible Institute, ICAN would continue to expose and draw attention to the evils of corruption in line with its social responsibility. He also assured that the Institute would readily sanction any of its members found to have compromised his/her professional position in order to ensure that public interest was protected.

He said that in response to societal expectation and to reassure users of the services of chartered accountants, the International Auditing and Assurance Standards (IAASB) of IFAC issued International Standards on Auditing (ISA) 240 which imposes on external auditors the responsibility to detect fraud as part of their audit engagement.

As a member of IFAC, he said, the Institute has re-issued these standards on Auditing No. 5 entitled “The Auditor’s Responsibilities Relating to Fraud in an Audit of Financial Statements.”

Declaring the workshop open, the Kogi State governor, Captain Idris Wada expressed his happiness over the Institute’s zero tolerance for corruption in either public or private sectors of the economy.

The governor emphasised his administration’s uncompromising stance on corruption as he reassured participants at the workshop that all transactions by his government had been conducted under the ideals of transparency, promising that he would not depart from this path of honour.

Appointed• Mrs. Oluseyi Williams , a ICAN Governing Council

member of the Institute, was appointed the 17th Head of the Lagos

State Public Service, by the Executive Governor of the State, Mr. Babatunde Raji Fashola. Prior to her appointment, she was Accountant-General of the state and was later seconded to Lagos State University as Bursar before she was moved back. In 2006, she became Accountant General/Permanent Secretary of the State Treasury Office. • M r. G o d w i n E m m a n u e l

Oyedokun has been appointed the International Institute of Certified Forensic Investigation Professionals (IICFIP) Membership Mobilisation Director for Africa. According to the appointment letter issued to him, of which a copy was made available to The Nigerian Accountant, Oyedokun was expected to his expertise to build effective public relation and marketing for of IICFIP services in Africa.• Mr. Jerry Igbekan Obazele, FCA

has been appointed the Head of Service of Edo state. Prior to his appointment, Mr Obazele has diverse experience in the field of accounting, auditing and

financial matters, spanning over three decades. Apart from being a Fellow of ICAN, he is also a Fellow of Chartered Institute of Taxation of Nigeria (CITN); Life member, Nigerian Economics Society; Member, Institute of Financial Consultants of U.S.A and Canada; Fellow Institute of Financial Consultants, U.S.A and Canada, etc.

Award of KnighthoodICAN Past Past President, Sir Herbert Adewole Agbebiyi, KJW,

FCA was awarded the Knight of John Wesley (KJW) at the 43rd/8th Biennial Conference of Methodist Church Nigeria. His nomination was ratified at the Church’s August 2012 Conference and the Award was conferred on him during the service of Recognition and Award of Merit held on Sunday 7th July 2013 at William’s Memorial Methodist Cathedral, Ago-Ijaiye, Ebute Metta, Lagos.

ICAN President, Alhaji Kabir Mohammed (right); Past President of ICAN and Special Guest of Honour, Dr. (Mrs.) Catherine Okpareke; and Vice President of ICAN, Mr. Chidi Ajaegbu at the

occasion of the 39th Association of Accounting Technicians (AAT) induction ceremony

Chairman – Dr. Kumshe Ahmed M. (MB No. 14814)Secretary – Mr. Kwazhi, John W. (MB No. 20547)Vice-Chairman – Dr. Kyari Adam K. (MB No. 17885)Treasurer – Dr. Akinniyi Opeyemi K. (MB No. 18169)Asst. Secretary – Abadam, Moh’d A. (MB No. 36029)Auditor – Alh. Adedoyin, M. (MB No. 07992)PRO – Ejiro R. Ebireri (MB No. 36179)Ex-officio – Mr. Patrick Kode (MB No. 11345)

New Excos for District SocietyMAIDUGURI/DAMATURU


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FROM OTHER BODIES

Limitless Requirements Forcing Companies to Disclose Too Much Information

The Institute of Chartered Accountants in England & Wales (ICAEW) has said that “limitless information requirements”

are forcing companies to disclose too much information in their financial statements. “Companies, auditors and enforcement agencies must be allowed greater scope to use their judgment in deciding what should be disclosed,” the ICAEW said.

Robert Hodgkinson, its executive director, said: “We need a major culture shift, where everyone is working to ensure that relevant and material information is disclosed, and immaterial disclosures are omitted. Regulators, standard setters, companies and auditors should all face the challenge of explaining what they are doing to ensure that disclosures are clear and focused, rather than complex and overwhelming.” (Source: The Times)

UK FRC Demands Exceptional Items Improvement

The Financial Reporting Council (FRC), UK, has warned companies quoted on the London Stock Exchange and other

UK markets that they need to improve the way they report their numbers in relation to exceptional items.

The FRC’s Financial Review Reporting Panel said that it had found a “significant number” of companies reporting exceptionals – meant to be one-off items on the face of their profit and loss statement. The FRC added that it had identified a number of situations “where the disclosure falls short of the consistency and clarity required, with a consequential effect on the profit reported before such items.” (Source: The Daily Telegraph)

Reports Predicts UK’s Boom in DC Next Decade

Spence Johnson reports that UK Defined Contribution (DC) plan assets are set to triple from £214bn to £676bn by 2023, with

the average participant’s account balance growing from £25,000 to £39,000. The report attributes this to the decline of Defined Benefit (DB), and a UK-wide enrolment in DC plans. The report predicts most DB plans would have closed within ten years. (Source: Pensions & Investments)

Apprenticeship Scheme Opens

The government is set to open its £2.3million London Professional Apprenticeship (LPA) scheme designed to help school leavers

in London to find work as accountants, management consultants and tax advisers. The Department for Business, Innovation and Skills said that the LPA will include training on exporting,

entrepreneurship and disciplines relevant to business in London. (Source: The Times, Business)

FSB Figures Point to 2014 GrowthNew research from the Federation of Small Businesses (FSB) has

indicated that growth and access to finance, will become easier for small UK firms in 2014. Its Small Business Index (SBI) measure of confidence in small firms has grown for four consecutive quarters, rising from -5.6 in Q4 2012 to +21.6 today – an increase of 27.2 points. Additionally, the number of firms refused credit is at its lowest since 2012. Reflecting on the findings, John Allan, national chairman of the FSB, said: “Small firms are creating more jobs and investing in their businesses, and there are encouraging results behind the headline figures.” (Source: Accountancy Age)

2013 Handbook of IPSAB, Code of Ethics, International Quality Control, Auditing, Review, Other Assurance, and Related Services Pronouncements AvailablePrint copies of the International Public Sector Accounting

Standards Board (IPSASB), the International Ethics Standards Board for Accountants (IESBA), and the International Auditing and Assurance Standards Board (IAASB) handbooks are now available to purchase and/or download: 2013 Handbook of International Public Sector Accounting Pronouncements, 2013 Handbook of the Code of Ethics for Professional Accountants, and 2013 Handbook of International Quality Control, Auditing, Review, Other Assurance, and Related Services Pronouncements. Discounts are available for students, educators, and those living in developing countries (as classified by the World Trade Organisation). (Source: IFAC website)

IFAC Issues Policy Position Paper on Enhancing Organisational ReportingIFAC has issued Policy Position Paper 8, Enhancing Organisational

Reporting, to emphasise the importance and usefulness of reporting broad-based information beyond that which is provided in traditional financial reporting. Enhanced organisational reporting provides a more complete view of an organisation’s position, performance, and longer term potential and sustainability, and is in the public interest. It provides important information for both internal and external stakeholders to support managing and directing operations, decision making, promoting transparency, and the discharge of accountability. (Culled from IFAC website)

SMP Committee Approves Reviews GuideAt its meeting in October 2013, the Small and Medium Practices

(SMP) Committee approved the final text of a new guide to help


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practitioners in practice, especially SMPs, with the implementation of International Standard on Review Engagements 2400 (Revised).

The Guide to Review Engagements, released in December, was intended to help IFAC member organisations support their members, and IFAC has encouraged all members to adapt and translate the Guide to meet the requirements and circumstances in their particular jurisdiction (email [email protected]). IFAC has developed an article (available soon) on the nature and value of review engagements for IFAC members to share with their members via their publications and websites (email [email protected] for access). (Culled from IFAC website)

New IFAC Discussion Paper Kindles Global Debate on Finance Leadership and Professional AccountantsTo stimulate a global debate on preparing accountants for

finance leadership, the IFAC Professional Accountants in Business Committee has released a new Discussion Paper, The Role and Expectations of a CFO. The paper featured five principles that highlighted the changing expectations, scope, and mandate of the Chief Financial Officer (CFO), finance leadership roles and recommended actions professional accountancy organisations and employers could take to prepare professional accountants for career progression to finance leadership. These principles and recommended actions raise awareness of the implications for the education, training, and development of professional accountants. The Discussion Paper would be used as a basis to engage professional accountancy organisations, employers, and other stakeholders to share and enhance approaches to preparing professional accountants for finance leadership. (Culled from IFAC website)

MOSAIC Publishes Ground-Breaking PAO Global Development ReportThe Memorandum of Understanding to Strengthen Accountancy

and Improve Collaboration, MOSAIC, recently published the Professional Accountancy Organisation (PAO) Global Development Report. MOSAIC is a historic Memorandum of Understanding that sets out the basis for improving cooperation and collaboration between IFAC and the international development community. It will provide the foundation for increasing the capacity of professional accountancy organisations (PAOs) and improving the quality of financial management systems in emerging economies. The creation of this report was jointly financed by the African Development Bank, the Asian Development Bank, the Inter-American Development Bank, and the World Bank and created in consultation with the MOSAIC Steering Committee, members, observers, and other interested organisations. Coordination of consultant inputs into this report was coordinated by the interim MOSAIC Secretariat, which is hosted by IFAC. (Culled from IFAC website)

IFAC Is Hiring

IFAC is hiring for a number of different positions, including technical managers in multiple areas. While positions require

a familiarity with the accounting profession and global financial issues, an accounting degree is not required for all positions. Visit Working at IFAC to learn more. Qualified candidates should send a resume and salary requirements to [email protected].

IFAC Issues Notice for Nominations for Its Board and Committees

The Notice of the Call for Nominations for the IFAC Board and Committees in 2015 was recently issued along with

the companion guide, Developing a Nominations Strategy. The Notice of the Call sets out the upcoming opportunities for membership on the Board of the International Federation of Accountants (IFAC), the global organisation for the accountancy profession with 179 members and associates in 130 countries, and its Compliance Advisory Panel, Professional Accountancy Organisation Development Committee, Professional Accountants in Business Committee, Small and Medium Practices Committee, and Nominating Committee.

For 2015, there are 29 vacancies on the Board and committees, including two leadership positions — the IFAC deputy president and the chair of the Small and Medium Practices Committee. All vacancies on the Board and committees are open for nominations by IFAC Members.

● The Nominating Committee encourages all IFAC Members to review the Notice of the Call, including the detailed information regarding open vacancies, composition targets, specific membership qualifications, and requirements for the Board and each committee. It also offers strategic guidance in selecting candidates, including identifying the most qualified nominee for each available position.

● The official Call for Nominations was issued on January 15, 2014, and nominations may be submitted from January 15 to March 15, 2014. The Notice of the Call is issued in advance of the Call for Nominations to allow sufficient time for stakeholders to prepare for the next nominations cycle.

● The Nominating Committee follows an open and transparent process in selecting the best candidates for the available positions while also striving to achieve gender, regional, and professional balance. For more information about the Nominating Committee, its due process, or guidance in selecting the best candidate, please visit the Nominating Committee web page. (Culled from IFAC website)

Candidates Sought for Independent Standard-Setting Boards

The Call for Nominations for the Independent Standard-Setting Boards in 2015 has been issued. The Call for Nominations

outlines the upcoming opportunities for membership on the International Auditing and Assurance Standards Board (IAASB), International Accounting Education Standards Board (IAESB), International Ethics Standards Board for Accountants (IESBA), and


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International Public Sector Accounting Standards Board (IPSASB).In 2015, there will be 22 vacancies on the independent standard-

setting boards, including the IAESB chair. All vacancies are open for nominations by all stakeholders, including professional accountancy and international organisations, governmental agencies, firms, and the public. Although, candidates will ultimately be selected on the basis of experience, nominations of highly-qualified candidates from the Africa-Middle East and Latin America regions are particularly encouraged.

The Call for Nominations includes detailed information on qualifications, including time commitment and performance expectations for volunteers, as well as instructions on how to apply during the nominations period, which runs from January 15 to March 15, 2014.

Nominations can be submitted through the Nominations Database (instructions on how to submit a nomination are included in the Call for Nominations). Additional information on the Nominating Committee and its transparent, open process is available on the Nominating Committee web pages. (Source: IFAC)

and revised Auditor Reporting standards (which are expected to be finalised in 2014), further information gathering on potential future work topics such as group audits and assurance on Integrated Reporting, and development of a post-implementation review process for the IAASB’s assurance and related services standards. The IAASB consultation also set out the topics that it intends to prioritise in 2017 and beyond in support of its strategic objectives.

How to CommentThe IAASB invites all stakeholders to comment on the IAASB

Consultation Paper, Proposed Strategy for 2015–2019 and Proposed Work Program for 2015–2016. To access the Consultation Paper or submit a comment, visit the IAASB’s website at www.iaasb.org/publications-resources. Comments are requested by April 4, 2014.

Ethics Board Consults on Future Strategy and Work Plan

The International Ethics Standards Board for Accountants (IESBA, the Ethics Board) today released for public consultation

its Proposed Strategy and Work Plan, 2014-2018. The proposed Strategy and Work Plan builds on the strong base established by the revised Code of Ethics for Professional Accountants (the Code) issued in July 2009, which clarified requirements for all professional accountants and significantly strengthened independence requirements for auditors.

The Consultation Paper was developed with input from a survey conducted earlier this year and other consultative activities. It lays out four proposed strategic themes to reflect the Ethics Board’s vision for the medium to longer term and to guide its work plan over the five-year period: maintaining a high-quality Code for application by professional accountants globally; promoting and facilitating the adoption and effective implementation of the Code; evolving the Code for continued relevance in a changing global environment; and increasing engagement and cooperation with key stakeholders.

“The board’s mandate is to develop high-quality ethics standards for the profession worldwide. Therefore, the board’s primary strategic priority should be to ensure that the Code continues to be a robust set of standards in the public interest,” said Jörgen Holmquist, chair of the Ethics Board. “The board also recognises the strategic importance of advancing adoption and effective implementation of the Code to further contribute to public trust and confidence in the profession, and of broadening and deepening stakeholder engagement as an essential ingredient to the quality of its standards and their global acceptance. It is critical that the board hears from stakeholders as to whether the actions and activities it is proposing to prioritise appropriately support these objectives.”

The Consultation Paper includes four work streams that the Ethics Board agreed to pursue in early 2012 in response to a strategic review of external developments: a review of the Code provisions addressing long association of senior personnel with an audit client, and non-assurance services, both with respect to independence; a review of the structure of the Code with a view to enhancing its usability and accessibility; and a review of Part C of the Code addressing professional accountants in business.

“The proposed Strategy and Work Plan reflects the Ethics

IAASB Consults on Five-Year Strategic Objectives and Work Priorities

The International Auditing and Assurance Standards Board (IAASB) has released for public comment its Proposed Strategy

for 2015–2019 and Proposed Work Program for 2015–2016. The proposals emphasise the IAASB’s commitment to developing and maintaining high-quality International Standards on Auditing (ISAs) to be adopted and implemented globally. At the same time, they reflect the importance of the IAASB staying abreast of emerging developments to ensure its work remains relevant to its wide range of stakeholders.

Titled Fulfilling our Public Interest Mandate in an Evolving World, the strategy proposals set out the following objectives for the five-year period:

● Develop and maintain high-quality ISAs that are accepted as the basis for high-quality financial statement audits.

● Ensure the IAASB’s suite of standards continues to be relevant in a changing world by responding to stakeholder needs.

● Collaborate and cooperate with contributors to the financial reporting supply chain to foster audit quality and stay informed.

“Stakeholders internationally expect the IAASB to not only produce high-quality standards that enhance audit and assurance practices, but also to carry out its efforts in coordination and cooperation with key stakeholders so that the standards it develops can achieve global acceptance and work, and can be seen to work, internationally,” said Prof. Arnold Schilder, IAASB chairman. “Our strategic objectives help meet these important expectations and provide the basis upon which the IAASB can effectively identify and respond to the most pertinent public interest issues.”

Within the context of the proposed strategic objectives, the IAASB intends to focus its efforts in 2015–2016 on the topics of quality control, professional skepticism, and special audit considerations relevant to financial institutions. Also envisaged is work to support the effective implementation of the IAASB’s new


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Board’s goal of further reinforcing and promoting the Code as a leading set of ethics standards for the global profession,” noted IESBA Technical Director Ken Siong, adding, “Ultimately, this consultation aims to ensure that the board’s proposed strategic priorities are aligned with the needs of its stakeholders and that it is best utilising and directing its resources to achieve its objectives.”

How to CommentThe Ethics Board invites all those with an interest in

international ethics standards for the accountancy profession to respond to the Consultation Paper, which includes specific questions to guide responses. To access the Consultation Paper and submit a comment, please visit the Ethics Board website at www.ethicsboard.org. Comments are requested by February 28, 2014. The Ethics Board encourages national and regional professional accountancy organisations to share the Consultation Paper with and encourage participation from their members and employees.

IFAC Releases New Guide on Review Engagements

The International Federation of Accountants (IFAC), the global organisation for the accountancy profession, has released the

Guide to Review Engagements. The guide, developed in conjunction with CPA Canada, aims to help professional accountants in practice, especially those operating in small- and medium-sized practices (SMPs), in conducting review engagements in compliance with International Standard on Review Engagements (ISRE) 2400 (Revised), effective for periods ending on or after December 31.

“Many Small and Medium-sized Entities (SMEs) around the world are not required, or do not elect, to have an audit. They may, however, wish to enhance the credibility of, and confidence in, their unaudited financial statements by having some degree of independent assurance on them. A review engagement, which offers limited assurance, may be the ideal solution. The guide can help practitioners prepare themselves to meet the potentially increasing demand in this area,” said SMP Committee Chair Giancarlo Attolini.

To help practitioners develop a deeper understanding of ISRE 2400 (Revised), the guide includes illustrative examples alongside relevant extracts from the standard. It also includes practical points for practitioners’ consideration and tips on how to efficiently implement the standard. Checklists and forms that can be adapted to meet the particular requirements and circumstances of individual review engagements and jurisdictions are also included.

To assist IFAC member organisations, the SMP Committee has also updated its Companion Manual, a supplementary user guide to help organisations understand the various ways they can use, translate, and adapt the committee's implementation guides.

To download the guide, visit SMP Publications & Resources. See also the article “Review Engagements for SMEs: Limited Assurance, Numerous Benefits,” which was developed to help IFAC members communicate the value of a review engagement and the availability of the guide to their members (see page for details). For access to additional resources from IFAC and other organisations from around the world, see Implementation Links.

About the SMP CommitteeThe SMP Committee of the International Federation of

Accountants (IFAC) represents the interests of professional

accountants operating in small- and medium-sized practices (SMPs). The committee develops guidance and tools and works to ensure the needs of SMPs are considered by standard setters, regulators, and policy makers. The committee also speaks out on behalf of SMPs to raise awareness of their role and value, especially in supporting SMEs, and the importance of the small business sector overall.

Accountants Should Share Probate Work

David Edmonds, the chairman of the Legal Services Board (LSB), has said that the Institute of Chartered Accountants in England

and Wales (ICAEW) should have the power to license probate work. Mr Edmonds described the move as “a very considerable step for liberalisation in the legal market” and added that he hoped to see the ICAEW move on, in due course, to regulate litigation and other legal services.

He explained that by allowing accountants to deliver reserved probate work, alongside related services that they currently provide, such as trust planning and estate administration, firms will be able to offer a more integrated service to clients who, in non-contentious cases, will be able to use a single adviser.

Such a move should have an impact on the overall cost of the service for consumers and increase competition, Mr Edmonds added. Vernon Soare, Executive Director of the ICAEW, said: “The LSB has recognised that consumers can receive legal services from appropriately regulated ICAEW chartered accountants that are of equal quality to traditional providers.” (Source: The Times)

EU Bodies Agree Audit Reform Deal

The EU has struck a preliminary deal that will force banks and listed companies to switch their auditors at least once every 24

years and typically every 10 years. Negotiators from the European Parliament and member states agreed a deal that will require companies to switch their auditors after 10 years or after 20 years if they put the work out to tender in the middle of that period.

Companies that use two audit firms would only have to switch after 24 years. Michael Izza, Chief Executive of the ICAEW, commented: “We are pleased that the decision makers have managed to come to an agreement, as there is now hope for all the required follow-up work to be completed before the EU elections next year. “The deal, which must be formally approved by national governments and the full European Parliament, weakens a proposal by the European Commission that had called for auditors to be rotated after six years, or nine years if they used two audit firms.”

“Despite the extension of the rotation period, this principle will have a major impact in reducing excessive familiarity between the auditors and their clients and in enhancing professional scepticism,” Michel Barnier, the EU’s commissioner for the internal market, said in a statement.

The deal also caps how much audit firms can earn in advisory fees from a company whose accounts they review, and creates a blacklist of some services that an audit firm can’t provide, “including stringent limits on tax advice and on services linked to the financial and investment strategy,” Mr Barnier said.

Source: The Independent Financial Times

PREAMBLEThe ICAN Members’ Benevolent and Educational Trust Fund was

established by the Council of the Institute of Chartered Accountants of Nigeria (ICAN) in 2003 to assist persons in need who are or have been ICAN members and/or their families and dependants. It is also aimed at promoting and supporting educational/research in Accountancy, Financial Management, Taxation and related subjects. The Board of Trustee of the Fund was formally inaugurated on July 13, 2003 in the Council Chamber of the Institute, Victoria Island.

Some Chartered Accountants due to no fault of theirs have been very unfortunate with employment so much so that as a result of economic downturn, prematurely lost their jobs. Some others suddenly became ill and were unable to cope with their jobs and so had to quit unexpectedly. Others became victims of natural disasters such as flood, fire etc and suffer untold hardship having lost all they laboured for in many years.

Those who were unfortunate to die (from accident, illness, etc) left dependants particularly children who were also forced out of school for lack of financial assistance from the extended family. It is for these reasons and more that the Benevolent Fund was set up.

OBJECTIVES OF THE SCHEMEThus the broad objectives of the Fund are:* To give financial assistance to members — For various

reasons hitherto vibrant and intelligent Chartered Accountants fade out for reasons such as natural disasters or accidents and they become incapacitated. There will be a need to assist them to get back to a sound state of health to continue to add value to society.

* To support families and dependants of members — Members who are unfortunate to pass on leave behind families and dependants who more often than not find it difficult to make ends meet or even continue with their education, particularly members of the immediate family.

* To promote and invest in Research and Educational development in order to continuously improve the technical competence of members, so as to protect the public interest.

STRUCTUREThe Fund has a five man Board of Trustees with Sir (Chief)

Simeon O. Oguntimehin (PP), OON as Chairman. Other members are:— Chief (Mrs) O.O. Olakunri (PP); — Sir Ike Nwokolo, OFR; — Mrs I.M. Osiyemi (PP); and — Alh. M.A. Dangana

ACTIVITIES OF THE MANAGEMENT BOARDThe major activities of the Management Board are fund raising

and Management of investments. Funds so generated are invested and it is the income from the investments that are disbursed to members in need and families that are distraught. Since inception, the Fund has been used to assist members and families of dead members. This include members who had renal (kidney) failure, blindness, stroke, spinal cord injuries, disaster (fire/flood/accident) victims, children’s education, etc.

CONDITIONS FOR GRANTING FUND1. Must be a professionally qualified member of the Institute

of Chartered Accountants of Nigeria (ICAN).2. Must have paid up the annual subscription of the Institute

at least up to the immediate past year of before incapacitation.3. The mishap for which the Fund is meant to grant succor to

the member must not be due to his/her careless, negligence, or recklessness, e.g. the Fund will not be disbursed towards cases like arson, murder, manslaughter, accident resulting from use of hard

drugs, etc.4. It must be proved beyond all reasonable that the member

cannot afford (as a result of his/her present circumstances) his immediate needs.

LIMIT OF FUNDThe minimum limit shall be a sum of Ten Thousand Naira

(N10,000.00) while the maximum limit shall be a sum of Two Hundred and Fifty Thousand Naira (N250,000).

MANAGEMENT BOARD MEMBERS• MrsIbironkeMojisolaOsiyemi(PP) — Chairman• DoyinOwolabi — Member• ChidiO.Ajaegbu — Member• MrsYinkaOlowu — Member• AlhajiS.I.Dabana — Member• KayodeAbe — Secretary• MrsJumokeKujore — Minutes Sec.

PROCEDURE FOR DISBURSEMENT1. Application shall be received from prospective beneficiaries

stating the estimate of his/her needs – Such application should also be supported by the District Society of the member.

2. Application to be considered by the Management Board. All applications considered and treated at any meeting where at least two (2) members of the Board are present is considered valid.

