Nigeria

The main legislation that establishes corporate financial reporting requirements in Nigeria is the Companies and Allied Matters Act of 1990 (CAMA) and its subsequent amendments. The CAMA outlines the formation, operation, and dissolution of companies, as well as the requirements for corporate accounting, auditing and financial reporting.

Accounting Framework

All companies are required to prepare annual financial statements in accordance with standards issued by the Financial Reporting Council of Nigeria (FRC) established by the Financial Reporting Council of Nigeria Act of 2011 (FRC Act). FRC is responsible for setting both private and public sector accounting standards and ensuring compliance with financial reporting requirements, among other functions. Under the FRC Act, accounting standards adopted by FRC must be in line with the standards issued by the IASB.

Since 2010, all public interest entities (PIEs) are required to apply IFRS in the preparation of their financial statements, while small and medium-sized entities (SMEs) are required to use IFRS for SMEs. PIEs include listed and non-listed entities, banking and non-bank financial institutions, pension funds, and state-owned public enterprises. SMEs are defined as companies that: (i) are not in the process of issuing debt or equity securities for trading in a public market; (ii) do not hold assets in fiduciary capacity for a broad group of outsiders as one of their primary businesses; (iii) have annual turnover Small and Medium-sized Entities Guidelines on Accounting (SMEGA) Level 3 issued by the United Nations Conference on Trade and Development (UNCTAD).

Regulatory bodies such as the Central Bank of Nigeria (CBN), the Securities and Exchange Commission (SEC), the Nigerian Stock Exchange (NSE), and the National Insurance Commission (NAICOM) stipulate additional financial reporting requirements for the entities that fall within their purview.

Auditing Framework

The CAMA establishes a mandatory statutory audit requirement for all entities in Nigeria. In accordance with the FRC Act, the FRC has been granted authority to develop or adopt and keep up-to-date auditing standards issued by relevant professional bodies and ensure consistency between the standards issued and the auditing standards and pronouncements of the IAASB.

Appointment of the auditors of regulated entities is subject to the approval of the respective regulators, to whom audited financial statements must be submitted on a periodic basis.

Professional accountants in Nigeria are regulated by the Financial Reporting Council of Nigeria (FRC) and at the professional level by two professional accountancy organizations operating in the jurisdiction—the Institute of Chartered Accountants of Nigeria (ICAN) and the Association of National Accountants of Nigeria (ANAN)

In accordance with the Financial Reporting Council (FRC) Act of 2011, FRC has oversight authority of the profession with respect to registration of professional accountants, quality assurance (QA) review inspections for audits of public interest entities (PIEs), and enforcement of sanctions for non-compliance with applicable standards and breaches of professional misconduct. FRC is also responsible for adoption of accounting standards that are to be consistent with the IFRS as well as for the development or adoption and maintenance of auditing standards issued by relevant professional bodies and ensuring consistency between the standards issued and the auditing standards and pronouncements of the IAASB. Lastly, FRC is also authorized to issue a Code of Ethics for auditors and other professionals providing services to PIEs.

The FRC Act requires professional accountants in Nigeria to be registered with the FRC to be authorized to prepare financial statements and conduct statutory audits of PIEs. A practicing certificate issued by any one of the abovementioned national PAOs is required as part of the registration process to deliver services in a public practice.

Both ICAN and ANAN offer their own qualifications to individuals pursuing careers in accountancy. ANAN offers the designation of Certified National Accountant (CNA). To qualify as a CNA, candidates must hold a University degree or a Higher National Diploma in accountancy and then enroll in the Nigerian College of Accountancy for a one year educational program and pass the professional exams at the end of the one-year training period. Subsequently, individuals must then complete two years of practical training through an Accountant-in-Training (AIT) program either with a practicing ANAN member or an approved professional in the respective sector. After completing practical experience requirements, individuals are eligible to receive the CNA designation and may begin practicing after receiving a practicing certificate from the Council.

ICAN offers the designations of Chartered Accountant (CA) or Associate Accounting Technician (AAT)—which are protected titles under the ICAN Act of 1965—upon fulfillment of education and certification requirements for either stream. These requirements include completing a professional accountancy education program, passing the qualifying examination, and completing a three-year internship with a firm of chartered accountants. CAs are permitted to practice as auditors once licensed by ICAN and once registered with FRC if they will serve as auditors for PIEs.

Through their respective founding legislations, both PAOs have the authority to determine initial professional development and continuing professional development (IPD and CPD, respectively) requirements for their members; determine examination and certification requirements for members; maintain membership registers; enforce rules of professional conduct as well as ethical and technical standards for their members; and carry out quality assurance reviews for members.

