CBN orders banks to replace long-serving external auditors


By Ifeanyi Onuba and Udeme Ekwere Tuesday, 14 Sep 2010   

The Central Bank of Nigeria on Monday directed all Deposit Money Banks to replace external auditors that had spent over 10 years auditing their financial records not later than December 31, 2010.

The CBN, which gave the directive in a statement signed by its Head, Corporate Affairs, Mr. Muhammed Abdullahi, on Monday, said the tenure limit included years spent by the auditors with constituent legacy banks. 

It said the directive was in line with the provisions of paragraph 8.2.3 of the CBN Code of Corporate Governance for Banks, adding that it would mandate affected bank auditors that failed to comply with the directive to resign at the expiration of the deadline.

The code states that “the tenure of the auditors in a given bank shall be for a maximum period of 10 years after which the audit firm shall not be reappointed in the bank until after a period of another 10 years.”

Prominent among the banks‘ auditors are Akintola Williams Delloite, KPMG and PricewaterhouseCoopers.With this directive, some of these firms, which are external auditors to as many as 10 banks, may swap banks, according to experts in the industry. 

The apex bank said, ”For the avoidance of doubt, the maximum period of 10 years shall include the period an audit firm, which later merged/changed name, first commenced audit assignment in the bank.“Consequently, all banks are to submit their status of compliance with the provisions of the above stated paragraph of the code on or before December 31, 2010 to the Director, Banking Supervision. Failure to comply will result in the CBN directing the affected auditors to resign mandatorily.”

In line with its determination to rid the banking sector of poor corporate governance, the apex bank had earlier directed non-executive directors, who had spent 12 years on the boards of their banks to quit by December 2010.It said the decision was in line with the Code of Corporate Governance 2006, which states that ”the maximum tenure for non-executive directors of banks is three terms of four years each.”

The CBN also pegged the tenure of banks‘ chief executive officers at 10 years, saying they could not spend more than two consecutive terms of five years each.A former President of the Association of National Accountants of Nigeria, Dr. Samuel Nzekwe, had, while assessing the role of auditors in the banking sector crisis, said, “We have to rotate auditing firms, from three to five years. When you know another auditor will be auditing what you have audited, you will be careful.”






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