Published On: Tue, Mar 18th, 2014

Focus shifts to FRC’s competence after Sanusi’s response

The audit competence and integrity of the Jim Obazee-led Financial Reporting Council (FRC) of Nigeria became a subject of public discourse following yesterday’s four-page response by Sanusi Lamido Sanusi, suspended governor of the Central Bank of Nigeria (CBN), to allegations relating to his suspension.

President Goodluck Jonathan had about four weeks ago suspended Sanusi as CBN governor over allegations of “various acts of financial recklessness and misconduct” by the FRC.

Amid the FRC’s claims and Sanusi’s public counterclaims, sources close to BusinessDay at the Financial Reporting Council said the embattled CBN governor’s response has created a row at the council which before now paraded itself as one whose activities brought utmost confidence to investors.

It was further learnt that after their meetings yesterday following Sanusi’s response, some loyalists to the FRC boss expressed worry over his approach to such a critical national issue which is now a subject of international discourse, maintaining that the ousted governor’s response remains a matter of grave concern.

BusinessDay learnt that Obazee who is said to parade himself as a perfecta of entities’ corporate governance structure has since 2010 been operating “a one-man management of FRC. Go to our website. It is there,” our source said.

We also gathered that based on Sanusi’s response, Obazee has initiated moves to amend some of the concerns earlier raised by Sanusi in his response, claiming that he has the powers that be behind him.

It was also learnt that the said audit report on CBN was not submitted to the technical and oversight committee of the board of the FRC in line with section 15 of the FRC act.

As the market expects the FRC to publicly confront Sanusi over his response, a renowned financial analyst who prefers anonymity told BusinessDay that “Sanusi’s response to the FRC’s allegations is a good starting point”, noting that it has provided a good resource which independent persons could use to determine the validity of the case against him and the CBN.

“However, in reality, I will take it as just a normal reaction by anybody who is accused of wrongdoing and is looking for a way to prove his innocence. It would have carried more weight if this response is from an independent third party who is authorised to investigate and report on it,” the analyst said.

“Moreover, it is a usual practice for auditors to prepare a management letter of the weaknesses observed during any audit exercise which may also be based on their opinion or what they consider as best practice, based on the prevailing situations,” he said.

He also told BusinessDay that until a competent body of examiners declares the allegations as untrue, there is no negative impact on the competence of the FRC’s audit.

The FRC’s main objectives, as defined in the FRC Act, are to protect investors and other stakeholders’ interest; give guidance on issues relating to financial reporting and corporate governance to professional, institutional and regulatory bodies in Nigeria; and ensure good corporate governance practices in the public and private sectors of the Nigerian economy.

Also, the FRC is supposed to ensure accuracy and reliability of financial reports and corporate disclosures, pursuant to the various laws and regulations currently in existence in Nigeria; harmonise activities of relevant professional and regulatory bodies as relating to corporate governance and financial reporting; and promote the highest standards among auditors and other professionals engaged in the financial reporting process.

It also sets out to enhance the credibility of financial reporting and improve the quality of accountancy and audit services, actuarial, valuation and corporate governance standards.

According to the financial analyst, Sanusi’s claim that he was seeing the FRC report for the first time is contrary to the tone of the FRC report which refers to responses from the CBN as inadequate or constituting gross incompetence, which implies that there was a response from the CBN.

“So, what Sanusi Lamido Sanusi is saying is that either the CBN responded without his knowledge or the FRC is lying about obtaining a response from the CBN. It will be good for the FRC or the FGN to also publish the supposed response from the CBN to back this up,” he added.

Another analyst who wishes not to be identified said the whole saga raises a big issue – the incompetence of the FRC which is clearly manifest.

“The FRC leadership consists of individuals who ‘lobbied’ to pass a law from which they were the biggest beneficiaries. That is an anomaly in itself. It is also essential that we note that this same Sanusi created the FRC indirectly when he began the advocacy for the adoption of International Financial Reporting Standards (IFRS),” the analyst said.

“The monster called FRC as is being run is feeding the power thirst of a few individuals who have never practiced accounting and therefore are ill-qualified to lead a body saddled with enforcement of accounting standards,” he said.

Our source further said that “it is unfortunate some of us were born to witness the incompetence of a few who are solely motivated and propelled by the love of their belly and personal comfort. We truly need help as a nation”.

