IFRS Academy Delay And The Interplay Of Forces | Independent Newspapers Limited
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IFRS Academy Delay And The Interplay Of Forces

Posted: Sep 13, 2016 at 6:23 am   /   by   /   comments (0)

By Seun Onatoye.


My discussion today is centred on the cause(s) of delay in the establishment of International Financial Reporting Standards (IFRS) academy following a 2012 press briefing by Hajia Maryam Ibrahim (Chairman of FRC Board) in which she disclosed that though the Academy was expected to take off in 2012, but had to be delayed to enable them put in place the necessary structures. You will recall that implementation of IFRS in Nigeria started in 2012, the IFRS Academy was part of measure to help companies and individuals build the capacity needed for effective implementation of IFRS. However, she promised that the Academy will take off by the first quarter of 2013.

Note that 27 of the 2015 annual report of Financial Reporting Council of Nigeria (FRC) stated that the Academy is in the process of incorporation as a special purpose vehicle called ‘’IFRS Academy Gte/Ltd’’ for education of IFRS and related matters in accordance with section 8(i)(i) of the FRC Act.

I also reviewed the IFRS Academy admission form for 3 months Professional IFRS Certification Programme, the admission is open to Regulators, Policy Makers, Academia, Preparers of Financial Statements, External Auditors and Audit Committee Members, and it was scheduled to start running as at 2013. The admission detail was broken down into three categories. Category A and B are free, but Category C will be paid for.

What we read in the media as the cause of the delay was that the fund needed to start the Academy has been diverted or invested to yield income for the CEO. Note that 19.1 of the 2015 annual report stated that the sum of N99,623,556 meant for the project was closed into the FRC Treasury Single Account (TSA) with the CBN from Guaranty Trust Bank and Access Bank. So, the reason while the Academy has not started running is not finance, but ‘’Selfish Interest’’ among some constituencies.

It is a known fact that Professional Bodies, Audit Firms, Professional Accountants and International Organisations run IFRS training in Nigeria. IFRS related work has contributed a significant percentage to the income of these organisations since 2012. Allowing IFRS Academy of FRC to start running for free will be against the economic interest of some groups. This is the reason why the project may not see the light of the day.

Public interest theory suggests that a regulation or regulator’s action (IFRS Academy) is the result of a public demand for correction of market failures (Exploitation of the public and below standard work). In this theory, the central authority (Decision Makers) is assumed to have the best interest of society at heart. It does its best to regulate so as to maximize social welfare. While the view of the theory represents an ideal on how regulation should be carried out, there are problems with its implementation. It can be argued from the standpoint of how regulation work is practiced, that the theory is superficial and, perhaps, naïve. However, the Interest group theory of regulation takes the view that an industry operates in the presence of a number of interest groups or constituencies (Professional Bodies, Audit Firms and Professionals); these various interest groups will lobby the decision makers (FRC Member Bodies) for a favourable regulation (Voting against the commencement of IFRS Academy).

It appears that Professional Organisations these days have put profit motive before the public interest which they claimed to be protecting. Professionals are now economic agents who tend to pursue what is in their best interest which is profit maximisation. Self-serving bias is manifested in most professions these days just like everyone else and professionals are rational maximisers of expected utility. Professional firms and organisations who are set up primarily to protect public interest are abandoning their first assignment to pursue profit maximisation and self-interest at the expense of the public.

Finally, I will advice President Muhammadu Buhari to constitute the board of FRC so that they make effectively implement the set objectives of the council. FRC should also adopt a win-win approach in negotiating with other stakeholders if this project must see the light of the day. Other stakeholders should know that IFRS Academy start-up is a litmus test for their integrity and their claim of protecting public interest. The conflicting interest of stakeholders requires a delicate balancing and maintenance of social accord is in the interest of all.