The Financial Reporting Council of Nigeria (FRC) is the audit oversight body in Nigeria established in accordance with the Financial Reporting Council Act (FRC) of June 2011.

In accordance with the FRC Act of 2011, FRC has oversight authority of the profession with respect to registration of auditors, quality assurance (QA) review inspections for audits of public interest entities (PIEs), and enforcement of sanctions for non-compliance with applicable standards and breaches of professional misconduct. The FRC is also responsible for adoption of accounting standards that are to be consistent with the IFRS as well as the development or adoption and maintenance of auditing standards issued by relevant professional bodies and ensure consistency between the standards issued and the auditing standards and pronouncements of the IAASB. Lastly, the FRC is also authorized to issue a Code of Ethics for auditors of PIEs.

FRC is not a member of the International Forum of Independent Audit Regulators (IFIAR).

Auditors must also be members of one of the two PAOs and be subject to the respective regulations of the Institute. Through their respective founding legislations, both PAOs have the authority to (i) determine initial professional development and continuing professional development (IPD and CPD, respectively) requirements for their members; (ii) determine examination and certification requirements for members; (iii) maintain membership registers; (iv) enforce rules of professional conduct as well as ethical and technical standards for their members; and (v) carry out QA reviews for members.

Association of National Accountants of Nigeria (ANAN)

The ANAN Act of 1993 establishes the Association of National Accountants of Nigeria (ANAN). ANAN administers a Certified National Accountants (CNA) certification, which is conferred on members who successfully complete the related qualification examinations administered by ANAN. CNAs are required to be members of ANAN. Many ANAN members are accountants who work in the public sector. The association’s mandate includes (i) setting initial professional development and continuing professional development (IPD and CPD, respectively) requirements for its members; (ii) determining examination and certification requirements for members; (iii) maintaining a membership register; (iv) enforcing rules of professional conduct as well as ethical and technical standards for its members; and (v) carrying out quality assurance reviews for members.

ANAN collaborates with the Financial Reporting Council of Nigeria (FRC) on audit and other professional standards. The association is a member of IFAC, the Pan African Federation of Accountants (PAFA) and the Association of Accountancy Bodies in West Africa (ABWA).

Institute of Chartered Accountants of Nigeria (ICAN)

The Institute of Chartered Accountants of Nigeria (ICAN), whose membership comprises accountants, auditors, and accounting technicians, was established in 1965 by Act of Parliament No. 15 of September 1, 1965 (the ICAN Act). ICAN is a mandatory membership organization and members of ICAN receive the title of Chartered Accountant or Associate Accounting Technician upon fulfillment of education and certification requirements for either stream. The titles are protected under the ICAN Act. ICAN’s responsibilities in relation to its members are (i) setting initial professional development and continuing professional development (IPD and CPD, respectively) requirements for its members; (ii) determining examination and certification requirements for members; (iii) maintaining a membership register; (iv) enforcing rules of professional conduct as well as ethical and technical standards for its members; and (v) carrying out quality assurance reviews for members.

The ICAN is a founding member of ABWA, IFAC, and PAFA.

Each of the professional accountancy organizations in the country is a beneficiary of capacity building projects.

The Institute of Chartered Accountants of Nigeria (ICAN) concluded a twinning arrangement with ICAEW sponsored by World Bank in 2015. In addition, Chartered Institute of Public Finance and Accountancy (CIPFA) and ICAN are working on developing a joint certification in Public Financial Management. CIPFA admits ICAN members with five years of public service experience as full members under a Memorandum of Understanding (MoU) signed by the two bodies in U.K in March 2015.

In 2016, the Certified Public Accountants Ireland (CPA Ireland) partnered with the Association of National Accountants of Nigeria (ANAN) and its training arm, the Nigerian College of Accountancy (NCA), to review and strengthen its study materials and examination processes. The two institutes are collaborating to review, update, and make recommendations for ongoing maintenance to the syllabus, study materials, and examination for NCA’s professional and conversion program. The capacity building project is managed by IFAC’s PAO Capacity Building Program and funded by the U.K. Department for International Development.

The Financial Reporting Council of Nigeria (FRC) is legally responsible for the establishment of a quality assurance (QA) review system in Nigeria in accordance with the FRC Act of 2011. In 2014, the FRC issued Guidelines/Regulations for Inspection and Monitoring of Reporting Entities. FRC has not fully commenced QA reviews although on November 1, 2018, the FRC inaugurated an Audit Regulation Working Group to provide it with technical assistance in releasing a comprehensive set of rules to better regulate the independent audit of corporate financial reporting in the interest of members of the public.

