Indigenous Audit Firms Cry Foul Over Lack Of Govt Patronage

Idris

Idris, Accountant-General of the Federation

INDIGENOUS audit firms have decried the poor implementation of the country’s local content law, which they accuse the government of flouting, with incessant appointment of foreign audit companies to investigate major government accounts.

They said the local content law was put in place to protect indigenous capacity and grow local skills, facilitate technology transfer, and maximise use of local manpower in the economy.

They however lamented the preference for foreign auditors by the government and its agencies. According to the local content act, Nigerian owned companies are to be given priority in the award of contracts.

But there is controversy over what constitutes local content. While some international firms with indigenous partners and employees address themselves as local audit firms, many argue it would be wrong to classify them as Nigerian firms simply because they have Nigerian workers and partners.

The chairman, SIAO, Mr. Robert Ade-Odiachi, said there is need to place emphasis on legal definition of a Nigerian firm. “All Nigerian companies should be allowed to partake in contracts, either for the supply of goods or for the provision of services as spelt out in the Act. Nigerians do not own the big four audit firms. That they have Nigerian partners does not make them Nigerian companies.”

Continuing, he said, “All other professions have their legal backing to preserve the entity for Nigerian participation, but the case is different for the audit practice as it has been left to all and sundry.”

He said: “Nigerian audit firms are dying as opportunities are being given to international organisations, with Nigerians as their partners or employees, who do not own any part of the company, but retire and go away, while the international firms smile to the bank and send money to their home country.”

According to him, ”when the local content was signed, I thought it was an opportunity for local audit firms to grow. But years after, we are still battling with branded firms practicing under international firms, even the stock agencies gravitate towards the big international firms; KPMG, Price Waterhouse Coopers (PWC), Accenture, Deloitte, and Ernst & Young (EY) because if you don’t use the firms, it won’t be recognised.”

According to him, the indigenous firms could do jobs given to the foreign audit firms better. “We have competent organisations in Nigeria that can also render the same services, yet some organisations cannot pay their staff on time, this affects the psyche of Nigerians that are being told, by this, that anything foreign is good.

We have engaged government to look into the matter, but it is still a long battle. Even if we don’t have the competence or process, we should share the space like they do all over the world through joint audit, so there can be some transfer of knowledge.”

The Managing Director, Olusola Makanjuola and Company said, “competition with international firms has always been a major challenge, because it leads to capital flight and job losses. Some firms in Nigeria cannot employ.

Even if they have Nigerian partners, the money still goes back to the foreign firms. The issue is whether the law compel government to use Nigerian firms? “We don’t have a body to prosecute some of the malpractices by these orgamisations.

Some would publish a report showing names of directors, but not the name of the organisation that audited, banks would also report profits, yet, they are in debts and some of them are still chasing debtors for non performing loans.

We need to ask for the name of the firms that audited some of these accounts. These are some of the issues we need to look into. We have problems on our hands beyond the local content.”

For Mr. Segun of Olusegun Akande and Company, it is a problem that has been on for a long time, although there is contention as to what qualifies as Nigerian organisation. “I do not think it is right to use these firms continuously at the expense of Nigerian owned firms because there are competent indigenous audit organisations that can do the same work for the Federal Government.

My grouse is why must it be the same organisation that would render the forensic audit service? This is the same problem we have in the banking sector, even the banks prefer the big four to any other organisation, but having an international source or backing does not connote perfection.”

Director General of Association of Enterprise Risk Management Professionals, Yinka Odutola, urged local audit firms to fight for their rights even without the application of local content law provision. “I don’t think there is any official position on it, which may not be deliberate.

The implication is that indigenous firms should not wait on the local content policy to take effect before fighting for what is theirs; rather they should also offer government the opportunity to audit at a lesser rate.

As a matter of fact, if government really wants to save money to fund infrastructure, it should patronise local accountants, because these foreign firms are paid in dollars, which is repatriated to the home country of such organisation.

That money can actually do a lot if it is remains here. Some of these politicians are just using foreign auditors to siphon our hard earned money, so this is another avenue to curb corruption.”

The president, Association of National Accountants of Nigeria (ANAN), Anthony Nzom also decried the government’s neglect of local firms. He urged government to give them a trial, adding that other indigenous firms could be contracted to review audit exercise for accuracy.

According to him, indigenous firms are not likely to connive with agency of government to commit fraud for fear of sanction from their professional bodies. “All indigenous firms are licensed by their respective professional bodies (ICAN or ANAN), which always check their activities and review their practicing status.

If in any case, they are found wanting, they will be sanctioned and disciplinary measures would be taken against the culprits.” But a Professor of accounting at the University of Lagos, Omolehinwa Eddy said it could be right to classify many of the international audit firms as Nigerian firms since Nigerians are managing them. “Nigerians are the ones managing these international organisations, so they are also Nigerian firms.

But there is something fundamentally wrong, with implementation by the government. Under the 1979 constitution, the auditor general is supposed to audit government account up until 1999.

But in 1999, it was changed; now the auditor general cannot audit some major accounts, and government should not wait until there is crisis before attending to issues. Funny enough, the accounts that are having problems are the ones that the auditor general is not allowed to audit.”

Dr Ajibolade, also a lecturer at the University of Lagos harped on the quality of service and independence of audit firms saying, “It is important for an audit firm to be independent and also be seen as independent, the quality of service is more important than the battle for local content.

Besides these organisations are not really foreign because Nigerians are the ones heading them, this issue is beyond looking at who gets the profit; if we keep looking at profit, we would get it wrong.

There is a lot of Nepotism in the system, so I think government is trying to be neutral, because if a Nigerian firm should be picked to do the job, the firm most likely to get it is the one that has connection to government.

However, Some of the indigenous firms can also merge to become bigger because research and findings have proven that quality of audit is affected by the size of a firm, they are able to pool fund from their firms in other countries to execute a project when necessary.”

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