By Oluchi Obiozor   

 

The theme of the 39th annual conference of the Institute of Chartered Accountants of Nigeria`s, ICAN, was `Think Global, Act National` but the issue of the nation`s banking sector took centre stage throughout the event. As the largest gathering of chartered accountants in the country, it was natural for them to be inundated with matters concerning the recent developments in the banking industry. The accountants are at the heart of the banking crisis as they are the auditors that review the banks` books. The audit reports prepared by accountants should have raised concerns that things were not well with the banks. Industry watchers say professional ethics require them to report facts as they are, no matter the pressure mounted on them by the management of the banks. If that has been the case, the recent revelations by the Central Bank of Nigeria , CBN, about the financial positions of most of the banks would not have been so. The accountants, they say, were expected to disclose the situation and possibly, prevent it from escalating.

But because most internal auditors, who are on the payroll of the banks, are scared, preferring to keep their jobs at the expense of professionalism, the banking sector was allowed to degenerate into the current crisis. The fear of auditing firms that if they report detrimental facts about the banks, their client`s base may shrink did not help matters. And now that the true situation has been unravelled, the executive management of the banks bear the brunt while the auditing firms are going about their normal

business. Olusegun Oladipo, one of the participants at the conference, said that all the firms that audited the accounts of the problem banks should be punished for refusing to disclose the true status of the banks. Tunde Lemo, deputy governor of the CBN agreed that the auditors were liable to some extent but said that sometimes, the auditors report their true findings but the banks discard them and present fictitious report to the regulatory authorities.  

Elizabeth Adegbite, president of ICAN, noted that the banking crisis had challenged the profession to hone its skills in risk management, business models and entrepreneurship in order to “address skills gap, reverse the current decline in asset values and restore confidence in the capital market as a mechanism for long-term investments.” She said, accountants are now expected, more than ever to reaffirm their faith in the values of their profession, especially in discharging financial advisory roles. Lemo explained that both the global financial crisis and the Nigerian banking crisis presented fresh challenges for the accounting profession as well as stricter monitoring of their activities by the regulatory authorities.

Lemo emphasised that accountants must begin to think within the context of adding real value to the profession. To do this, they are expected to have both accounting knowledge and an in-depth understanding of the operational functions and the commercial processes of their companies. “The modern accountant needs not only the ability to understand and manipulate financial as well as non-financial data, b

but he must have the capacity to communicate this data both in written form and verbally to financial as well as non-financial audiences. He must also develop competence in persuasion, negotiation and mentoring abilities to manage cross-functional project teams,” Lemo stated.

Bisi Onasanya, group managing director, First Bank of Nigeria, FBN, equally said that the present crisis provided an excellent opportunity for internal audit functions to be extended beyond the traditional financial and compliance focus, to the provision of assurance services for board and management on corporate governance and risk management. He believes that the internal auditor needs to take the lead in ensuring that the risk management processes are working effectively across the entire organisation. If these functions are well played by the internal auditors, Onasanya is convinced that it can help improve boards` oversight by providing information on the operational and enterprise risk management effectiveness of organisations.

Goodluck Jonathan, vice president, represented at the conference by Mansur Muhtar, minister of finance, told the accountants that they would be put to the test over the coming months to an extent that is greater than usual whether they are in private practice, government or in business. “The spotlight will be on you and questions will be asked about the role you played in events leading up to the economic crisis and, indeed, during and after it.  The regulatory regime will change and different expectations will arise from this,” he said.

Adegbite

assures that the profession will live up to the tasks assigned to it as ICAN is embarking on a strategy aimed at enhancing the quality of financial reporting and promoting transparency. It is building capacity through its faculties to proactively enhance the skills of its members in preparation for the new phase of financial reporting in Nigeria. To improve the standards of audit in Nigeria and in consonance with statements of membership obligations to the International Federation of Accountants, Adegbite said the institute had conducted the first round of practice review to ensure compliance with International Auditing Standards. “The reports are being compiled for corrective action as the next rounds of reviews would attract sanction for deviations from Best Practice. The global financial crises are attributable to failure of corporate governance emanating from decaying values, non-adherence to ethical codes of conduct and sound practice standards. A total of 13 firms of chartered accountants have so far been visited by our experienced reviewers. In the days and weeks ahead, many more of these visits will be conducted. Our role as purveyors of financial information which drive economic decision processes demands that we do this in the public interest,” she explained.

Adegbite had a last word for accountants: “As we continue to operate in a globalised, information-driven business environment, our institutions, systems and processes must conform to world-class standards. Only then can we continue to create value for sustained growth and development of the national economy.”