Nonetheless, the two professional accountancy organizations (PAOs) in the country—the Association of National Accountants of Nigeria (ANAN) and the Institute of Chartered Accountants of Nigeria (ICAN)— have established their own QA review systems for their respective members in accordance with their founding legislations and conduct QA reviews for audits of all entities (both public interest and non-public interest entities).

ANAN has operated a QA review system since 2011 for its member firms that provide auditing and other services. In 2018, ANAN completed a self-assessment of its review process against the SMO 1 requirements and confirms its QA review fulfills the SMO 1 requirements.

ICAN has been engaged in conducting QA reviews of its member firms since 2009. The institute adopted ISQC 1. ICAN has conducted a self-assessment of its QA review system against the SMO 1 requirements and reports that its system is aligned.

Current Status: Adopted

Initial and continuing professional development (IPD and CPD) of professional accountants in Nigeria are determined by the two professional accountancy organizations (PAOs) in the country—the Institute of Chartered Accountants of Nigeria (ICAN) and the Association of National Accountants of Nigeria (ANAN)—as well as the National Universities Commission (NUC) and National Board for Technical Education (NBTE). The NUC and NBTE determine the curriculum of universities in Nigeria and polytechnic institutions respectively and the PAOs accredit universities to ensure alignment with the IES requirements.

Under the ANAN Act of 1993, ANAN is responsible for determining and overseeing the education and training requirements leading to the qualifications that it offers to its members. The association reports that IES 1 to IES 7 are incorporated into ANAN’s requirements and IES 8 requirements apply as deemed appropriate. ANAN follows the IES benchmarks and its last review of the standards and its programming was in 2019.

The ICAN Act of 1965 grants ICAN authority to determine the IPD and CPD requirements for the qualification it offers. The ICAN indicates that its syllabus for its professional accountancy education program was revised in June 2014to take effect in November 2019. This new syllabus meets the revisions of IES requirements from 2015 which outline a learning outcome approach to IPD components. ICAN members must obtain 90 credits of CPD over a three-year period which does not fully meet the input-based approach outlined in IES 7 of 120 credits over three years.

Current Status: Partially Adopted

The Companies and Allied Matters Act of 1990 (CAMA) establishes mandatory statutory audit requirement for all entities in Nigeria. In accordance with the Financial Reporting Council (FRC) Act of 2011, the Financial Reporting Council of Nigeria (FRC) has been granted authority to develop or adopt and keep up-to-date auditing standards issued by relevant professional bodies and ensure consistency between the standards issued and the auditing standards and pronouncements of the IAASB. The FRC, ICAN, and ANAN all indicate that all standards and pronouncements are adopted as issued by the IAASB for application in the jurisdiction. The 2020 IAASB Handbook is in effect, which includes ISA 540 revised (effective December 2019) and conforming amendments.

Current Status: Adopted

The Financial Reporting Council (FRC) Act of 2011 establishes the Financial Reporting Council of Nigeria (FRC) as the ethical standard-setter for registered professional accountants (in Nigeria this means auditors and other professionals providing services to public interest entities (PIEs)). The FRC Act outlines that the FRC is also responsible for developing and liaising with relevant professional bodies—the Institute of Chartered Accountants of Nigeria (ICAN) and the Association of National Accountants of Nigeria (ANAN)—regarding ethical standards.

In accordance with its mandate under the ANAN Act of 1993, ANAN initially developed a Code of Professional Conduct and Ethics, which was consistent with the 2006 version of IESBA Code of Ethics. As of the date of the assessment, it states that it has updated its Code in line with the 2018 version of the IESBA Code of Ethics.

ICAN developed a “Professional Code of Conduct and Guide for Members” as part of its responsibility under the ICAN Act of 1965. However, ICAN decided, in May 2018, to directly adopt the Code of Ethics for Professional Accountants as issued by the International Ethics Standards Board for Accountants (IESBA)—The 2021 IESBA Handbook as of the date of the assessment.

Current Status: Partially Adopted

In accordance with the Financial Reporting Council (FRC) Act, the Financial Reporting Council of Nigeria (FRC) is responsible for setting public sector accounting standards in Nigeria. The FRC Act requires that the FRC establish standards that are in line with those issued by the IPSASB.

The FRC developed a roadmap for the phased adoption and implementation of accrual-basis IPSAS at all levels of the government, with the full adoption since January 2016.