Iheanyi Nwachukwu

Displaying 17 Comments
Have Your Say
  1.' faith says:

    I am an accountant/auditor by profession. I read Sanusi;s response to FRC’s allegation with full more respect for Sanusi. From the the response, I have an opinion that 1. FRC allegation is at best a witchhunting.2. The FRC as it is presently consistuted lack the professionalism the office demand.and 3. The FRC as it is presently consistuted can not be said to be independent and cannot be said to be an unbiased judge. NIGERIA IS REALLY SICK. GOD , THE BELOVED OF THIS GREAT COUNTRY IS STILL WAITING FOR YOUR RETURN TO HEAL THIS NATION OF OURS. LORD HOW LONG WILL YOU COME TO REMOVE OPPRESSION , ORRUPTION AND KILLING OF THE HIGHEST ORDER , FATHER IN HEAVEN WE ARE STILL WAITING!!!!.

    •' Dipo says:

      You are part of the problem. Waiting upon God to come down and solve all your problems. Do you know how silly you sound?

    •' joseph says:

      it is only d Lord that can help us all out, even after each xtian has played his own part – owolabi joseph o. ACA

  2.' James says:

    The idea of an FRC is not unique.
    It was copied from Europe and America.
    FRCs are set up to maintain accounting standards.
    They are suppose to set standards for financial reporting for accountants.
    They are not set up to conduct audit.
    The FRC, as we have it in Nigeria, is a fraud !!!

    •' Johnson says:

      @James, thank you very much. When Nigeria adopted IFRS, the question arose as to whether the Nigerian Accounting Standards Board (NASB) should be abolished. In line with practices elsewhere, the FRC was created. So, I don’t understand how FRC came into this affair.

  3.' Dd says:

    After having read Sanusi’s submission and the plethora of evidences to support his submission, I’m appalled that a body regulating accounting professionals in Nigeria could come up with such spurious allegations that is worthy of a first year associate in a professional services firm. It’s embarrassing that as a body of supposed professionals they could make far reaching conclusions without any basis.

    He’s in the news for being the head of a financial regulatory body that doesn’t know what an auditor does. The outcome of his report has brought embarrassment to Nigeria. It also temporarily destabilized the nation’s financial system and has inflicted “local” reputational damage on a man who has been one of the few with a good track record in government in the last four years.

    Enough is enough of bad governance.

  4.' KK says:

    Story based on a wrong premise that becuase SLS has provided an answer, that nullifies the query of the FRC. Wrong. SLS answer will only do that if it is reasonable and accurate. So perhaps, instead of annonymous sources, BusinessDay should talk to a chartered accountant who will be able to say openly on his honour that SLS answers are accurate accounting wise. For example, concerning the N38 billion expense on NSPMC, is it right to lump debts, prepayments and accruals as a single item on the balance sheet or P&L as SLS seems to suggest in his answer? BusinessDay has accountants, ask them if that is how they do their accounting? There is noSLScounting standard. Give FRC some slack. They have been around well before SLS and would be there well after him. Jim Obazee is not Jonathan appointee on FRC. Do not destroy FRC becuase of SLS?

    •' Sahfeeyah says:

      Give FRC some slack? Why? Did FRC give CBN any slack at all? If Jim Obazee, the one-man riot squad of FRC didn’t understand what was in the audit report, couldn’t he have gotten clarifications from CBN? The way and manner he wrote his report was clearly malicious. ‘Financial Recklessness’ indeed! Even when there was a drop in expenses, he queried it. Hope Jim Obazee and those he’s done the hatchet job for will do same with other Government MDAs.

  5.' Chuks says:

    Before my comment, let me quickly advise that people should only comment on what they are competent to talk about. Otherwise, they will be commenting out of ignorance.Accounting is different from law.You cannot argue it especially if a Standard has been issued on it. Its same treatment internationally. I will pick only the treatment of N38billion paid to NSPMC and the explanation of the CBN Governor to state that if the explanation of the Governor is the truth, then, the CBN accounts as presented is questionable.Current year expenses must be matched and charged against current year income and treated accordingly in the Income Statement. Consequently, either CBN manipulated its accounts or the Governor is economical with the truth with intention to confuse the general public. Period! No sentiment.

