CBN Challenges Auditors On Bank Reporting
 2nd NOV 2006

The CBN has tasked auditors on bank reporting and statements of account declaration as it issued new measures to guide investments in the post-consolidation era.

CBN Governor, Prof. Charles Soludo issued the challenge recently in Abuja at the opening of a two-day conference of Regulators and External Auditors of Financial Institutions.

Speaking at the conference, Soludo said, "auditors should no longer assume that the posting by banks management were correct."

He added that recent happenings in the world showed that auditors needed to be more careful, stressing that the post-consolidation era depended on their ability to protect people's investment.

Soludo said that in its effort to protect investments in the sector, the CBN had adopted some measures to ensure that operators in the sector discharged their responsibility in line with laid down rules.

The measures, he said, included Vision 2020, aimed at repositioning the sector and the transfer of external reserve management to both local and international banks.

Others included reforming the Forex sector and the mandatory rotation of external auditors by banks and risk-based supervision and auditing in a computerised environment.

Soludo named the rest as the electronic financial assistance surveillance system (e-FAST) and the introduction of a corporate governance code for banks.

In an address, the Managing Director, Nigeria Deposit Insurance Corporation (NDIC), Alhaji Ganiyu Ogunleye, said that ensuring good corporate governance of financial institutions had remained a major issue of concern in the country.

"Good governance is about how to build trust and sustain confidence among the various interest groups,'' he said.

He added that others were ensuring transparency, accountability and maintaining effective channel of information to foster good corporate performance.

Ogunleye said that a diagnostic review of failed banks in the country had revealed that most of them were "guilty of various acts of insiders’ abuse and financial malpractice."

"In one of the banks, more than 60 per cent of the loan portfolio was loans granted to the chairman's related companies in another bank.

"N250 million advance rent was paid between 2002 and 2004 for the lease of a building owned by the chairman which is currently under construction," he said.

Ogunleye said that with the emergence of large banks of comparable sizes, competition had become keener than hitherto, stressing that curtailing unhealthy competition had become a major issue in the sector.

"In this regard, severe sanctions have been prescribed for banks which engage in unwholesome practice of de-marketing their competitors," he said.

Ogunleye, however, said that the emergence of large banks had resulted to banks showing more interest in consumer and mortgage lending.

He added that if the trend continued, the country would witness the re-emergence of the middle-class sooner than later.

In a goodwill message, ICAN President, Mrs. Catherine Okpareke, observed that the consolidated banks were not doing enough to fast track their integration. She said that a situation where customers of some merged banks still could not effectively carry out transactions beyond the branch of the banks where they had account before the merger was unacceptable.

Okpareke said that this was in spite of their acclaimed on-line real-time service, noting that it was injurious to the reputation of the sector.

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