CBN to compel banks to comply with international standard on auditing rule

The Central Bank of Nigeria (CBN) has advised all banks and their external auditors to adhere to Rule 9 (Application of International Standard on Auditing (ISA) 701 – (Communicating Key Audit Matters in the Independent Auditor’s Report) of the Financial Reporting Council of Nigeria (FRCN).

Independent auditors are mandated by the rule to ensure that listed and unlisted entities comply with the requirements of ISA 701 for audit of financial statements for periods ending on or after December 15, 2016 and June 30, 2017, respectively.

The CBN explained this in a letter with reference number BSD/DIR/GEN/LAB/10/006 dated February 6, 2017, and titled: “Application of International Standard on Auditing (ISA) 701 (Communicating Key Audit Matters in the Independent Auditor’s Report) in the Banking Sector.”

The letter was addressed to all banks and their external auditors.

The CBN stated: “The attention of all banks and their external auditors is hereby drawn to the Rule 9 (Application of International Standard on Auditing (ISA) 701 – Communicating Key Audit Matters in the Independent Auditor’s Report) of the Financial Reporting Council of Nigeria (FRCN) which requires independent auditors of listed and unlisted entities to comply with the requirements of ISA 701 for audit of financial statements for periods ending on or after December 15, 2016 and June 30, 2017, respectively.

“In order to create a level playing field for the implementation of ISA 701 in the Nigerian banking industry, the CBN has obtained the concurrence of the FRCN for external auditors of all banks (both listed and unlisted) to comply with the requirements of the new standard for audits of financial statements for periods ending on or after December 15, 2016.

“Accordingly, the auditors’ reports accompanying audited financial statements of all banks for the applicable periods should be compliant with ISA 701.”

In a related development, the CBN in its revised “Guidelines for Direct Debit Scheme in Nigeria 2017,” among other things, stated that payment service providers must be duly licensed by the CBN and subject to electronic payment guidelines.

“The payment service providers shall execute direct debits in line with the instructions on the direct debit mandate. It is the responsibility of the Payment Service Provider to give information, advice and guidance on all aspects of the scheme to the biller,” it added.