    •' igida eyefo says:

      @chuks. I hope you can distinguish cash flow from income statement. It appears your reading of FRC’s allegation and SLS’s response is faulty. SLS is saying CBN paid so much in a certain year (cash flow), part of it covered debt incurred in a previous year, part for the present, and some for prepayment. If NSPMC doesn’t capture all the payments in its income statement, it means we are looking in the wrong place for the money. Besides, if SLS wants to steal money, will it be by making a payment to NSPMC and reporting it in his financial statement. You should concede to him some intelligence and the presidency and FRC should eat the humble pie and admit that in their haste to hang the dog, they gave him the wrong name.

    •' Tem says:

      Chuks, it’s like you are commenting on what you know NOTHING about. You are totally ignorant of the issues and you are hereby advised to talk more on buying and selling of oranges than talk anything accounting.

  6.' Nnamdi says:

    Sanusi’s response is very well articulated such that it is now easy for people to accuse the FRCN of pursuing an agenda. Whether this is the case or not, it is good to hear one side of the story. Clearly, the onus is now on FRCN to respond to Sanusi.

    All the talk of the FRCN boss running a one man show remain allegations until proven otherwise by a competent party. There is also a need for an independent party to review all the claims by both parties and issue a fair statement.

  7.' patrick ijegbai says:

    I read the full text of SLS response just this morning despite not been aan accountant I felt a bit more educated on some accounting principles based on his response.I must confess I respect sls the more for been well grounded for docummentary evidence attached to almost every response to buttress his point.This clearly shows an epitome of a man who is well grounded an knows his job.Despite not been in office,despite not having access to certain documents as a result of sudden ouster he has been able to respond to the understanding of even the layman on the street,jim obazee,FRC should bury their head in shame for gross incompetence.Let them look for our missing $20b oil money period.

  8.' Tem says:

    Jim Obazee of FRC of Nigeria, has brought the Accountancy profession into disrepute with his mediocre and dishonorable report he submitted to President Jonathan on CBN. It was harsh, full of innuendoes, unprofessional and libelous. I hope CBN, as an institution, would take a court action against FRC.

    I also hope ICAN and other professional bodies represented in the Board of FRC would act to redeem the disrepute that Obazee has brought on FRC. With the leadership of Obazee in that body, most accountants will not give it any regard. Obazee has no character whatsoever. Read the following:

  9.' Chrisooooooooooooooo! says:

    SLS has tried to have explained vividly on each issue.This is an intelligent man of repute. His articulation is superp. FRC and the Federal Government should reconsider their report and get it reconciled else it will be a shame. SLS should be recalled to finish his tenor. Period

  10.' wizzy says:

    A criminal will always b a criminal wen sls was being reckless wit finannncial figures nobody compliained n since den he as d cbn governor lost ma respect. Evrytin said now is just 2 justify any actions he has mmade in d past. I refused to b deceived

  11.' Tem says:

    CEO of Financial Reporting Council denies allegations of sexual abuse by staff (Details)
    Posted By TheScoop on August 2, 2013


    by Stanley Azuakola

    A staff of the Financial Reporting Council of Nigeria, Mrs. Abimbola Patricia Yakubu, has accused the Executive Secretary/CEO of the government agency, Mr. Jim Osayande Obazee, of sexual harassment, oppression, humiliation and intimidation.

    The Scoop is in possession of two letters, one from Mrs. Yakubu to the chairman of the governing board of the Financial Reporting Council of Nigeria, Hajia Mariam Ladi Ibrahim, and another from her lawyers, the Public Interests Lawyers League to the Minister of Trade and Investment, Olusegun Aganga. Aganga is the supervising minister in charge of the Financial Reporting Council of Nigeria.

    Yakubu, a mother of three kids, was the Personal Assistant to Obazee for three years, from 2010, until Friday, 24th May 2013, when she was posted in controversial circumstances to Kaduna where the council maintains a liaison desk at the Corporate Affairs Commission.

    Yakubu claims that the transfer out of the head office was as a result of the repeated sexual advances from her boss which she had been rejecting. In her letter, she said, “For the period of years that I worked with him, I have always been closing as late as 10pm and sometimes beyond. I have been very loyal, committed and dedicated to duty. I have never for one day shown any sign of insubordination. Early this year, I noticed the Executive Secretary’s attitude changed towards me. I met with him on several occasions, asking him what I have done wrong but he would not say anything rather, he would yell and scream at me saying all manner of unprintable words like: ‘when I am done with you, you will cry’; ‘when I am done with you, you will hang yourself’. So I withdrew and kept to myself. He continued in this attitude towards me, not relating with me and giving my subordinates my job to do (the things I should be doing).”

