‘NASB Has Been Proactive In Setting Accounting Standards In The Country’
The Nigerian Accounting Standards Board (NASB) has been in existence since 1982. How has the Board contributed to the growth and development of the accounting profession in Nigeria?
The Board came into being as a result of what happened during the indigenisation era. Then, foreign companies were mandated by the Nigerian government to give up part of their holding in their companies. And these companies came from different parts of the world. So, in other to maximise what they were going to take away, they shopped around for accounting rules to use. So, the result you got when they prepared account depended on the rules they used to prepare the account. In the end, they used different accounting rules and Nigeria was not any better for it. As a result, people who had interest in financial reporting in Nigeria, specifically the Institute of Chartered Accountants of Nigeria (ICAN), the Nigerian Stock Exchange and Securities (NSE) and the Securities Exchange Commission (SEC) got together and decided to stop that. They then came up with our own local standards so that if you are in Nigeria and you are preparing your financial statement, you must follow the Nigerian standard. And so in 1982, they set up the NASB.
When I joined the Board in 1990, we were occupying two rooms in ICAN office. I met three staff then-the administration manager, a secretary and a typist. Today, the Board has grown to become a recognised institution in Nigeria. During this period, there had been some transformations in the system. In the late 80’s we had serious problems in the banking industry, as people did not believe the profits the banks were recording. The Central Bank of Nigeria (CBN) called the NASB to intervene. We came up with a totally home-grown standard because then the International Accounting Standards Committee (IASC) did not have any standard for accounting in the banking industry. So, we came up with a standard that dealt with income recognition, loss recognition and balance sheet classification including disclosures in the banking industry and that contributed a lot to sanitise the banking industry in Nigeria.
We all know how oil is important to Nigeria but until 1993, we didn’t have any accounting standard for the oil industry. The operators in the oil industry in Nigeria were all preparing their financial statements the way they wanted to. So, in 1993, we issued accounting standard for the up stream oil industry while that of the down stream was issued in 1997. The standards have contributed to the development of the oil industry and subsequently the Nigerian economy in terms of the revenue that accrues to government and reliability of financial reporting in the oil industry.
When we issued our standard for the insurance industry, the IASC didn’t have such. So, NASB has been very proactive in its approach to setting accounting standards and that has made a lot of contribution to the development the Nigerian economy.
How then would you assess the impact of your leadership on the Board almost 20 years in the saddle?
When I joined the Board in 1990, we had eight accounting standards but today we have 30 accounting standards. Also, we now have the Nigerian Accounting Standards Board Act. In those days, we could only enforce our standards through moral persuasion but now the law compels the companies to obey the standards.
It was under my watch that we were able to persuade the National Assembly to pass the NASB Act in 2003, which gave the Board enforcement powers. Now, we are very close to getting the Financial Reporting Council Bill passed into law. The National Assembly had passed the bill into law during the Obasanjo administration but unfortunately, he didn’t sign it and we had to start all over again. If we succeed this time, it will transform financial reporting in Nigeria because the law will bring all the people involved in financial reporting in Nigeria under an umbrella and that will have a very significant impact on financial reporting in the country.
Also, if you consider the fact that Nigeria has concluded the road map report on the adoption of international financial reporting standards, which will be announced to the public in a very short while, you will see that while I would not want to blow my own trumpet, by the grace of God, we have made some modest of the modest contributions towards the growth of the economy.
What specific challenges did you face over this period and how were they surmounted?
One of the biggest challenges that we face is enforcement of standards. This is because every manager wants to look good; every manager wants to present a rosy report. This is a fact whether he is White or Black and it is not different with companies. Every company wants to announce a rosy profit and get praised by the shareholders. So, if you don’t enforce accounting standards, managers would do whatever they like to make their positions look good.
We have been able to address that through the NASB Act, which established the Inspectorate Unit and gave it powers to inspect companies. The Act gave tremendous powers to the Board to penalise companies whenever they don’t follow the standards. One wonderful thing that came out of the exercise, which I noticed, is that if you inspect and punish a company this year, next year, you will see improvement in their financial report. That is something that gives us a lot of pride.
The other challenge is paucity of resources and that is natural. As at today, NASB is still operating from rented space as its office, which shouldn’t be. We are still hoping for a suitable office accommodation.
It is, however, noteworthy that in 2006, the World Bank stepped in and made some very significant contributions to the work of the Board. From 2006 till date, they have probably spent about $3 million in equipping the NASB in terms of computerisation and overseas training for my staff. Through that intervention, I can now boast of very capable technical staff at the Board that can stand their own anywhere in the world with respect to accounting standards.
Which government ministry does the Board report to?
