Financial Reporting Council of Nigeria (FRC), the body that is saddled with the responsibility of setting accounting standards in Nigeria, sees fair value accounting as an essential guidance that will enhance financial statement reliability.
Fair market value is an estimate of the market value of a property based on what a knowledgeable, willing, and unpressured buyer would probably pay to a knowledgeable, willing, seller in an arm’s length transaction.
“We are going to see fair value accounting fraud going forward”, said Jim Obazee, executive secretary/chief executive officer of FRC, in a lecture note delivered during the three-day press retreat for business editors and finance correspondents in Lagos.
“Journalists have to be painstaking while analysing the financial statements of companies as the days of financial crisis is not over, it will have a different form,” he said.
Directors of companies and banks through creative accounting known as window dressing conceal the estimate of actual or market price of goods, service, or assets. This deliberate misrepresentation of financial information for material gains also occurs between group companies and their subsidiaries especially when the transactions are not at arm’s length.
Meanwhile, FRC has declared 2015 as the score card on the adoption of IFRS in Nigeria. The council said it would commence audit quality inspection, adding that it is currently seeking membership of the International Forum of Independent Audit Regulators (IFAR), which, he said, will boost the capacity of the council to monitor audit quality.