3. The Secretary shall be responsible for the processing and issuance of cheque for the amount approved.

4. All cheques shall be crossed “account payee only’ and made payable to the beneficiary through the District Society, unless otherwise decided by the Board.

5. All failed/rejected applicants will be informed of the reason for failure/rejection.

We use this medium to passionately appeal to you for donation to meet the rising demands on the Fund. We are not unaware of the times we are in but we believe some members are more privileged and fortunate than others. We request that you extend a hand of love to your colleagues. This is a worthy cause and we pray that God will remember you in your time of need.

Finally, we wish to assure you that donations received would be thankfully received and acknowledged.

Kindly issue your cheque in favour of

“ICAN BENEVOLENT AND EDUCATIONAL TRUST FUND” or pay directly into the account:

Guaranty Trust Bank PLC: 229-677234-110

APPEAL FOR DONATIONThe Management Board has received many applications for

financial assistance in recent times, which it could not positively respond to due to lack of fund. This financial limitation has hindered the progress of work, as the Board is desirous of touching many more lives, which we believe have the potentials to add value to society. We are therefore constrained to make direct appeal to organisations and net worth individuals to support the Fund. The donation can be in form of cash, property, bequeathment in wills, endowment, etc.

For further information please contact:• IbironkeM.Osiyemi(Mrs) — Chairman• RotimiA.Omotoso — Registrar/Chief Executive• KayodeAbe — Secretary Tel.: 01-7735204, 7740627, 4705336e-mail: [email protected]

THE INSTITUTE OF CHARTERED ACCOUNTANTS OF NIGERIA

ICAN Members’ Benevolent and Educational Trust Fund

Fund Raising Brochure


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59

INTERNATIONAL GOOD PRACTICE GUIDANCE

Principles for Effective Business Reporting Processes: Executive Summary

The Importance of Effective Business Reporting Processes

As organisations fully depend on their stakeholders for their sustainable success, it is in their interest to provide them with high-quality reports. In addition, high-quality reports promote better internal decision making. Effective

reporting processes should ensure that all internal and external stakeholders receive appropriate high-quality business reports in a timely fashion.

Flowing from their responsibilities in providing financial leadership, recording financial and non-financial transactions, and measuring performance, professional accountants in business

are often involved in the implementation — including design, planning, execution, audit, evaluation, and improvement — of their organisations’ reporting processes.

The guidance helps organisations enhance their reporting processes and discusses the key issues professional accountants in business need to address when implementing effective reporting processes in their organisation.

The International Good Practice Guidance, Principles for Effective Business Reporting Processes, establishes 11 key principles for evaluating and improving business reporting processes, which are complemented by practical guidance outlining the critical arrangements that need to be in place for effective business


reporting. This guidance applies to all organisations, regardless of their size or structure, public or private, to address the need for effective reporting processes to produce high-quality reports.

Principles for Establishing Effective Business Reporting ProcessesThese principles represent good practice, designed to ensure

effective reporting processes in organisations. They do not prescribe a specific approach but instead highlight a number of areas for specific consideration when implementing reporting processes.

A. Senior management should assume leadership for high-quality reports through effective reporting processes. The governing body should demonstrate commitment to high-quality reports and provide strategic input into, and oversight over, the organisation’s reporting processes.

B. The organisation should determine the various roles, responsibilities, and consequential capabilities in the reporting process, appoint the appropriate personnel, and coordinate collaboration among those involved in the reporting process.

C. The organisation should develop and implement an effective planning and control cycle for its reporting processes

in the context of, and in alignment with, its wider planning and control cycles.

D. To ensure the provision of high-quality information, the organisation should regularly engage with its internal and external stakeholders and understand their information needs with regard to past, present, and future activities and results of the organisation.

E. Based on the outcomes of its stakeholder engagement, and taking cost-benefit considerations into account, the organisation should define the content to be included in its reports and also decide on the audience, layout, and timing of its reports.

F. The organisation should have a process in place to ensure that the most appropriate reporting frameworks and standards are selected and that the requirements of those frameworks and standards are aligned with stakeholder information needs.

G. The organisation should determine what information needs to be captured, processed, analysed, and reported, and how to organise the information processes and related systems for effective reporting.

H. The organisation should (a) identify, analyse, and select appropriate communications tools and (b) decide how to optimise distribution of the organisation’s reporting information via the

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News/Events

Relation of Business Reporting Principles


various communications channels.I. The organisation should ensure that reported information

is sufficiently analysed and interpreted before it is provided to internal and external stakeholders.

J. When obtaining internal or external assurance is not a matter of compliance, the organisation should consider voluntary internal or external assurance on its reports and reporting processes.

K. The organisation should regularly evaluate its reporting processes and systems in order to identify and carry out further improvements required for maintaining reporting effectiveness.

The Figure above illustrates how the various principles relate to each other. In essence, they form mutually reinforcing elements in a cycle of continuous improvement of organisational reporting processes, not necessarily in a fixed order.

The Significance of the PrinciplesThe principles help establishing effective business reporting

processes in organisations by: A. Ensuring Commitment for Effective Reporting from the Top Commitment from the governing body and senior management

to the benefits of providing high-quality reports is crucial as it sets the tone for the implementation of effective reporting processes in organisations.

B. Determining Roles and Responsibilities Determination of roles and responsibilities provides clarity for

the various stakeholders in the reporting process. Organisations should establish experience requirements for positions in the reporting process and impose training requirements to keep capabilities up-to-date.

C. Planning and Controlling the Reporting Processes Reporting processes require rigorous planning and control

to keep them effective and efficient and to produce high-quality reports in a timely manner. In addition, the organisation should establish and maintain effective risk management and internal control over all relevant reporting processes and systems.

D. Engaging Internal and External Stakeholders Stakeholders should receive sufficient information in order

to make well-informed decisions regarding the organisation. Therefore, organisations should be receptive to the information needs of their various internal and external stakeholders and adjust their reporting accordingly.

E. Defining the Right Reporting Content Once organisations have a clear view of the information needs

of their various stakeholders, they should ensure that reasonable demands from stakeholders for information are met, and that the information provided to the various stakeholder groups is useful to those groups.

F. Selecting Appropriate Standards and Frameworks As part of maintaining effective reporting processes,

organisations have to periodically assess which reporting frameworks and standards are applicable or useful to them.

G. Determining Effective and Efficient Reporting Processes

The organisation’s reporting processes and related systems should be capable of effectively and efficiently providing the

information required for high-quality reports. Organisations should, therefore, determine what information needs to be captured, processed, analysed, and reported, and how to organise the information processes and related systems.

H. Using Appropriate Reporting Technology In addition to traditional, paper-based reports, organisations

now have a wealth of vehicles and channels they can use to increase the effectiveness of their stakeholder communication. In close communication with their stakeholders, organisations should regularly evaluate and continue improving their various reporting methods.

I. Sufficiently Analysing and Interpreting the Reported Information Appropriate analysis and interpretation of the reported

information before it is distributed to stakeholders is an essential component of effective reporting, as it lowers the risk of error —and thus increases reliability — and increases the usefulness of the information.

J. Obtaining Assurance and Providing for Accountability Obtaining internal or external assurance on an organisation’s

reports and reporting processes is an important step in implementing effective reporting processes in organisations, as it contributes to additional accountability, transparency, and reliability.

K. Evaluating and Improving Reporting Processes Periodic evaluation and further improvement are crucial

aspects of maintaining effective reporting processes.

International Good Practice GuidanceIFAC’s purpose in issuing principles-based International

Good Practice Guidance (IGPG) is to foster a common and consistent approach to those aspects of the work of professional accountants in business and public services not directly covered by international standards. IGPGs focus on key areas of strategic importance to professional accountants in business, with the aim of guiding their thought processes and decision making and, thus, supporting the exercise of professional judgment, which is critical in their roles. IGPGs address governance, evaluation, improvement, and implementation of strategic decisions for which professional accountants in business are responsible or to which they can contribute their expertise as trusted colleagues and advisors. The Professional Accountants in Business (PAIB) Committee has applied the extensive expertise, experience, and diversity of its members and IFAC member organisations to draw out a set of internationally accepted principles that professional accountants can apply in organisations where they work, regardless of jurisdiction, size, economic sector, or form of ownership. The principles provide a common frame of reference when deciding how to address issues and challenges, and helping organisations to achieve sustainable success. IGPGs also help accountants to identify additional available resources by including links to the relevant work and resources of IFAC member organisations and other colleagues.

The full-length version of Principles for Effective Business Reporting Processes includes a select list of relevant resources from IFAC, its member bodies, and other relevant organisations. It can be downloaded free of charge at www.ifac.org/paib.

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News/Events


Welcome to this column. Before I continue, the objective of my storyline is to create awareness about the change IFRS has brought to this our part of the world, especially in the accounting profession. This change

which affects businesses, the accounting curriculum in our universities and other higher institutions of learning, as well as the practice of accounting, have ripple effects on many things, including people’s lives and jobs.

As an accountant with a company in Lagos, I was engrossed in my duty when my “Oga” (the MD) came back from a workshop (or was it a seminar?) he attended. Before I could notice his presence I heard the question: “Tunde, this IFRS of a thing, what is it all about?” I was terrified and confused at the same time. In my shock, I realised that my knowledge about IFRS was limited to what we were taught when we were about to write ICAN examinations. I managed to tell my boss, “Sir it is International Financial Reporting Standard.”

The man retorted, “it is like this thing may make rubbish of some accountants if they do not wake up.” “Haaba Oga’’, I replied, trying to calm him and I down. He chuckled and left. His unusual countenance, and the statement about this thing making rubbish of some accountants, kept on echoing in my mind throughout that day till the close of work.

By the time I got home that day, I had forgotten about it. I was taking my bath, ready for food when the words came back to my mind again, “...this thing may make rubbish of some accountants if they do not wake up.” It seemed I was in a trance. I held my ‘gari’ (morsel), to deep it in the soup and found that I could not. My wife looked at me and the next thing I heard from her was “I hope there is no problem?” “Problem ke, not at all,” I replied.

On my bed that night, I saw myself in the office. I went to the MD’s office but unfortunately he was not in there. I glanced at something he jotted on his table. Out of curiosity, I moved closer and noticed that it was what he jotted at the IFRS Executive breakfast meeting which he attended with MDs from other companies. My eyes went to the number one item on the list and it reads, “1. Look for an IFRS compliant accountant and fire Tunde.’’ “Fire me ke! Fire me ke!!”, I shouted. The next thing? I got a tap on my shoulder from my wife; then I realised I was just dreaming and said, “thank God.”

When I woke up, I narrated the dream and my experience during the day at the office to my wife. “But when I asked you, you said there was no problem. Well, it is not a problem, we will discuss it tomorrow morning,” she said. “Please what do you have to say. If you do not say anything I may not sleep,” I pleaded with her. She laughed and said, “What do you want me to say?” “Say something, just anything,” I entreated. She said, “Ok, we will discuss but let us sleep for now.” That was how we went to bed finally that night.

Thank God, the next day was a Saturday morning. I woke up late, around 7:30 am. My wife had left bed and the bedroom, and gone to the kitchen. Discovering that I was all alone in the room, I called on her. “Yes, honey, I am in the kitchen.” She answered straight from the kitchen. Immediately, I went to meet her. “How was your night?’’, she asked. “Fine”, I answered. “As regard the discussion of last night, how far?’’ I asked. She told me that the table was set and that I should go and take my shower then we shall be set to eat and discuss.

At breakfast she said, “here are the rules of this game: (1) you eat but I would not, because for now I am your teacher/coach, (2) you only talk when I want you to talk, but before you do that, you swallow whatever is in your mouth and cool it down with a cup of water.” “Deal or no deal?”, she asked. “Deal” was my reply.

“Right, the game starts now.’’ She said and sat down. For about five to eight minutes she was saying nothing, only looking at me munching my meal and whenever I wanted to talk she would remind me of Rule 2 of the game. Then it was remaining about two spoonfuls of what I was eating (sorry, I did not tell you the food she prepared, trust women, my best food, Jollof rice). As I was about putting the last spoon of rice in my mouth, she fired her first question: “what do you think that is certain apart from God and death?” she noticed that I was struggling with myself as to answer the question right away. “No, don’t drop it, eat it and take a cup of water,” she remarked. I quickly swallowed it and stepped it down with a cup of water.

I answered after a deep thought. “God and some of those things like nature are certain and one major thing that is certain is CHANGE.” She clapped her hands as she said: “well done Honey!”, and she continued, you get it right, CHANGE, that is it, it is change that is imminent in your accounting profession now, let

Seeking Knowledge of IFRS is the Beginning of Wisdom for Accountants

By DISU ADIO

Opinion


all the accountants know that their profession is going through changes in the world and you know, as Warri guy usually dey talk am, den no day carry last. Nigeria would not want to be left out. I learnt from one of your professional magazines, that whenever you collect it you just keep it there, that Nigeria is adopting FIRS from 2012, 2013 and 2014.

I quickly corrected her: “it is not FIRS rather it is IFRS.” “Don’t blame me this is not a lesson note.” She retorted confidently with the flair of a professional teacher that she is.

“Do you know things which ‘change’ do? It renders some people irrelevant and catapults some people to higher heights. Where are the typists we knew when we were growing up for example? As an accountant or someone doing anything relating to it such as tax, auditing, teaching or learning, you must be relevant in the dispensation of IFRS. Whatever body, or bodies, of accountancy you belong to, IFRS is indispensable.

I looked at her and asked: ‘’what does that mean?” “What does that mean?”, she retorted and continued, “embrace IFRS, remember if you do not update your knowledge base, you will be outdated; if you are not in the ‘know’ you will not be in the ‘flow.’ In my mind, I was wondering when this woman metamorphosed into a motivational speaker. That is to tell you never to underestimate your wife; that is why the holy books emphasise that we should hold them in high esteem. She then analysed the word ‘knowledge’ to me and I felt as if I had never heard that word before.

The great motivational speaker, that is my wife, continued with her self-possessed but articulate lectures what I christened ‘Seeking Knowledge of IFRS is the Beginning of Wisdom for Accountants.’

Like any other profession, accountants must seek ‘KNOWLEDGE’. I will reveal something to you today about the word ‘KNOWLEDGE’. I grew up in a Muslim community. Though I was not one, but they were good people to me and our family. We were like relations. Why am I saying this? During the last ten days of the fasting, they use to organise Muhd Nebiu (forgive me if my pronunciation is wrong). In one of them, as the Sheik that was delivering the message was preaching, he told the people that were reading the Holy Book to read a verse. I am sorry I don’t know what the verse says but when the people wanted the interpretation he said that verse is simply saying ‘seek knowledge’; that, if you have to leave our village that time and go as far as China in order to acquire knowledge, the Holy Book enjoins you to do so. That is the answer to your problem,

“Now let me analyse the word ‘KNOWLEDGE’ to you,” she continued. “Write out the word KNOWLEDGE.” I did. “Again, my husband, write that word but now write the ‘L’ as a slash “/”. Now what do you have? KNOW/EDGE”. I pronounced it ‘KNOW’ ‘EDGE’. She said, “you got it right; it is in knowing that you have the edge among your equals. Those that ‘KNOW’ have ‘EDGE’ over those who do not know. Those that KNOW may even EDGE out those who do not know from the playing field.” Then I told her, “my dear, you’re making a point here o. This means that those people that have knowledge of the IFRS among the accountants will not have to chase jobs; jobs will be chasing them, whether they are into practice or working for someone.” She stood up and pointed at me and said, “Accountant, take action!” As she left, I shouted “how much will you collect for consultancy fees?” She jokingly said, five thousand naira only for a pot of soup.

Opinion Legal Matters

The ICAN Disciplinary Tribunal at its recent sitting in Lagos reinstated Mrs. Joy Isoken Sonubi, ACA (MB 011334) as an Associate member of the Institute having applied for re-

instatement under Section 12(7) of the ICAN Act.

Mrs. Sonubi’s name was struck out in March, 2006 from the Institute’s register of members. Accordingly, the original certificate of membership submitted by her to the Institute’s Secretariat would be released. By this act, Mrs. Sonubi, ACA has once again become a bonafide member of the Institute.

In the case of ICAN Vs Onyekachi Ekwueme, Dr. Sam Erugo holding brief for the Respondent’s Counsel sought the Tribunal’s adjournment of the case to allow the matter be settled out of Court and the application was granted.

In same vein, the following cases that were listed for hearing at the Tribunal were subsequently adjourned till its next sitting based on the request of their Counsel:

✓ ICAN Vs Uzowanne F. Ogboko

✓ ICAN Vs Alhaji Mohammed Abdullahi Bulawa

✓ ICAN Vs Samuel Lucky Iroegbu

✓ ICAN Vs Olusegun Adetoro Adepoju

In the case of ICAN Vs Tunde Williams, the Respondent’s Counsel moved a Motion requesting the Tribunal to refer the matter back to the Investigating Panel for stated reasons. The Prosecution did not oppose the Motion and the Tribunal reserved Ruling for its next sitting.

In the two cases involving Bamidele Odunowo, the Tribunal adjourned the cases as the Respondent was not in attendance.

The ICAN Disciplinary Tribunal was set up in keeping with the ICAN’s mandate to regulate the accountancy profession in accordance with Section 12 of the ICAN Act.

The Tribunal tries cases of alleged erring members on recommendation of the Investigating Panel. Appeals lie from the decisions of the Tribunal to the Court of Appeal and different sanctions are meted out to those found liable for the offences, which are strictly related to the professional conduct of members.

ICAN DISCIPLINARY TRIBUNAL RE-INSTATES SONUBI AS MEMBER OF THE INSTITUTE


Opinion

INTRODUCTION

It is almost twelve years since the inglorious Enron/Worldcom saga hit the USA corporate world in 2001 with devastating impact on all stakeholders in investment business, causing, in its wake, credibility crises for the global accountancy profession,

loss of huge pension funds by Enron employees, the whittling down of the premium hitherto placed on the USA Generally Accepted Accounting Principles (GAAP), rating agencies, audit committees (ACs), etc. The extinction of Arthur Andersen (AA), one of the Big 5 then and best brands of the accountancy profession, remains a bitter pill to swallow. Without doubts, the passage of the Sarbanes-Oxley (SOX) Act in August 2002 by the US Congress was a deft move to check the vices unveiled during the investigations into the Enron saga that occurred a year earlier. The can of worms opened by the US Congress in the process made the introduction of more restrictive or harsh provisions inevitable in a determined effort to redress the observed inadequacies of American corporate governance practices.

Yet with the SOX Act, it appears nothing has fundamentally changed in spite of the changes and innovation it brought into corporate governance practices. Many analysts see the Act as a beautiful but hastily drafted document which merely introduced more regulatory measures without visible impact on the conscience of operators/players. Today, ironically, cases of improprieties appear to have increased with more regulation. This is not strange. Capitalism promotes competition, survival of the fittest, sharp practices, economic decline, stagnation and inevitably, corporate failures. Not a few analysts believe that except a new corporate conscience dedicated to the public interest is evolved, the cycle of crises and corporate collapse will continue un-end. In their view, regulations merely build checkpoints and reminders which are intended to promote compliance. Since no law can legislate ethical conduct into existence, therefore, investments in all jurisdictions can be made more secured if people apply their conscience and play by the rules. Indeed, only corporate conscience can make good to consistently triumph over evil. An entity with conscientious men that act with integrity is a corporation with conscience. This is what is good today for the business world.

The thrust of this paper is to critically appraise the impact of USA Sarbanes-Oxley Act of 2002 on corporate governance practices such that useful lessons can be learnt as Nigeria strives to review

Sarbanes-Oxley Act: Evolving a Corporate Conscience

By ABEL AIG. ASEIN

its business legislation called the Companies and Allied Matters Act (CAMA) enacted in 1990. Accordingly, this write-up is segmented into four sections including this introductory one. Section two will consider the main provisions of the SOX Act. Section three will review corporate governance practices around the globe while the last section will contain my recommendations and concluding remarks.

MAIN PROVISIONS OF THE SARBANES-OXLEY ACT 2002

Named after the two distinguished USA legislators that initiated the Bill, Senators Paul Sarbanes and Michael G. Oxley, the SOX Act 2002 was enacted to “protect investors by improving the accuracy and reliability of corporate disclosures made pursuant to the securities laws and for other purposes”. Pursuant to this objective, the 2002 SOX Act provides: • That the Chief Executive Officers(CEO) and Chief Finance

Officer (CFO) will swear on oath before a Notary that, to the best of their knowledge, the financial statements of their companies contained neither an “untrue statement” nor omit any “material fact.”• That it is a crime to knowingly alter, destroy, mutilate,

conceal, cover up, falsify or make a false entry in any record with the intent to impede, obstruct or influence the investigation or proper administration of any federal department or agency.• That auditors must maintain all audit or review work-papers

for five years from the end of the fiscal period in which the audit or review was conducted.• For the immediate establishment of a Public Company

Accountability Oversight Board (PCAOB) to oversee the audit of public companies. As part of its functions, the Board will register audit firms, establish auditing, quality control, ethics, independence and other standards relating to the preparation of audit reports, conduct investigations and disciplinary proceedings concerning violations of securities laws, etc.• That audit firms registered by the PCAOB must not perform

certain non-audit services for their clients, e.g. financial information systems design and implementation, internal audit outsourcing services, bookkeeping or other services related to the accounting


Opinion

records or financial statements of the audit client, etc.• That both the lead and reviewing audit partners must be

rotated at least every five years. The Act has no requirement to rotate audit/accounting firms but requires a study to be conducted regarding their mandatory rotation.• That each member of the audit committee must be

independent implying that such a director must not accept any consulting, advisory or other compensatory fee from the issuer or be an affiliated person of the issuer or any subsidiary.• That Audit committees must establish procedures for

receipt, retention and treatment of complaints regarding accounting and audit matters. • That the Audit committees must have

the authority to engage outside advisors, according to the Act, at least one of the members must be a financial expert.• That the audit committee must be

directly responsible for the appointment, compensation and oversight of the external auditor (including resolution of disagreements between management and the auditor regarding financial reporting). • For full disclosure of material off-

balance sheet arrangements; and that pro forma financial information be presented so as not to be misleading and to reconcile the pro forma information with GAAP.• That report regarding changes in

stock ownership arising from insider trading activities must be fully disclosed before the end of the second business day following such change.• That an issuer is prohibited from directly or indirectly

extending, maintaining or arranging for the extension of credit, in the form of a personal loan, to or for any director or executive officer of the issuer. • For whistleblower protection for employees of public

companies reporting fraud. From all indications, the SOX Act brought fresh and tough policy

initiatives to checkmate the malfeasance of resource managers in an era of stiff competition and business without borders. Indeed, many of the provisions were designed to address the pleas by principal actors in the Enron saga. For instance, Messrs Jeffrey Skilling of Enron and Bernie Ebbers of Worldcom pleaded that they had no idea what their Chief Finance Officers (CFOs) were doing with the financials. Yet a few of the CFOs pleaded that they acted under pressures from their CEOs. Provisions were therefore made by the SOX Act to prohibit what it sees as unacceptable practice or conduct.

The point can be made that with every observed or new malfeasance or misdemeanor in US and other jurisdiction, a new legislation is passed. This “fire fighting” strategy of the USA and other countries is neither new nor effectual. From economic history, most of the corporate laws enacted in USA and other countries were children of various crises. Consider for instance, the Glass-Steallgate Act of 1933 and the Securities Exchange Act of 1934. These laws were enacted soon after the global economic recession of the 1929-34 in an effort to protect stakeholders. Again, following the 2003 Parmalat scandal, the Italian government, on December 9, 2003, rushed through an emergency legislation aimed at allowing quick

bankruptcy procedures for the dairy giant, in order to protect its industrial activities, payrolls and vendors, etc, from creditors claims (Celani, 2004). More recently, the US Congress passed the Economic Stimulus Act of 2008, Emergency Economic Stabilisation Act of 2008 which created the Troubled Asset Relief Program (TARP), American Recovery and Reinvestment Act (ARRA) of 2009 and the Dodd-Frank Act, 2010 all in response to the 2007/2008 financial crises which engulfed the world following the mortgage sublime defaults. In Nigeria, we can recall the abrogated Failed Banks Act of 1984, the Nigeria Deposit Insurance Corporation Act (NDIC) 1986,

the Banks and Other Financial Institutions Act (BOFIA), 1991, Assets Management Corporation of Nigeria (AMCON) of 2010, etc, which were passed to address the crises that faced the banking industry during those years. Effectively, fire fighting in this manner can only address the symptoms instead of the fundamental causal factors of breach of trust for pecuniary gains by persons in fiduciary positions.

The view of this article is that failed societies and businesses are evidence of poor ethical standards. Indeed, ethical compromises are betrayals of trust and a prelude to the erosion of confidence. Therefore, it is the people’s conscience, rather than, legislation that drives best practices in corporate governance and by extension, corporate success. Except a new corporate conscience dedicated to the public interest

is evolved, the cycle of crises and corporate collapse will continue unend. Rather than just make more laws, the battle for the mind should be simultaneously intensified. Only then can the bar of accountability be raised, in the public interest, on a sustainable basis.

