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Fraud: KPMG seeks probe of companies over account submission

by Business News Report

KPMG Nigeria has called on the authorities in the capital market to probe any company that fails to submit its financial statement for a minimum of one year, saying that it might be a sign that the company is manipulating its financial statement or a sign of fraud in such company.

Over the years, the Securities and Exchange Commission, SEC, and the Nigerian Stock Exchange, NSE, only impose fines on companies that fail to submit their financial statements as at when due.

It is only in rare cases that trading is suspended on the shares of such companies. For example, the NSE said it imposed a total fine of N61.2 million on companies in 2013 for various infractions.

Speaking at the annual seminar for audit committee members of the Nigeria Shareholders’ Solidarity Association, NSSA, in Lagos, Mr. Tola Adeyemi, Partner and Head, Audit Services, KPMG, said the regulatory authorities should strictly enforce the rules on non-submission of financial statement and also carry out an intensive probe of the financials of companies for fraud.

According to him, immediate action should be taken after the first year a company fails to submit its financial statement; the authorities should beam their searchlight on the firm and find out the reason for the delay.

“Members of audit committees of such companies should raise alarm at that moment. This is because these are signs of fraud. Companies should be put on the spot as regards early submission of their financial report,” he noted.

He said audit committees play an important role in the life cycle of every firm, especially in stemming fraud in any organisation.

To strengthen the effectiveness of audit committees, Adeyemi advocated improvement in the quality of individuals appointed to audit committees; improvement in quality of training and improvement in the quality of information presented to the committee.

Also speaking, Mr. Akinyemi Ashade, Partner, Audit Services, KPMG, maintained that audit committee members should adopt all best practices in their organisations for the prevention and deterrence of fraud.

According to him, audit committees need to be aware that they are a part of the body responsible for the governance of their various organisations and are accountable to the shareholders whom they represent.

To prevent and detect fraud in the financial statements of an organisation, Ashade disclosed that audit committee members should perform an assessment of fraud risks, provide effective monitoring, communicate with the external auditors of the company, report findings to the Board of Directors, while ensuring that the Board acts on its recommendation.

He further stated that members of the committee should monitor the financial process, ensuring that they understand management’s responsibilities and representation; review earning releases and also assess whether the financial statements are complete and fairly present in all material respect among.

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