By YINKA KOLAWOLE

The Financial Reporting Council (FRC) has emphasized the need for Not-for-profit organisations to comply with the new financial reporting regime, given them till the end of the year to comply to register with the Council.

Chief Executive Officer/Executive Secretary, FRC, Mr. Jim Obazee, at an interactive session with journalists, last week, in Lagos, said at the end of the deadline, the Council will begin commence the enforcement of the law against them. He said the Council is currently registering Not-for Profit organisations via its website, adding that a number of them have already registered.

“Currently, financial statements presented by Not for Profit organisations in Nigeria are not uniform and comparable. They differ from one type of institution to another and sometimes among institutions of a particular type, thus, making comparison and accountability difficult. SAS 32, that became effective July 1, 2011 establishes uniform basis of accounting and reporting of activities of Not for Profit organisations.

“Section 11(d) of the Financial Reporting Council of Nigeria Act No. 6, 2011 provides that the Council is to ensure accuracy and reliability of financial reports and corporate disclosures, pursuant to the various laws and regulations currently in existence. This includes the financial reports of Not-for-Profit Organisations.

“It has also been noticed that a number of entities operating on commercial lines, within charity, are claiming exemption on their income on the ground that the totality of the outfits are charitable institutions. This is based on the argument that they are engaged in the “advancement of an object of general public utility” and classified as “company limited by guarantee” as provided for by Section 26 of the Companies and Allied Matters Act LFN 2004. Such a claim, when made in respect of an activity carried out on commercial lines, is contrary to the intention of the provision and put the assets of the charitable purpose at significant risk,” he stated.

Meanwhile, Obazee said FRC is not responsible for approving financial reports of organisations, but rather reviews them to ensure compliance with International Financial Reporting Standard (IFRS). He was reacting to a newspaper report (not Vanguard) that the Council refused to approve the 2012 annual report of the Central Bank of Nigeria, CBN.

“The financial report of entities including that of the CBN is approved by the Governing Board of the organisations. The FRC does not approve accounts. Section 8 (d) of the FRC Act requires preparers of financial statement to send their financial statements to the FRC within 60 days after approval by their own board. The FRC looks at the financial statements sent to us and review it. And remember, they first have to submit the statement to their primary regulators before the approval of the board, and it is only after these have been done that they end a copy of the approved statement to the FRC,” he remarked.

The FRC chief executive further stated: “If we discover that you have non-compliance issues that are not significant, we will write you and raise the issues with you so that you can go and correct them. But if the issues are significant, we will ask you to withdraw the financial statement and re-issue it in line with the law.

“If we ask you to withdraw and re-issue, the applicability of the law will not be denied. Because according to Section 7, if we ask an organisation to withdraw and re-issue, the Chief Executive Officer (CEO) and Chief Finance Officer (CFO) will forfeit every bonus they have received from the company and if they sold shares owned by them, the profit will be calculated and forfeited. That is why when companies fill out our forms, we ask for the details of the shareholdings of the CEOs and CFOs,” he stated.