    According to her, the “excuses” which Obazee finally gave when he spoke to people included allegations that in a February trip to Abuja, his driver, John Sambo, was not at the airport to pick him.

    “The blame was pushed to me,” she said. “I did my job by notifying the driver on Sunday night, which was the night before he travelled. As usual I was expecting the driver to be on duty since he did not take permission from me to be away from station. But unfortunately when I called him on Sunday, he said he was in Nassarawa for the weekend. At least, he ought to be at work the next morning, so I instructed him to be at the airport early enough to pick the ES.”

    Other reasons allegedly given by Yakubu were that her husband sent him a threat text and that she did not remind him of the council’s ex-chairman’s daughter’s wedding and another programme he was to send a representative to, even though the representative, Mr. Osawe still made the programme.

    “All of these have been on since the beginning of this year 2013. Sometimes in April, I wrote to request for a 5 day casual leave from 25 days out of my 30 days annual leave to travel and attend to a family commitment outside the country. But, he bluntly turned down my request. I had to lose the ticket for the trip even though I showed it to him.

    “Thinking that was enough punishment and with no other event happening in between, to my greatest surprise, I was called by the HR manager on Friday 24th of May, to receive a letter of transfer to Kaduna State, where we do not have a functional office, but a liaison desk at the Corporate Affairs Commission. And that I, a level 12 officer should be reporting to a level 10 officer. I still did not show any sign of reaction but rather, I complied,” she said.

    She then narrated how had been wooing her since she resumed at the office, advances which she said she turned down because of her Christian faith, fear of God and her love for her husband, who is a Pastor in The Redeemed Christian Church of God (RCCG).

    She cited several instances when he made his demands following their “close working relationship.”

    She said: “I close very late at night as a civil servant, not because we really have much work to do, but that’s when he finds it most convenient to talk to me about his love for me. He makes sure everyone has closed and we are left alone in the office to make his demands. I am grateful to God for the kind of husband I married who is very understanding. Besides, there is no sexual move or plea he made that I did not tell my husband, from the very beginning of the advances. So, my husband is very much aware of the goings on but, he trusts me. Even when I told the Executive Secretary that my husband is aware of his moves he tells me it is not true, that there is no man who will allow his wife go through such since all men are jealous. He then warned me sternly not to ever mention goings on the office with my husband.

    “We have had to travel around the country together to places like, Calabar, Uyo, Enugu, Ibadan, Ijebu-Ode, Abuja and Minna. These were occasions he would have had his way had God not helped me, if I had not been determined to stand firm and if my husband was not solidly behind me. All of the time when we ought to retire back to our hotel rooms he would call me to either come to his room if we are in the same hotel or he would call to tell me he was coming to my room. Other times when we stay in different hotels, like when we are in Abuja, he would call me sometimes very late at night to tell me he was on his way to my hotel,” she said.

    She cited a particular incident which occurred in November 2012 in Abuja. According to her, Mr. Obazee called very late at night that he was coming to her hotel room.

    “I immediately called my husband who was out of the country at that time to notify him and he said I should be tightly dressed and safe guard myself. I use an MTN line; I believe if the authority would demand to get the voice data from MTN or even ask for the call log, my points here can be verified,” she said.

    She alleged that several times, he had persuaded her to leave her husband and marry him instead, lamenting how his own marriage was an error, and how he was sure she was the woman for him. According to her, he said the only reason he married his wife hurriedly was due to pressure from the office in his early days in NASB when he was told that if he did not have a wife he would not be allowed to go on international trips.

    Speaking further, she said, “He has told me how him and his wife are two different people that is the reason why he does not go back home early from work, but that if he marries me, he would be closing by 4pm and we would have as much as 10 children as against the two he has from his wife; and that the gap between the two children is wide because he does not have time for her. Then, I have always advised him on this and told him countless times that if he can go back home and rechanneled all the love he said he has for me on his wife his marriage would work better.

    “He had asked that I run along with him to America and we both get married there and that he would establish me, and I told him that can only work out if he was willing to marry me, my husband, my three kids and all my dependants. He never liked it when I bring my husband into our discussion that’s why he asked me to stop picking his calls while at work.