The Institute of Chartered Accountants of Nigeria (ICAN) and the Association of National Accountants of Nigeria (ANAN) report that accrual-basis IPSAS as issued directly by IPSASB are adopted and applicable for all public sector entities. The 2016 government financial statements were the first to be compliant with IPSAS (IFAC, CIPFA 2018).

Current Status: Adopted

According to the Financial Reporting Council (FRC) Act of 2011, the FRC may investigate and issue sanctions for registered professional accountants (in Nigeria this means auditors and other professionals providing services to public interest entities (PIEs)) that fails to comply with applicable standards and professional codes of conduct. The Association of National Accountants of Nigeria (ANAN) reports that the FRC operates an I&D mechanism that is in line with SMO 6.

Both professional accountancy organizations (PAOs) in the country—the Institute of Chartered Accountants of Nigeria (ICAN) and the Association of National Accountants of Nigeria (ANAN)—are also legally authorized to establish and operate investigative and disciplinary (I&D) systems for their members.

ANAN’s mandate to investigate and discipline its members is outlined in the ANAN Act of 1993. ANAN has established an Investigative Panel and Disciplinary Tribunal, which its reports are independent and separate. ANAN reports in its self-assessment against the SMO 6 requirements that its I&D system incorporates most SMO 6 best practices; however, there are some administrative processes that are not yet fully aligned such as a tracking mechanism to monitor progression of cases and a procedure to review complaints with no follow-up indicated.

ICAN is empowered to investigate and discipline members for breach of professional standards and misconduct under the ICAN Act of 1965. ICAN states that its I&D system incorporates major requirements of SMO 6 and it is working to ensure the SMO 6 requirements are fully met. The remaining inconsistency is that ICAN’s I&D committees are only comprised of professional accountants although lawyers do serve as secretaries.

As of December 2016, ICAN indicates that there is currently no collaboration between the Financial Reporting Council of Nigeria and two PAOs regarding the I&D of professional accountants in the jurisdiction and all cases are handled separately.

Current Status: Partially Adopted

All companies are required to prepare annual financial statements in accordance with standards issued by the Financial Reporting Council of Nigeria (FRC) as established by the Financial Reporting Council of Nigeria Act of 2011 (FRC Act). Under the FRC Act, accounting standards adopted by the FRC must be in line with the standards issued by the IASB.

Since 2010, all public interest entities (PIEs) are required to apply IFRS in the preparation of their financial statements, while small and medium-sized entities (SMEs) are required to use IFRS for SMEs.

Micro-sized entities, defined as those entities that are not PIEs or SMEs, may apply IFRS for SMEs or the Small and Medium-sized Entities Guidelines on Accounting (SMEGA) Level 3 issued by the United Nations Conference on Trade and Development (UNCTAD).

Regulatory bodies such as the Central Bank of Nigeria (CBN), the Securities and Exchange Commission (SEC), the Nigerian Stock Exchange (NSE), and the National Insurance Commission (NAICOM) stipulate additional financial reporting requirements for the entities that fall within their purview.

Current Status: Adopted

Relevant Organizations

Association of National Accountants of Nigeria

Institute of Chartered Accountants of Nigeria

Financial Reporting Council of Nigeria (FRC)

Relevant Legislation

Association of National Accountants of Nigeria CAP.A26 Law, 2004

Companies and Allied Matters Act, 1990

Financial Reporting Council of Nigeria Act, 2011

Guidelines/Regulations for Inspection and Monitoring of Reporting Entities, 2014

Institute of Chartered Accountants of Nigeria Act, 1965

Relevant Publications

ANAN, 2015 IESBA Handbook of Code of Ethics for ANAN Members, March 2016.

--, ANAN Quality Assurance Review Guidelines, n.d.

--, “ANAN Standards on Auditing”, 2009.

--, SMO Action Plan, February 2018.

Ajayi, Rotimi, “Nigeria’s Financial Statement in Compliance with IPSAS- AGF” in PR Nigeria, 23 Jan 2018.

Francis, Ndubuisi, “ICAN Launches Accountability Index to Curtail Public Fund Mismanagement” in This Day, 3 Oct 2018.

Gbonegun, Victor, “ICAN moves to safeguard integrity, review syllabus” in The Guardian, 27 May 2018.

ICAN, “New Regulations and Examinations Syllabus for ICAN”

--, “Nigerian Standards on Auditing”, April 2013.

--, “Non-Compliance with Laws and Regulations”.

--, “SMO Action Plan,” February 2019.

IFRS Foundation, “IFRS Application Around the World?Jurisdictional Profile: Nigeria,” June 2016.

World Bank, Report on the Observance of Standards and Codes—Accounting and Auditing: Nigeria, June 2011.