Oando Nigeria Plc issued a press release last week that it will not be able to release its 2015 Annual Reports on schedule because of a clause in Rule 5 of the Financial Reporting Council of Nigeria.
The Management of Oando PLC would like to advise our valued shareholders, key stakeholders, and wider investor community that from available indications we are unlikely to complete our 2015 audit and issue our audited accounts on 31 March, 2016, as required by The NSE Rules (the Rules). We have worked diligently with our external auditor, Ernst & Young (“EY”) to ensure a swift conclusion to the audit process. However, after reviewing the financials, EY indicated that the Accounts may likely need to be referred to the Financial Reporting Council of Nigeria (“FRC”) pursuant to Rule 5 of the recently publicised FRC Rules. We expect the process to be concluded on or before 31 May, 2016, however this is dependent on the completion of the external review process as referred to above.
Rule 5 of the FRCN, states as follows;
A qualified opinion basically means that the information provided by Oando Plc on some aspects of its Financial Statements was limited in scope and/or the company being audited has not maintained IFRS accounting principles. What this basically means is that the auditors of Oando have indicated that the financial statements of the oil giant though, fairly represented, lacked documentary evidence to verify various aspects of the transactions and reports being audited.
Oando faced similar circumstances in 2014 when its auditors drew attention to the fact that Oando paid dividends in the first half of the year from audited reserves, a contravention of section 379 of the Company and Allied Matters Act (CAMA).
Oando is hugely indebted to a lot of Nigerian banks providing some concerns for investors in the banking sector and the company as well. The CBN had instructed commercial banks who lent money to Oando to take a 5% provision an indication that the loans were doubtful despite banks saying it was performing.