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Shortly before the Central Bank of Nigeria’s axe fell on the five managing directors of the ailing banks, their external auditors were campaigning on their behalf over the proposed implementation of the International Financial Reporting Standard (IFRS), thereby misinforming the public that all was well.
Not a few financial experts believed that if there were absolute transparency in financial reporting, we would doubtless have seen major insolvencies in a number of industries, particularly the banking industry. Is it right to say that regulators were in dilemma whether to act against the banks and perhaps precipitate their collapse with widely damaging effects, or whether to continue with the status quo, that would likely result in a worse failure at a later date as being experienced now? These could have motivated CBN’s governor, Sanusi Lamido Sanusi’s action on the five ailing banks.
With the well known collapse also of the US energy giant, Enron, Worldcom, etc and its multiplier effects, the accounting and auditing profession also came under sharp scrutiny by a disturbed and bewildered public and with that other extraneous factors that, hitherto, have no fundamental on management performance came under high beam; questioning the accountant’s competence and integrity, apart from raising doubts on the extant standards of corporate governance. 
The question still awaiting answers remain that some auditors approved these banks’ financials which were presented to shareholders at the annual general meetings, refusing to disclose their debt portfolio. What a misinformation? 
For instance, an audit firm in Nigeria with international reputation had audited and approved the consolidated financial statement of one of the five ailing banks and its subsidiaries, stating that the preparation and fair presentation of the financial statements is in accordance with Nigerian Statement of Accounting Standards (SAS) and with the requirements of the Companies and Allied Matters Act 1990 and the Banker and Other Financial Institutions Act 1991. How one wished the Nigerian Accounting Standards Board was aware of this. CBN’s findings on these five banks raise questions on most auditors’ credibility especially on disclosures of debt exposures. 
For every going concern, especially those public limited companies, accounting for sustainability involves recognising the hidden (or intangible) costs and benefits of decisions as well as the tangible: seeing now how the decisions taken today will affect future performance and outcomes.
The auditors had told the bank’s shareholders that “we have audited the accompanying consolidated financial statements of “the Bank” and its subsidiaries (together “the Group”) which comprises the consolidated cash balance sheet as at 31 December, 2008 and the consolidated profit and loss account and consolidated cash flow statements for the period then ended and a statement of significant accounting policies and other explanatory notes. In our opinion, the financial statement gives a true and fair view of the state of the financial affairs of the banks and group as at 31 December, 2008 and of their profits and cash flows for the period then ended in accordance with the Nigerian Statement of Accounting Standards, the Companies and Allied Matters Act 1990 and the Banks and Other Financial Institutions Act 1991.”  
Accounting information about a business entity or enterprise is required by a variety of users. This needs dictate the fundamental objectives of accounting and the model of reporting information. Firms, organisations or enterprises carry on business activities in a given economic, social and political environment and there is public interest in their operations. For instance, individuals, financial institutions or group of investors need accounting information to determine the liquidity, profitability and viability of the enterprise. Managers in an enterprise need accounting information to measure performance, plan and control operations. Employees and customers of an enterprise need accounting information in order to assess the ability of the enterprise to produce goods or to render services on a continuous basis. Governments and regulatory bodies need accounting information in order to be able to impose and collect taxes, to regulate certain business activities and to plan, execute and evaluate government projects. Quasi-government establishments need accounting information in order to meet their statutory obligations. 
Before this bank mess, the increasing misinformation on financials of public quoted companies by accountants, auditors has continued to put local and international investors in a fix and allowing them to sit on gun powder awaiting explosion.
Disclosure of information relating to financial implications of inter-company transfers and technical/management agreements between a subsidiary/associated company and its immediate and/or ultimate parent/related company usually provided additional insight into the understanding of financial statements. For instance, a Nigerian Accounting Standard takes the view that disclosure which goes beyond minimum legal requirements is useful for a more meaningful understanding of financial statements.  
The importance of well audited financial reports cannot be overemphasised because the recent reporting of financial information on the internet which is fast becoming common goes a long way to explain how important it is to investors. It gives investors from any country ready access to the financial information of companies, regardless of their country of domicile. 