GLOBAL BEST PRACTICES IN CORPORATE GOVERNANCE

Corporate governance has to do with the manner in which organisations, particularly limited liability companies (LLCs), are managed and the nature of accountability a resource manager is expected to render to owners. It involves the direction and control of those who have responsibility for the day-to-day running of organisations.

In a much broader macro-economic sense, it can be viewed as the systems of checks and balance that exist in a market-driven democratic society. These systems include the existence of institutional and legal structures and the observance of the rule of law and best practices such that business relationships and economic activities can easily be consummated transparently, honestly for the benefit of the larger society. Indeed, the view is rife that effective corporate governance procedures are crucial to the survival of the macro-economy. The challenge therefore is how to make boards, composed mainly of persons with different experiences, skills and perspectives, more effective knowing fully well that imperfection is a hallmark of humans.

Given that ownership is often separated from control in the Anglo-Saxon dispensation, it has become imperative for legislation

“From all indications, the SOX Act brought fresh and tough policy initiatives to checkmate the malfeasance of resource managers in an era of stiff competition and business without borders”


to be enacted to protect the interests of the non-active shareholders from the possible extravagance, inefficiency, ineptitude and deceit of the active directors. Such legislation was expected to force directors to account for the results of all transactions undertaken by them on the company’s behalf during their period of stewardship in order to show the impact of their managerial decisions on the stock of wealth of shareholders. In many nations of the world, the regular preparation and presentation of stewardship reports by professional managers to shareholders at Annual General Meetings (AGMs) is a statutory requirement. Thus corporate governance describes the holistic system of control by which companies are directed in the drive towards the achievement of their set corporate objectives. Indeed, the preamble to the 1992 UK Combined Code on Corporate Governance notes that the purpose of corporate governance is to “….facilitate efficient, effective and entrepreneurial management that can deliver shareholder value over the longer term.” In this respect, Section 1A of the Code states that, the Board’s role is “to provide entrepreneurial leadership of the company within a framework of prudent and effective controls which enables risk to be assessed and managed.”

The direction and control of corporate entities are statutorily done in Nigeria, as in many other countries of the world. Of the several mechanisms evolved for ensuring good corporate governance, the Audit Committees (ACs) and the appointment of external auditors by shareholders are the prominent ones. The AGM is the forum where directors submit their stewardship reports to shareholders in the form of audited financial statements for approval. Statutorily, AGMs must be held annually to transact the business of appointing the directors, consider financial statements prepared by the existing directors, appoint external auditors, approve the payment of dividends and other resolutions (e.g., to change the equity capital of the company, approve mergers and acquisition initiatives) that may be brought by the board for consideration.

In recent times, the corporate governance debate has tended to expand the objective of business beyond the maximisation of shareholders’ wealth to include discharge of duty to the society. Practices such as child labour, environmental pollution and degradation, for instance, are against the interests of society. To ensure that companies continue to shoulder the burden of the externalities which their productive activities impose on society, politicians have become interested in corporate governance.

Although in the West, the initial corporate governance debate tended to centre around the composition and responsibilities of the Board of Directors, internationally, the objectives have been to improve labour and environment standards in the workplace, eliminate corruption and promote consumer rights. Thus, in addition to the Lord Cadbury’s Report of 1992 mentioned above, the UK alone has had the Greenbury Report 1995, the Hampel Report

1998, the Turnbull Report 1998, the Higg’s Report 2002 and the Smith Report, 2003. In July 2003, the Financial Reporting Council in UK also released a new Combined Code which incorporated the revised version of the Higg’s Report and recommendations made by Sir Robert Smith in his report on Audit Committees. All of these reports were designed to eliminate abuses by requiring additional disclosures in the annual report concerning corporate governance matters.

The King’s Report of 1994 provided a new phase in corporate governance discourse. Unlike its counterparts in other countries at the time, the King Report 1994 went beyond the financial and regulatory aspects of corporate governance in advocating an integrated approach to good governance in the interests of a wide

range of stakeholders having regard to the fundamental principles of good financial, social, ethical and environmental practice. In adopting a participatory corporate governance system of enterprise with integrity, the King Committee in 1994 successfully formalised the need for companies to recognise that they no longer act independently from the societies and the environment in which they operate.

According to the South African Institute of Directors, this inclusive approach requires that the purpose of the company be defined, and the values by which the company will carry on its daily life should be identified and communicated to all stakeholders. The stakeholders relevant to the company’s business should also be identified. These three factors must be combined in developing the strategies to achieve the company’s goals. In other words, the relationship between the company and its stakeholders should be mutually beneficial.

Indeed, in a recent publication, Institute of Chartered Accountants in England &

Wales (ICAEW) posits that to build trust, corporate entities must, today, look at how things should be in corporate governance to meet society’s expectations. This does not mean that companies do only what the society wants: it is about defining its business purpose in the wider context, that is, looking at issues that matter to society. According to ICAEW, companies should be responsible for four key things: achieving a business purpose, behaving in a socially acceptable way, complying with law and regulations, acknowledging and answering for their actions.

A wealth of evidence has established that this inclusive approach is the way to create sustained business success and steady, long-term growth in shareowner value. This approach to corporate governance has given rise to call for integrated financial reporting or sustainability reporting by His Royal Highness, the Prince of Wales, Prince Charles. In a documentary presented at the IFAC World Congress of Accountants (WCOA) 2010 held in Malaysia, he decried the negative impact of productive activities on the climate and environment and called for a deliberate strategy that will guarantee the sustainability of the earth for the continued

“What underlies the doctrine of corporate opportunity is transparency of directors and top management teams. In their business conduct, they must not only be above board and absolutely loyal to the common cause, they should pride themselves in the quantum of honesty and integrity they exhibit in all their business dealings”

Opinion


existence of mankind. He was greatly enthused by the fact that the global Accountancy Profession, as the soul of business, had taken on the gauntlet to bring up an integrated approach to reporting which will capture the impact of financial, environmental and social factors on an organisation’s long term performance. Simply, Prince Charles urged professional accountants to help to “sustain long term growth in a corporate world demanding short term solutions by providing better systems and information which are so urgently needed and to show that acting for the long term and in the best interests of communities and the environment, is the right financial approach.” The then IFAC President, Mr. Richard Bunting corroborated this thinking when he urged corporate entities to work towards the massive reduction of externalities in their productive activities. Corporate social responsibility, according to him, was for the long term sustainability of the enterprise and not a favour to the community.

Recently, the Asian Development Bank (ADB) released a list of ten principles of Corporate Governance. These are: performance orientation, nomination and compensation committees, disclosure, audit committee, code of conduct, conflict of interest, environmental and social commitment, conduct of boards of directors, responsibilities of investors and the role of directors in turnaround situations. The objectives of the principles are to assist (i) enterprises design and implement their own corporate governance guidelines by benchmarking their practices against these principles; (ii) to assist domestic and institutional investors, fund managers, as well as ADB, in their quest for excellence in corporate governance in investee enterprises; and (iii) to assist governments in designing corporate governance regulations.

Impressed by these initiatives, the International Organisation of Securities Commissions (IOSCO) issued a revised set of objectives and principles for securities regulation in February 2002. Among the 30 principles it embraced are those related to full, timely and accurate disclosure of financial results (by issuers), the need for high quality and internationally acceptable accounting and auditing standards, and the need for regulators to have comprehensive inspection, investigation, surveillance and enforcement powers.

In the wake of continuing stock exchange mergers across Europe in 1999 and 2000, the European Association of Securities Dealers (EASD) had to issue a new set of guidelines in 2000 to act as a benchmark for companies. Hitherto, national corporate governance guidelines differed widely across Europe. EASDAQ, the European stock market for high growth companies, has adopted the guidelines so that quoted companies must disclose reasons if they do not comply.

Also on an international basis, efforts are being made by such organisations as the United Nations and the Organisation for Economic Co-operation and Development (OECD) to advance the cause of corporate governance. For instance, at the June 2000 meeting of OECD, ministers from the 30-member countries plus Argentina, Brazil, Chile and Slovakia signed up to a new international code of conduct setting out international standards for multinational companies (MNCs) to follow in combating corruption, safeguarding consumer rights and promoting good labour practices. Each government is responsible for ensuring that MNCs operating in or from their home country abide by the guidelines. These guidelines were revised in May 2004 by the OECD Council to include protection for whistleblowers, protection for minority shareholders and an

increased role for shareholders. What has become obvious from this global trend is the need

for more transparency and disclosure in financial reporting and the placement of greater premium on integrated reporting with emphasis on the impact of financial, environmental and social factors on an organisation’s long term performance. Corporate entities must adopt inclusive approach to corporate governance to ensure sustained business success and steady, long-term growth in shareowner value.

RECOMMENDATIONSAs more and more legislations are passed, the creative minds

of criminals will be activated to seek ways of circumventing the law. In spite of its acclaimed regulatory efforts, the CBN 2008 Report showed that a total of 313 bank employees were involved in fraudulent acts which cost the system a whopping N53billion loss in 2008. By implication, given banks’ minimum capitalisation of N25billion at the time, the economy lost 2 banks in 2008! In spite of SOX Act also, Mr. Bernard Madoff (aged 70years) was convicted and jailed for 150 years by a US court for defrauding investors to the tune of over US$65b in 2008! Although this also was as shocking as it was sad, Ponzi schemes of all kinds will continue to emerge, temporarily thrive and eventually collapse with devastating impact on gullible investors, if greed is not subordinated to focused, well thought out investments. It is against this that the following recommendations are made:-

Corporate Code of Conduct It is common knowledge that the 2007/2008 global crisis was

caused by corporate governance failures. This has necessitated the call for organisations to mandatorily set and enforce corporate code of conduct that will define acceptable behaviour. The tone of an organisation is set at the top. If the leadership of any organisation is committed in words and actions to high ethical and moral values, the employees will kowtow. It is therefore recommended that organisations should set out their ethical policies in a Code that should be widely publicised and distributed within the company and to shareholders while boardroom-monitoring procedures should be put in place. The FRC can make this a regulatory requirement for listed entities, in the first instance.

Harmonisation of Corporate Governance CodesIn an effort to promote best practices in organisations, many

regulators have developed their own code of corporate governance. Today, the Central Bank of Nigeria, the Securities and Exchange Commission and the National Insurance Commission have their codes. Without doubt, harmonisation of the various Corporate Governance Codes in the country would facilitate compliance. This call is particularly important because everyone is required to voluntarily comply with all these Codes. Their breaches are not accompanied by statutory sanctions. These Codes can be harmonised without reducing their provisions and the same goal will be achieved. The UK Combined Code is a clear example of this. Happily, the Financial Reporting Council (FRC) of Nigeria Act No.6 of 2011 made the development, monitoring and enforcement of corporate governance code the exclusive statutory responsibility of the Council. The current initiative by FRC to harmonise these Codes

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pursuant to its statutory powers is as timely as it is commendable. The uniform national code may come into force in the first quarter of 2014.

Doctrine of Corporate OpportunityAs it is common knowledge directors are, statutorily, agents

of the organisation and therefore must act in utmost good faith. They are expected to prudently handle the affairs of the company so that the interests of all directors, clients, investors, employers and the general public are properly balanced. A director owes the company his undivided loyalty. Whatever he earns as profit from taking advantage of a business opportunity rightly belongs to the organisation. He cannot use the influence of the company to earn himself some personal gains. He holds such gains in trust for the company. This is the doctrine of corporate opportunity.

What underlies the doctrine of corporate opportunity is transparency of directors and top management teams. In their business conduct, they must not only be above board and absolutely loyal to the common cause, they should pride themselves in the quantum of honesty and integrity they exhibit in all their business dealings. In fact, CAMA 1990 demands no less from directors in addition to the fact that they must expressly state their interests in the business, whether direct or indirect. Unfortunately, many directors have been known to have compromised their offices because of selfish interests, pressures from families, relations, friends and communities. However, not all business opportunities that come to a director necessarily belong to the company. Those that relate to him as an individual and are clearly outside the corporate interests, are his to pursue. The Articles and Memorandum of the company should be clear on this as this is a main crux of most disagreements within the boardroom. It is expedient that the new CAMA addresses this thorny issue.

Audit CommitteeThe role of Audit Committees (ACs) in corporate governance

is very crucial. As the watchdog, the failure of audit committee is often the failure of corporate governance. Section 359(6) of CAMA 1990 provides that the ACs should ascertain whether the accounting and reporting policies of the company are in accordance with legal requirements and agreed ethical practices; review the scope and planning of audit requirements; keep under review the effectiveness of the company’s system of accounting and internal control, etc. As envisaged by CAMA, 1990, the AC is expected to provide a prompt check on the activities of the board and management of the company. The SOX Act 2002 even gave the powers to engage external auditors, review their work, resolve disputes between external auditors and management, establish procedures for receipt, retention and treatment of complaints regarding accounting and audit matters, etc, to the ACs!

Therefore, to ensure its efficacy, its members must possess minimum qualification including financial literacy and expertise. Since the AC interfaces between the external auditor and the Board, its chairman should be a financial expert as this will impact on the leadership he would provide to his team. This recommendation is made notwithstanding the fact that Section 301 of the SOX Act permits the AC to hire its own experts as it deems fit. Secondly, the composition should be skewed in favour of shareholders rather than the current practice of equal representation. The Independence of

AC members should not be in doubt. For instance, Enron financed the election of members of US Congress including Phil Gramm, the husband of the Audit Committee’s chairman, Wendy Gramm. The AC was unable to fulfill its mandate because it compromised its integrity. As SOX Act noted, each member of the AC must be independent implying that such a director must not accept any consulting, advisory or other compensatory fee from the issuer or be an affiliated person of the issuer or any subsidiary. It is therefore not sufficient to disclose any interest. An AC member must not only be independent, he must be seen to be transparently so. These recommendations should be incorporated into CAMA in order to enhance the powers and value of ACs.

Doctrine of Covering the FieldPrior to the recent issuance of ISA 240 by International Auditing

and Assurance Standards Board (IAASB) of IFAC, the US SAS 99 or NSA 5 by ICAN, the external auditor did not and was not required to check 100% of a company’s transactions as he was not looking for fraud. Even the CAMA 1990 did not intend that all transactions should be looked into. Section 360(2) states unambiguously that if the auditors are of the opinion that proper accounting records have not been received from branches not visited by them, or if the balance sheet and (if not consolidated) the profit and loss account are not in agreement with the accounting records and returns, the auditors shall state that fact in their report. There is now a new song: sampling as an audit technique will no longer suffice. A more detailed work would now need to be mandatorily done by external auditors. Interestingly, until 30-40 years ago, auditing used to involve the checking of every entry in the books hence it was possible to detect even the smallest of fraud or defalcation. However, with the growth in the size of firms, globalisation of operations and the complexities of undertakings, techniques of auditing have changed significantly. The ISA 240, US SAS 99 or NSA 5 is simply asking that auditors should revert to the status quo ante by taking on their historic responsibility not only to prevent but also detect fraud. In other words, display professional skepticism and detect fraud. Thus, as merchants of integrity, they are now required to cover the entire field! Accordingly, CAMA 1990 needs to be amended to reflect this new development in auditing standards and practice.

Nature of Audit Opinion on Internal controlsIn order to reinforce corporate governance practices and enhance

the reliability of audited financial statements, Section 404 of SOX Act 2002 requires External Auditors to express opinions on the internal control processes of clients as part of audit engagement. It was pursuant to this provision in the US law that Sections 63-65 of the Nigerian Investment and Securities Act of 2007 made it compulsory for external auditors to express opinion on the efficacy of the internal control of their clients. Also, the NSA 5 requires the auditor to “evaluate the design of the entity’s related controls, including relevant control activities, and to determine whether they have been implemented.” Again, raising the stakes, the Financial Reporting Council of Nigeria Act No.6 of 2011 similarly now requires external auditors to express opinion on internal control and management information systems of their clients as part of their normal audit engagement. While this is plausible, both regulatory bodies need to develop and make available to practicing firms of chartered accountants best practice templates for preparing such reports to

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ensure uniform standards of audit opinion. The point must be made that this additional statutory responsibility imposed on external auditors can positively impact the cost of audit which clients must pay and if they operate in an inelastic product market, transfer to consumers in the form of higher prices. The Institute’s Scale of Professional fees needs to be reviewed to reflect this additional work and responsibility.

Practice Monitoring InitiativeThe Institute of Chartered Accountants

of Nigeria has commenced a professional practice monitoring initiative in order to monitor and subsequently enforce compliance to set standards and sanction deviant behaviours. As professionals, the public recognises that chartered accountants have assembled impressive skills and abilities and wants us to expand the universe in which we apply our disciplines. We must live up to society’s expectations while endeavouring to bring those expectations back into line with reality. If the quality of services delivered by members fails to match this expectation, the Accountancy Profession will lose its prime position in business. No one desires this. Practice monitoring was therefore conceptualised to raise the quality of financial reporting in the country in order to ensure that stakeholders continue to significantly trust and rely on the work of the external auditors in evaluating their proprietary worth in any commercial entity. Although a few have raised the possible fear of breach of their confidential relationship with their clients and loss of trade secrets to reviewers (who are their competitors), the Institute has evolved a code of conduct for reviewers in addition to their signing an oath of confidentiality. Any reviewer who breaches any section of the oath or code would be brought to justice. Accordingly, practitioners need to build trust in this free peer review system which is for their long term survival, growth and prosperity. It is therefore imperative that the initiative is supported by regulators and practitioners alike. ICAN and FRC must cooperate to ensure the success of the initiative.

Increased Knowledge of Client’s Business and ControlsGiven the current sophistry of the business environment and

spate of corporate governance breaches by persons in governance positions, the external auditor is enjoined not only to continue to display an attitude of professional skepticism and hone his skills through training and retraining but also, not to rely on his previous year’s knowledge of the client as well as the confidence he had in the honesty and integrity of the management. He should carry out all necessary audit checks as if it was his first year of undertaking the audit engagement. He must consider whether there exists fraud risk factors in all the information he obtained, design and perform audit procedures to respond to these risks including management override of controls. In view of this, any practicing firm worth its salt, must continue to invest in capacity building such that its

staff would be technically competent to handle emerging auditing issues associated with a client’s business. Indeed, NSA 9 or ISA 315: “Understanding the Entity and its Environment and Assessing the Risks of Material Misstatement” states that, “the auditor should obtain an understanding of the entity and its environment, including its internal control, sufficient to identify and assess the risks of

material misstatement of the financial statements whether due to fraud or error, and sufficient to design and perform further audit procedures.”

The Board of DirectorsEvery public company should have

an effective Board of Directors which controls and leads the company. The board should essentially have a team of executive and non-executive directors under the leadership of a chairman. There should be clear division of the executive responsibilities for running of the board and the company’s business. In principle, the roles of chairman and chief executive officer should be separated and the board should have a charter of its mandate. A board should have a balance of executive and non-executive directors such that no party can dominate the board’s decision making. The board should be provided with appropriate and timely information and of sufficient quality to enable it to carry out its duties. New appointments to the board should be made via a formal

and transparent procedure. Decisions as regards appointment should be taken in reality as well as in form by the board. Indeed, the Board should have an appropriate mix of skills, experience and independence to enable its members to discharge their duties and responsibilities effectively.

Also, there is need to restrict the number of board positions that each director can hold. It is common knowledge that some directors have multiple directorships in organisations. This affects not only their performance, but also their independence particularly when unsavoury decisions are to be taken against a board on which they serve. As we set out to amend the Companies and Allied Matters Act, 1990, this restriction should be imposed and reinforced with security reports of such board members as currently done by the Central Bank of Nigeria (CBN) for directors of money deposit banks. The board should also give special attention to the issue of management succession planning which the National Insurance Commission (NAICOM)’s Code of Corporate Governance emphasises as a core principle and critical success factor for business development and economic growth of the nation. Above all, the Board should communicate to the company’s shareholders and other stakeholders, at regular intervals, a fair, balanced and understandable assessment of how the company is achieving its business purpose and meeting its other responsibilities.

Shareholders’ ActivismOrganisations with active shareholders are most likely to adopt

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“Mandatory rotation of audit among the few major firms in the country will whittle down not only competition but also lead to the growth of monopoly and high cost of audits. In my view, mandatory rotation of external auditors will lead to statute-aided dominance of the audit business by a few firms”


good corporate governance principles and ultimately, would experience better performance and greater value creation. If shareholders do not attend AGMs and also fail to appoint any proxies, they would have lost the opportunity to influence the policies of their companies. Indeed, the exercise of shareholders’ rights is seen as a good principle of corporate governance by the NAICOM Code. Under the current UK Corporate Governance requirement, it is mandatory that “shareholders are invited specifically to approve all new long term incentive arrangements and significant changes to existing schemes unless prohibited by the Listing Rules.” In fact, in the UK Company Act 2006, liability limitation agreements entered into by the board with external auditors will not have any effect until approved by the shareholders, who are the owners of the companies. Effectively, shareholders are statutorily encouraged to be part of their company’s governance processes. Organisations with docile shareholder groups therefore, will certainly not be able to prod their boards to greater productivity or performance. The above provisions in the UK Company Act 2006 can be accommodated to our laws too. This will further reinforce the growing vibrancy of professional shareholder associations in the Nigerian business environment.

Renaissance of ValuesA critical factor underlying corporate collapse each time is the

spate of compromises of integrity by persons in fiduciary positions manifesting frequently in unbridled sale of conscience for pecuniary gains. Abuse of trust in the face of stiff legislative provisions and possible sanctions imply a complete failure of the social value system. Often, people lose their self regulation and indulge in deviant and unacceptable practices prohibited by law. As Goleman, D. (1998) observed, “self regulation enhances integrity. Many of the bad things that happen in companies are a function of impulse behaviour. People rarely plan to exaggerate profits, pad expense accounts, dip into the till or abuse power for selfish ends. Instead, an opportunity presents itself, and people with low impulse control just say yes.” Since virtuous societies are built on enduring values observed by all without prompting, we must collectively and frontally address the current corporate malfeasance and failing social value system in the long term interest of the Nigerian economy, society and prosperity of business. Aggressive sensitisation of the people and introduction of civics in the curriculum of schools would be a starting point for the renaissance of our social values. Role models and value ambassadors must be projected to support the view that compliance to best practices pays. Similarly, deviants must be punished to dissuade others from towing the path of dishonour. We must ensure that criminals do not benefit from their crimes through the unjustifiable practice of plea bargain or mere legal technicalities. We must deliberately remove one of the elements of the fraud triangle that

makes the commission of crime easy.

Mandatory Rotation of External AuditorsThe debate on the propriety of

mandatory rotation of external auditors by companies assumed greater prominence following the Enron saga of 2001 and the enactment of the Sarbanes-Oxley Act 2002 by the USA Congress. Instead of the rotation of lead and reviewing audit engagement partners recommended by the SOX Act, the CBN has made the rotation of external auditors by money deposit banks mandatory every ten years. Although many have argued that the mandatory rotation of external auditors will address the issue of familiarity threat between the personnel of the Audit firms and the client as well as promote best practices, the point must be made that the frequent change of auditors will definitely have disruptive implications for corporate entities particularly when long-term strategic initiatives are being implemented. Each time, the external auditor is changed, the cost of acquiring

knowledge about the client’s business will be significant both in terms of time and money. Mandatory rotation of audit among the few major firms in the country will whittle down not only competition but also lead to the growth of monopoly and high cost of audits. In my view, mandatory rotation of external auditors will lead to statute-aided dominance of the audit business by a few firms.

Above all, the retention of external auditors ought to and should be based on performance rather than the need to just satisfy a legal requirement. The current practice of engagement partner rotation, which is recommended by SOX Act, makes more business sense. Its position reinforces the recommendations contained in the Report of the Committee on the Financial Aspects of Corporate Governance chaired by Lord Adrian Cadbury in UK in 1992. In the view of Lord Adrian Cadbury, the father of Corporate Governance, (See Section 5.12), “…any advantages which rotation of auditors could bring would be more than outweighed by the loss of the trust and experience which are built up when the relationships are sound….” Based on this premise, Lord Cadbury recommended very persuasively that the accountancy profession should workout appropriate guidelines that will facilitate periodic rotation of audit partners and personnel by audit firms. This position is more inviting and plausible. To help small and medium-sized firms build capacity and grow, however, the concept of joint audit with the big firms can be explored and eventually made a subject of the law. Since CAMA 1990 (see sections 362-366) and the ICAN Rules on the matter did not make rotation of auditing firms mandatory, the CBN’s policy may need to be reconciled with the law and professional practice. In addition, a common rule for the entire economy should be evolved.

