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CBN faces the potential withdrawal of audited reports amidst investigations

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The Central Bank of Nigeria (CBN) may face the prospect of withdrawing its audited annual financial reports, which were publicly released just last month, The Punch report indicated on Tuesday.

This revelation follows meticulous investigations conducted by a team appointed to scrutinize the regulatory bank’s financial accounts, unearthing troubling discrepancies and irregularities.

The CBN, in an unusual move, published its financial accounts spanning the years 2016 to 2022 this past August. This disclosure unfolded against the backdrop of an ongoing inquiry into the financial services sector regulator, instigated by Special Investigator Jim Obazee, appointed by President Bola Tinubu.

Obazee’s mandate extends beyond the CBN; it encompasses investigations into the Nigerian National Petroleum Corporation Limited, the Financial Reporting Council of Nigeria (FRC), and other government-related entities.

In a letter personally signed by President Tinubu and dated July 28, 2023, he articulated the government’s unwavering commitment to combat corruption, as stipulated in the Constitution of the Federal Republic of Nigeria.

He charged Obazee with the responsibility of investigating the CBN and related entities. This appointment took immediate effect, and Obazee was directed to report directly to the president’s office.

The President’s directive entailed strengthening the integrity of key government business entities, plugging financial leakages within the CBN and its associated entities, and compiling an extensive report on the state of public wealth held by both corrupt individuals and establishments, whether in the private or public sector. Obazee is empowered to engage a team of seasoned experts to assist in the investigation, collaborating closely with relevant security and anti-corruption agencies. Regular progress briefings are expected to be provided to the president.

Furthermore, the President attached a copy of his directive suspending Godwin Emefiele from his position as Governor of the CBN, a move that occurred on June 9, 2023.

The CBN Special Investigator has enlisted the expertise of accountants, auditors, and forensic accountants to conduct their probing examination.

Meanwhile, insiders have indicated that the CBN may soon be compelled to retract its seven-year audited financial account reports spanning from 2016 to 2022 due to allegations of containing erroneous and falsified data.

READ ALSO: JP Morgan Nigeria’s FX reserves estimate ‘presented out of context,’  says CBN

Multiple sources closely tied to the investigation suggest that presidential approval is imminent, enabling the Financial Reporting Council (FRC) to instruct the CBN to withdraw these contentious financial accounts.

Key sources within the Special Investigator’s team assert that the CBN’s financial reports failed to comply with International Financial Reporting Standards 9 (IFRS 9), which requires comprehensive disclosure of all financial transactions. Instead, the regulatory bank purportedly adopted guidelines obtained from the FRC in a questionable manner for the preparation of these reports.

Notably, it has come to light that the CBN allegedly disbursed N401.75 million to the IFRS Academy for these guidelines used during the 2016–2022 period.

An anonymous official closely connected to the investigation stated, “As a government institution, if you are receiving any revenue, you are obligated to deposit it into the Treasury Single Account, from which a certain percentage is deducted for the government. According to documents, the N401 million paid by the CBN for the accounting guidelines between 2016 and 2022 were paid into the IFRS Academy account. The academy is a limited guarantee company set up by the FRC to train people in IFRS accounting.”

This official went on to highlight that the guidelines employed in compiling the CBN’s accounts for the aforementioned years were not supposed to incur a cost. Moreover, any accounting guidelines issued by the FRC are typically required to gain board approval and be made publicly available on the FRC’s website—a protocol that was allegedly not followed. The suspicion is that evading IFRS 9 was intended to understate financial figures.

Additional sources close to the investigation contend that providing FRC accounting guidelines to external organizations was an improper action.

Consequently, it is now part of the Special Investigator’s recommendations that the President grant approval for the FRC to instruct the CBN to retract the released annual financial accounts spanning from 2016 to 2022. This step aims to pave the way for the preparation of new financial accounts using the appropriate accounting methodologies and standards.

Furthermore, it has been disclosed that the Department of State Services (DSS) may summon the Executive Secretary/Chief Executive Officer of the FRC, Shuaibu Ahmed along with senior officials of the agency, for questioning regarding these controversial accounting guidelines employed by the CBN and related matters.

The Special Investigator and his team are also slated to interrogate FRC officials concerning these allegations.

In recent developments, the DSS has already interviewed some deputy governors of the CBN as part of the ongoing investigation.

Additionally, there are indications that further cases involving Godwin Emefiele may emerge during legal proceedings.

President Tinubu, in his July 28 directive, entrusted the CBN Special Investigator with the task of collaborating with security and anti-corruption agencies to compile a comprehensive report on the state of public wealth, whether held by corrupt individuals or entities, whether in the private or public domain.

(Edited by Oludare Mayowa; omayowa@globalfinancialdigest.com; Newsroom: +234 8033 964 138)

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