Obazee: National Code of Corporate Governance Will Ensure Best Practice
Chief Executive Officer of the Financial Reporting Council, Mr. Jim Obazee believes that the national code of corporate governance will ensure that institutions in the country adhere to global best practice. He spoke to Obinna Chima. Excerpts:
The IFRS Academy is an issue that has been on for a very long time. Why is the FRC finding it difficult to set up the proposed Academy?
Interesting! You know the FRC is a government institution and to such extent, under a democratic setting, government would continue to create an avenue for cooperation and understanding and seek stakeholders’ views. Now, the IFRS Academy is not intended to be a department of the FRC. It is supposed to be a special purpose vehicle for the achievement of an objective that would lead to full compliance with the provisions of the FRC Act and then to be able to pursue the agenda of the FRC as an entity. That was the purpose. The FRC is championing for government the financial reporting standards, which has to do with accounting, auditing, valuation, actuarial and corporate governance. The FRC is championing the corporate governance code which is now statutory. The FRC is pursuing an agenda for accountability, probity and transparency for public institutions that publishes accounting standards for public sector. If these are the agenda that we have in place and we want to drive it using international rules, it is important that we have you must have an institution that is able to train people to have an understanding of those international rules, especially when the rules are largely new. Not only new, they are also fluid because we have International Financial Reporting Standards (IFRS), we have IFRS Public Sector Accounting Standards, and these are not just static standards. Every year they are reviewed. So, you must have training for it, but there is dearth of that knowledge in Nigeria. That was why we said we would set up the IFRS Academy to do the teaching and training for those who are already experts to be able to learn to deal with these issues. But if a federal government institution is setting up a special purpose vehicle (SPV), it will have to go to the Corporate Affairs Commission (CAC) to register it as a company limited by guarantee. So if it limited by guarantee, the law states that you will have to look for institutions that deal with such issues ordinarily to seek their collaboration. All they need to say is ‘no objection.’ In the case of Nigeria, we have two of such bodies –the Institute of Chartered Accountants of Nigeria (ICAN) and the Association of National Accountants of Nigeria (ANAN). We have since written to them asking for ‘no objection.’ ANAN has not replied us since, but ICAN has replied. The letters we sent to them were dated May 26, 2014, but ICAN replied us December 16, 2014 and they objected. What was their ground of objection? They stated that the institute currently runs IFRS programmes that include a certification programme by its corporate faculty, mandatory continuous professional education programme for members of the institute as well as continuous education programme for non-members and they stated in the letter that “feedback over time confirmed that the programmes are acclaimed to be world class.” What does that mean? Will university lecturers go and attend ICAN’s IFRS programme? Will ANAN members attend it? Will government officials attend it? So you see that, those are narrow views that are largely self-centred. You see what ICAN did and ANAN has not even been able to dignify us with a reply. ANAN and ICAN have representation on our board, but as it is now, they have stalled the establishment of the Academy. Since May last year, we have been on this with them. But what is the next step because we are not going to stay static? The next step is for us to report back to the Attorney General of the Federation to say we were not able to secure the ‘no objection.’ So it is the Attorney General that can tell us to go ahead with the establishment of the Academy without the ‘no objection.’ It is the office of the Attorney General that actually requires the ‘no objection’ otherwise we would have set up the Academy. We already have the board of trustees. So this is what is actually standing before us and the academy.
Why is the important?
‘no objection’ letter so
If you don’t get registration from the CAC, what would you be calling the Academy? The IFRS Academy set up by what? It is not a department because organisations have departments and directorates and we cannot have a full blown institution standing as a department.
When will the national code of corporate governance become operational?
The national code of corporate governance is one of the advantages of the President Goodluck Jonathan’s administration. Hitherto, we used to have persuasive codes, we didn’t have statutory codes. Since we didn’t have statutory codes, a persuasion means that we are seeking your cooperation and we are in a society where doing right does not come naturally. So, when you are looking for persuasion, you are likely not going to get the desired results. We have a persuasive code of the Central Bank of Nigeria (CBN) for banks, we have that of the National Insurance Commission (NAICOM) for insurance companies, we have that issued by the CAC, the Securities and Exchange Commission, Nigerian Communications Commission and of course you have the one issued by the National Pension Commission and these are non-mandatory. So the mandatory code is ready, but we have said we would exercise