By BABAJIDE KOMOLAFE & ROSEMARY ONUOHA

The Financial Reporting Council, FRC, has called for the enactment of a financial management law that will compel the federal and state governments to present financial statement.

Executive Secretary/Chief Executive Officer of FRC, Mr. Jim Obazee made this assertion at the annual workshop of Financial Correspondents Association of Nigeria, FICAN, in Ijebu-Ode last week.

Obazee said that the federal and state governments have always issued bonds with no financial statement showing how they have managed funds and allocations under their care.

To this end, there is need to change the financial management law in the country to create room for accountability, Obazee said.

Obazee said that through bonds, governments can repair the nation’s infrastructural deficit, however, governments must be made to present accurate and authentic financial statement of their stewardship before such bonds can fly.

With a sound financial management law, Obazee said that international investors will want to reckon with Nigeria, stating “If we don’t change the negative perception of this country, the country will not change.”

While commenting on the capacity of FRC to punish defaulting external auditors, Obazee said that the law setting up the FRC empowers it to punish such offenders.

“As the Nigerian Accounting Standards Board, NASB, we only punished defaulting external auditors within the ambit of the law and that law was largely defective in the sense that it didn’t allow us to publish all of those things we were doing. But as FRC, we are now allowed to publish and that is why you can now see us mention names on our website and going forward, you will begin to hear names of offenders and of what is going on.”

Obazee warned external auditors to avoid sharp practices as they stand to lose their operational licenses due to false reporting of financial statements.

Obazee said that, already, the Council was investigating an auditor, who was found to have presented several reports of a quoted company, saying he risk having his license withdrawn.

“There is a place for Nigeria going forward, there is no place for Nigeria going backward,” Obazee enthused.

Obazee noted that there is need to reduce the dominance of banks in the nation’s financial sector by introducing policies that will expand the investment scope of other players in the system.

He said, The third lesson from the crisis is that having a variety of markets and institutions helps the system regain equilibrium more quickly. That the US banking system has been able to recapitalize, at all, has been because it has been able to tap into a variety of sources including sovereign wealth funds.

Similarly, some asset sales have been possible because private equity and hedge funds specializing in distressed assets were willing to take up the impaired assets that banks wanted to offload.