Protection for WhistleblowersAs recommended by the SOX Act, organisations should create

mechanisms through which whistleblowers can confidentially

“Organisations should create mechanisms through which whistleblowers can confidentially communicate information about suspected misconduct or infraction to the management or board for further action. There should be not only strict administrative protection for whistleblowers for providing information but also, rewards or incentives for doing so”

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communicate information about suspected misconduct or infraction to the management or board for further action. There should be not only strict administrative protection for whistleblowers for providing information but also, rewards or incentives for doing so. Accomplices who declined to blow the whistle should not be spared. The whistleblower in the Enron case, Ms Sherron Watkins, CPA (ex AA), Enron Global Finance Vice-President was the only lone voice that felt uncomfortable with the various financial shenanigans. On discovery of the ills, she felt like reporting but became apprehensive of her job security and personal safety. She reached out to her former colleagues at Arthur Andersen for help; went to church for prayers and moral support before blowing the whistle anonymously at first, and then, opening up to the chairman of the company on her findings. Whistleblowers need to be protected by the system they seek to save.

Create an Office of Financial LiteracyMany investors are not financially literate neither do they

understand the data often reeled out by stock brokers and other market players. As a result, they are often at the mercy of agents that may sometimes not be sincere with their investment advise. It is therefore recommended that an Office for Financial Literacy should be created by CAMA as a department of Corporate Affairs Commission supervised by the Minister of Trade and Investment. The Securities and Exchange Commission can leverage on this to educate existing and potential investors. An enlightened market player is an asset to the community of investors and the economy at large.

CONCLUSIONThe SOX Act was passed to

address some observed flaws in corporate governance practices and breaches of Securities’ laws in USA. The piece of legislation ambitiously sought to regulate companies in other jurisdictions desirous of doing business in USA in an effort to instil best practices in corporate governance. It is not difficult to aver that it has not realised its goal. In spite of its stringent and punitive provisions, it could not avert the financial crises of 2007/2008 caused by corporate governance abuses and insider dealings. What seems instructive is that no law can successfully legislate ethical conduct into existence. Ethical conduct is driven by conscience, by cherished values and societal mores. Hence, this write-up recommends the introduction of civics in school curriculum as part of the strategies for the renaissance of our value system. We also noted that multi-board positions should be restricted while members of the audit committee must truly be independent of the company in words and deeds. Except persons in fiduciary positions remain merchants of integrity and good conduct, laws will only remain road blocks that temporarily hinder, but do not abort, movements. For organisations to evolve a new corporate conscience and thrive on a long term basis, shareholders,

the ultimate owners, must not be docile.

REFERENCESACCA (2007), Report of Research conducted by Institutional

Shareholders Services, Shearman & Sterling LLP & European Corporate Governance Institute.

Asein, A.A. (2008), “Corporate Governance and the Issue of Shareholders’ Democracy,” The Nigerian Accountant, Vol. 41, No. 1. Jan/March.

Asein, A.A. (2007), “Changing Responsibilities of the Auditor,” The Nigerian Accountant, Vol. 40, No. 3, July/Sept. 2007, Pages 56-60.

Asein, A.A. (2007), “Mandatory Rotation of External Auditors,” The Nigerian Accountant, Vol. 40, No. 2, April/June.

Asein, A.A. (2004), “Improving the Image of Banks and Bankers in Nigeria,” LMDS Journal of Accountancy, Vol. 2, No. 1, January 2004.

Asein, A.A. (2002), “Carrying the Cross of Enron,” The Nigerian Accountant, Vol. 35, No. 1, Jan/March 2002.

Asein, A.A. (1999), “Managing Audit Risks,” The Nigerian Accountant, Vol. 32, No. 1, January/March.

Banks and Other Financial Institutions Act 1991(as amended).

Bailey, A.W. (2013), “The Accountancy Profession, Ethics and Wealth Creation.” Being a paper presented at the 43rd Annual Conference of the Institute of Chartered Accountants of Nigeria held in Abuja between October 7-11, 2013.

Boyle, P. (2009), Keynote address delivered by Chief Executive, Financial Reporting Council to the London Stock Exchange Conference on Corporate Governance held at the Mansion House, London on February 25, 2009.

Cadbury, Lord A. (1992), Report of the Committee on the Financial Aspects of Corporate Governance, UK .

Companies and Allied Matters Act, 1990 (as amended).

Conger, J.A.; Finegold, D.; & Lawler III, E.E. (1998), “Appraising Boardroom Performance,” HBR, January-February.pp.136-148.

Goleman, D. (1998), What Makes a Leader? HBR January 2004, Page 1-11.

ICAEW (1999), “Implementing Turnbull, A Boardroom Briefing,” Centre for Business Performance and Thought Leadership.

ICAEW (1996), “Corporate Governance: Developing a Charter for Success.” Proceedings of the forum held on November 1, 1996 at the Chartered Accountants’ Hall, UK.

IFAC (2003), “Rebuilding Public Confidence in Finance Reporting – An International Perspective.”

IFAC (2003), “Enterprise Governance: Getting the Balance Right.”

Oyejide, A. & Soyibo, A. (2001), “Corporate Governance in Nigeria,” Business Times, February 12-18 & Feb. 19-25.

UK Companies Act 2006.

* Mr. Abel Aig. Asein is the Deputy Registrar, Technical Services, The Institute of Chartered Accountants of Nigeria.

“What seems instructive is that no law can successfully legislate ethical conduct into existence. Ethical conduct is driven by conscience, by cherished values and societal mores”

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Introduction

The prolonged strike by the Academic Staff Union of Universities (ASUU) that started on 1 July, 2013 may result to federal government’s release of a sum of N1.3 trillion by the end of 2018 to public universities. 1 This is likely to have far-reaching implications for the

entire university system in Nigeria. Subsequently, stakeholders would be expecting commensurate value for the invested funds into the system. Consequently, government’s surveillance and oversight activities on these institutions will witness escalating pressure on the universities to become more efficient, and strive to deliver in line with global best practices. In the wake of these growing expectations and increasing supervision, the role of internal audit in these institutions will have to evolve to meet up with the emerging insistence on value-for-money auditing. Even from within the university systems, Managements and Councils which may have been hitherto taking piecemeal looks at internal

auditing may now be increasingly demanding for the full picture. Though this scenario is typical of, and may be initiated in, public institutions, the emerging dynamics is likely to have a significant toll on private universities which shall necessarily need to become more effective and efficient to survive the imminent competition.

Sequel to the emerging development in the Nigerian university environment, there is an urgent need to consider reshaping perceptions so that the stakeholders view internal audit function as value-adding; more so when regulatory changes around the world and donors’ requirements are propelling internal audit to the forefront, leading to increasing recognition and awareness of the profession. For example, internal audit annual reports of federal universities in Nigeria are now required to be deposited with Office of Accountant-General for the Federation. While this presents numerous opportunities for Internal Auditors (IAs) in the system to showcase their relevance, it also comes with responsibilities requiring a paradigm shift from the traditional

Internal auditing is important in public universities as it is in the business world. With the ongoing reforms pressed by the Academic Staff Union of Universities with the strike in 2013, Directorates of Internal Audit in Nigerian universities are expected to rise up to the challenge of being a key factor in ensuring the delivery of the right value, at the right cost, and at the right time in the system. This paper identifies and discusses the effective ways of breaking barriers and building bridges as imperatives of optimising value-for-money internal auditing in Nigerian universities. The objective is to provoke discussions that eventually address the generation of internal auditors with creative-thinking and communication skills, career development and progression, recognition and rewards as a way of optimising value-for-money internal auditing in the system.

Imperatives of Value-for-Money Internal Auditing in Nigerian Universities

By JOSEPH ACHUA and FREDERICK OGUNJUBOUN

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focus on financial risks, controls and compliance to growing focus on driving improvements in operational areas and greater involvement in risk management. The fundamental value proposition for internal auditing is the role it plays in maintaining a system of effective organisational structure (Anderson, 2012). Accordingly, it is becoming increasingly compelling for the IAs in the system to consciously, contentiously and concertedly reassess their strategies to prepare them for a future that is certain to be radically different from status quo.

This paper attempts to identify and analyse the pertinent barriers and bridges incidental to imperatives of optimising value-for-money internal auditing in Nigerian higher institutions generally, and universities in particular. The objective is to provoke discussions that eventually address the generation of IAs with creative-thinking and communication skills, career development and progression, recognition and rewards in the system. The expected outcomes could include repositioning of the Directorates of Internal Audit (DIAs) in these institutions as a key factor in ensuring the delivery of the right value at the right cost, and at the right time in the system.

Historical Perspectives and Evolution to Modern Internal AuditingRamamoorti (2003) has lucidly documented the evolution of

internal auditing. As organisational activities grew in size, scope, and complexity, a critical need for a separate internal assurance function that would verify the information used for decision-making by management emerged. Management needed some means of evaluating not only the efficiency of work performed for the business but also the honesty of its employees. Around the turn of the 20th century, the establishment of a formal internal audit function to which these responsibilities could be delegated was seen as the logical answer. In due course, the internal audit function became responsible for “careful collection and interpretive reporting of selected business facts” to enable management to keep track of significant business developments, activities, and results from diverse and voluminous transactions (Mautz, 1964).

In summary, the collective effect of growing transaction complexity and volume, the owner/manager’s remoteness from the source of transactions and potential bias reporting parties, technical expertise required to review and summarise organisational activities in a meaningful way, need for organisational status to ensure independence and objectivity, as well as the procedural discipline necessary for being the “eyes and ears” of management all contributed to the creation of an Internal Audit Department within organisations. Starting as an internal organisational function primarily focused on protection against payroll fraud, loss of cash, and other assets, internal audit’s scope was quickly extended to the verification of almost all financial transactions, and still later, gradually moved from an “audit for management” emphasis to an “audit of management” approach (Reeve, 1986).

Thus, like most other disciplines, internal audit is a child of necessity. According to Arthur E. Hald, 1944 (quoted in Flesher, 1996, pp.1, 3):

Necessity created internal auditing and is making it an integral part of modern business. No large business can escape it. If they haven’t got it now, they will have to have it sooner or later, and, if events keep developing as

they do at present, they will have to have it sooner.

This historical fact holds true for most of the early universities in Nigeria which did not start with an internal audit unit. University of Ibadan for example, started in 1960 with a Finance Department; but without an internal audit unit. 2

The importance of internal auditing was succinctly underscored by Walsh (1963):

The widening gap between management and action has made it necessary to develop a series of controls by means of which the business may be administered efficiently. The internal auditor perfects and completes each of these activities by providing on-the-scene appraisal of each form of control. There is no known substitute for each activity.

Indeed, this prophecy seemed fulfilled in so short a time as there is hardly any organisation of a considerable size without a form of internal audit. It is inconceivable, for example, to think of a university or any tertiary institution without an internal audit unit in modern times, the world over.

In the late 1990s, partly as a result of insightfulness, the Institute of Internal Audit (IIA) sponsored research studies as well as numerous forward-thinking articles that recognised a fundamental need to formally reassess and evaluate the profession’s governing principles, orientation, and knowledge base of competencies and skills. As a result, the new definition of internal auditing was eventually formulated to accommodate the profession’s expanding role and responsibilities:

Internal auditing is an independent, objective assurance and consulting activity designed to add value and improve an organisation’s operations. It helps an organisation accomplish its objectives by bringing a systematic, disciplined approach to evaluate and improve the effectiveness of risk management, control, and governance processes.

It is evident from the preceding historical review and summary that internal auditing has evolved remarkably over the last 60 years and has gained an increasingly important role within organisations, whether in industry, government, or the non-profit sector. Alongside this development, the internal auditing function today accepts a broader responsibility towards the organisation itself and its stakeholders. By offering expanded assurance and consulting services to the organisation, the internal audit function effectively contributes to improved organisational governance. Furthermore, information assured by IAs enhances both internal and external decision-making, thereby improving the deployment, and the effective and efficient use of scarce organisational and economic resources. For example, there is empirical evidence that internal auditing has been relatively effective in the Nigerian public sector (Okechukwu and Kida, 2011).

Based on an understanding of how contemporary organisations function and the relevant influences, the internal audit function and its activities can be viewed in different perspectives. These perspectives provide a richer and fuller understanding of the context of the internal auditing function and its activities in a modern university system, and thus help generate the types of basic

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is what may set a good internal audit directorate apart. If DIAs in universities get their acts right, they can claim their rightful place in the scheme of development in the universities. For instance, all Principal Officers in universities are so designated on the assumption of the value their offices add to the system. Apart from, perhaps, the Vice Chancellor, the DIA should add commensurate or more value to the system than any other Principal Officer and claim its rightful place in the institution as a Principal Officer. This is an important issue to be considered by the Committee of Heads of Internal Audit Departments/Units in Nigerian Universities (CHIADINU).

Figure 1 depicts the strategies CHIADINU could consider in the course of reengineering internal auditing for effective value-for-money in Nigerian universities, and other higher institutions. In doing this, the following are global best practice drivers that influence the effective use of the framework for developing strategies and implementing the right tactics to ensure high success are imperative (Pricewaterhousecoopers, 2003):üAlign its value proposition with stakeholders’ expectations. üAlign the stakeholders’ expectations with the overall

functional strategy.üFocus on critical risks and issues. üEngage and manage stakeholder relationships. üDeliver cost-effective services. üMatch its talent model to the value proposition. üEnable a client service culture. üPromote quality improvement and innovation.üLeverage technology effectively. There are no hard and fast rules as to the sequence of the

process; however, communication must be effective throughout the design process (Arena and Azzone, 2009). The framework is intended to be used as a guide to affirm that a Directorate of Internal Audit is aligned with their institution’s strategies and risks, and its stakeholders’ needs. The premise is that a strategic foundation for internal audit is based on having a clear understanding of stakeholder expectations and by developing an audit plan that focuses on the most critical risk areas.

Clarifying Stakeholders Expectations and Critical EnablersIt is important to note that that internal audit must define

and develop the supporting capabilities needed for execution of the framework (Pricewaterhousecoopers, 2012). The framework is a guide of action that must be activated to accomplish desired results. It merely defines the specificities and procedures for their accomplishment. When this is done in the dream world, without connection to reality, it becomes ineffective. The first, and perhaps the most important, step in designing an optimal internal audit function is to clearly understand the expectations of key stakeholders. Internal audit’s primary stakeholders must determine how the function will deliver the desired value (Van Peursem and Pumphrey, 2005). These expectations are constantly changing. To achieve this goal, DIAs must frequently engage in a robust dialogue with Council members, Principal Officers, Management staff, Budget Monitoring Committee, external auditors, and, where appropriate, regulators and donors. Such meetings help in clarifying expectations for the internal audit function and determine how it should add value to the institution.

and applied research questions that are likely to be of serious and enduring interest to academics and practitioners. However, the new status and expectation of adding value through internal auditing should be the goal for any organisation regardless of whether the perspective is compliance, strategic or risk management. It follows therefore that the traditional ‘tick box’ auditing approach is no longer in vogue. Historically, the problems that auditors identified may not have focused on elevating performance and improving the underlying organisational practices. The new role of internal audit is to not only root out inefficient processes and procedures but also to suggest ways to improve organisational practices in order to help the organisation achieve desired results. Today, there is a growing focus on driving improvements in operational areas and greater involvement in risk management. Modern IAs are broadening their roles to enhance their value to the organisations they serve.

Principles and Framework for Effective Internal AuditingBy correctly utilising the skills and talents of the IAs, providers

can benefit from the recommendations and observations that come from those IAs that truly understand the workings of the organisation and are committed to best practice, improvement and advancement. However, for internal audit to add value and drive efficiency, the following four principles of modern internal auditing are imperative (Pricewaterhousecoopers, 2003):vAdd value and improve performancevRisk identificationvCompliancevAssurance.These principles are the main drivers of modern internal audit.

Their holistic application is the Improvement audit that can drive real and measurable change within an organisation.

The IIA has laid down the principles for designing internal audit (Audit Executive Centre, 2009). To design an effective internal audit function, strategy must drive tactics, not the inverse. Too often, the activities of internal auditing are mere responses to an immediate tactical need. In a rush to implement a response, key strategic issues can be overlooked. The result can be a tactical internal audit function in search of a strategy. This is a major pitfall of DIAs in our tertiary institutions. It is often seen as an appendix that does not necessarily need to be included in the strategic plan of the overall structure in the institution. Lack of strategic planning has confined this all-important element of management to the traditional ‘tick-box’ approach. This may explain why IAs in the system are often relegated to the background, neglected or even ignored.

There is need to ensure that the strategic plans of internal audit units are built into the institutional strategic plan. Even where this has not been done wilfully, DIAs should use the institution’s strategic plans to identify the risks that matter most in the context of the organisation’s risk appetite. Elements of the organisational strategy will vary according to the very specific nature of the research institutions. To remain relevant in the system, IAs need to use risk assessments based on the institution’s strategic objectives. This implies that a DIA needs to operate like other facets of the organisation, holding itself accountable for operational excellence, continuous improvement and tracking impact. Being able to look at the totality of the organisation and of the processes as a way of facilitating the accomplishment of the institutional strategic plans

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Unfortunately, stakeholders are not always on the same page, especially when expectations are evolving (Kramer, 2013). This should be seen as a veritable opportunity for the Director of Internal Audit to play a leadership role. It presents the auditor the landscape to bring improvement through innovation. Internal audit needs to take the lead in reconciling differences and finding the common ground. This is one way IAs may take leadership of the activities of their institutions rather than the ‘attachment syndrome’ which has been casting apathy on the profession in tertiary institutions. The importance of IAs in any institution is derived from the value it is seen to be adding, not necessarily from being a ‘loyal servant’ that is rather often seen as a liability to the system. The repercussions of being identified as a ‘loyal servant’ to one or few of the key stakeholders is loss of credibility to the other essential stakeholders, and even suspicion of collusion.

Through this process, stakeholders should define specified outcomes or “value drivers” expected of the Directorate. Common internal audit value drivers include (Pricewaterhousecoopers, 2003):

► Risk management and control assurance. ► Assessment of internal control effectiveness and efficiency. ► Regulatory and institutional compliance assurance. ► Donors, grant awarding institutions and creditors

satisfaction.► Ability to respond to urgent events. ► Return of value from the internal audit investment. ► Fostering awareness of risk and control across the

institution. ► Consultative institutional collaboration/partnering to

address complex research issues. ► Source of management talent and development. ► Effective management of, and coordination with, the

external auditors.Once established, stakeholder expectations should be reassessed

effectiveness and quality of their services”.As the role of the internal auditor evolves and stakeholder

expectations rise, internal audit increasingly requires competencies that exceed the more traditional technical skills. In addition to internal audit knowledge, stakeholders expect IAs to have the ability to team with management and organisational units on relevant institutional issues. They also expect internal audit resources to have deep knowledge of the institutions business.

The following chart depicts the structure of the framework and how the core competencies relate to each other. As would be seen, professional ethics is at the base of the framework as indications of the need to promotes and apply professional ethics for the success of internal audit in any organisation. Technical skills remain absolutely necessary, but they are no longer sufficient on their own. The most effective “Internal Auditor of the Future” possesses a broad range of non-technical attributes in addition to deep technical expertise. The internal audit function is considered value-added when it lends credibility to findings by reducing the information risk associated with those reports. Indeed, audit reports and findings do matter but how the company can be made better matters most. When IAs provide assurance services, they are providing their opinion by utilising their professional judgment. Stakeholder trust in such a judgment depends on the reputation of the IAs. If the stakeholder does not trust the reputation or the judgment of the IAs, questions may arise regarding the accuracy of the object of assurance. Thus, if the IAs are considered to be untrustworthy, their services may not be considered value-added or helpful to the organisation or its stakeholders. There should be a good mix of both soft and technical skills, and appropriate supervision, for an acceptable level competency.

The Directorate of Internal Audit should have a defined competency plans for staff development in identified critical areas of the organisation; have a plan for technical internal audit skills; have a plan for relevant institutional acumen; and have a

Source: Adapted from Priestman (2013)

Figure 1: Strategy Map for CHIADINU

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on a regular basis, preferably at the instance and coordination of the DIAs.

Activating the framework to foster stakeholder expectations require critical enablers. Enablers are the primary levers an internal audit function has in day-to-day execution of its activities in line with its framework strategies. The appropriate resources, a suitable level of risk coordination and innovation are crucial for the envisaged success. These are functions of IAs’ competencies. A competency is the ability of an individual to perform a job or task properly, being a set of defined knowledge, skills, and behaviour (Institute of Internal Auditors, 2013). Competencies have to be continuously updated to match changing stakeholder expectations and environment. The IIA’s Code of Ethics (Rule 4.3) requires thus: “internal auditors shall continually improve their proficiency and the


Source: Institute of Internal Auditors (2013)

The Structure of the Framework Chart Improvement and Innovation

Internal Audit Delivery

Personal Skills

Communication Persuasion and Collaboration

Critical Thinking

Technical ExpertiseInternational

Professional Practices Framework

Governance, Risk and Control

Business Acumen

Internal Audit Management

Professional Ethics

plan for institutional management and leadership. There should be a defined competency plan for all internal audit staff. The nature, size and philosophy of the institution determine critical areas. It is important that internal audit understands the skills it has, the skills it needs and where the gaps are in each competency area. In this regard, reference could be made to the IIA Global Internal Audit Competency Framework which is a tool that defines the competencies needed to meet the requirements of the International Professional Practices Framework (IPPF) for the success of the internal audit profession.

Two main approaches internal audit can take to complement its capabilities are role rotation and outsourcing. Staff roles should be rotated on regular basis as the experience and the way of thinking one gains from working in a critical area of the organisation is unique and transferable to entire system. It is also recommended to outsource certain aspects of the function for which the


Figure 2: Balanced Scorecard for CHIADINU

directorate may not readily provide the required competency. The IIA’s Code of Ethics stipulates competency based on the following rule (Rule 4.1): “Internal auditors shall engage only in those services for which they have the necessary knowledge, skills, and experience.” The gains here are that not only does the institution

crucial in generating a shift in attitudes towards the effectiveness and efficiency of internal audit functions in Nigerian tertiary institutions.

Internal audit’s value will be measured by its ability to drive positive change and improvement. To be effective, internal

gets a credible service and recommendation; audit staff learn from the experts and improve on their own performance. The internal audit function should always take a holistic approach of the entire intention.

Internal Audit and Results MeasurementsTo what extent do

internal auditing influence stakeholders’ attitudes towards the institutional behaviour, institutional intention and the behaviour itself? Assessment should be seen as a critical component of internal audit function because of its capability to enable a greater understanding of its impact and how it may be improved, on the basis of its effectiveness and efficiency (Austin Chapter Committee, 2009). This is

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audit team must demonstrate results, requiring a performance measurement system tied to the stakeholder value (Bo a-Avram, Popa and Tef, 2010). It is important to regularly track and measure internal audit performance against broad management expectations in order to meet, and possibly exceed, the expectations of key stakeholders.

A balanced scorecard (BSC) could be considered as an effective tool that goes well beyond numbers to examine important, broad-based activities for value measure. BSC concept was created by Drs. Robert S. Kaplan and David P. Norton in 1992 based on the simple premise that “measurement motivates” (Kaplan and Norton, 1997). The characteristic of BSC and its derivatives is the presentation of a mixture of financial and non-financial measures each compared to a ‘target’ value within a single concise report. The report is not meant to be a replacement for traditional financial or operational reports but a succinct summary that captures the information most relevant to those reading it. It is the method by which this ‘most relevant’ information is determined (Frigo and Krumwiede, 2000). BSC is designed with reference to vision and mission of the institution. It was the most widely adopted performance management framework reported in the 2010 annual survey of

stakeholder’s expectations. The “tick-box” approach has fast become old-fashioned in favour of value-for-money, improvement and governance assurance internal auditing. Recent happenings in the Nigerian university system have heightened the rate of increase of the expectation gap. The bottom line is that pressures have never been greater as for IAs in the system to focus not only on waste and inefficiency but on operational improvement.

The Way ForwardThe challenge for IAs is to swiftly identify actionable

opportunities to enhance the bottom line. This presents an opportunity for DIAs to demonstrate value. However, this has also necessitated reappraisal and repositioning of the system in Nigerian Universities to be able to cope with the emerging challenges. There is need for SWOT analysis of the entire system by CHIADINU for an effective remodelling and re-engineering. The diagram shown in Figure 3 below is just a prototype.

To break barriers and build bridges of internal audit, the barriers and bridges must first be identified. SWOT analysis comes in handy as a veritable tool of accomplishing this task. It should therefore precede the strategic framework as informed by the


Figure 3: CHIADINU SWOT Analysis

internal audit drivers highlighted by the outcome of the SWOT analysis. It must be noted that competency plan is indispensable in the process of repositioning. The importance of these strategic relationships is to facilitate the Directorates of Internal Auditing in Nigerian universities to close the ‘expectations gap’ by highlighting and articulating the added value that the internal audit provides within the organisation to essential stakeholders. Even though internal audit has long been included in the structure of higher institutions in Nigeria, stakeholders seem to be having difficulties in identifying framework and strategies by which to respond to challenges posed by rising stakeholder expectations. For an internal audit function to be effective, strategy must drive tactics, not the inverse. Too often, the activities of internal auditing are mere responses to an immediate tactical need and key strategic

management tools undertaken by Bain & Company (2013). A sample scorecard is shown in Figure 2.

