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Presidency threatens to sanction CBN over Stanbic IBTC

• CBN Governor Godwin Emefiele

The presidency has threatened to sanction the
Central Bank of Nigeria (CBN) if it is discovered that
the errors observed in the financial statements of
Stanbic IBTC are found to be true.

This is contained in a letter written on Tuesday 10th
November, 2015 by the Financial Reporting Council
of Nigeria (FRC) to the CBN governor in reaction to
the earlier controversial letter written by the CBN.
According to the FRC, the Presidency has promised
to wield the big stick against the CBN “because the
CBN approved the said financial statement before
they were issued.

The explosive letter from the FRC had indicated
that a meeting had been convened by the Chief of
Staff to President Muhammadu Buhari, Alhaji Abba
Kyari between the CBN governor Mr. Godwin
Emefiele and the Executive Secretary of the FRC Mr.
Jim Obaze in the presidential villa on the 29th of
October, 2015.

According to the letter, the Chief of Staff had
instructed both the CBN and the FRC to come up
with a harmonized position as two regulators on
the review of the Stanbic IBTC’s financial statement
for the years ended 31st December, 2013 and 2014.
At the end of the meeting, the Chief of Staff
directed that the CBN “should write to the
management of Stanbic IBTC, directing them to
stop all negative publicity being sponsored against
the FRC. He directed you (CBN Governor) to send a
copy of that letter to me (Jim Obaze of FRC and up
Up till now, you are yet to send a copy of that letter
to me).

Abba Kyari also directed that “a team of CBN
should visit Stanbic IBTC to review the records
again to know whether the errors were due to
oversight or incompetence or compromise;
that the FRC should secure a written position on
the matter from the external auditors of Stanbic
IBTC and that the CBN Governor and the FRC
Executive Secretary should agree on a date to meet
thereafter and review the document received and
reach a final decision.”

The FRC in its letter accused the CBN of acting in
bad faith and that the actions of the CBN were
designed to embarrass the FRC. Obaze in his letter
said the CBN in its letter had cleared Stanbic IBTC
and maligned the FRC.

On the financial issues raised by the CBN, Obazee
in his letter to the Emefiele said the CBN “mixed up
issues and eventually ended up with very wrong
and hasty conclusions.” The FRC said its regulatory
decision was for the purchase and assignment of a
banking application software request made to
NOTAP by Stanbic IBTC on July 3rd 2013 “which is
another transaction other than the one the CBN
letter addressed.”

FRC then “wondered why the CBN is condoning and
vehemently defending an unwholesome disclosure
and reporting practice such as this. The only
plausible reason will be that the CBN actually
approved these financial statements.”

Wrong classification of items of assets and
liabilities (two of the three major elements of
financial statements) the FRC said “could affect the
economic decision of users, which implies that:
“assets and liabilities figures do not reflect what
they actually are and the financial statement
misrepresents the true state of the company’s

Qualitative characteristics of verifiability and
comparability have been compromised; and
the financial statements do not actually comply
with IFRS.”

Jim Obazee wrote that the FRC would “make bold to
say that we acted within the provisions of the FRC
Act, 2011 and the Inspectorate Unit Guidelines/
Regulatory 2014. Since, the FRC is neither a
department of the CBN nor a reporting agency to
the CBN, we do not owe the CBN any explanation in
this respect,” the letter concluded.

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Posted By Bobricky On 09:54 Thu, 12 Nov 2015

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