Now, more than ever before, it has become essential for companies to take an active approach to improving the reliability of their financial reporting by strengthening internal controls that prevent fraud and misstatements.
The Investment and Securities Act (ISA) of 2007 established the Securities Exchange Commission of Nigeria (SEC) as the apex regulatory body for the Nigerian capital market. SEC oversees the activities of public companies and enforces compliance with the provisions established in the Act. Sections 60 - 63 of the Act highlights the corporate responsibility of public companies regarding the establishment of an internal control system and filing of a report on the effectiveness of its internal control system.
Over the past few years, the SEC observed that public companies were not complying with the above-mentioned provisions of the Act noting that the root cause for noncompliance was the absence of a framework to guide practitioners and the management of public companies. In order to ensure compliance, SEC released a guideline and has adopted the COSO Framework (or any other suitable, recognized control framework that is established by a body or group that has followed due-process procedures, including the broad distribution of the framework for public comment) to provide guidance on the implementation of Sections 60 – 63 of the ISA.
To gain more understanding of the current state of awareness and implementation of the framework as well as the challenges companies face in implementation, we facilitated a webinar on 30 June 2021 during which we surveyed 106 respondents from public and private companies in Nigeria. The respondents were majorly Finance, Internal Audit, Risk and Control professionals of organisations across various sectors.
This publication provides a snapshot of the current state of awareness and implementation of internal control over financial reporting.Consequently, this publication seeks to enlighten stakeholders on how their organisatons can approach the implementation of the SEC Guideline on internal control over financial reporting (ICFR) to better manage risks, enhance performance and demonstrate compliance with Sections 60- 63 of the Investment and Securities Act of 2007 (ISA).
Based on our experience, we have also included a Frequently Asked Questions (FAQs) section which helps to answer specific and prevalent questions.
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