    “On some occasions also, he has asked me not to call him ‘Oga’ anymore but to call him Jim and I would refuse. I had to keep telling him not to treat me differentially but to treat me like any other staff. “Don’t spoil me sir” I would tell him. “you are my oga and I will always treat you so.

    “A few text messages I still have on my phone will show the close working relationship we had,” she said.

    She alleged that his subsequent attitude towards her, and her transfer to Kaduna was as a result of her repeated refusal to accept his advances. Narrating further, she said that even when she chose to heed the transfer directive, she received a memo, which she attached in her letter, asking her to “report through a GL8 officer on ground to a GL10 officer and that on no account should I leave my post without clarifying from him who should receive directives from the Executive Secretary directly. I just want to state here clearly that this is a manifest evidence of a personal molestation or vendetta. Before I left Lagos for Kaduna I went to see the GL10 officer he said I should report to, to get some guide lines as to what the job entails, asking her to put me through. He sent for her and asked that I be ordered to leave the office premises immediately and report in Kaduna within 48 hours or face the music. He would not let me have the time to speak with the officer in charge of the department. I saw it all as a way to make me go to work without any tool: like building bricks without straws.”

    According to her, she is currently experiencing some health issues which are a result of the trauma and verbal threat she’s had to go through in the hands of Mr. Obazee.

    “However, I have been in Kaduna for four weeks now not working for my salary as there is really nothing to do. I am therefore appealing to you ma to use your good office to return me back to the Lagos office where I can work and serve Nigeria better.  I am however receiving treatment right now in Lagos based on the doctor’s recommendation from Kaduna. I have tendered the doctor’s Excuse Duty Form to my office in Lagos,” she said.

    The man in the centre of the storm, Jim Obazee, however denies the accusations. When The Scoop reached him for his reaction to the allegations, he said he would be unable to respond because he had not seen a copy of the letter. He said that if indeed a letter had been written to the chairman, then it would be sent to the board.

    “I have no idea,” he said. “Number One, the chairman should be the one to talk to me.”

    Following subsequent prodding by The Scoop, he admitted that Mrs. Yakubu had indeed worked as his Personal Assistant before but had been transferred. He insisted that she wasn’t qualified for the job.

    “I remember chairman asking how we could have employed a person with such a qualification. She has a Bachelor in Education, Social Studies or something like that,” he said.

    According to him, that wasn’t the only reason for her transfer. “Not only that, you know as CEO, if you work directly with the CEO, you become privy to sensitive information. When any staff is compromised there’s an issue,” he said, but did not give details of how exactly she was compromised.

    “You know like when I’m in a meeting, she’s the one that’s with all my phones, so if she’s compromised, we have a problem,” he said.

    Speaking further, he said he wasn’t even directly responsible for her transfer because although he is CEO, “I’m not the one that redeploys staff. I only mentioned that she wasn’t fit for it, then they’ll ask which department is ready to accept and if we don’t find, we redeploy. The alternative will be to sack her, but we have to be considerate, there are no jobs in the country.”

    Asked whether he ever made sexual advances towards Mrs. Yakubu, Obazee flatly denied it, “Look, if I’m your PA the first thing I’ll accuse you of is sexual harassment. She says it has been going on for long. But if one makes advances the first time, you say no, then second time, third time, and so on, why didn’t she ever make a complaint?”

    The Scoop, also spoke with the media officer of the council, Mr Mark, who said the two were close in the past but could not tell more than that because “these things are personal. You can’t know the truth when it comes to man and woman matter. If the going is good, you won’t hear anything. What I know is that the woman was his PA and something went wrong along the line and she was transferred to Kaduna and lost all her entitlements and that’s the pain. The real thing that happened I don’t know because I wasn’t following them to anywhere.”

    Meanwhile efforts by The Scoop to reach the chairman of the governing board of the council has been unsuccessful so far.

    The Public Interest Lawyers League which is representing Mrs. Yakubu, has however demanded that the minister of trade and investment, Olusegun Aganga, carries out a “formal but thorough ministerial investigation of the complaint against Mr Jim Osayande Obazee. And whilst we also urge that disciplinary measures be exercised where appropriate, we humbly request that the purported transfer of our client be rescinded pending the completion of investigation.”

    In their letter which was signed by their president, Abdul Mahmud, they listed four points which must be investigated namely the abusive language allegedly used by Obazee on their client, “the inhuman and unfriendly working condition under which our client worked for him”, the”purported” transfer and sexual harassment.

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