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As a follow up to the implementation of the International Financial Reporting Standards (IFRS), the insurance regulator, National Insurance Commission (NAICOM), has threatened to blacklist any audit firm that endorses fraudulent reports for insurance companies.
It said blacklisted firms would not be allowed to work for any other insurance company in the country and would also be formally reported to their umbrella body, the Institute of Chartered Accountants of Nigeria (ICAN) and the Financial Reporting Council (FRC).
The Director in charge of Supervision at the commission, Mr. Nicholas Opara, made the position of the commission known during the seminar for Journalists on Ilorin, Kwara State recently.
He said NAICOM feels auditors should not stamp their seal on an account that the figures are questionable, adding that the commission has since reported some of such auditors to their ICAN and the FRC.
“In other jurisdictions, once an Auditor puts its stamp on an account, that account is accepted as credible. We shall begin to ask auditors questions on why the accounts submitted to NAICOM were not correct.
“We have reported some of the auditors to ICAN and Financial Reporting Council (FRC) that they are not helping us. If the Chief Financial Officer of a company is not doing a job well, why should the auditor not correct that? We are beginning to report those auditors who have failed to live up to expectations” he said.
Opara complained that a sizeable number of insurance companies had issues trying to get approval for their 2012 financial reports as a result of the conversion to IFRS from the Nigerian Generally Accepted Accounting Principles (NGAAP).
According to him, NAICOM issued guidelines and circulars on IFRS conversion and trained relevant Finance Officers of insurance companies and their consultants on the new reporting format. It was unfortunate that many companies were still confused without knowing how to go about the conversion, he added.
Meanwhile, the commission has reacted to the complaints by some quoted companies that it was making them pay fines unnecessarily to the Securities and Exchange Commission (SEC) and the Nigerian Stock Exchange (NSE) for the delay in submitting their 2012 financial reports.
The Commissioner for Insurance, Mr. Fola Daniel, said such companies had up till November, 2013 not done the right things and were yet to get approval for their 2012 financials, which they were expected to prepare in compliance with the IFRS.
He said the commission did not owe anybody any explanations for the delay, saying until these companies do the right things, NSE and SEC had to wait and apply necessary sanctions for failure.
“We are not making excuses neither are we apologising to those companies whose accounts are still pending. They refused to do the right thing. The NSE and SEC are aware of what we are doing and they are supporting us” he said.
Daniel observed that some companies deliberately refused to submit their accounts as at when due because they can afford to pay the N5,000 daily fine for late submission, saying that companies who do that were indirectly telling their shareholders and customers that they are not doing well.
IFRS are principles-based standards, interpretations and framework adopted by the International Accounting Standards Board (IASB). Its overall objective is to create a sound foundation for future accounting standards that are principles-based, internally consistent and internationally converged.
NAICOM in 2011 directed insurance and reinsurance companies under its supervision to convert to IFRS in by the end of the first quarter of the last year.
“Insurance and reinsurance companies being public interest entities are expected to start their transition from January 2, 2011 while insurance brokers being other public interest entities will take their turn in 2012.
“The commission is committed to the adoption of IFRS not only because it is one of the initiatives of the insurance industry under FSS 2020 programme, but also because it is an imperative for the recognition of our insurers and reinsurers,” the commission explained.