Keys To Responsible Governance And Control


Thursday, 12 July 2018   11.38AM / ICAN


Being an address by Alhaji Razak A. Jaiyeola, BSc. ACFE, CRISC, FCA, 54th President, The Institute of Chartered Accountants of Nigeria at the 2018 Audit Committee Conference held between July 11 – 12, 2018 at NECA House Conference Centre, Ikeja, Lagos State.


Distinguished Ladies and Gentlemen, it is gratifying for me to be part of this Conference considering its centrality in addressing the myriads of economic and social challenges facing the Nigerian system. Secondly, I want to say the theme of the Conference resonates with the ideals of the Institute of Chartered Accountants of Nigeria (ICAN) which is well-articulated by our motto of “accuracy and integrity”. As a professional body that regulates the activities of practitioners who are the conscience of the society, we place very high premium on high ethical conduct, accountability, responsibility and the safeguarding of wealth of society and organizations.   

While different theories have been propounded and programmes developed across economies to entrench good governance, the human conscience will still play prominent roles in the success of such efforts. Indeed, remove ethics and morality from any government policies or programmes, and what you have left is just mere texts on white papers. Nothing more! 

Interestingly, the accounting profession is arguably the profession that requires the highest level of adherence to high ethical conduct among its practitioners. This is not only because our activities transcend tribes, creed, religion and colour, but they go deep into the heart of the workings of an economy. When a country’s accounting system is characterized by integrity and professionalism, other sectors will be well-positioned to discharge their duties appropriately, thereby aiding growth and development in the economy. 

Esteemed audience, the pervasive level of corruption in the Nigerian polity has raised several integrity questions on accountants, especially the auditors. With the country ranking 148th out of 180 nations in the Corruption Perception Index (CPI) issued by Transparency International in 2017, it is natural to ask what the role of auditors have been in taming this alarming rate of corruption in the system. With the number of well-trained and technically-competent Auditors we parade as a nation, then one is tempted to opine that what it takes to be a good auditor goes beyond technical skills. 

Perhaps what accountants and auditors require in addition to their technical competence has been adequately distilled out by the theme of this Conference – “Cultivating the Conscience of Stewards & Gatekeepers: Key to Responsible Governance and Control”. A society that is sick with corruption and bogged down with the siphoning of public wealth by a privileged few cannot be productive.  The absence of trust makes governance and control costly due to unnecessary processes, documentation, verifications, and meetings and duplicated activities – a lot of motions striking the air but producing very little.  To build a high trust society in which empowered people bring their best to work requires cultivation of conscience, a natural instrument of control that is at work with us even when we sleep.  

At ICAN, the issues I have raised above continue to keep us awake. We have resolved not to relent in our efforts at supporting government at all levels to stamp out corruption in our country, or at least reduce it to a tolerable minimum. This can only be achieved if we ensure that our members who are in audit departments of various organizations adhere religiously to our Professional Code of Conduct. To facilitate this, we deploy moral suasion and, when necessary, engage our very formidable Investigating Panel and Disciplinary Tribunal to enforce discipline and punish any professional misdemenour. 

Permit me at this juncture to intimate you with some of the machineries we have put in place to support this anti-corruption crusade and the promotion of good governance in the country. 

It is noteworthy that since 2015, ICAN launched a N50 million Whistle-Blower’s Fund to protect and compensate its members who report any form of financial misdemeanor in both the public and private sectors of the economy. We were therefore elated when the Nigerian Senate passed the Whistle-Blower Protection Bill of the Federal Government in June 2017.   

We recently keyed into the new standard of ethics issued by an arm of the global accounting body, the International Federation of Accountants (IFAC). The standard sets out a first-of-its-kind framework to guide professional accountants in what actions to take in the public interest when they become aware of a potential illegal act, known as Non-Compliance with Laws And Regulations, or NOCLAR, committed by a client or employer. 

Similarly, we are developing an ICAN Accountability Index (ICAN-AI) which aims at improving the process for assessing public finance management and public governance practices across the three tiers of the Nigerian public sector including the Federal, State and Local Governments. 

Some of the specific objectives of the Index are to:

  • Encourage greater accountability and transparency in fiscal and Public Financial Management (PFM) practices in Nigeria.
  • Improve quality of governance and compliance with Fiscal Responsibility Act 2007.
  • Tackle corruption by engaging quality professionals in public sector. 

We are working towards ensuring that the first result of the Accountability Index is released by September of this year. 

As you may already be aware, an Exposure Draft of a new Code of Corporate Governance has been published by the Financial Reporting Council of Nigeria (FRC). Also, various public hearings are being staged across the different States of the Federation to create awareness and harvest inputs to the Code before it is eventually released in 2020 for implementation. I am pleased to notify you that in addition to participating at the public hearings, ICAN is staging different high-level stakeholders fora to dispassionately review the old and new Codes with a view to identifying the strengths and weaknesses of each. 

We have set up an ad-hoc Committee that will compile the Institute’s position and thereafter communicate FRC accordingly. This is a safeguard that will ensure that the country has a robust Corporate Governance Code capable of attracting the level of Foreign Direct Investment (FDI) we require for job creation. 

However, it is germane for me to quickly mention some of the fundamentals in the new Code that ICAN has identified and which call for the attention of various stakeholders. The implementation model of the new Code is based on “Apply and Explain”. Our experiences as a nation show that this laxity provided for in the new Code, devolving the powers to companies in the application and explanation of how it has been applied by respective companies, may not be sufficient enough to achieve the objectives of the Code. At ICAN, we are proposing some measure of enforcement of the Code and sanctions for erring organizations. 

Also, there is over concentration of power to the shareholders in the new Code. At the Institute, we have critically looked at the various financial reports of companies and, on the average, equity funds is around 18 per cent while 82 per cent are stakeholders’ capital. This is worrying as the Code does not make adequate provision for the protection of stakeholders, the “real owners” of business, whose capital the shareholders are making decisions on. To protect the stakeholders, ICAN is proposing the introduction of a Non-Independent Executive Director to forestall a situation of internally-dominated Boards. 

International best practices provide that Independent Non-Executive Directors should be the majority in the constitution of Boards of Audit Committee. This is not well-spelt out in the new Code. Audit Committee should be made up of three non-executive Directors and three shareholders. 

Another crucial point I need to mention is the appointment of internal auditors by companies. In the new Code, there is a provision that allows companies to outsource this role. This is a great departure from the ideal and it has led to the collapse of big organizations such as Carillion Plc in the United Kingdom, the 2nd largest construction company in the UK. Are we towing same path in Nigeria by allowing internal audit roles to be outsourced?   

Distinguished Ladies and Gentlemen, responsible governance and control will be a mirage in the country if accountants and auditors fail to discharge their duties with a high sense of responsibility, accountability and professionalism. In fact, it is an anomaly for any system to have corrupt auditors – this will perhaps be the worst form of corruption anywhere. History has been generous enough to educate us on the enormity of atrocities such a phenomenon can cause an organization or a country. Even the “too big to fail” have succumbed to this singular act. 

Governments and organizations have historically depended on accounting and accountants to lead the quest for integrity and anti-corruption.  Despite human imperfection, we have generally done it well.  We bring our forte of rectitude and diligence to bear on the quest for a corruption free society in Nigeria.  To the Nigerian community we say, ICAN and accounting will tirelessly fight corruption with with you to the end and help restore Nigeria to a high trust society – it is possible in our life time.  We will justify the confidence reposed in us by upholding the public trust.  We are with you, Nigeria. 

Once again, I am glad to be here and sincerely appreciate the organizers for giving me this great opportunity. 

Thank you for listening and God bless.


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