A maximised internal audit function demonstrates results, improvement, and value. Unfortunately, it is not known if any Nigerian university’s Directorate of Internal Audit today has a robust set of meaningful targets and metrics. Metrics can relate to either efficiency or effectiveness. A holistically BSC also should serve as a basis for annual performance goals for everyone within the audit organisation so they can be held accountable for results and rewarded for successes. Internal audit is not unlike any other business process. Its performance and value contribution can be measured if clear value drivers have been established at the outset and effective measurement protocols developed. The value of an internal audit activity is directly related to its perceived contributions to the organisation. Such contributions are a proxy for value provided. It should be noted that not all perceptions have equal value; those of top management and the Council may matter most.

Conclusion The new challenges in the Nigerian university system herald

new demands of internal auditing. Historically, internal audit is a child of necessity as a key to good governance and the sustainable success of organisations. Over time, the profession’s role and responsibilities have been expanding due mainly to changing

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issues can be overlooked. The result can be a tactical internal audit function in search of a strategy.

It has been difficult to assess the value of internal auditing system in Nigerian universities. This is because the measurement tool for the value assessment of the internal audit function in Nigerian higher institutions is missing. This is a challenge that makes the future relevance of IAs in these institutions a serious concern not only because what can be measured can be is done, but what cannot be measured has doubtful impact. For example, can investments in internal audit units in Nigerian higher institutions be sustainable in the long-run given the dearth of value addition and/or lack of its measures? As it is frequently the case, “you get what you measure.” Value has to be measurable. Without measurement, the claim of effectiveness becomes a mere unverifiable opinion. This is dangerous for the future of the profession and its practitioners. If DIAs get their acts right, they may soon join the league of Principal Officers. But, this is dependent on engaging in measurable value-for-money auditing as adjudged by key stakeholders as producing ‘principal value’ to the institutions.

If internal audit is not made effective in universities and polytechnics where the main inputs are manufactured (production of graduates), it is a clear indicator that the system has completely decayed! The outcome of internal audit activities in these institutions should be models that reflect their quality of research and teaching.

FOOTNOTES1. This is contained in a circular outlining the resolutions

reached at the meeting between Federal Government and representatives of Academic Staff Union of Universities (ASUU) chaired by the President and attended by the leadership of the Nigerian Labour Congress (NLC) and Trade Union Congress (TUC) of Nigeria held at the State House, Abuja on 4th November, 2013 referenced FME/TE/SS.IM/C.I/1/99 and signed by Dr. Mac John Nwaobiala, Permanent Secretary in Federal Ministry of Education. In the resolution, the President of the Federal Republic of Nigeria promised to release N200 billion in 2013, and N220 billion each from 2014 to 2018 (totalling N1.3 trillion). The document also adds, among other things, that funds shall be paid into a dedicated account at the Central Bank of Nigeria on a quarterly basis, from which the Universities will draw.

2. Internal audit unit was established in 1974 (14 years later) following recommendations by the Committee that investigated into the losses of stock which resulted into loss of colossal sum of money in the Catering Department of the University (Brief History of Internal Audit Department from 2005 to Date, http://www.ui.edu.ng/content/internal-audit-unit).

REFERENCES Anderson, U. (2012), Meeting Stakeholder Expectations

for Assurance: Internal Audit’s Role in a Group Effort, www.dallasiia.org/PDF/020212_Pre.pdf

Arena, M. and Azzone, G. (2009), Identifying Organisational Drivers for Internal Audit Effectiveness, International Journal of Auditing, Vol. 13, pp.43-69.

Audit Executive Centre (2009), 10 Risk Management Imperatives for Internal Auditing, Institute of Internal Auditors, Altamonte Springs, Florida.

Austin Chapter Committee (2009), Performance Measures for Internal Audit Functions: A Research Project, Institute of Internal Auditors, Altamonte Springs, Florida.

Bain and Company (2013), Management Tools and Trends, available at http://www.bain.com/management_tools/home.asp

Bo a-Avram, C., Popa, I. and Tef Nescu, C. (2010), Methods of Measuring the Performance of an Internal Audit, The Annals of The “tefan cel Mare”, Vol. 10, Special Number, pp.137-146.

Flesher, D.L. (1996), Internal Auditing: Standards and Practices, Institute of Internal Auditors, Altamonte Springs, Florida.

Frigo, M.L. and Krumwiede, K.R. (2009), The Balanced Scorecard: A Winning Performance Measurement System, Strategic Finance, January, pp.50-54.

Institute of Internal Auditors, Inc. (2013), The IIA Global Internal Audit Competency Framework, Institute of Internal Auditors, Altamonte Springs, Florida.

Kaplan, R.S. and Norton, D. 1997), Translating Strategy Into Action Balanced Scorecard, Boston, MA: Harvard Business Press.

Kramer, J. (2013), The Worst Practices for Marketing and Selling Internal Audit, Protiviti Inc., www.misti.com

Mautz, R.K., Fundamentals of Auditing, 2nd Ed, New York: John Wiley & Sons, Inc., 1964.

Okechukwu, A. and Kida, M.I. (2011), Effectiveness of Internal Audit as Instrument of Improving Public Sector Management, Journal of Emerging Trends in Economics and Management Sciences, Vol. 2, No. 4, pp.304-309.

Pricewaterhousecoopers (2003), Building Strategic Internal Audit Function: A 10-Step Framework, www.pwc.be/systems-process-assurance/pwc-strategic-internal-audit.pdf

Pricewaterhousecoopers (2012), Aligning Intenal Audit: Are You on the Right Floor? www.pwc.gi/publications/asets/state_of_internal_audit.pdf

Priestman, A. (2013), presentation at Scottish Local Authority Chief Internal Auditors Group Conference, June, available at http://www.internalauditscotland.gov.uk/EasySiteWeb/GatewayLink.aspx?alId=85000

Ramamoorti, S. (2003), Internal Auditing: History, Evolution, and Prospects, Institute of Internal Auditors, Altamonte Springs, Florida.

Reeve, J.T. (1986), Internal Auditing, In Cashin, J.A.; Neuwirth, P.D.; and Levy, J.F. (eds.), Cashin’s Handbook for Auditors (2nd Ed.), Englewood Cliffs, New Jersey: Prentice Hall, pp.8-1 to 8-39.

The Institute of Internal Auditors (2013), The IIA Global Audit Competency Framework, Institute of Internal Auditors, Altamonte Springs, Florida.

Van Peursem, K. and Pumphrey, L.D. (2005), Internal Auditors and Independence: An Agency Lens on Corporate Practice, Financial Reporting, Regulation and Governance, Vol. 4, No. 2, pp.1-24.

Walsh Jr., F.J. (1963), Internal Auditing: Business Policy Study, No. 111, New York: National Industrial Conference Board.

* Joseph K. Achua is a lecturer in the Department of Accounting, Benue State University ([email protected]) while Frederick I. Ogunjuboun is head of Ade Ogunjuboun & Co., Chartered Accountants/Forensic Consultants ([email protected]).

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Technical

The acquisition of new clients continues to be a dominant driver of profitability for small- and medium-sized practices (SMPs). Indeed, in the latest edition of the IFAC SMP Quick Poll, the

largest portion of respondents identified acquisition of new clients as the main driver of practice profitability — by a wide margin (see chart below).

While SMPs understand the importance of improving operational leverage (doing more with less), improving productivity (e.g., changing work practices or introducing technology), reducing overheads, and better utilisation of assets, these are not the main drivers of profitability for most SMPs. This is not surprising given

the fact that practice overheads are relatively fixed. The poll results seem to question the wisdom of many practice

management “gurus” who say that the cost of acquiring a new client is far higher than the cost of retaining, or selling more services to, an existing client. What those “gurus” may be failing to recognise is the full potential and cost effectiveness of a marketing campaign that includes low-cost social media.

This article looks at promotion and marketing and, in particular, the role of social media in acquiring new clients and driving practice profitability.

BrandingThe first step of a marketing strategy is to identify your target

customers and what they need. You then have to determine how you can satisfy those needs at a profit and, at the same time, differentiate

Social Media Marketing May Be the Key to Practice Profitability

By STUART BLACK and PAUL THOMPSON

yourself from your competitors. This becomes your brand. The aim of your marketing strategy is to have people associate your brand with their needs and desires, choose you over the competition, and, if you do it right, pay a premium for your services.

Promotion and MarketingAn organic growth strategy involves leveraging promotion

and marketing activities to build brand and attract new clients or sell additional services to existing clients. Remember that most businesses in the market are likely to already have an accountant. In the majority of cases, that means for you to grow your practice

you will need to win clients from rival practices. And, in order to do that, you must offer a compelling reason for them to switch. This makes promotion and marketing more important than ever — and demands that practices build the capability to proficiently promote and market their brand and service offerings. You will likely be faced with the classic “make-or-buy” dilemma, that of using (and training as needed) existing staff to do promotion and marketing, or else recruiting or outsourcing for the requisite skills.

Promotion and marketing efforts are most effective when a number of activities and channels are used simultaneously: this harnesses the momentum of such efforts and is likely to be more impactful. There are many “tried and true” strategies for marketing but the newest one, social media, has already broken the mold. Social media marketing has rapidly grown in prominence and gone from marginal to mainstream in the marketing space. Social media is a


Technical

low-cost channel with a very wide reach into your target market.

Social Media MarketingSocial media essentially has taken traditional word-of-mouth

marketing (historically the norm for accountants) and moved it to a digital space, exponentially increasing opportunities to influence. It is one of the most powerful tools to engage customers and drive revenue growth. But according to Steven D. Strauss, small business expert and author of The Small Business Bible, while small business owners recognise how important social media is to their success, they’re not taking advantage of social media’s full potential. 1 And, chances are, the same applies to SMPs: after all, SMPs are effectively small businesses in the accountancy sector.

Getting started in social media marketing and deciding whether it can benefit your practice can be quite overwhelming — even scary, at first. Here are some steps to take when building a social media presence:

1. Set aside preconceived notions — social media carries risks but the rewards are greater: it will take time and expense to plan and execute but there are many tools, resources, and articles to help.

2. Learn about the what, why, and how — take the time to read and educate yourself about social media, including Twitter (see Twitter’s Small Business Guide), LinkedIn, Facebook, and blogging, and see what your peers are doing.

3. Check out the tools and resources available to help — there is a growing suite of tools, resources, and guidance available, for example, the AICPA PCPS has developed a number of resources, many of which are available for free, including a social media toolkit and articles.

4. Create a strategy and action plan — define goals, decide how you will measure success and allocate responsibility, then start out small by, for example, pilot testing one of the tools. See “10 Questions to Ask When Creating a Social Media Marketing Plan.”

5. Implement the plan — aim to provide content that creates conversation rather than advertises and involve staff from the millennial generation as they often have the most experience.

6. Periodically evaluate, analyse, and update the plan — track your efforts and monitor the return on investment using common metrics including likes, shares, followers, traffic, and conversions.

7. Consider the need for a policy — this can help manage the risks and reap the rewards.

ResourcesIFAC’s website hosts a range of resources and tools to help SMPs

grow their practices. See Resources and Tools in the SMP area of the IFAC website (www.ifac.org/SMP, especially the Guide to Practice Management for Small- and Medium-Sized Practices) and the SMP Committee’s Delicious page, which features bookmarked links to relevant free resources (see especially Practice Management, Module 3).

FOOTNOTE 1. Simonds, Lauren “Business Growth and Social Media,”

Time, June 28, 2013, Web, September 26, 2013.* Culled from the International Federation of Accountants (IFAC).

INSTRUCTIONS TO AUTHORS

Authors wishing to have their articles published in The Nigerian Accountant and ICAN Students’ Journal are advised to adopt the following guidelines:

1. Articles must be well researched on contemporary issues in the field of: Accounting; Audit; Investigations; Forensic Accounting; Taxation and Fiscal Policy Management; Consultancy; Information Communication Technology; Insolvency and Corporate Re-engineering; Public Finance; Corporate Finance; Banking; Insurance; Manufacturing; Capital Market.

Articles from other disciplines e.g. Health/Medicine; Agriculture; Engineering; Education; Religion; Fashion; Construction; Oil and Gas; etc, are welcome.

Opinion articles would also be accommodated.

2. All articles should be typed on standard A4 paper and must not exceed twenty pages in 12-point Time Roman font and double spacing.

3. The title page should include the title and author’s contact information (no other page should include author’s information).

4. The second page should include the title and an abstract of not more than 150 words.

5. The research paper must be properly referenced. The American Psychological Association style should be used in the following format:

a) In-text referencing: Author’s name and year of work e.g. Lucey (1997) or (Lucey, 1997) at the end of sentence. Page numbers must be included for direct quotations e.g. (Lucey, 1997, p.8). b) List of references: Arranged in alphabetical order in

the author-date format, e.g. Book Reference Lucey, T. (1997), Management Information

Systems (8th ed.), London: Letts Educational. Journal Article Reference Wainer, H. (1997), Improving Tabular Displays: With NAEP Tables as Examples and Inspirations, Journal of Educational and Behavioural Statistics, 22, 1-30. Internet Reference Baker, F.M. & May, A.J. (2007), Survey Research in Accounting. Unpublished manuscript retrieved

January, 2008 from http://www.maybaker.org/journals/webref.html.

6. Every page must be numbered.

7. Two Hard copies of the paper should be delivered to the Editor, Corporate Communications & Marketing, The Institute of Chartered Accountants of Nigeria, Plot 16, Idowu Taylor Street, Victoria Island, P.O. Box 1580, Lagos, while the Soft copy saved in Microsoft Word 2007 should be forwarded to [email protected] and

[email protected]


INTRODUCTION

Nigeria operates a federal system of government with three levels of government, viz federal, state and local governments. Each level of government has its own expenditure responsibility and autonomy in the

performance of its constitutionally assigned responsibilities. By the 1999 Constitution of the Federal Republic of Nigeria, all revenue accruing to the federation account are distributed among the federal, states and local governments on such terms and in such manner as prescribed by the National Assembly. Also the states share of the revenue is distributed among the 36 states in the manner prescribed by the National Assembly. The question of an acceptable formula for sharing federally collected revenue among the three tiers of governments has been the most protracted and controversial debate in the political and economic management of the economy. So contentious has this matter been that none of the formulae evolved over the years has gained acceptability among

An Appraisal of the Fiscal Federalism in Nigeria

By UGOCHUKWU C. NZEWI and HOPE N. NZEWI

Given the controversial debate on an acceptable formula for sharing federally collected revenue, the study appraised the formula for sharing the states share of revenue from the Federation account among the individual states in order to determine whether it discriminates against any group of Nigerians. The 27 non-oil producing states of Nigeria were purposely selected for the study. Data on revenue from the Federation account to each state were obtained from the Office of the Accountant General of the Federation. Kruskal-Wallis one way analysis of variance by rank was used to analyse the data. Findings show that there is significant difference in the per capita revenue attracted by individual Nigerians to their respective states. The implication is that the current formula for horizontal distribution of states share of the federation account is not in the spirit of Section 42 of the Nigerian Constitution which prohibits discrimination against any Nigerian. The study recommends that the National Assembly should take note of this finding and possibly review the existing formula for distributions of the states share of the Federation account among the states.

Key Words: Federal Allocation, allocation formula, per capita allocation, State Governments.

the component units of the country (Ikeji, 2011). This is evidenced by the continuous agitation for the review of the allocation formula between the federal government on the one side, and the states and local governments on the other (Okeke et al, 2012). Currently, the applicable formula is: federal government 52.68%, states 26.72% and local governments 20.60% ( Federal Ministry of Finance 2010).

The formula for horizontal distribution of the states and local governments shares among the 36 states and the 774 local governments respectively are hardly contentious. The current formula for sharing the 26.72% share allocated to the states horizontally among the 36 states of the Federation is said to be based on equity principle, even development, national interest, continuity of government service, minimum responsibility of government, financial comparability, primary school enrolment, social factors including national minimum standards, land mass and terrain. The actual allocations are: equality of states 45.23%, population 25.6%, population density 1.45%, internal revenue

Development


generation effort 8.31%, land mass 5.35%, terrain 5.35%, rural road and inland water ways 1.21%, portable water 1.5%, education 3% and healthcare 3%. The horizontal allocation among the local governments follow the same principles in the sharing of the 20.60% share to the 774 local governments (Federal Ministry of Finance, 2010).

As a matter of fact, all federally collected revenue belong to the Nigerian people. These people reside in the various states and local governments. Somehow the impact of the current horizontal allocation formula for the states and local governments on the individual Nigerians has never been seriously questioned or examined.

By the Nigeria Constitution, all citizens are equal in law. The revenue collected by the states and local governments is for the welfare of the Nigerian people. It stands to reason therefore that whatever allocation formula that is adopted should ensure that no group of Nigeria is shortchanged by reason of belonging to a particular state or local government. Perhaps it is for such reason that the 1999 Constitution provided for freedom from discrimination as a fundamental right of all Nigerian citizens. As section 42 of the constitution puts it:

1. A citizen of Nigeria of a particular community, ethnic group, place of origin, sex, religion or political opinion, shall not by reason only that he is such a person (a) be subjected either expressly by or in practical application of any law in force in Nigeria or any executive or administrative action of any government to disabilities or restrictions to which citizens of Nigeria of other communities, ethnic group, place of origin, sex, religion or political opinion are not made subject…

(2) No citizen of Nigeria shall be subjected to any disability or deprivation merely by reason of the circumstances of his birth.

The combined effect of Section 42, sub-sections (1) and (2) is that no Nigerian no matter his state or local government should be discriminated against in the sharing of whatever is communally owned including state and local governments shares of revenue from the Federation account. It can therefore be reasoned that in whatever formula the National Assembly approves for the horizontal distribution of states shares of the federation account to the benefiting states, it should be such that there should be no significant difference in what individual Nigerians attract to their states on a per capita basis, if the fundamental right is to be preserved.

The purpose of this study therefore is to assess the horizontal distribution formula for the state share of revenue from the Federation account among the individual states so as to determine whether it discriminates against Nigerians in any part of the Federation.

LITERATURE REVIEW AND DEVELOPMENT OF HYPOTHESIS

Prior studies on revenue distribution among federal, state and local governments, otherwise viewed as fiscal federalism, present varied perspectives for fiscal relations within a polity (Sharma, 2011; Ozon-Eson, 2005, & Shah, 2001). Ekanade (2011), investigated the historical dynamics that have shaped the

development of fiscal federalism in Nigeria and Canada. He argued that Nigeria’s defective federal structure, military rule, presidential federalism, politicised sharing principles and the parochial political culture have inhibited the efficient and equitable allocation of tax powers and expenditure responsibilities in Nigeria. Ekanade advocated for Canadian federalism as a viable option for renewing autonomy of sub-national units, predominance of civic culture, scientific equalisation and dependence of intergovernmental relations on mutual convenience, rather than on statutes.

Related research by Udoka (2004) focused on governance and fiscal federalism in Nigeria. He submitted that the issue of fiscal federalism has remained a thorny issue on the Nigerian political scene as evident in the number of revenue allocation commissions set up since 1946. He suggested that the Federal Government should be more sincere and honest by adhering strictly to the agreed formular in the disbursement of revenue to the various tiers of government and among the states.

Ikeji (2011) explored the theory and practice of revenue allocation in a federal setting like Nigeria, and averred that given Nigeria’s experience, the degree and form of the diverse nationalities are directly related to the nature and form of federalism in the polity. The study suggested that in real terms, the lingering problem of revenue allocation in Nigeria derives essentially from the distortions inherent particularly in the Nigeria’s Federal system.

In a similar development, Chukwuemeka and Amobi (2011) evaluated fiscal federalism in Nigeria with a view to identifying the problem areas. Using survey research method, their findings revealed that the recommendations proffered by the revenue allocation commissions set up by government did not make much impact on the economy due to imperfection in the 1999 Federal Government Constitution. Findings on insignificant economic impact of fiscal federalism and economic growth were reported by Usman (2011). Employing multiple regression models, his finding indicated that there exists a direct relationship between the revenue allocation formula as proxied by the share of federal, states and local governments from the federation account and economic process in Nigeria.

Another study explored the politics of resource control in Nigeria and attributed the problems of revenue allocation to the changing nature and dynamics of federalism (Bassey & Akpan, 2012). From the comparative analysis of data from other federalism, Bassey and Akpan (2012) concluded that fiscal federalism cannot endure in a mono-cultural economy like Nigeria.

Corroborating the changing nature and dynamic of federalism, Arowolo (2011) investigated the causes of dissatisfaction and violent agitation arising from fiscal federalism and adopted allocation formula. Findings from his descriptive and analytical methods suggested that the centralism, the age-long hegemony of federal government and protracted period of military interregnum contributed to the constant conflicts associated with fiscal federalism in Nigeria.

Cognisance of many theories of fiscal federalism (Arrow, Musgrave & Samuelson in Ozon-Eson, 2005), this study is anchored on the theoretical framework known as theory of public goods (Arrow, Musgrave & Samuelson in Ozo-Eson,2005). The theoretical framework was basically a Keynesian proposition which advocated for dominant role of the state in economic affairs. He identified

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three responsibilities to include:— Roles of government in correcting the various forms of

market failure;— Ensuring an equitable distribution of income; and— Seeking to maintain stability in the macro-economy at full employment and stable prices.

It is true that previous studies have made useful insight to the problems of fiscal federalism in Nigeria. It is also true that those studies have tended to focus on the vexed issue of the division of federally collected revenue among the three tiers of government and the issue of resource control canvassed by the south-south region of Nigeria where crude oil exploration has been going on for the past fifty years or more. Curiously, the issue of equitability in the distribution of the states’ share of federally-collected revenue among the 36 states of the federation appear to be taken for granted. Hence there is hardly any study in that direction.

Given that the primary objective of the government is the welfare of the people and that the Constitution of the Federal Republic of Nigeria prohibits discrimination against any citizen on account of his state of origin, there is thus a justification for an inquiry into the basis for distribution of whatever is due to the states from the federation account among the 36 states of the Federation. The idea is to determine whether Nigerians in any state of the federation are shortchanged. It is true that the existing distribution formula factored in equity principles, even development, continuity of government service and minimum responsibility of government among others, the resultant effect should not be in the spirit of the Nigerian Constitution, if there is significant difference on its effect on the individual Nigerians in the various states of the Federation.

Accordingly the following hypothesis will be tested:Irrespective of the host of factors, factored into

the formula for the distribution of the states share of revenue from the federation account among the state governments, there is no significant difference in the per capita allocation to individual Nigerians in the different states of the federation.

MethodologyDescriptive research design was adopted for this study.

Descriptive design is a non-experimental design that specifies the nature of a given phenomenon (Osuala, 2005). This design is appropriate for this study because we seek to determine whether the revenue allocation formula currently applied in the sharing of the states’ share of revenue from the federation account is fair to all Nigerians irrespective of the states they find themselves.

The population for this study is the 36 states of the Federal Republic of Nigeria. A sample of 27 non-oil producing states was judgmentally used for the study. The justification is that the remaining 9 states constitutionally get more revenue from the federation account because they are entitled to 13% of the oil revenue derived from their states.

Sources of DataData on the revenue accruing to each of the 27 non-oil producing

states from the states share of federation for the period 2000-2010 were obtained from the Office of the Accountant General of the Federation. The data on the population of each state and the growth

rate of population over the study period were obtained from the National Population Bureau. Thus with the annual allocation and population, we computed the per capita allocation for each of the 27 states over the study period.

Data Presentation and AnalysisThe schedule of per capita allocation, total annual allocation

and population of each of the twenty-seven non-oil producing states over the study period is shown as Appendix I.

Kruskal-Wallis one way analysis of variance by rank was used to analyze the data to determine whether there is significant difference in the per-capita allocation for each of the 27 states over the study period. The details are shown as Appendix 2.

Test of HypothesisHo: Irrespective of the host of factors, factored into the formula

for distribution of the state share of revenue from the federation account among the state governments, there is no significant difference in the per-capita allocation to individual Nigerians in the different states of the Federation.

Kruskal-Wallis Test Statistic H = 12 k R2 – 3 (n+1)

n(n+1) i =1 ni

= 12 �297(297+1)� �7,471,204 � – 891

= 121.35

Since there are at least 5 observations in each of K = 27 groups, H may be assumed to be approximately chi-square distributed with 27–1 = 26 degree of freedom under the null hypothesis. For a 5% significance level, the critical chi-square value is 38.88.

Since H = 121.35>38.88, we reject the null hypothesis at 5% level of significance and conclude that there is significance difference in the per-capita allocation to individual Nigerians in the different states of the Federation.

Analysis of Findings and Policy ImplicationsThe hypothesis tested reveals that there is significant difference

in the amount of revenue attracted by individual Nigerians on a per capita basis to their states of residence. This result becomes relevant in view of Section 42 (1) and (2) of the Constitution of Federal Republic of Nigeria which prohibits discrimination against any citizen on account of his place of birth or state of origin. Arguably, no citizen of Nigeria will be comfortable if his counterpart in another state of the Federation attracts more revenue on a per capita basis, to his state of residence. As shown on the table in Appendix 1, the three states whose residents would appear to be most favoured in the per capita allocation are Yobe (N9,925), Kwara (N9,222) and Nassarawa (N8,296). Conversely the most disadvantaged Nigerians in terms of per capita attraction of Federal revenue to their states reside in Kano (N3,232), Kaduna (N3,899) and Katsina (3,962).