Auditors need to understand that information expected to be provided in financial statements are those that are quantitative and qualitative in nature to aid their users in making informed economic decisions. There is no doubt saying that financial statements are therefore expected to be simple, clear and easy to understand by all users. Financial statements are the means of communicating to interested parties information on the resources, obligations and performances of the reporting entity or enterprise. Meaningful information can be gathered, collated and presented in different forms. At present, the information disclosed by some enterprises is limited to the minimum legal requirements. While other enterprises disclose additional information such as source and application of funds statements and value added statements, little information is provided in respect of related company’s transactions. 
Business failures were initially blamed on management; it is now perceived that auditors contribute to the mess. For instance, this led the British Institute of Management to request for a standard on operational audit in the early 1980’s. Operational audit was expected to be a systematic, comprehensive, critical and constructive examination and appraisal of organisational structure and management practices. This is what has today metamorphosed into corporate governance. 
The Nigerian Accounting Standards Board (NASB) hitherto, had a version of response to these casts. It had in existence an extensive due process in the development of its standards. This process was considered essential to ensure that all parties are given ample opportunity to express their thoughts, practice, dreams, and views so as to ensure that the standards, practices and guidelines so developed, are relevant, consistent and logically derived. The board has always been directed by a governing council drawn from organisations having operational interest in financial reporting. 
Apart from the fact that Section 335(1) of the Companies and Allied Matters Act, 1990 requires that all financial statements issued in Nigeria must comply with the standard laid down in the Statements of Accounting Standards issued from time to time by the Nigerian Accounting Standards Board, one can point to some measures of persuasion that were evident. This include independent auditors, who besides taking it as a professional responsibility to ensure that accounting standards are applied properly by management were also required by the Institute of Chartered Accountants of Nigeria (ICAN) to ensure compliance and to also so indicate in their report. 
Likewise, the provision of Section 26(2) of the Banks and Other Financial Institutions Act (No.25) of 1991 requires the financial statements of banks to comply with all applicable accounting standards. The Central Bank of Nigeria also requires auditors’ report of banks to state categorically that the accounts have been prepared in compliance with relevant Statements of Accounting Standards. 
The fact that relevant enabling laws that set up the organisations and entities mentioned earlier only required them to exercise authority over varying aspects of monitoring of compliance to Statements of Accounting Standards, without clearly vesting the power on any one entity made the situation very cloudy. 
It is unsurprising that in the midst of confusion, compliance monitoring was not satisfactorily done and worst still, none of these organisations/agencies was clearly vested with the responsibility for the damages that may have ensued. 
The promulgation of the NASB Act, 2003 and the setting up therein of the NASB Inspectorate Unit came as a better version of an evolutionary approach by government to strengthen compliance to accounting standards and enhance reliance. 
The second term of the immediate past administration brought with it major reforms aimed at promoting confidence in corporate reporting and governance, public sector procurement, revenue administration, accelerated liberalisation and deregulation of the petroleum sector, governance and institutional strengthening, inter-governmental relations, financial management and accountability (financial management, external audit, financial reporting practices and capacity building in the budget offices), civil services administration reforms. 
The pursuit of these reform mandates gave rise to such measures, in government, as the fashioning of the Fiscal Responsibility Bill, implementation of the new oil and gas unit, parastatals’ support unit, the setting up of Economic and Financial Crimes Commission (EFCC), the Independent and Corrupt Practices Commission (ICPC), and the Nigerian Extractive Industries Transparency Initiative (NEITI). 
In the midst of these developments, it became important that the government needed to engage in wide-ranging reviews, which recognises the importance of reassuring the markets and the public at large, that corporate reporting and governance frameworks in Nigeria were sufficiently robust.  
It would be recalled that on May 17, 2007, the National Assembly passed the bill for the enactment of a unified independent regulator to be given the central role of delivering a package of reforms to raise the standards of corporate governance, strengthen the accounting and audit profession, valuation and actuarial practices and provide an independent system of regulation for those professions. 
Regrettably, it was not signed into law before the present administration assumed office. It is worthy to note that the current administration has sent the bill again to the National Assembly for accelerated hearing.
Financial experts believe that continuity in governance shall climax this law in the shortest possible time; especially now that the global credit crisis is necessitating governments to make “accounting decisions”.