Submit audited financial statements or risk penalty, FRC warns govt entities

The Financial Reporting Council of Nigeria (FRC) has warned government entities that are yet to file their audited financial statements to do so as the Council had begun imposing fines and penalties in line with the provisions of the FRC Act and its extant rules .

The executive secretary of the FRC, Shuaibu Ahmed,  at the opening session of a national learning and development programme on accounting and financial reporting in the public sector said, so far , a total of 115 Public Sector Entities comprising of government parastatals, agencies, and business entities have filed their annual financial statements between the end of 2020 and October this year .

He lamented that based on the review of these audited financial statements filed with the FRC, financial reporting in the public sector is fraught with challenges and issues to which the learning programme is designed to address.

He said, “Our various engagements with the National Assembly further expose the lingering issues of late submission of financial reports by MDAs, lack of proper treatments of accounting issues, poor disclosures.

“Public Sector Entities play a pivotal role in the national economy as a major driver of productive activities and the largest single business entity.

“As a bedrock of the economy, the importance of financial reporting quality in the national economy cannot be over emphasized.

“Credible financial reports are no doubt germane as they not only support efficient decision making by those charged with governance, but also boost the perception index of the country and by extension, enhancing Foreign Direct Investments (FDIs) and Foreign Portfolio Investments (FPIs) as veritable tools and catalysts for the nation’s economic growth.”

He stated that public sector entities are expected to provide financial information that are not only timely, but are accurate and useful to evaluating government performance as a bastion of public accountability and stewardship.

He called on the National Assembly to make it a rule that the budget proposals of Public Sector Entities in default of filling their AFS of the previous year should not be considered and approved for the coming year.

“A situation where critical institutions of Government, some of them apex regulatory bodies, are 2 to 3 years behind in releasing their audited financial statements should not and will no longer be tolerated going forward.

“We at the FRC have resolved to set good example by ensuring that our 2021 AFS are prepared, audited and filed within 2 months after end of the 2021 Financial Year.”

Also, the Minister of Industry Trade and Investment Mr Niyi Adebayo, said a major challenge of financial reporting by public sector entities is the poor knowledge and application of accounting standards.

He said, “This program is therefore essential for government agencies and I commend both FRC and the Office of the Accountant General of The Federation for the creation of this forum.

“I have been informed that the Financial Reporting Council of Nigeria has carried out a review of some of the financial statements filed with them by a number of public sector entities and a lot has been revealed.

“It has been observed that there is lack of proper understanding of the requirements for credible financial reporting in the public sector.

“Some public sector entities still use the Statement of Accounting Standards (SAS) issued by the defunct Nigerian Accounting Standards Board (NASB) as their reporting framework while others  use a number of other formats,” he said.

He described the capacity-building program as FRC’s contribution to Nigeria’s economic development.

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