Impact Analysis of the Financial Reporting Council of Nigeria (Amendment) Act, 2023 on Businesses
Introduction
The Financial Reporting Council of Nigeria (Amendment) Act 2023 (“the Act” or “Amended Act”) introduces several key modifications to the provisions of the FRCN 2011 Act (“the Principal Act”). These changes are intended to enhance transparency, accountability, good governance, and sustainable development within Nigeria’s business sector.
In this analysis, we will outline the major developments introduced by the Act and their significant impacts on businesses in Nigeria, with a particular focus on financial reporting.
1. Expansion of the PIE Definition
The Amended Act refines the definition of Public Interest Entities (PIEs) to include a broader range of entities, thereby expanding the scope of financial reporting requirements:
Government and government organizations
Listed entities on any recognized exchange in Nigeria
Non-listed entities that are regulated
Public limited companies
Private companies that are holding companies of public or regulated entities
Concession entities
Privatized entities with government interest
Entities engaged in public works with annual contracts of NGN 1 billion or more, funded by public funds
Government licenses
Entities with an annual turnover of NGN 30 billion or more
Previously, PIEs were described more narrowly, which led to ambiguity and varying interpretations. This broadening aims to reduce uncertainty and ensure comprehensive financial reporting across more sectors.
Conclusion
The Financial Reporting Council of Nigeria (Amendment) Act 2023 brings significant changes to the regulatory landscape for businesses. By expanding the definition of PIEs and creating a national repository for financial reports, the Act aims to improve transparency and accountability in financial reporting, ultimately contributing to better governance and sustainable development within Nigeria’s business environment.