The range between the highest and lowest in the average per capita allocation among the states over the eleven year period

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Appendix 1: Schedule of Per Capita Allocation, Total Allocation and Population

of the Twenty Seven Non-Oil Producing States of Nigeria

covered by this study is N6,693. This statistic is quite revealing of the extent of disparity which the current revenue sharing formula has created when it is considered on a per capita basis.

Conclusion It is evident from this study that there is significant difference in

the revenue accruing to the individual states from the Federation account when considered on a per capita basis, implying that individual Nigerians residing in different states of the Federation

do not receive equal treatment. This revelation should call the attention of the National Assembly whose duty it is, to ensure that the spirit of Section 42 of the Constitution is reflected in the practical consequences of any formula they approve for distribution of the states’ share of revenue from the Federation account.

RecommendationsIn the circumstance therefore, this study advocates that in

the spirit of the constitution, it will be necessary for the National

Adamawa Anambra Bauchi Benue Borno Ebonyi Ekiti Enugu Gombe Jigawa Kaduna Kano Katsina2000 Per capita (N) 2563 1922 1816 2185 2282 2882 2772 2165 2780 1914 1755 1270 1745

Allocation (N billion) 6.97 6.92 7.30 7.91 8.10 5.39 5.60 6.02 5.56 7.26 9.18 10.22 8.64Population (Million) 2.72 3.60 4.02 3.62 3.55 1.87 2.02 2.78 2.00 3.74 5.23 8.05 4.95

2001 Per capita (N) 3591 2895 2593 3056 3181 4300 3817 3231 4024 3623 2339 1855 2491Allocation (N billion) 10.02 10.17 10.71 11.37 11.61 8.64 7.94 9.24 8.25 10.29 12.56 15.01 12.68Population (Million) 2.79 3.70 4.13 3.72 3.65 1.92 2.08 2.86 2.05 3.84 5.37 8.27 5.09








2009 Per capita (N) 4797 3545 3824 3905 4383 5832 5353 4407 5742 3888 3141 2566 3168Allocation (N billion) 16.31 16.59 19.08 17.61 19.46 13.53 13.65 15.38 14.47 18.08 20.54 25.74 19.11

Population (Million) 3.40 4.68 4.99 4.51 4.44 2.32 2.55 3.49 2.52 4.65 6.54 10.03 6.192010* Per capita (N) 3341 2467 2689 2743 3066 4076 3750 3113 4027 2532 2205 1803 2174


MEAN N5,982 N4,670 N4,650 N5,103 N5,348 N7,278 N6,697 N5,571 N7,070 N4,881 N3,899 N3,232 N3,962


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Source: Compiled from data obtained from Office of the Accountant General of the Federation and National Population Bureau* The total allocation and per capita for 2010 is based on 6 months data

Assembly to review the current revenue sharing formula. We recommend that population should not be the sole criterion for sharing of federally collected revenue among the states. But whatever other factors that are factored into the formula, it should be such that there should be no significant difference on the allocation to the individual states on a per capita basis.

ReferencesAromolo, D. (2011), “Fiscal Federalism in Nigeria: Theory

and Dimensions,” Afro Asian Journal of Social Science, 2(2). Bassey, C., & Akpan, F. (2012), “The Politics of Resource

Control in Nigeria,” European Journal of Social Sciences, 27(2), 222–232.

Chukwuemeka, E.E.O., & Amobi, D.S.C. (2011), “The Politics of Fiscal Federalism in Nigeria: Diagnosing the Elephantine Problem,” International Journal of Business and Management 6(1). Available at www.ccsenet.org. Accessed on 7th April, 2012.

Ekanade, D.V. (2011), “Fiscal Federalism and Nigeria’s

Adamawa Anambra Bauchi Benue Borno Ebonyi Ekiti Enugu Gombe Jigawa Kaduna Kano Katsina2000 Per capita (N) 2563 1922 1816 2185 2282 2882 2772 2165 2780 1914 1755 1270 1745










2009 Per capita (N) 4797 3545 3824 3905 4383 5832 5353 4407 5742 3888 3141 2566 3168Allocation (N billion) 16.31 16.59 19.08 17.61 19.46 13.53 13.65 15.38 14.47 18.08 20.54 25.74 19.11

Population (Million) 3.40 4.68 4.99 4.51 4.44 2.32 2.55 3.49 2.52 4.65 6.54 10.03 6.192010* Per capita (N) 3341 2467 2689 2743 3066 4076 3750 3113 4027 2532 2205 1803 2174


MEAN N5,982 N4,670 N4,650 N5,103 N5,348 N7,278 N6,697 N5,571 N7,070 N4,881 N3,899 N3,232 N3,962


Appendix 1 Continued: Schedule of Per Capita Allocation, Total Allocation and Population

of the Twenty Seven Non-Oil Producing States of NigeriaKebbi Kogi Kwara Lagos Nassarawa Niger Ogun Osun Oyo Plateau Sokoto Taraba Yobe Zamfara

2000 3230 2393 3207 1622 3525 2326 2254 2272 1730 2401 3146 3275 3165 22196.59 6.70 6.44 12.52 5.64 7.91 7.19 6.68 8.32 6.33 6.89 6.55 6.33 6.192.04 2.80 2.01 7.72 1.60 3.40 3.19 2.94 4.01 2.72 2.19 2.00 2.00 2.78

2001 4552 3465 4309 2291 4957 3140 3055 2272 2385 3780 4824 1524 4688 31999.56 9.98 8.92 18.17 8.13 10.96 10.02 9.21 11.78 9.43 9.73 9.32 9.61 9.152.10 2.88 2.07 7.93 1.64 3.49 3.28 3.02 4.94 2.79 2.25 2.06 2.05 2.86

2002 4967 3730 4521 2395 5298 3296 3211 3200 2541 3608 3177 4829 5095 344910.48 11.04 9.63 19.52 8.90 11.80 10.82 9.92 12.88 10.32 10.61 10.14 10.70 10.142.11 2.96 2.13 8.15 1.68 3.58 3.37 3.10 5.07 2.86 3.34 2.10 2.10 2.94

2003 5306 3967 4804 2660 5657 3512 3410 3412 2690 3833 3376 5202 5428 266911.46 12.06 10.52 22.24 9.73 12.89 11.80 10.85 13.99 11.27 11.58 11.08 11.67 11.082.16 3.04 2.19 8.36 1.72 3.67 3.46 3.18 5.20 2.94 3.43 2.13 2.15 3.02

2004 8577 6208 7742 4237 9290 3512 5381 5534 4289 6288 5665 8493 8380 607419.04 19.37 17.42 36.35 16.35 21.77 19.10 18.04 22.86 18.99 19.94 18.60 18.52 18.832.22 3.12 2.25 8.58 1.76 3.77 3.55 3.26 5.33 3.02 3.52 2.19 2.21 3.10

2005 10053 7184 9065 4926 10840 6824 6275 6500 5002 7416 6759 9982 9612 177622.92 22.99 20.94 43.35 19.73 26.34 22.84 21.71 27.33 22.99 24.40 22.46 21.82 22.822.28 3.20 2.31 8.80 1.82 3.86 3.64 3.34 5.46 3.10 3.61 2.25 2.27 3.18

2006 11615 8372 10481 5917 12575 7916 7209 7529 5764 6835 7786 11604 11159 821927.18 27.46 24.84 53.31 23.39 31.27 26.89 25.75 32.22 27.46 28.81 26.69 25.89 27.042.34 3.28 2.37 9.01 1.86 3.95 3.73 3.42 5.59 3.18 3.70 2.30 2.32 3.20

2007 12808 9193 11421 6969 13863 8651 7209 8283 6336 9414 8591 12723 12244 908030.61 30.89 27.75 64.25 26.34 34.95 30.21 28.99 36.24 30.69 32.56 29.10 29.14 30.332.39 3.36 2.43 9.22 1.90 4.04 3.82 3.50 5.72 3.26 3.79 2.35 2.38 3.34

2008 16718 11849 14418 9189 18051 11014 10307 10265 8254 11502 11012 16539 16274 1177440.96 40.76 35.90 84.74 35.20 45.60 40.30 36.75 48.37 38.42 42.93 39.86 39.71 40.272.45 3.44 2.49 9.44 1.95 4.14 3.91 3.58 5.86 3.34 3.88 2.41 2.44 3.42

2009 6594 4672 5870 2416 7055 8039 4043 4139 3181 4689 4290 6571 6418 459216.42 16.40 14.91 23.27 14.04 19.05 16.13 15.11 19.02 15.99 16.99 16.10 15.98 16.032.49 3.51 2.54 9.63 1.99 4.22 3.99 3.65 5.98 3.41 3.96 2.45 2.49 3.49

2010 4629 3226 4421 1607 5153 2893 3106 3005 2187 3236 3010 4620 4500 321911.76 11.55 11.45 15.78 10.46 12.44 12.64 11.18 13.34 11.26 12.16 11.55 11.43 11.462.54 3.58 2.59 9.82 2.03 4.30 4.07 3.72 6.10 3.48 4.04 2.50 2.54 3.56

MEAN N8,095 N5,841 N9,222 N4,168 N8,296 N5,556 N5,042 N5,128 N4,032 N5,727 N5,603 N7,760 N9,925 N5,115

Development: Comparative Perspectives from Canadian Fiscal Federalism,” Journal of Global Initiatives: Policy, Pedagogy Perspective. Available at http://www.digital.commons.kennesaw.edu. Accessed on 1st April, 2012.

Federal Ministry of Finance (2010), A Compendium of Federation Account Revenue Allocation, Federal, States and Local Governments, Office of the Accountant General.

Ikeji, C.C. (2011), “Federalism and Revenue Allocation in Nigeria: Theory, Practice and Dynamics,” African Journal of

Social Sciences 1(2), pp95-109.Ikeji, C.C. (2011), Politics of Revenue Allocation in Nigeria:

A Reconsideration of Contending Issues, Sacha Journal of Policy and Strategic Studies 1 (1).

Okeke, M.I., Nzewi, U.C., & Nnamani, D.O. (2012), “The Onus of Fiscal Federalism: Challenges and Issues in the Nigerian 1999 Constitution,” National Journal of Banking and Finance 1(3).

Osuala, E.C. (2005), Introduction to Research Methodology, Onitsha: Africana-First Publishers.

Development


Source: Compiled from data obtained from Office of the Accountant General of the Federation and National Population Bureau* The total allocation and per capita for 2010 is based on 6 months data

Kebbi Kogi Kwara Lagos Nassarawa Niger Ogun Osun Oyo Plateau Sokoto Taraba Yobe Zamfara2000 3230 2393 3207 1622 3525 2326 2254 2272 1730 2401 3146 3275 3165 2219

6.59 6.70 6.44 12.52 5.64 7.91 7.19 6.68 8.32 6.33 6.89 6.55 6.33 6.192.04 2.80 2.01 7.72 1.60 3.40 3.19 2.94 4.01 2.72 2.19 2.00 2.00 2.78

2001 4552 3465 4309 2291 4957 3140 3055 2272 2385 3780 4824 1524 4688 31999.56 9.98 8.92 18.17 8.13 10.96 10.02 9.21 11.78 9.43 9.73 9.32 9.61 9.152.10 2.88 2.07 7.93 1.64 3.49 3.28 3.02 4.94 2.79 2.25 2.06 2.05 2.86

2002 4967 3730 4521 2395 5298 3296 3211 3200 2541 3608 3177 4829 5095 344910.48 11.04 9.63 19.52 8.90 11.80 10.82 9.92 12.88 10.32 10.61 10.14 10.70 10.142.11 2.96 2.13 8.15 1.68 3.58 3.37 3.10 5.07 2.86 3.34 2.10 2.10 2.94

2003 5306 3967 4804 2660 5657 3512 3410 3412 2690 3833 3376 5202 5428 266911.46 12.06 10.52 22.24 9.73 12.89 11.80 10.85 13.99 11.27 11.58 11.08 11.67 11.082.16 3.04 2.19 8.36 1.72 3.67 3.46 3.18 5.20 2.94 3.43 2.13 2.15 3.02

2004 8577 6208 7742 4237 9290 3512 5381 5534 4289 6288 5665 8493 8380 607419.04 19.37 17.42 36.35 16.35 21.77 19.10 18.04 22.86 18.99 19.94 18.60 18.52 18.832.22 3.12 2.25 8.58 1.76 3.77 3.55 3.26 5.33 3.02 3.52 2.19 2.21 3.10

2005 10053 7184 9065 4926 10840 6824 6275 6500 5002 7416 6759 9982 9612 177622.92 22.99 20.94 43.35 19.73 26.34 22.84 21.71 27.33 22.99 24.40 22.46 21.82 22.822.28 3.20 2.31 8.80 1.82 3.86 3.64 3.34 5.46 3.10 3.61 2.25 2.27 3.18

2006 11615 8372 10481 5917 12575 7916 7209 7529 5764 6835 7786 11604 11159 821927.18 27.46 24.84 53.31 23.39 31.27 26.89 25.75 32.22 27.46 28.81 26.69 25.89 27.042.34 3.28 2.37 9.01 1.86 3.95 3.73 3.42 5.59 3.18 3.70 2.30 2.32 3.20

2007 12808 9193 11421 6969 13863 8651 7209 8283 6336 9414 8591 12723 12244 908030.61 30.89 27.75 64.25 26.34 34.95 30.21 28.99 36.24 30.69 32.56 29.10 29.14 30.332.39 3.36 2.43 9.22 1.90 4.04 3.82 3.50 5.72 3.26 3.79 2.35 2.38 3.34

2008 16718 11849 14418 9189 18051 11014 10307 10265 8254 11502 11012 16539 16274 1177440.96 40.76 35.90 84.74 35.20 45.60 40.30 36.75 48.37 38.42 42.93 39.86 39.71 40.272.45 3.44 2.49 9.44 1.95 4.14 3.91 3.58 5.86 3.34 3.88 2.41 2.44 3.42

2009 6594 4672 5870 2416 7055 8039 4043 4139 3181 4689 4290 6571 6418 459216.42 16.40 14.91 23.27 14.04 19.05 16.13 15.11 19.02 15.99 16.99 16.10 15.98 16.032.49 3.51 2.54 9.63 1.99 4.22 3.99 3.65 5.98 3.41 3.96 2.45 2.49 3.49

2010 4629 3226 4421 1607 5153 2893 3106 3005 2187 3236 3010 4620 4500 321911.76 11.55 11.45 15.78 10.46 12.44 12.64 11.18 13.34 11.26 12.16 11.55 11.43 11.462.54 3.58 2.59 9.82 2.03 4.30 4.07 3.72 6.10 3.48 4.04 2.50 2.54 3.56

MEAN N8,095 N5,841 N9,222 N4,168 N8,296 N5,556 N5,042 N5,128 N4,032 N5,727 N5,603 N7,760 N9,925 N5,115

Ozon-Eson, P. (2005), “Fiscal Federalism: Theory, Issues and Perspectives." Available at http://www.dawodu.com.

Shah, A. (2001), Ed. The Practice of Fiscal Federalism: Comparative Perspectives, London: McGill-Queen’s University press. Available at http:public oxford journals.org.

Sharma, C.K. (2011), “Beyond Gaps and Imbalances: Restructuring the Debate on Intergovernmental Fiscal Relations,” Public Administration, 89(1D). Available at http://onlinelibrary.wiley.com. Accessed on 15th April, 2012.

Udoka, N.I. (2004), “Governance and Fiscal Federalism in Nigeria,” Global Journal of Social Sciences. 3(1), pp29-36.

Usman, D. (2011), “Fiscal Federalism and Economic Growth Process in Nigeria," European Journal of Business and Management 3(4). Available at http://www.iiste.org. Accessed on 8th April, 2012.

* Dr. Ugochukwu C. Nzewi and Dr. Hope N. Nzewi are Lecturers in the Accounting Department of Nnamdi Azikiwe University, Awka, Anambra State.

Development


Adamawa Anambra Bauchi Benue Borno Ebonyi Ekiti Enugu Gombe Jigawa Kaduna Kano Katsina

2000 40 12 10 17 24 56 50 15 51 13 7 1 6

2001 103 59 42 64 76 138.5 111 84 119 106 27 11 36

2002 114 54 52 86 92 158 121 101 133 53 34 14 29

2003 57.5 70 55 96 104 168 131 109 137 62 43 48 39

2004 198 116 154 171 165 233 214 186 221 162 26.5 89 125

2005 222 182 181 189 201 253 242 210 245 188 26.5 116 153

2006 247 204 203 212 224 268 259 231 263 209 178 142 177

2007 255 218 217 227 237 283.5 267 246 274 223 190 159 192

2008 286 254 257 269 273 283.5 291 272 293 258 230 202 232

2009 149 102 112 117 134 183 170 135 179 115 69 41 73

2010 90 35 46 49 65 123 108 67 120 37 19 9 16

R1=1,761.5 R2=1,306 R3=1,329 R4=1,497 R5=1,595 R6=2,147.5 R7=1,964 R8=1,656 R9=2,035 R10=1,426 R11=850 R12=830 R13=1,078

Kebbi Kogi Kwara Lagos Nassarawa Niger Ogun Osun Oyo Plateau Sokoto Taraba Yobe Zamfara

2000 83 30 79 4 100 26 21 22 5 32 71 87 72 20

2001 141 97 132 25 156 68 63 23 28 110 151 2 147 77

2002 157 107 140 31 167 88 80 78 38 105 74 152 163 95

2003 169 118 150 44 175 98.5 93 94 47 113 91 166 173 45

2004 241 191 225 128 252 98.5 172 174 129 194 176 240 239 187

2005 261 213 248 155 266 206 193 197 160 219 205 260 256 8

2006 279 238 265 185 288 228 215.5 220 180 207 226 278 275 234

2007 290 251 277 208 292 244 215.5 236 195 253 243 289 287 249

2008 296 280 285 250 297 271 264 262 235 281 270 295 294 282

2009 200 146 184 33 211 229 122 124 75.5 148 130 199 196 143

2010 145 82 136 3 164 57.5 66 60 18 85 61 144 138.5 81

R14=2,262 R15=1,753 R16=2,121 R17=1,066 R18=3,069 R19=1,614 R20=1,505 R21=1,490 R22=1,110.5 R23=1,747 R24=1,698 R25=2,112 R26=2,204.5 R27=1,421

Appendix 2:Ranks of Per Capita Federal Revenue Allocation to the

Twenty-Seven Non-Oil Producing States of Nigeria

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36


Adamawa Anambra Bauchi Benue Borno Ebonyi Ekiti Enugu Gombe Jigawa Kaduna Kano Katsina

2000 40 12 10 17 24 56 50 15 51 13 7 1 6

2001 103 59 42 64 76 138.5 111 84 119 106 27 11 36

2002 114 54 52 86 92 158 121 101 133 53 34 14 29

2003 57.5 70 55 96 104 168 131 109 137 62 43 48 39

2004 198 116 154 171 165 233 214 186 221 162 26.5 89 125

2005 222 182 181 189 201 253 242 210 245 188 26.5 116 153

2006 247 204 203 212 224 268 259 231 263 209 178 142 177

2007 255 218 217 227 237 283.5 267 246 274 223 190 159 192

2008 286 254 257 269 273 283.5 291 272 293 258 230 202 232

2009 149 102 112 117 134 183 170 135 179 115 69 41 73

2010 90 35 46 49 65 123 108 67 120 37 19 9 16

R1=1,761.5 R2=1,306 R3=1,329 R4=1,497 R5=1,595 R6=2,147.5 R7=1,964 R8=1,656 R9=2,035 R10=1,426 R11=850 R12=830 R13=1,078

Kebbi Kogi Kwara Lagos Nassarawa Niger Ogun Osun Oyo Plateau Sokoto Taraba Yobe Zamfara

2000 83 30 79 4 100 26 21 22 5 32 71 87 72 20

2001 141 97 132 25 156 68 63 23 28 110 151 2 147 77

2002 157 107 140 31 167 88 80 78 38 105 74 152 163 95

2003 169 118 150 44 175 98.5 93 94 47 113 91 166 173 45

2004 241 191 225 128 252 98.5 172 174 129 194 176 240 239 187

2005 261 213 248 155 266 206 193 197 160 219 205 260 256 8

2006 279 238 265 185 288 228 215.5 220 180 207 226 278 275 234

2007 290 251 277 208 292 244 215.5 236 195 253 243 289 287 249

2008 296 280 285 250 297 271 264 262 235 281 270 295 294 282

2009 200 146 184 33 211 229 122 124 75.5 148 130 199 196 143

2010 145 82 136 3 164 57.5 66 60 18 85 61 144 138.5 81

R14=2,262 R15=1,753 R16=2,121 R17=1,066 R18=3,069 R19=1,614 R20=1,505 R21=1,490 R22=1,110.5 R23=1,747 R24=1,698 R25=2,112 R26=2,204.5 R27=1,421

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Globalisation is not a new phenomenon but what is new is both its velocity and how it affects small- and medium-sized entities (SMEs). The impact on SMEs

has significant implications for the accounting practices, in particular small- and medium-sized practices (SMPs), that typically serve SMEs. According to the Edinburgh Group (EG)’s recently published report, Growing the Global Economy through SMEs, SMPs may need to carefully critique the services they provide to SMEs seeking to internationalise. As a starting point, the report suggests specific actions for SMPs that include developing more understanding and expertise internally, strengthening relationships with funding institutions, and building international networks of trusted professional and business contacts. SMPs have the potential to become a key agent for the internationalisation of small business if they are able to provide SMEs with the advice they need.

Globalisation of SMEsSMEs are a vital and integral part of the global economy.

According to the OECD, they account for the majority of private sector employment and GDP as well as a disproportionately large share of new jobs; they are a major source of entrepreneurship and innovation. These SMEs are increasingly becoming part of the global business community. Dramatic changes in communications, transportation, and information technology have accelerated the pace of globalisation. SMEs now regularly manufacture products and provide services in many countries and sell to customers and clients around the world — just as large multinational companies have been doing for many years.

The EG report reveals a significant amount of international activity among the SME sector. Almost 75% of the SMPs it surveyed have clients that have some sort of international aspect to their business, even if it is simply buying goods or services from abroad.

Role of SMPsWhile globalisation presents great opportunities for SMEs

— not least new markets for their goods and services — it also poses great challenges. Perhaps the greatest challenge SMEs face is the lack of human capital, including managerial expertise, and financial resources to take advantage of these opportunities. IFAC research indicates that SMEs will likely look to SMPs, their trusted business advisors, to fill the resource gap. The EG report, however, suggests that SMPs themselves must ready themselves to capitalise on the opportunities created by the internationalisation of small business.

Recommendations for SMPs from the EG Report The EG report (page 5) makes the following recommendations

for SMPs:1. Provide more proactive support to SMEs in their

planning for internationalisation, including support in identifying the most attractive, fast-growing international markets.

2. Develop knowledge and information resources to guide SMEs through the red tape challenge associated with international activity, and to help them access all appropriate sources of funding.

3. Build relationships with banks and other key financiers of international investment and trade, to facilitate introductions between these funding sources and SME clients.

4. Identify where SMEs are dealing in foreign currency and seek opportunities to provide value-adding advice in areas such as managing foreign exchange risks and forecasting currency needs.

5. Co n s i d e r wh e t h e r a d d i t i o n a l n e t w o rk i n g opportunities exist to build relationships with other professionals or to help connect SME clients with each other to create mutually supportive environments and information channels.

6. Assess how the proactive delivery of services targeted at SMEs with international ambitions could help to grow practice income, as well as strengthening client relationships and the firm’s wider reputation.

7. Consider whether developing the international resources available to the practice — for example, by participating in an international network of accountancy firms or building more direct close relationships with firms in other countries — could benefit the firm itself, and its SME clients.

SMEs are increasingly being integrated into the global business community. However, in order for SMEs to maximise the opportunities from internationalising their business, they need timely advice. SMPs are well placed to provide this counsel.

ResourcesIFAC’s website hosts a range of resources and tools to help SMPs

implement these recommendations. These resources and tools help SMPs enhance their practice management and build their capacity to offer business advisory services. See Resources and Tools in the SMP area of the IFAC website (www.ifac.org/SMP) and the SMP Committee’s Delicious page, which features bookmarked links to relevant free resources (filter by Practice Management [especially Module 2 on networks] and Business Advisory).

* Culled from the International Federation of Accountants (IFAC)

Seven Tips for Accountants on Supporting the Globalisation of Small Business

Technical


INTRODUCTION

The theme of this workshop, Enhancing Economic Growth through Anti-Corruption measures is an acknowledgment of the role of corruption in the retardation in the Socio-Economic development of the Nigerian Nation over the years.

Since Nigeria attained independence in 1960, corruption has remained the bane of our society. It has continued to grow in sophistication and diversification with the attendant negative impact on the Country’s developmental efforts. It has resulted in stunted growth and enormous decay in public infrastructure, the Social Fabric of Society and the general quality of life of the average Nigerian.

