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FRC report on Stanbic IBTC faulty, says CBN

The Central Bank of Nigeria (CBN) came down hard on the Financial Reporting Council of Nigeria (FRCN) saying the Council’s indictment of  Stanbic IBTC Holdings Plc (SIBTCH) is baseless and lacking in merit.
The CBN Governor, Godin Emefiele who registered the bank’s displeasure with the Council in a letter addressed to its Executive Secretary/Chief Executive, Jim Obazee, said the body was reckless and hasty in sanctioning the bank and its directors for alleged misstatement of the company’s 2013 and 2014 accounts.

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Emefiele
Emefiele absolved the bank’s management and board of almost all the Council’s allegations and regretted that the Council did not follow due process stipulated in the FRC Act No.6 of 2011 in punishing SIBTCH.
“In the light of the foregoing facts, which clearly show that FRCN did not follow due process, the CBN regrets to inform that it is unable to accede to FRC’s request to take disciplinary action against SIBTCH. Indeed, the CBN does not see any reason to advise or compel SIBTCH to obey the sanctions meted to it by the FRCN,” the apex bank said.
For instance, the CBN said the final notice and regulatory decision by the Council were based on the FRC Act No.6 of 2011 and Regulation 21 of the FRC Guidelines/Regulation for Inspection and Monitoring Entities 2014.
The CBN said contrary to the allegation of the FRC that Stanbic IBTC did not obtain approval from the National Office for Technology Acquisition and Promotion (NOTAP) for payment of affiliate software licence, its review showed that the bank actually obtained the necessary approval from NOTAP to pay affiliate software license from the Standard Bank South Africa, for the period of three years covering June 1, 2012 to 30th May 2015.
“With regard to the allegation of non-disclosure of intangible assets in SIBTC’s 2013 and 2014 financials, we note that the bank adequately recognised the software as an intangible asset in its 2011 financials and sufficiently disclosed the disposal of the software in the 2012 financials. Consequently, the said software could not have been reported as an intangible asset in the succeeding years 2013 and 2014,” the CBN said.
On the allegations of lumping several expense items under ‘Others’, the CBN said the items were not material enough to appear as line items in the income statement and that the non-disclosure of the items did not materially affect the true and fair view of the financial statements.
It however agreed with the FRC that SIBTC erred in the classification of some line items. “However, the identified misclassifications did not understate or overstate its assets and liabilities did not understate or overstate its assets and liabilities, neither did it increase nor decrease its income or expenditure, such as would have caused a material misrepresentation of the financials,” the CBN said.
Defending SIBTC, the apex bank said if the company used its judgment to capture donation of N275 million under ‘Others’ because it was of the opinion that it was not a charitable donation but a mandatory contribution towards the victims of terrorism in the country.‎

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