This is one of those anti business regulatory restrictions that somehow passed under the nose of those who should know better and then passed into the law. The Financial Reporting Council Act was passed into law and signed by GEJ in July 2011 amidst several rebuttals by accountants. The law which replaced the NASB (National Accounting Standards Board Act), serves to regulate the financial reporting process includes some of the most strident regulations that I have ever seen in the financial reporting. It places so much power on the Chairman Mr Jim Obazee and his council one wonders if things will ever be the same again.
Not only is the law central to the performance of the accounting profession it also affects those in other fields of endeavors who may be seeking to work for the large organizations or Public Interest Entities (PIE) as the act calls them. For example section 30 says the following;
30.—(1) The Council shall make and issue such rules or ethical codes of practice to establish its procedures and policies for the purpose of monitoring registered auditors and other professionals rendering services to public interest entities.
Meaning if you are an architect and which to render a service to a bank or to a government agency, then you are automatically under supervision by the council. Section 41 below even places stricter registration rules on any professional seeking to render services to public interest entities. See below’
2) A person shall not hold any appointment or offer any service for remuneration as a professional for public interest entities, unless he is registered under this Act.
(3) A person who wishes to be registered shall make a written application to the Council in a prescribed form.
(4) An application made under sub-section (2) of this section shall be accompanied by such fees and such information as the Council may from time to time determine.
(5) Where the Council is satisfied that the applicant holds a practicing certificate, the Council shall enter the name of the registered professional and such particulars as it considers relevant, in the Register of Professionals.
(6) A person who contravenes sub-section (2) of this section commits an offence and is liable on conviction, to a fine not exceeding N500,000.00 or to imprisonment for a term not exceeding 6 months or both.
Whilst I do support regulations in practices I do not see why they should get in the way and stifle businesses from thriving. Based on this law any one seeking to consult will not only register with his own professional body and other regulatory “bodies” out there including the quasi ones set up by large corporations, they wll now contend with getting a certificate from FRC.
Financial Burden?? The law also places huge financial burden on corporate organization as section 31 of the act makes provisions for levies on organizations and individuals. Every registered professional must pay at least N5,000 annually while quoted companies must pay at least N500,000.
Whilst I have argued provisions of section 41 with auditors as I believe it only refers to accountants and tax consultants auditors and lawyers believe it is all encompassing provided you are rendering a service for a public interest entity. Sadly, whilst the law defines a PIE it fails to define “other professionals”.
PIE are defines as follows
“Public Interest Entities” means governments, government organizations, quoted and unquoted companies and all other organizations which are required by law to file returns with regulatory authorities and this excludes private companies that routinely file returns only with the Corporate Affairs Commission and the Federal Inland Revenue Service ;