KPMG Professional Services has advised shareholders, especially members of audit committees of companies, to monitor the activities of companies in their purview closely.

According to the company, this is in line with the expected adoption of the International Financial Reporting Standards by quoted companies as from the 2012 accounting year.

The Partner, Consumer Markets KPMG Professional Services, Mrs. Toyin Gbagi, said that it was important for shareholders to continue to monitor accounting judgements and estimates and prepare for accounting changes.

Gbagi was speaking at an annual Audit Committee Members’ seminar for Nigeria Shareholders’ Solidarity Association, organised by KPMG Professional Services.

She said, “It is important for shareholders to monitor fair value estimates, impairments and management assumptions underlying critical accounting estimates and also request entity-specific IFRS presentations by managements and advisors from time to time.

“Also, shareholders should try to understand how major accounting changes on the horizon may impact the company, including implementation/resources and IT system requirements.”

Gbagi stated that given the importance of transparency within the investor community as well as the ongoing focus by regulators on disclosures, it was essential for shareholders to consider how disclosures can be improved upon to better address expectations.

She also warned shareholders to ensure that they stay focused on the audit committee’s top priority of financial reporting and related internal control risks.

Gbagi noted that IFRS adoption had brought to the forefront the various issues that could not be ignored by the shareholders, adding that it would boost transparency in reporting

“An entity shall disclose the presentation currency; information about the assumptions it makes about the future and other major sources of estimation uncertainty at the end of the reporting period; and shall disclose the date when the financial statements were authorised for issue and who gave that authorisation,” she added.

In his own submission, the President, NSSA, Mr. Timothy Adesiyan, commended KPMG for the seminar stating that it was timely and addressed a critical issue that hitherto remained unclear to shareholders.

He said, “The seminar is timely as it is aimed at preparing shareholders and members of companies’ audit committees for the task ahead in the adoption of the IFRS in reporting their accounts, and a lot of shareholders have been made aware of their oversight functions and what to look out for in reports.

“We believe that the adoption of IFRS is laudable as the various additional disclosures that are now required from companies would make them perform better in terms of transparency and corporate governance.”

He added that with the new system, huge cases of fraud would be almost non-existent, as there would be full disclosures because shareholders would be made aware of the questions to ask the management concerning their results.

Source: Punch/Udeme Ekwere