The World Bank defined corruption as involving:“……behaviour on the part of officials in the Public and

Private Sectors, in which they improperly and unlawfully enrich themselves and/or those close to them, or induce others to do so, by misusing the position in which they are placed.” 1

A former Accountant-General of the Federation, Kayode Naiyeju aptly captured the negative effects of corruption on development when he stated thus:

“There is no gainsaying that corruption is the number one enemy of development and progress of any Nation. As a cankerworm when it eats into the fabric of any society, it retards both social and economic development and distorts political programmers.” 2

In the year 1999, a United Kingdom-based non-Governmental Organisation, Jubilee 2000 Coalition has alleged that about $55 Billion corruptly acquired by some Nigeria rulers, their agents and some government officials were lodged in various Banks in the United Kingdom. 3 Some may disagree with the total figure,

The ICPC, EFCC, Money Laundering, Code of Conduct Bureau, Fiscal Responsibility and Public Procurement Acts: An Overview

By TAIWO OSIPITAN

but the fact remains that several billions of dollars and pounds are involved!

Currently, there is an on-going investigation by the National Assembly regarding about 16 billion Dollars allegedly spent by the Obasanjo Administration on the Power Sector with no visible results on ground. It would indeed be a tragedy of enormous proportions if those funds are found to have been misappropriated under the watch of the Retired General whose Administration launched a massive anti-corruption war upon his assumption of Office in 1999 starting with the passing into Law of the Corrupt Practices and other Relates Offences Act 2000.

That move which came quite early in the life of the Administration gave quiet a number of people in Nigeria and beyond genuine hope that the Cancer of corruption had found its nemesis in the Retired General, who as far back as 1994 had made the following profound pronouncements on the Prevalence of Corruption in Africa.

“The average African is not by nature more corrupt then than European or anyone else from any part of the world. But others have institutions, laws conventions and practices, which effectively discourage and punish Corrupters and Corruptees. Effective Sanctions, moral, social and legal are an essential part of the antidote against corruption, human rights abuse and all form of Anti-democratic tendencies.” 4

It is against the foregoing background that the promulgation of the various Anti-Corruption Statutes such as the ICPC Act, The EFCC Act, The money Laundering (Prohibition) Act, the Code of Conduct Bureau Act, the Fiscal Responsibility Act and the Public Procurement Act should be viewed as a modest attempt at institutions capacity building in the War against corruption with the objective of enhancing economic growth of our Nation. These statutes should be embraced as right steps in the right direction.

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The scope of this paper requires us to embark on “an overview of the ICPC Act, The EFCC Act, The Money Laundering (Prohibition) Act, the Code of Conduct Bureau Act, the Fiscal Responsibility Act and the Public Procurement Act”.

In order to completely capture the Legal framework for fighting corruption in Nigeria, the Paper commences with a consideration of the provisions of the 1999 constitution. Other relevant anti-corruption statutes are thereafter examined.

THE 1999 CONSTITUTION(1) The Constitution of the Federal Republic of Nigeria 1999

contains provisions aimed at outlawing corrupt practices, ensuring transparency and accountability among Public Office holders.

(i) LEGISLATIVE POWER OF INVESTIGATIONThe Constitution gives the National and State Assemblies the

Power to conduct investigation into the conduct of affairs of any person, authority, Ministry or Government department charged with the duty of executing or administering laws or disbursing monies appropriated by any of the Legislative houses. 5

The power is exercisable for the purpose inter-alia, of“Exposing corruption, inefficiency or waste in the execution

or administration of laws within its legislative competence and in the disbursement or administration of funds appropriate by it”.It is noteworthy that it was in pursuance of the above

investigative power that the Senate set up the Idris Kuta Panel to investigate allegations of misappropriation of funds, leveled against a former Senate President. It was also exercise of that power that the House of Representatives investigated spending in the power Sector by the Obasanjo Administration and other similar investigations relating to the NNPC, NITEL and Steel Rolling Mills.

The Legislature, as empowered by the Constitution can also utilize its power of appropriating monies to the Executive as a veritable tool for the control of reckless spending or corrupt practices by the Executive arm of Government if the will exist amongst its members. 5

Indeed a duty is imposed by the Constitution on various arms and tiers of Government to take decisive actions against corruption. Accordingly, section 15(5) of the 1999 Constitution mandates that “the State shall abolish all corrupt practices and abuse of power.”

(ii) AUDIT OF PUBLIC FUNDSThe Auditor-General has a role to play in preventing and

detecting the looting of Public Funds through periodic auditing of Public Accounts and making such Reports available to the National Assembly. 6 The Auditor-General is expected to be independent in the discharge of this Assignment. Regrettably, neither the Accounts of the Executive arm of Government nor that of the National Assembly has been audited since the inception, to the end of the Obasanjo Administration. The same is also through of the 1st term of the Yar'Adua/Goodluck Administration.

A few States managed to publish a one or two-page summary of their Audited Accounts periodically. However, most commentators doubt the credibility of such published Accounts dismissing most of them as mere publicity stunts!

The solution to the problem lies in an amendment to the Constitution by providing for sanctions against any Auditor-General

who fails or willfully refuses to comply with the Constitutional provision.

It has in fact been suggested that the Auditor-General's Report should be made available to the public, as is the case in South Africa. 7

The advantage of making the Report of the Auditor-General public is that same would be available for public scrutiny and challenge and would certainly reduce corrupt practices on the part of concerned public office holders.

(iii) CODE OF CONDUCTThe Code of Conduct for Public Officers is to be found in Part

1, Paragraphs 1-13 of the 5th Schedule to the 1999 Constitution. The Code of Conduct Tribunal which is also established under the Constitution is vested with the Power to try and Punish Public Officers who violate the provisions of the Code of Conduct. The punishments include vacation of Office, seizure and forfeiture of assets. In view of the fact the provisions of the Constitution are all contained in the Code of Conduct Bureau and Tribunal Act, CAP C15 Laws of the Federation 2004 we shall centre the discussion on the provisions of the Act.

THE CODE OF CONDUCT BUREAU AND TRIBUNAL ACT 2004The Act establishes the Code of Conduct Bureau and the Code

of Conduct Tribunal. The aims and objectives as stated in Section 2 are:

“To establish and maintain a high standard of morality in the conduct of government business and to ensure that the actions and behaviour of public officers conform to the highest standards of public morality and accountability.”

The Act prohibits among others Conflict of Personal interest of public officers with official duties (S.5); operation of foreign accounts (S.7); Request for or acceptance of any property or benefits by public officers for himself or any other person on account of anything done or omitted to be done by him in the discharge of his duties (S.10); The offer to a public officer of any property gift or benefit of any kind as inducement or bribe for the granting of any favour or the discharge in his favour of the public officer’s duty.

DECLARATION OF ASSETS(1) By Section 15 of the Act every public officer shall within 15

months after the coming into force of the Act or immediately after taking office and thereafter:

(a) At the end of every four years;(b) At the end of his term of office; and (c) In the case of a serving officer, within 30 days of the receipt of the form of the Bureau or at such intervals as the Bureau may specify submit a written declaration in the form prescribed of all his properties, assets and liabilities and those of his spouse or unmarried children under the age of 21 years.(2) Any statement in any declaration that is found to be false

by any authority or person authorised in that behalf to verify it, shall be deemed to be a breach of the Act.

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(3) Any property or assets acquired by a public officer after any declaration required by subsection (1) of this Section and which is not fairly attributable to income, gifts or loan approved by this Act, shall be deemed to have been acquired in breach of the Act unless the contrary is proved.

Section 16: Any complaint that a Public Officer has committed a breach of or has not complied with the provisions of this Act shall be made to the Bureau.

Section 17: A Public Officer who does any act prohibited by this Act through a nominee, trustee or other agent shall be deemed ipso facto to have committed a breach of the Act.

Section 20 of the Act establishes the Code of Conduct Tribunal which vested with the power to try and punish public officers who violate the provisions of the Act.

Section 21 prescribes the punishments to be imposed by the Tribunal where it finds a public officer guilty of contravening any of its provisions. The punishments which the Tribunal may impose shall include:

(a) Vacation of office or any elective or nominated office, as the case may be;(b) Disqualification from holding any public office (whether elective or not) for a period of not exceeding ten years; and(c) Seizure and forfeiture to the State of any property acquired in abuse or corruption of office.It is noteworthy, that the punishments mentioned above are

without prejudice to the penalties that may be imposed by any law where the breach of conduct is also a criminal offence under the Criminal code or any other enactment.

The Code of Conduct scheme with its reliance on assets declaration by public officers has largely been ineffective as a result of the non-publication of such declarations for the benefit of members of the public.

Apart from the fact that the assets declarations are capable of being abused by public officers, who will inflate their assets in anticipation of future corrupt acquisitions, the non-publication of declaration has made it impossible for Complaints to be lodged against under/false declaration of assets by public officers. After all, members of the public cannot be expected to complain about the unknown.

It is therefore suggested, that for the Law to achieve the intended aims and objectives, it should be amended to provide that, Asset declaration Forms returned by public officers should be made public through widely circulated Newspapers and Official Gazettes as well as the Official Website of the Code of Conduct Bureau.

CORRUPT PRACTICES AND OTHER RELATED OFFENCES ACT, 2004The Corrupt Practices and other Related Offences Act 2004 (the

ICPC Act) more commonly known as the Anti-Corruption Act, 2004 was enacted against the backdrop of the need of decisively fight corruption in Nigeria. The Act establishes an Independent Corrupt Practices and other Related Offences Commission.

By virtue of Section 3 (2), the Commission shall be a body corporate with perpetual succession with power to sue and be sued in its Corporate name.

DUTIES OF THE COMMISSION:The duties of the commission are spelt out under Section 10 of

the Act. By that provision, it shall be the duty of the Commission:(a) Where reasonable grounds exist for suspecting that any

person has conspired to commit or has attempted to commit or has committed an offence under this Act, or any other law prohibiting corruption, to receive and investigate any report of the conspiracy to commit, attempt to commit or the Commission of such offence, and in appropriate cases make its recommendation or otherwise to the office of the Attorney-General of the Federation or of the State to prosecute the offenders;

(b) To examine the practices, systems and procedures of Public bodies and where, in the opinion of the commission, such practices, systems or procedures aids facilitates fraud or corruption, to direct and supervise a review of them;

(c) To instruct advice and assist any officer, agency or parastatal on ways by which fraud or corruption may be eliminated or minimised by such officer, agency or parastatal;

(d) To advice heads of public bodies of any changes in practices, systems or procedures compatible with the effective discharge of the duties of the public bodies as the Commission thinks fit to reduce the likelihood or incidence of bribery, corruption and related offences;

(e) To educate the public on and against bribery, corruption and related offences; and

(f) To enlist and foster public support in combating corruption.

It is clear from the foregoing that quite apart from its power to apply the “big stick” of prosecution, the Commission is charged with other non-prosecutorial functions.

The scope of offences under the Act is evidently wide. The relevant provisions to bear in mind are sections 12-29 of Act. The offences include accepting gratification, giving or accepting gratification through agents, making corrupt offers to public Officers, making of corrupt demand, counseling of offences relating to corruption, fraudulent acquisition of property, fraudulent receipt of property, deliberate frustration of investigation by the Commission, making false statement or return, gratification by and through agent. Bribery of Public Officer using agents, failure to report bribery transactions, dealing with property acquired through gratification, making of statement which is false or intended to mislead are some of the offences created by the Act.

The Act addresses problems of offerees of gratification. It is an offence for a public officer to demand or receive gratification on account of the performance of his official duties. Similarly, it is an offence for a private person or Organisation to offer gratification to a public officer in order to sway such officer in the performance of his duty. Both offences attract seven (7) years imprisonment. Under section 26 of the Act, a duty is imposed on any public officer to whom gratification has been offered or who has received gratification to immediately report the offer or gift to the nearest officer of the Commission or Police Officer. Similarly, any person from whom gratification has been demanded has a duty to report to the nearest Officer of the Commission or Police Officer. Failure to comply with the above provision of the Act, shall upon conviction, be punishable with a fine not exceeding One Hundred Thousand Naira or imprisonment for a term not exceeding two years or to both fine and imprisonment.

Other offences under the Act, include demanding or accepting

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gratification through agents, counseling of offences relating to corruption, fraudulent acquisition or receiving or property, corruptly giving or conferring benefits, as well as public officer using his position or office for gratification. Section 41 of the Act empowers the Court to order the forfeiture of any property, which is the subject matter of the offence or used in the Commission of the offence, in cases where the offences are proved against the accused is the owner of the property a forfeiture order can still be made by the court provided the Court is satisfied that no other person is entitled to the property as a purchaser in good faith for valuable consideration.

The Anti-Corruption Law also contains provisions on Evidence and procedure. These include power of the Anti-Corruption Commission to seize and retain custody of any moveable or immoveable Property, which evidences commission of the offence.

Under Section 41 of the Act, where an allegation of corruption or anything purporting to contravene the Act is made against the President or Vice President or against the Governor or Deputy Governor, the Chief Justice of the Federation shall, if satisfied, that sufficient cause has been shown, upon an application on notice, supported by an Affidavits setting out the facts on which the allegation is based, authorise an Independent Counsel (who shall be a Legal Practitioner of not less than fifteen years standing) to investigate the allegation and report the findings to the National Assembly, in the case of the President or Vice President or to the relevant State House of Assembly in the case or the State Governor or Deputy Governor.”

My worry about the above provision is not because it fails to allow the prosecution of the above key actors in our democratic set up. Indeed, it is futile to attempt to prosecute them for corruption whilst in office. Section 308 of the 1999 Constitution, which remains the grundnorm, provides effective shield against their prosecution whilst in office. Any attempt by the Act, to prosecute these office holders will result in the Act being declared null and void to the extent to its in constituency with the constitution. My worry is that the Act fails to direct the National Assembly or the State House of Assembly on what to do with the Report of the Independent counsel should these Legislative Houses merely receive the Report and do nothing about the findings there in.

I sincerely believe that a President or Vice President or Governor or Deputy-Governor who is indicted by the Independent Counsel should be proceeded against, by the Legislative Houses through the impeachment procedure. This obviously must have been the rationale for the provision in the Act.

Some of the provisions of the Act extend to private individuals. It is for instance possible under Section 13-28 to prosecute individuals and private entities for corrupt practices in some situations. This is a welcome development. But there is need to ensure uniform applications of the Act to the Private and Public Sectors. The impression created by the Act is that corruption is the exclusive preserve of the Public Sector. This is a wrong impression. Corruption blossoms both in Public and Private Sectors. Why limit the sanctions to Public Officers who receive bribes and exclude non-Public Officers who also receive bribes?

A point ignored by the makers of the Law is that a Private Company or individual who offers bribe to a non-Public Officer is bound to pass the cost to Consumers. In the case of Private Companies, bribes paid out will definitely diminish the profitability

of the business and the return on investments of Shareholders. It is unthinkable that we can effectively tackle corruption by merely focusing on Public Sector probity and ignoring the Private Sector. We cannot because the cancer in the private sector will eventually affect the public sector. Both public and private sectors must be cleansed of corruption.

THE ECONOMIC AND FINANCIAL CRIMES COMMISSION During the immediate post-Independence era in Nigeria and

until the late 90’s the responsibility for combating economic crimes rested squarely on the shoulders of the Nigeria Police Force.

A marked increase in the dimension and sophistication of economic crimes in the 90’s with the attendant negative publicity for the country around the world saw to the emergence of the Economic and Financial Crimes Commission (EFCC) in the year 2002, vide an Act of the National Assembly. The Act was subsequently repealed and re-enacted in the year 2004 as the Economic and Financial Crimes Commission (Establishment) Act, 2004.

Section 1 of the Act established the Commission as a body corporate headed by an Executive Chairman, with perpetual succession and a Common Seal capable of suing and being sued in its Corporate name. It is designated as the Financial Intelligence Unit (FIU) in Nigeria, charged with the responsibility of coordinating the various institutions in the fight against money laundering and enforcement of all laws dealing with economic and financial crimes in Nigeria.

FUNCTIONS OF THE EFCCThe Act setting up the EFCC has vested in the Commission a level

of power which has never been accorded a single institution in the history of Nigeria. Unfortunately, the vast majority of Nigerians are yet to come to terms with the enormity of those powers. Hence, the constant criticisms of the Commission by members of the public for “exceeding its mandate.” Admittedly, there have been numerous cases of overzealousness, misuse of power and even unnecessary arbitrary use of power by functionaries of the Commission in the recent past, which generated some bad publicity for the Commission.

By section 6 of the EFCC Act, the Commission shall be responsible for:

(a) The enforcement and the due administration of the provision of this Act;

(b) The investigation of all financial crimes including advance fee fraud, money laundering, counterfeiting, illegal charge transfers, futures market fraud, fraudulent encashment or negotiable instruments, computer credit card fraud, contract scam, etc;

(c) The co-ordination and enforcement of all economic and financial crimes laws and enforcement functions conferred on any other person or authority;

(d) The adoption of measures to identify, trace, freeze confiscate or seize proceeds derived from terrorist activities, economic and financial crime related offences or the properties the value of which corresponds to such proceeds;

(e) The adoption of measures to eradicate the Commission of economic and financial crimes;

(f) The adoption of measures which includes coordinated,

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preventive and regulatory actions, introduction and maintenance of investigative and control techniques on the prevention of economic and financial related crimes;

(g) The facilitation of rapid exchange of scientific and technical information and the conduct of joint operations geared towards the eradication of economic and financial crimes;

(h) The examination and investigation of all reported cases of economic and financial crimes with a view to identifying individuals, corporate bodies or groups involved;

(i) The determination of the extent of financial loss and such other losses by government, private individuals or organisations;

(j) Collaborating with government bodies both within and outside the Nigeria carrying on functions wholly or in part analogous with those of the Commission concerning:

(i) The identification, determination of the whereabouts and activities of persons suspected of being involved in economic and financial crimes.

(ii) The movement of proceeds or properties derived from the commissions of economic and financial and other related crimes.

(iii) The exchange of personnel or other experts.(iv) The establishment and maintenance of a system

for monitoring international economic and financial crimes in order to identify suspicious transactions and persons involved.

(v) Maintaining data, statistics, records and reports on persons, organisations, proceeds, properties, documents or other items or assets involved in economic and financial crimes.

(vi) Under taking research and similar works with a view to determining the manifestation, extent, magnitude and effects of economic and financial crimes and advising government on appropriate intervention measures for combating same;

(k) Dealing with matters connected with extradition, deportation and mutual legal or other assistance between Nigeria and any other country involving economic and financial crimes;

(l) The collation of all report relating to suspicious financial transactions analyses and disseminate to all relevant government agencies;

(m) Taking charge of supervising, controlling, coordinating all the responsibilities, functions and activities relating to the current investigation and prosecution of all offences connected with or relating to economic and financial crimes;

(n) The coordination of all existing, economic and financial crimes investigation units in Nigeria;

(o) Maintaining a liaison with the office of the Attorney-General of the Federation, the Nigerian Customs Service; the Immigration and Prison Service Board, the Central Bank of Nigeria, the Nigerian Deposit Insurance Corporation, the National Drug Law Enforcement Agency, all government security and law enforcement agencies and such other financial supervisory institutions involved in the eradication of economic and financial crimes;

(p) Carrying out and sustaining rigorous public enlightenment campaign against economic and financial crimes within and outside Nigeria; and

(q) Carrying out such other activities as are necessary or expedient for the full discharge of all or any of the functions conferred on it under this Act.

SPECIAL POWERS OF THE COMMISSION UNDER SECTION 7(1) OF THE ACTThe commission is empowered under section 7 (1) of the Act, to:(a) Cause investigations to be conducted as to whether any

person, corporate body or organisation has committed an offence under this Act or other law relating to economic and financial crimes;

(b) Cause investigations to be conducted into the properties of any person if it appears to the Commissions that the person’s life style and extent of the properties are not justified by his source of income.

(a) SECTION 7(2)In addition to the powers conferred on the Commission by this

Act, the Commissions shall be the coordinating agency for the enforcement of the provisions of:

(a) The money Laundering Act 2004; 2003 No. 7. 1995 No. 13;(b) The Advance Fee Fraud and Other Related Offences Act

1995;(c) The Failed Banks (Recovery of Debts) and Financial

Malpractices in Banks Act, as amended;(d) The Banks and Other Financial Institutions Act 1991, as

amended;(e) Miscellaneous offences Act; and(f) Any other law or regulation relating to economic and

financial crimes, including the Criminal code and Penal Code.

(b) ESTABLISHMENT OF SPECIAL UNITSSection 12 establishes the following units for the Commissions:— The General and Assets Investigation Unit.— The Legal and Prosecution Unit.— The Research Unit.— The Training Unit.

(c) OFFENCESThe relevant provisions of the Act with regard to offences are

to be found under Sections 14-18 of the Act. Such offences include:S.14 Offences relating to financial malpractices whereby any

person who being an officer of a Bank or other financial institution who fails or neglect to secure compliance with the provisions of the Act or fails or neglects to secure the authenticity of any statement submitted pursuant to the provisions of the Act commits an offence and is liable on conviction to imprisonment for a term not exceeding five years or to a fine of Fifty Thousand Naira or to both such imprisonment and fine.

S. 15 Offences relating to terrorism under which any person found guilty of financing, facilitating, committing or attempts to commit a terrorist act is liable to imprisonment for life.

S. 16 Offences relating to public offices, under this provision any public officer who, in the discharge of his duty under the Act presents to another public officer who is to take a decision thereon, false information, commits an offence and is liable on conviction to imprisonment for a term not less than 2 years and not exceeding 3 years – S.(16) (1).

Section 17 RETENTION OF PROCEEDS OF A CRIMINAL CONDUCT:The Section prescribes a prison term of not less than 3 years

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or a fine equivalent to 100 percent of the proceeds of the criminal conduct or to both for any person who whether by concealment, removal from jurisdiction transfer to nominees or otherwise retains the control of the proceeds of a criminal conduct or an illegal act. Ditto for anyone who knows that any property in whole or in part directly or indirectly represents other person’s proceeds of a criminal conduct, acquires or uses that property or has possession of it.

S. 18 deals with offences in relation to economic and financial crimes and penalties. Any person who without lawful authority:

(a) Engages in the acquisition, possession or use of property knowing at the time of its acquisition, possession or use that such property was derived from any offence referred to in this Section; or

(b) Engages in the management, organisation or financing of any or the offences under the Act; or

(c) Engages in the conversion or transfer of property knowing that such property is derived from any offence under the Act; or

(d) Engages in the conversion or disguise of the true nature, source, location, disposition movement, rights with respect to or ownership of property knowing that such property is derived from any offence under the Section commits an offence and is liable on conviction to imprisonment for a term not less than 2 years and not exceeding 3 years.

SECTION 19 JURISDICTIONS TO TRY OFFENCESThe Federal High Court or High Court of a State or the Federal

Capital Territory has jurisdiction to try any offence under the Act.

Presumption against accused person SECTION 19 (5) In any trial for an offence under the Act, the fact that an

accused person is in possession of pecuniary resources or property for which he cannot satisfactorily account and which is disproportionate to his known sources of income, or that he had at or about the time of the alleged offence obtained an accretion to his pecuniary resources or property for which he cannot satisfactorily account, may be proved and taken into consideration by the Court as corroborating the testimony of any witness in the trial.

SECTION 26 FORFEITURE OF ASSETS OF PERSONS ARRESTED FOR OFFENCES UNDER THE ACT26(1) Where a person is arrested for an offence under this Act,

the Commission shall immediately trace and attach all the assets and properties of the person acquired as a result of such illegal act and shall cause to be obtained an interim attachment order by the Court.

SECTION 27 DISCLOSURE OF ASSETS AND PROPERTIES OF AN ARRESTED PERSON(1) Where a person is arrested for committing an offence

under the Act, it shall be obligatory for such person to make a full disclosure of all his assets and properties by completing the Declaration of Assets Form as specified in FORM A of the Schedule to as Act.

(2) The Declaration of Assets Form shall be forwarded to

the Commission for full investigation by the General and Assets Investigating Unit of the Commission.

(3) Any person who (a) Knowingly fails to make full disclosure of his assets and liabilities or makes a false declaration knowingly, or fails to answer any question or fails, neglects or refused to make a Declaration Form commits an offence and is liable to conviction to imprisonment for a term of 10 years.

SECTION 20 FORFEITURE AFTER CONVICTION IN CERTAIN CASES (1) A person convicted of an offence under this Act shall forfeit

to the Federal Government:(a) All the assets and properties which may be or are the

subject of an interim order of the Court after an attachment by the Commission under Section 26 of the Act.

SECTION 25 relates to the Power of the Commission to seize property incidental to an arrest or search.

S. 21 FORFEITURE PROPERTYSection 21 of the Act provides that without any further

assurance than the Act, all the properties of a person convicted of an offence under the Act and shown to be derived or acquired from such illegal act and already the subject of an interim order shall be forfeited to the Federal Government. The same fate awaits any foreign assets held by the convict, subject to any treaty or arrangement with such foreign country.

