Auditors back away as FRC, Stanbic battle over financials

The External auditors to Stanbic IBTC Holdings Plc, KPMG, has indicated that it would not sign off the much-awaited 2015 financial statement of the financial services group due to fear that the Financial Reporting Council of Nigeria (FRC) might sanction the auditing firm.

 

The FRC and Stanbic IBTC Holdings have been engaged in a bitter legal squabble over the appropriateness of the reporting structures and details of accounts of Stanbic IBTC Holdings.

 

KPMG, which had all along defended the appropriateness of the financial statements of the Stanbic IBTC Holdings, has formally informed the financial services group that it would not be able to express an audit opinion on the 2015 financial statements of the bank due to the threat of sanction from the FRC.

 

In a regulatory filing, Stanbic IBTC Holdings stated that FRC had informed KPMG that as “privies” of FRC, the audit firm would be sanctioned if it issues an audit opinion in respect of the financial statements of Stanbic IBTC Holdings Plc or any of its subsidiaries.

Stanbic IBTC Holdings noted that while it had prepared its accounts for the period ended December 31, 2015 in compliance with the new FRC rules published on March 15, 2016 and all extant accounting standards, KPMG has however indicated that it would not be able to express an audit opinion in respect of the financial statements given the threat of sanction from FRC.

“Stanbic IBTC Holdings Plc considers the position taken by the FRC with respect to the injunction and its 2015 financial statements erroneous and unfortunate and has alerted the Central Bank of Nigeria (CBN), its primary statutory regulator, as well as the Honorable Minister of Industry, Trade and Investment to the challenges posed by the FRC,” Stanbic IBTC Holdings stated.

According to the group, FRC has informed the group that it will not comply with the court orders or engage constructively with Stanbic IBTC Holdings unless and until there is a non-appealable decision of a court of competent jurisdiction. It is pertinent to mention that only decisions of the Supreme Court of Nigeria are non-appealable.

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Stanbic IBTC Holdings stated that the delay in submitting its annual report and accounts is due to the challenges being faced from the FRC. The group however assured that it will continue running of its business while exploring its constitutional rights to seek redress and protection through the legal process and the law courts.

 

It should be recalled that Stanbic IBTC Holdings had instituted an appeal at the Lagos Division of the Court of Appeal following allegations of misrepresentation of its financial report, over which FRC had announced a regime of sanctions against Stanbic IBTC Holdings, including a fine of N1 billion.

 

As the bickering raged, Stanbic IBTC Holdings had on March 24, 2016 filed a notice with the Nigerian Stock Exchange (NSE) on the reporting challenges it was experiencing with FRC regarding its 2015 financial statements. It obtained the approval of the NSE to delay the filing of its 2015 audited financial statements on 24 March 2016, while the Securities and Exchange Commission (SEC) applied the regulatory sanction for late filing of financial statements by a listed entity.

 

However, the challenges with the FRC continued, as the regulatory agency continued to place hurdles in the way of fair and quick resolution of the issues. For instance, on March 15, 2016, FRC published on its website undated new rules which the agency said applied with immediate effect. In essence, the new rules would apply to all financial statements that had not been finalized as at March 15, 2016.

 

While reiterating that it remains well-capitalized, liquid and continues to operate profitably, Stanbic IBTC Holdings assured that it will continue to engage with the CBN and its solicitors to comply fully with all extant laws and regulations applicable to the conduct of its business.

 

 

 

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