The NASB is a parastatal under the Federal Ministry of Commerce and Industry and that is where it should be. People have asked me why we are not under the Ministry of Finance but the Ministry is only responsible for accounting for government money, which is not our job. Our job is to promote investment. We are trying to adopt the international financial reporting standard to attract foreign direct investment into the country. The thing is that if they are not convinced that the reporting in Nigeria follows the same standard that they understand they won’t bring in their money. So, we naturally belong to the Ministry of Commerce and Industry.
In terms of employment, is it the Ministry that recruits the staff of the Board or the management?
The management of NASB employs but as a government parastatal, we get approval before we finalise the process.
That brings me to an interesting thing that has happened over the years. When the government wanted to take over the Board after the promulgation of the Companies Decree in 1990, we were very sceptical because we thought the government would just destroy what we were doing. But it has been a pleasant surprise that since 1992 when the Board was inaugurated as a Federal Government parastatal, no minister has interfered in the technical duties of the Board and I have worked with at least 15 ministers.
For you, it has been almost 20 years of resounding success at the NASB. How would you comment on your relationship with members of staff of the Board who have certainly helped you to wade through the challenges you faced?
Of course, there is no way I could have achieved anything alone. I have said that when I joined, there were just four of us. As we speak, the staff strength of NASB is very close to 60. In the technical department, we have about 15 staff.
The work of the Board involves a lot of research and inspection and I don’t even participate in inspection at all. So, there is no way I could have done it alone. I must say that I enjoy a very cordial relationship with my staff. I am fortunate that I had been there when most of them came to join the Board. So, to some extent, I had a hand in engaging each of them. Out of the four of us, only two of us are still with the Board so I can say that I hired the rest. However, that doesn’t mean that I must automatically get the cooperation of the staff but I think I have had a very good and cordial working relationship with them.
My policy at the Board has been that I am happy when my staff are happy. Before I go for one foreign training programme or anything like that, a lot of my staff would have gone twice or more. It has worked like magic as I can send anybody at the Board to represent me anywhere. So, I think I am very proud of the staff complement I have here.
I understand that your tenure will end in November, this year. Having done so well, will you seek for a second term?
As a matter of fact, the NASB Act came into force in 2003 and the Board was inaugurated in 2005. The Act stipulates a five-year tenure for the Executive Secretary renewable for only one term. So, my tenure started on November 4, 2005 and will end on November 3, 2010. I could still ask for one more term as the law entitles me to. But I have young people working with me. If I should continue to sit there, they would still remain my subordinates and naturally I expect any of them to aspire to head the place.
Some of my staff joined the Board in 1993 and that desire to move ahead ought to be there and if I don’t leave, that chance would not be there. That may sound sentimental but I feel totally convinced that without me in the Board, it would continue to grow stronger and move on. It is said that one should quit when the ovation is loudest and I think the ovation is loudest for me now. In any case I am not getting any younger. So, I won’t seek a second term.
The step you are about taking is very alien to this country, as not many people will wave a second term to give others a chance to grow. What really is the driving force behind it?
To me moral consideration is very important in life. But more importantly, I believe that I can serve this country in many other capacities, not just in government. I could set up a business outfit and become an employer of labour and start serving the country. So, I believe that there are so many capacities in which I can serve Nigeria. In any case I have been here for 20 years, I don’t think I have anything exceptionally new to bring to bear on the work of the Board again. And I may move to another side and begin to contribute more and even better. It is true that the fear of unknown is a big problem for humanity. But then again at my age, I am willing to try some other things. My children are grown and gone.
So, what should be expected of you in retirement?
I will first of all take like three to six months ‘doing nothing’. That does not mean that I will just go and sleep. No, I will be engaged in my local church, my community and other things like that but I won’t take any full time employment within the period. After that, I will try to do a book on my experiences over these years and thereafter do whatever God says I should do.
But you must be thinking of something?
You mean in terms of post retirement career?
I am thinking of so many things and have told you some of them. Till now, I still see myself as a teacher because at NASB, I spend a lot of time presenting papers, addressing seminars and discussing workshops. So, that comes very highly in my post retirement plan.
However, sometimes I also think that may be I should concentrate and try to make some money. And I know that if must make money, the university is not the best destination. So, I am also considering working with some companies as consultant.
What about the option of joining politics?
No! Honestly, I don’t have any such plans. I don’t have any competence in that area. I have spent all my life as a professional accountant. I am not saying that accountants can’t go into politics but I have never done that before. So, I don’t have any special skills in that area.
Looking ahead, what future do you see of the NASB?
I don’t have a crystal ball but if the situation I have in NASB now persists, I think the future is very bright because I have very competent and dedicated people at NASB who are focused and understand the work of the Board. So, the future of NASB is well assured and very promising.