SECTION 23 FORFEITURE OF PASSPORTThe passport of any person convicted of an offence under this

Act shall be forfeited to the Federal Government and shall not be returned to that person until he has served any sentence imposed or until the grant of pardon under the prerogative of mercy exercisable by the President under the constitution. Other provision relating to forfeiture and disposal of properties of convicted persons are to be found under Section 23, 24, 25, 28, 29 and 31 of the Act.

SECTION 34 FREEZING ORDER ON BANKS OR OTHER FINANCIAL INSTITUTIONS The Chairman of the Commission could, if satisfied that the

money in the account of an arrested person is made through the commission of an offence under the Act apply to the Federal High Court ex-parte, for an order freezing the Account and any other order directing the Bank or other financial institution to supply an information and produce books and documents relating to the account.

POWER TO COMPOUND OFFENCESSECTON 14 (2) Under this provision subject to the power of

the Attorney General of the Federation under Section 174 of the 1999 constitution to institute, continue or discontinue criminal proceedings against any person in any Court of Law, the EFCC may compound any offence punishable under this Act by accepting such sums of money as it thinks fit, not exceeding the amount of the maximum fine to which that person would have been liable if he had been convicted of that offence.

The power to compound offences in return for looted funds

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conferred on the EFCC under Section 14 (2) has drawn sharp criticisms from a broad segment of the Nigerian population who detest the fact that “High profile” criminals are being handled with kid gloves because of their stature in society. Some see the exercise of that discretion in favour of some former public officers as double standards. They argue that while a petty thief gets jailed, a high profile public servant who misappropriates billions of naira of public funds is merely made to pay over the money into the Treasury and remain “free.” Such criticisms however ignore the fact that penal systems the world over have since shifted focus from retribution to restitution and rehabilitation. This paradigm shift is essential because the recovered loot goes back into the public Treasury to be used for the public good. If this provision is not provided for the recovery of the Abacha loot and the Alamieyesigha loots could have been difficulty if not impossible. We however acknowledge that the system is not perfect. There has also been the needless controversy over the power of the Attorney-General of the Federation to initiate or take-over prosecution of offences from the EFCC.

SECTION 14 (2) of the Act acknowledges the overriding powers of the Attorney-General of the Federation as conferred by Section 174 of the constitution to institute, continue or discontinue criminal proceedings against any person, subject only to the primacy of “the public interest, the interest of justice and the need to prevent abuse of legal process”.

The provision of the Constitution is superior to that of any other law. What Nigerians should be more concerned about is to ensure that no Attorney-General exercises that power arbitrarily or against the public interest. With the EFCC Act, Nigeria has an effective tool in the fight against all forms of corruption. What is required now is the zeal, the will of effectively bringing the full weight of the law to bear on the perpetrators to corruption and all forms of economic crimes.

(iv) MONEY LAUNDERING (PROHIBITION) ACT 2011The money Laundering Act is a product of International co-

operation. In 1993 the United Nations, had through the United Nations Drug Control Programme, produced a model law in money laundering. The key features of the model law include provisions aimed at preventing money laundering. The key features of the model law include provisions aimed at preventing money laundering, the investigation/detection of money launderer and sanction for money laundering activities. It suffices to acknowledge, that our money laundering Act No. 3 of 1995, subsequently replaced by the money laundering (prohibition) Act 2004, and now replaced by the Money Laundering (Prohibition) Act, 2011 is based on the United Nations Model law. From the view point prevention and detection of money laundering, the Act imposes obligations on Banks, Financial Institutions, Bureau de change, Casinos and commercial institutions.

Under Section 1 of the Act, no person or body corporate shall make or accept cash payment of a sum exceeding N5,000,000 or its equivalent in the case of an individual or N10,000.000 or its equivalent in the case of a body corporate except in a transaction through a financial institution. The above provision is motivated by the need to prevent the laundering of cash through purchases of luxury goods, cars buildings, etc. it is hoped that the provision will help in stemming the tide of cash movements in the payment

for goods and services. Under Section 2, it is mandatory for every transfer of funds or securities to or from foreign country to be reported to the Central bank of Nigeria and Securities and Exchange Commission if the amount is greater than $10,000.00 or its equivalent. Such report must include an indication of the nature of the transfer, the amount of transfer the name and address of the sender and the name and address of the receiver and must be done within 7 days. Failure to abide by this will attract on conviction a fine not less than N250,000 (Two Hundred and Fifty Thousand Naira) for an individual and not more than N1,000,000 (One Million Naira) for a body corporate, for each day that the contravention continues unabated. Section 3 requires a financial institution and designated non-financial institution (dealers in cars, Jewellery, luxury goods, chartered accountants, audit firms, tax consultants, clearing and settlement companies, lawyers, hotels, supermarket and casinos and such other businesses that may be so designated) to identify his customer through a know-your-customer-test (KYC) and record every transaction involving a sum in excess of $1,000 or its equivalent. When such transaction is suspected to be a proceed of crime and the transaction is less than $1,000, the customer must also be identified through KYC.

Section 4 imposes duties on operators of Casinos to verify the identity of a gambler who buys, brings into or exchanges clips or tokens by requesting the gambler to present authentic documents bearing his names and addresses. Such operator, shall also record all transactions indicating the nature and amount involved in each transaction and each gamblers surname, forenames and address, such record must be preserved for at least 5 years.

Section 5, 6 and 7 deal with the requirement of identification of customers. A financial and designated non-financial institution is obliged to verify its customer’s identity before opening an account for, issuing a passbook to, entering into a fiduciary transaction with, renting a safe deposit to or establishing any other business relationship with the customer. In case of an individual, the verification involves production of original official document bearing his names and identity, address and originals of receipt issued within three previous months by public utilities. In case of corporate bodies, the prescribed means of identification are the original certificates of incorporation.

Under section 5 (1) where a financial institution suspects that the amount involved in a transaction relates to the laundering of drug money, it shall require identification of a customer even where the amount involved in the transaction is less than $1,000.

Under Section 7 and 8, a financial institution is obliged to preserve and keep at the disposal of the Economic and Financial Crimes Commission, the National Drug Law Enforcement Agency, Central Bank of Nigeria, Judicial Authorities, Customs Officers and such other relevant bodies designated by Central Bank of Nigeria the record of customers' identification for a period of at least five years after the closure of accounts or the severance of relations with the customers.

S.11 (1) prohibits the opening and or maintaining of numbered or anonymous accounts by any person, financial institution or corporate body. Any individual or financial institution or corporate body that contravenes the above prohibition commits an offence and is liable on conviction to a term of imprisonment of not less than two years but not more than five years in the case of an individual offender. Corporate and financial institution

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contraveners of the above prohibition are liable if convicted to a fine of not less than N10million, and not more than N50million, for each offence committed.

In order to identify narcotic drugs and psychotropic substances, proceeds, property objects and other things related to the commission of an offence, Section 13 empowers the regulatory authorities and anti-corruption bodies to place any bank account or comparable to a bank account under surveillance, or tap any telephone line, have access to any computer system and obtain communication or any authentic instrument or private contract together with all bank financial and commercial records. S.13 (4) banking secrecy or confidentiality shall not be used to preclude the operation of this section.

The Act prescribes offences of principal offenders, those aiding the commission of offences and others parties to offences. Accordingly, a person who converts or transfer resources or property derived from illicit traffic in narcotic drugs or psychotropic substances in order to conceal or disguise the origin of the resources or collaborates in concealing or disguising the nature, origin, location, movement of the resources, property or rights thereto, is liable on conviction to not less than 5 years or not more than 10 years imprisonment. Section 15 outlines the different offences which Directors and employees of financial institutions are capable of committing. Thus an employee or Director of a financial institution who warns or in any other way intimates the owner of the funds involved in transaction referred to in Section 10 about the report he is required to make or the action he has taken or destroys or removes a register or record required to be kept under the Act commits an offence and is liable on conviction to a term between 5 and 10 years imprisonment. The same punishment will be imposed on a Director or employee who fails to make necessary report under the Act. A jail term of between 5 and 10 years awaits any persons who carries out or attempt under false identity to carry out any of the transactions specified in Section 15 of the Act. In addition to any sentence or fine that may be imposed on a convicted person under Section, the affected employee or Director may be further banned indefinitely or for a period of 5 years from exercising the profession which provided the opportunity for the offence to be committed.

Under Section 16, it is an offence to conspire with or aid, abet or counsel any person to commit an offence under the Act. It is also an offence to attempt to commit or to be an accessory after the fact of an act. The punishment in any of the above situation is not less than 5 years imprisonment. The obstruction of NDLEA or any authorised officer of NDLEA in the exercise of the powers conferred on the Agency under the Act is also an offence. Section 20 stipulates imprisonment for a term between 2 and3 years for a person convicted of the offence. Where the offence is committed by a financial institution, the punishment is a fine of N1million.

(v) THE FISCAL RESPONSIBILITY ACT 2007The objective of the Act is to ensure prudent management of

the nation’s resources. The Act provides for prudent management of the Nation’s Resources, ensure Long- Term Macro-Economic stability of the National Economy, secure greater accountability and transparency in Fiscal operations within the Medium Term Fiscal Policy Framework. It also provides for the establishment of the Fiscal Responsibility Commission to ensure the promotion

and enforcement of the Nation’s Economic objectives; and for related matters. The Act establishes a body known as the Fiscal Responsibility Commission. The Commission has the power to compel any person to disclose information relating to public revenues and expenditure and cause an investigation into whether any person has violated any provisions of the Act. If the Commission is satisfied that such a person has committed any punishable offence under the Act, or violated any provisions of the Act, the Commission shall forward a report of the investigation to the Attorney-General of the Federation for the possible prosecution.

The functions of the Commission are stated in section 3. It provides that the Commission shall:

a. Monitor and enforce the provisions of this Act and by so doing, promote the economic objectives contained in section 16 of the Constitution;

b. Disseminate such standard practices including international good practice that will result in greater efficiency in the allocation and management of public expenditure, revenue collection, debt control and transparency in fiscal matters;

c. Undertake fiscal and financial studies, analysis and diagnosis and disseminate the result to the general public; Make rules for carrying out its functions under the Act; and perform any other function consistent with the promotion of the objectives of this Act.

S.7 consists of the powers of the Commission. It provides as follows that the Commission shall have power to:

1) Formulate and provide general policy guideline for the discharge of the functions of the Commission;

2) Superintend the implementation of the policies of the Commission;

3) Appoint for the Commission, such numbers of employees as may in the opinion of the Commission be expedient and necessary for the proper and efficient performance of the functions of the Commission;

4) Determine the terms and conditions of service in the Commission, including disciplinary measures for the employees of the Commission;

5) Fix the remuneration, allowances and benefits of the employees of the Commission as approved by the Salaries and Wages Commission;

6) Do other things, which in its opinion are necessary to ensure the efficient performance of the functions of the Commission; and

7) Regulate its proceeding and make standing orders with respect to the holding of its meetings, notices to be given, the keeping of minutes of its proceedings and such other matters as the Commission may, from time to time determine.

Section 11 provides that the Federal Government after consultation with the states shall prepare and place before the National Assembly Medium Term Expenditure framework for the next three financial years and thereafter every next three financial years. Included in the framework is a Macro-Economic Framework setting out the macroeconomic projections; the financial objectives; the policies of the Federal Government for the medium term relating to taxation, recurrent (non-debt) expenditure debt expenditure, capital expenditure, borrowings and other liabilities, lending and investment; the strategic economic, social and developmental

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priorities of the Federal Government; for the next three financial years and how they are to be realised. The framework is required to be approved by a resolution of each House of the National Assembly.

S.13, the Minister is responsible for presentation of the Medium Term Expenditure Framework. The Minister may consult widely in preparing the framework. Section 14 provides that the presentation of Medium Term Expenditure Framework to Federal Executive Council for consideration and endorsement before the end of the second quarter of each financial year. The Medium Term Expenditure Framework as approved by the National Assembly shall be published in the Gazette.

S.18 states that the Medium Term Expenditure Framework shall be the basis for the preparation of the estimates of revenue and expenditure required to be prepared and laid before the National Assembly under section 81 (1) of Constitution.

S.21 requires that budgetary planning of corporations and other related agencies be submitted, not later than 6 months from the commencement of the Act and every three financial years thereafter and not later than the end of the second quarter of every year, to the Minister as well as estimates of revenue and expenditure for the next three financial years. This is required to form part of the Appropriation Bill to be submitted to the National Assembly.

S.22 provides that operating surplus and general reserve fund must be paid into the Consolidate Revenue Fund of the Federal Government not later than one month following the statutory deadline for publishing each corporation’s accounts.

S.26 requires that the Minister shall within 30 days of the enactment of the Appropriation Act, prepare and publish a disbursement Schedule derived from the Annual Cash Plan for the purpose of implementing the Appropriation Act. S. 30 mandates the Minister to monitor and report on implementation.

S.41 provides the framework for debt management and requires that government at all tiers shall only borrow for capital expenditure and human development, provided that, such borrowing shall be on concessional terms with low interest rate and with a reasonable long amortisation period subject to the approval of the appropriate legislative body and shall ensure that the level of public debt is held at a sustainable level as prescribed by National Assembly on the advice of the Minister.

S.42 sets limits on consolidated debt of Federal, State and Local Governments. The President is required within 90 days from the commencement of this Act and with advice from the Minister of Finance, subject to approval of National Assembly, set overall limits for the amounts of consolidated debt of the Federal, State Governments pursuant to the provisions of items 7 and 50 of Part I of the Second Schedule of the constitution and the limits and conditions approved by the National Assembly, shall be consistent with the rules set in this Act and with the fiscal policy objectives in the Medium Term Fiscal Framework.

S.44 requires that any Government in the Federation or its agencies and corporations desirous of borrowing shall, specify the purpose for which the borrowing is intended and present a cost-benefit analysis, detailing the economic and social benefits of the purpose to which the intended borrowing is to be applied.

Most importantly, S.51 provides for the enforcement of the Act:A person shall have legal capacity to enforce the provision

of this Act by obtaining prerogative orders or other remedies at the Federal High Court, without having to show any special particular interest.This Act generally enthrones transparency and accountability

in government spending.

(vi) THE PUBLIC PROCUREMENT ACT 2007This Act establishes the National Council on Public Procurement

and the Bureau of Public Procurement as the regulatory authorities responsible for the monitoring and oversight of public procurement, harmonising the existing government policies and practices by regulating, setting standards and developing the legal framework and professional capacity for public procurement in Nigeria.

S. 2 provides that the Council shall among other duties consider, approve and amend the monetary and prior review thresholds for the application of the provisions of the Act by procuring entities and consider and approve policies on public procurement.

Under S.4, the objectives of the Bureau includes the harmonisation of existing government policies and practices on public procurement and ensuring probity, accountability and transparency in the procurement process; the establishment of pricing standards and benchmarks; ensuring the application of fair, competitive, transparent. value for money standards and practices for the procurement and disposal of public assets and services; and the attainment of transparency, competitiveness, cost effectiveness and professionalism in the public sector procurement system.

S. 5 gives the Bureau the power to do everything incidental to achieving the stated objectives including formulation of procurement policies, educating the public, monitor the prices of tendered items and keep a national database of standard prices; publish the details of major contracts in the procurement journal; publish paper and electronic editions of the procurement journal and maintain an archival system for the procurement journal; maintain a national database of the particulars and classification and categorisation of federal contractors and service providers; collate and maintain in an archival system, all federal procurement plans and information; undertake procurement research and surveys: organise training and development programmes for procurement professionals; periodically review the socio-economic effect of the policies on procurement and advise the Council accordingly; prepare and update standard bidding and contract documents; prevent fraudulent and unfair procurement and where necessary apply administrative sanctions; review the procurement and award of contract procedures of every entity to which this Act applies; perform procurement audits and submit such report to the National Assembly bi-annually; introduce, develop, update and maintain related database and technology;

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establish a single internet portal that shall, subject to Section 16 (21) to this Act serve as a primary and definitive source of all information on government procurement containing and displaying all public sector procurement information at all times; and co-ordinate relevant training programs to build institutional capacity.

S.6 empowers the Bureau to enforce the monetary and prior review thresholds set by the Council and issue certificate of “No Objection for Contract Award” within the prior review threshold for all procurements within the purview of the Act. The Bureau is to always keep relevant MDAs informed of the procedures pre- requisite of the issuance of no objection certificate.

S.15 defines the scope of the Act to include application to all procurement of goods, works, and services carried out by FGN and all procuring entities; including all entities that derive at least 35% of the funds of procurement from the Federation share of Consolidated Revenue Fund. The Act also applies to the procurement involving National defense or National security unless the President’s express approval has been first sought and obtained.

S.16 prescribes the fundamental principles of procurement. All procurement falling within the threshold must be backed by budgetary appropriations and no procurement proceedings shall be formalised until the procuring entity has ensured that funds are available to meet the obligations and a No Objection Certificate obtained from the Bureau. The No Objection Certificate can only be obtained by operating an open transparent and competitive bidding. All bidders must possess professional and technical expertise, tax payment must be up to date, and the directors must not have a criminal record, etc.

S.18 and 19 state the procurement procedure planning and implementation procedure. This include preparing the needs assessment and evaluation identifying the goods, works or services required, analysing the cost implications of the proposed procurement; must obtain the best price possible and integrate its procurement expenditure into its yearly budget, advertise and solicit for bids in adherence to the Act and guidelines as may be issued by the Bureau from time to time; invite two credible persons as observers in every procurement process, one person each representing a recognised: (i) private sector professional organisation whose expertise is relevant to the particular goods or service being procured; and (ii) non-governmental organisation working in transparency, accountability and anti-corruption areas; (iii) obtain approval of the approving authority before making an award.

S.24 provides that all procurements of goods and works by all procuring entities shall be conducted by open competitive bidding, including offering to every interested bidder equal simultaneous information and opportunity to offer the goods and works needed. Invitation for bids must be widely published.

S.30 and 31: All bids must be submitted before the deadline or date specified in the tender documents or extension allowed.

Attendees are to be permitted to examine the envelopes to ascertain that the bids have not been tampered with and all the bids to be opened in public, in the presence of the bidders or their representatives and any interested member of the public. All bids shall be first examined to determine if they meet the minimum eligibility requirements stipulated in the bidding documents.

A procuring entity may ask a supplier or a contractor for clarification of its bid submission in order to assist in the examination, evaluation and comparison of bids.

S.32 (1) and (2): For the evaluation and comparison of bids that have been adjudged as valid for the purposes of evaluation, no other method or criteria shall be used except those stipulated in the solicitation documents. The objective of bid evaluation shall be to determine and select the lowest evaluated responsive bid from bidders that have responded to the bid solicitation.

S.33 (1) and (2), the successful bid shall be that submitted by the lowest cost bidder from the bidders responsive as to the bid solicitation. However, the selected bidder needs not be the lowest cost bidder provided the procuring entity can show good grounds derived from the provisions of this Act to that effect.

S.34 generally permit domestic preferences in favour of local suppliers and manufacturers but this must be clearly indicated. Margins of preference shall apply only to tenders under international competitive bidding S.34 (3).

S.35 states that mobilisation fee of not more than 15% may be paid to a supplier or contractor, supported by an unconditional bank guarantee acceptable to the procuring entity. Thereafter, no further payment shall be made to the supplier or contractor without an interim performance certificate issued in accordance with the contract agreement.

By S.40, a procuring authority may rely on restricted tendering where the time and cost of evaluating a large number of bids is disproportionate to the value of goods to be procured.

S.43 provides that a procuring entity may carry out an

emergency procurement where the country is either seriously threatened by or actually confronted with a disaster, catastrophe, war, insurrection or Act of God; the condition or quality of goods, equipment, building or publicly owned capital goods may seriously deteriorate unless action is urgently and necessarily taken to maintain them in their actual value or usefulness; or a public project may be seriously delayed for want of an item of a minor value. In an emergency situation, a procuring entity may engage in direct contracting of goods, works and services. This may be handled with expedition but along principles of accountability, due consideration being given to the gravity of each emergency. Immediately after the cessation of the situation warranting any emergency procurement, the procuring entity shall file a detailed report with the Bureau which shall verify same and if appropriate issue a Certificate of ‘No Objection’.

Part VIII deals with the procurement of the services of consultants. S.44 requires that such need must be advertised in

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at least 2 newspapers and procurement journals except where the value of services to be provided are less than a million naira then invitation may be made to between 3 and 10 consultants. This part includes other provisions that is capable of ensuring honesty and transparency in respect of service rendering.

S.53 gives the Bureau the power to review and recommend for investigation by any relevant authority any matter related to the conduct of procurement proceedings by a procuring entity, or the conclusion or operation of a procurement contract if it considers that a criminal investigation is necessary or desirable to prevent or detect a contravention of the Act.

S.54 provides that a bidder may seek administrative review for any omission or breach by a procuring or disposing entity under the provisions of the Act, or any regulations or guidelines made under the Act or the provisions of the bidding documents.

S.55 and S.66, the open competitive bidding is the primary source of receiving offers for any public property offered for sale. Valuation report must be prepared in respect of such property and must be independently valued by a relevant and competent professional.

S.58 (1) provides that any natural person not being a public officer who contravenes any provision of the Act commits an offence and is liable on conviction to a term of imprisonment not less than 5 calendar years but not exceeding 10 calendar years without an option.

CONCLUSION It is a fact that unlike the period before the years 2000, Nigeria

can now boast of very potent Anti-Corrupt and Anti-Money Laundering statues. Credit must go to the Obasanjo Administration and the National Assembly for those achievements. Whether that Administration fought the war against corruption creditably is an entirely different matter.

The ICPC Act, the EFCC Act, the Money Laundering Act, the Code of Conduct Bureau Act, the Fiscal Responsibility Act and the Public Procurement Act focus more on public sector probity. They ignore the fact that both the public and private sectors belong to the integral society. They ignore the fact that the attitude/habit of one sector will definitely affect the other sector. It is futile to clean up one sector without doing the same for the other sector. The unclean sector will definitely contaminate the clean sector. We cannot draw an effective line between private and public sectors. The Anti-Corruption Act must therefore extend to all persons whether in private or public sectors. It must cover all persons whether of high, medium or low status.

The ten lettered word “corruption” raises legal, sociological and other non-legal problems. It is futile to think that the Anti- Corruption Law alone is capable of effectively tackling the corruption in our society. Poverty, greed, untamed capitalism and decay in societal values are some of the identified factors, which foster the growth of corruption.

The point, which I am trying to convey is that we cannot battle corruption solely and exclusively through law. Our socio-economic problems must be seriously addressed. Jobs for the unemployed,

adequate remuneration for the employed, socio-economic arrangements for the old, sick, jobless and homeless are some of the key issues to be addressed. Above all, we must shun those who acquires wealth using their offices. We should publicly appreciate, reward and honor hones and incorruptible persons. Religious and moral instructions in primary and secondary schools throughout the Federation must be encouraged. There is the assurance that moral instructions will be inculcated into our children in whom the future of the nation will be entrusted.

The ideals behind the promulgation of the money Laundering Act are evidently laudable. However, in order to succeed in the battle against the Laundering of drug money, there is the need for co-operation, understanding and protection of the financial community.

We must also acknowledge the achievements recorded by the Economic and Financial Crimes Commission from its inception, we have seen some high profile convictions.

However, a lot more work needs to be done. The EFCC with its enormous powers to even intervene in the work of other under-achieving Anti-Corruption Agencies has all it takes, in terms of Legislative empowerment, to change the face of the fight against corruption in Nigeria. EFCC should also change its image as an agency that is being used to fight the real and imaginary enemies of Mr. President and the presidency.

What is required is the honesty of purpose and patriotism on the part of the Leadership of the Agency, total support from Government by way of resource empowerment and non-interference with investigations and prosecutions. To complement the efforts of the Anti-Corruption Agencies, there must be an additional change in Nigerians who presently tend to hero-worship persons who possess wealth, no matter how dubiously acquired.

We must shun those who acquire wealth using their offices as they are the source of desperate poverty in the Land, decay in infrastructure, joblessness, hunger, ill-health and economic backwardness that has turned Nigerians into Economic refugees all over the world. We must also publicly appreciate, reward, honour, honest and incorruptible individuals for their steadfastness, courage and optimism that with all hands on deck, we can fix Nigeria. That to my mind is our surest path to Economic growth and national redemption.

FOOTNOTES1 htt://www.adb.org/Documents/policies/Anti-Corruption

300. 2 The Guardian Newspaper, April 21, 2002, P.1. 3 Daily Times, November 2, 1999, P. 1-2.4 “Corruption, Democracy and Human Rights in East and

Central Africa” (African Leadership Forum 1994, P. 56).5 Sections 88 (2) (b) and 128(2) (b) of the 1999 Constitution.6 Section 85 (2) (4) of the 1999 Constitution. Section 125

relates to Auditor-General of a State.7 Owasanoye, B. “Transparency, Accountability and Good

Governance under the 1999 Constitution in Nigeria” – Issues in the 1999 Constitution – NIALS 2000 – P. 243.

* Professor Taiwo Osipitan, SAN, presented this paper at the workshop on enhancing economic growth through anti-corruption measures organised recently by ICAN in Lokoja.

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