CBN May Withdraw, Restate Published Seven-Years Financial Statements
In the coming days, the Central Bank of Nigeria (CBN) may be asked to withdraw and restate the entire seven years’ financial statements published last week owing to the alleged inherent flaws and also, for containing misleading information.
The apex bank published the financial statements for 2016, 2017, 2018, 2019, 2020, 2021, and 2022 last week but findings by InsideBusinessNG showed that the published documents did not pass through approved procedures and were also, riddled with inaccurate figures.
In addition, the two auditors of the financial statements, Ernst & Young and KPMG had also confessed before an investigative panel of the Department of State Service (DSS) early this year that the 2016, 2017, 2018, 2019, 2020, and 2021 financial statements that have just been released were flawed, fraudulent and unreliable.
Another reason why the financial documents may be withdrawn, according to a source, is the guidelines from the Financial Reporting Council of Nigeria (FRC) titled, “Accounting Guideline for Financial Reporting by CBN”, which they alleged, was fraudulently prepared to cover up alleged unwholesome practices in the apex bank’s operations.
A top official who preferred anonymity defended the bank, stating that the financial statements satisfied the laid down procedure before they were published and hence, no need for their withdrawal.
“For now, I didn’t hear that they will be withdrawn because we followed the appropriate procedure. Every last week of February, we submit the audited accounts to the National Assembly and also to the Presidency for approval. So they won’t be withdrawn.”
He however said he was not sure of the president’s approval. “I did not know whether they got President Tinubu’s approval on these financial statements”, he told InsideBusinessNG on the phone.
The enabling act of the apex bank stipulates the procedures for the publication of a financial statement which include submission to the National Assembly for scrutiny, and thereafter, the approval of the President, after which it will be gazetted and published. Sources at the bank however confided in InsideBusinessNG that none of these financial documents pass through such procedures.
“The current National Assembly could not have scrutinised the financial documents because the standing committees of the Senate that would have done that were constituted the same week that the CBN published the financial statements”, stated another top official who is familiar with the issue.
“Also, former President Muhammadu Buhari did not approve the documents and the current President, Bola Tinubu has not approved the financial statements because they were part of the queries issued to the suspended governor, Godwin Emefiele and which he could not answer. The reason for the unavailability of the financial statements is one of the reasons for the appointment of the Special Investigator, Jim Obazee, who together with his team during the DSS investigation, had all resolved that the documents should be withdrawn, restated, and reissued because of the inaccurate information and also, their preparation with the FRC guidelines which were said to be fraudulent “.
The criminal aspect, according to the source is that both EY and KPMG, the two auditors to the CBN had, earlier in the year signed and submitted undertakings to the DSS, stating that the six financial statements from 2016 to 2021 were fraudulent and misleading and therefore, the figures therein should not be relied upon for any decision.
“As you can see, since their publication last week, Nigerians and the media have been quoting the figures in the financial statements. Unknown to them, those figures are not reliable because the guidelines that were used to prepare the audited accounts allowed them to cook up the figures”, stated another top official of the bank who is also well informed of the developments.
“For instance, the over N23 trillion loan (Ways & Means) from the CBN to the federal government was not the accurate figure”, he told InsideBusinessNG.
The publication of the financial statements, according to those that volunteered information, was done out of panic to give the impression that the current management under the Acting-Governor, Folasodun Shonubi is working. Another performance index that the current management could have used is foreign exchange, but this is still uncontrollable after 10 weeks of its unification.
Findings however show that the main reason for the publication of the statements without their restatement is to cover up shady dealings of the Emefiele era which the top hierarchy of the bank are all complicit in, and also to derail the ongoing investigation of the bank.
Before these publications, the last financial statement that was made public by the apex bank was that of 2015 which was gazetted and published in 2018 according to findings from the Government Press in Abuja and Lagos.
DSS in December 2022 assembled a team of forensic experts led by Jim Obazee, the current Special Investigator of the CBN who was re-appointed by President Bola Tinubu. Obazee, together with his team of forensic experts began the investigation of the banking industry including the CBN.
