The executive secretary of the Financial Reporting Council of Nigeria (FRC), Jim Obazee, has written to the CBN governor, Godwin Emefiele, accusing him of acting in bad faith concerning the recent actions taken against StanbicIBTC bank by the FRC. Obazee claimed in his letter that the federal government has threatened to wield the big stick against the CBN because “it approved the said financial statement by StanbicIBTC before they were issued.”
Obazee’s letter dated 10th November was in response to an earlier letter which Emefiele wrote to him. In that letter, the CBN had taken sides with the bank.
Obazee said in his letter that a meeting had been convened by the Chief of Staff to President Muhammadu Buhari, Alhaji Abba Kyari between the CBN governor Mr. Godwin Emefiele and the Executive Secretary of the FRC Mr. Jim Obazee in the presidential villa on the 29th of October, 2015.
According to the letter, the Chief of Staff had instructed both the CBN and the FRC to come up with a harmonized position as two regulators on the review of the Stanbic IBTC’s financial statement for the years ended 31st December, 2013 and 2014.
At the end of the meeting, the Chief of Staff directed that the CBN “should write to the management of Stanbic IBTC, directing them to stop all negative publicity being sponsored against the FRC. He directed you (CBN Governor) to send a copy of that letter to me (Jim Obaze of FRC and up Up till now, you are yet to send a copy of that letter to me).”
Abba Kyari also directed that “a team of CBN should visit Stanbic IBTC to review the records again to know whether the errors were due to oversight or incompetence or compromise; that the FRC should secure a written position on the matter from the external auditors of Stanbic IBTC and that the CBN Governor and the FRC Executive Secretary should agree on a date to meet thereafter and review the document received and reach a final decision.”
The FRC in its letter accused the CBN of acting in bad faith and that the actions of the CBN were designed to embarrass the FRC. Obaze in his letter said the CBN in its letter had cleared Stanbic IBTC and maligned the FRC.
On the financial issues raised by the CBN, Obazee in his letter to the Emefiele said the CBN “mixed up issues and eventually ended up with very wrong and hasty conclusions.” The FRC said its regulatory decision was for the purchase and assignment of a banking application software request made to NOTAP by Stanbic IBTC on July 3rd 2013 “which is another transaction other than the one the CBN letter addressed.”
FRC then “wondered why the CBN is condoning and vehemently defending an unwholesome disclosure and reporting practice such as this. The only plausible reason will be that the CBN actually approved these financial statements.”
Wrong classification of items of assets and liabilities (two of the three major elements of financial statements) the FRC said “could affect the economic decision of users, which implies that: “assets and liabilities figures do not reflect what they actually are and the financial statement misrepresents the true state of the company’s affairs. Qualitative characteristics of verifiability and comparability have been compromised; and the financial statements do not actually comply with IFRS.”
Jim Obazee wrote that the FRC would “make bold to say that we acted within the provisions of the FRC Act, 2011 and the Inspectorate Unit Guidelines/Regulatory 2014. Since, the FRC is neither a department of the CBN nor a reporting agency to the CBN, we do not owe the CBN any explanation in this respect,” the letter concluded.