In the quest to meet regulatory standards of the Central Bank of Nigeria (CBN) and other international requirements, Nigerian tier-one banks spent N362.98 million more to audit their half year 2019 financial reports.
According to the banks’ financial reports as analysed by Businessday, the Deposit Money Banks (DMB) audited their half-year financials at a joint cost of N1.61 billion in H1 2019. On year-on-year comparison, the figure is 29.19 percent higher than the N1.24 billion spent in the corresponding period of 2018.
Under the Banks and Other Financial Institutions Act (BOFIAS 1991) as amended to date, money depository institutions in Nigeria in addition to the provisions of CAMA 1990 are required by BOFIAS to submit audited financial statements to the CBN for approval before publication in a national daily newspaper within four months after the year end.
A dive into the financials of the country’s biggest banks revealed that Access Bank spent more in auditing its half-year financials. The lender audited its H1’19 financial report with N561.47 million from the N257.16 million spent in the corresponding period of last year.
This was followed by Guaranty Trust Bank (GTB) and Zenith Bank as they paid their auditors N390 million and N379 million, respectively.
Compared to the previous year, the lenders paid 2.9 percent and 12 percent more than the N379 million and N336 million reported as auditors’ remuneration in H1 2018.
In the same period under review, United Bank for Africa (UBA) reported N4 million rise in auditor’s fees as the lender paid N275 million in H1 2019 compared to N271 million in the previous year. The breakdown of the figures from FBN Holdings was however not ascertained at the time of this report.
In 2017, the Central Bank instructed that the auditors’ reports accompanying audited financial statements of all banks should be in compliance with International Standard on Auditing (ISA) 701- communicating Key Audit Matters in the Independent Auditor’s reports of the Financial Reporting Council of Nigeria (FRCN).
The FRCN 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.
Consequently, the CBN said it had 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).
Checks by Businessday revealed that the appointment of auditors for banks is approved by the apex bank.
A further probe into the H1 2019 financials of Nigeria’s five biggest banks revealed that the Pricewaterhousecoopers (PWC) audited four banks in the review period leaving only one bank to KPMG Professional Services.
According to the reports, PWC was the external auditor to Access Bank, FBN Holdings, UBA and GTB and it attracted a total of N1.23 billion from three of the lenders.
“We concluded our audit in accordance with International Standards on Auditing (ISAS). We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion,” PWC said.
On the other hand, KPMG audited the financials of Zenith Bank with an auditor’s remuneration of N379 million.
In its remark, KPMG stated that “the accompanying consolidated and separate interim financial statement (of Zenith Bank) gave a true and fair view of the consolidated and separate financial position of the Bank and its subsidiaries as at 30 June 2019”.