InsideBusinessNG had earlier in the year reported that the DSS, during its investigation that was suspended in January 2023, detected several holes in the apex bank’s financial statements from 2016 to 2021. This led to the decision, which they said, is also known to the CBN officials, that they should all be withdrawn and restated.
Sources in the apex bank told this Online Newspaper that this position had not changed as the financial documents were not restated before the break in the investigation in January 2023 and up till the exit of the administration of former President Buhari. The documents have not also been restated till last week when they were published, InsideBusinessNG learnt.
The source also queried the authenticity of the 2022 financial statement which he said that Ernst & Young and KPMG had not commenced the preparation as of the time that Obazee was appointed on July 28, because the documents to use for its preparation had since January, been in the custody of the DSS.
“The 2022 accounts could not have been prepared between July 28 and now. The period is too short for its preparation and its passage through the appropriate procedures for publication”.
Scrutiny of the financial statements by InsideBusinessNG shows they are riddled with errors and misleading facts such as those in the 2017 financial statements.
For instance, the first paragraph in the introductory part of the Report of the Committee of Governors stated that the financial statements which were said to have been published on December 31, 2017, according to the information on the CBN website, were prepared with a March 2018 accounting guidelines prepared by the FRC.
“The consolidated and separate financial statements of the CBN for the year ended 31 December 2017 were prepared based on accounting policies set out on pages 16 to 36 which are derived from the International Financial Reporting Standards (IFRS) and the recommended practices in the guidelines issued by the Financial Reporting Council of Nigeria (FRC) titled, “Accounting Guideline for Financial Reporting by CBN”, on March 2018 as it affects CBN operations, the CBN Act of 2007 and the FRC Act No.6 of 2011″.
The 2017 audited account ought to have been published on February 28 or 29 of 2018, and using March 28 guidelines from the FRC for its preparation easily raises suspicion.
A check of all the financial statements also shows that they were all prepared, using the 2018 guidelines from the FRC which was revised annually as stated in the Report of the Committee of Governors in all of the accounts from 2017 to 2022.
“The consolidated and separate financial statements of the Central Bank of Nigeria (‘the Group’) for the year ended 31 December 2022 were prepared based on accounting policies set out on pages 18 to 49 which are derived from the IFRS Standards, the recommended practices in the guidelines issued by the Financial Reporting Council of Nigeria (FRCN) titled “Accounting Guideline for Financial Reporting by Central Bank of Nigeria” (“the Guideline”) in February 2018, revised annually for reporting period up to 31 December 2022, the relevant provisions of the Central Bank of Nigeria Act No. 7, 2007 and the Financial Reporting Council of Nigeria Act No. 6, 2011″, according to all the financial documents.
These guidelines developed during the era of the late David Asapokhai-led- management and the current management of the FRC under Ahmed Shuaib, were alleged to have helped to plunge the apex bank into a huge mess.
The guidelines, procured from the FRC, according to findings, were adjudged fraudulent by the audit firms, the FRC, and the apex bank before the DSS investigative panel that held from December 2022 through January 2023.
Sources close to the DSS panel confided in InsideBusinessNG that the FRC guidelines allegedly rendered all the financial statements from 2016 to 2021 useless because the guidelines were alleged to be fraudulently contrived.
This discovery, it was gathered, led to the detention of both Jamiu Olakisan of EY and Ayodele Othihiwa of KPMG by the DSS during the investigation. The two representatives of the audit firms who are still on bail, were released by the Nigeria secret police after their statements in which they admitted that the 2016 to 2021 financial statements of the apex bank which they prepared and issued, “were fraudulent, misleading and unreliable for economic decisions”.
With this admission, the two have prepared and issued CBN financial statements that misled the National Assembly, the president, and the entire Nigerians.
All over the world, data in Central Banks’ financial statements are used for countries’ annual budgets and the determination of economic decisions by both the government and the private sector.
The admission by the FRC and the auditors before the DSS panel that the financial statements are fraudulent and misleading, has therefore, rendered all the Monetary Policy Committee (MPC) decisions and the interest rates charged by Deposit Money Banks (DMBs) from 2016 to date as flawed and misleading.
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