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UK Financial Reporting Council Sanctions KPMG On Quality Of Banking Audits

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KPMG

The United Kingdom Financial Reporting Council (FRC) has sanctioned one of the biggest audit firms, KPMG LLP over the quality of its banking audits which U.K.’s industry regulator said it was “unacceptable” that for the third year running the accounting firm’s work wasn’t up to scratch.

The FRC in its annual report released on Friday examined the U.K.’s seven biggest auditing firms, which include Ernst & Young and Deloitte, said almost 30 percent of all bookkeeping was below par in the year to the end of March.

“Overall Inspection results at KPMG did not improve and it is unacceptable that, for the third year running, the FRC found improvements were required to KPMG’s audits of banks and similar entities.

“Given the systemic importance of banks to the UK economy, the FRC will be closely monitoring KPMG’s actions to ensure findings are addressed in a timely manner.

“KPMG has agreed on additional improvement activities to be delivered this year over and above its existing audit quality improvement plan,

“In response to our findings this year, the firm’s senior leadership has committed to making further changes necessary to improve audit quality in time for 2021 year-end audits.

“We will monitor these closely to assess on a timely basis the extent to which they address our findings,” the report released on Friday stated.

The FRC said that “We will also continue to focus our inspections on KPMG banking audits.”

The regulator said central to achieving consistent audit quality is a healthy culture within the audit practice that encourages challenge and professional skepticism, as it set out in its letter to Heads of Audit
in December 2020.

“We have a major project underway to examine audit culture, including an international conference held in June this year on the subject.

“Operational separation of audit practices from the rest of the firm should help the largest firms to focus on developing an appropriate audit culture,” the FRC stated.

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Tax Tribunal Orders NLNG to Pay $27.5M to FIRS for 2016 Tax Settlement

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Value added tax - Investors King

The Tax Appeal Tribunal (TAT) has mandated Nigeria Liquefied Natural Gas Limited (NLNG) to pay $27.5 million to the Federal Inland Revenue Service (FIRS) as a full and final settlement for the revised Companies Income Tax (CIT) assessment for the year 2016.

The judgment, delivered by a five-member panel chaired by Mrs. Alice Iriogbe, came after extensive legal proceedings and negotiations between the parties.

The TAT’s decision was based on the terms of settlement agreed upon by both NLNG and FIRS.

The legal dispute began when NLNG contested FIRS’ notice of additional assessment dated December 15, 2021, which demanded $141.75 million in CIT for 2016.

Following FIRS’ refusal to amend this assessment in March 2022, NLNG filed an appeal with the TAT in April 2022 under the suit marked TAT/ABJ/APP/331/2022.

Despite the ongoing trial, both parties engaged in settlement negotiations, culminating in an agreement filed with the tribunal on July 10, 2024.

The certified true copy of the judgment, made available on Tuesday, revealed that NLNG agreed to pay $27.5 million as the final settlement if the payment was made by July 12, 2024.

The judgment stated, “The appellant (NLNG) on Monday, July 8, 2024, duly remitted the said sum of $27.5 million to the respondent (FIRS), being the full and final settlement amount agreed upon by the parties. The terms contained in the terms of settlement have been adopted and made the judgment of this honourable tribunal. This is the judgment of this Honourable Tribunal.”

Earlier in the proceedings, NLNG had filed an interlocutory motion seeking to disqualify the tribunal from hearing the case, citing potential bias due to the involvement of two tribunal members who were former FIRS employees.

However, this motion was dismissed by the tribunal, which found no substantial grounds for the disqualification request.

The tribunal’s ruling marks a notable resolution in the ongoing tax dispute between NLNG and FIRS, reflecting the effectiveness of the TAT in mediating complex tax-related conflicts.

It also underscores the importance of legal and procedural adherence in corporate tax matters in Nigeria.

The judgment has been met with varied reactions from stakeholders, highlighting the broader implications for corporate tax compliance and governance within Nigeria’s burgeoning energy sector.

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Banking Sector

Access Bank and FMO Sign Landmark $295 Million Syndicate Tier II Facility Agreement

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Access bank

Access Bank Plc, sub-Saharan Africa’s largest bank by customer base, has reached a significant milestone in its enduring partnership with the Dutch Entrepreneurial Development Bank (FMO).

This collaboration, spanning over two decades, marked a historic moment on Tuesday with the signing of a monumental syndicate Tier II Facility agreement valued at $295 million, approximately N442.5 billion.

The relationship between Access Bank and FMO, which began in 2003, has been a testament to their shared commitment to economic development in Nigeria.

This latest agreement, the third of its kind arranged by FMO for Access Bank, represents more than just a financial transaction; it symbolizes the deep-rooted trust and synergy between the two institutions.

This historic agreement is notably the largest syndication in FMO’s history, a substantial investment resulting from a collective effort involving a syndicate of Global Development Finance Institution (DFI) partners.

These partners include esteemed entities such as British International Investment (BII), Belgian Investment Company for Developing Countries (BIO), BlueOrchard, FinDev Canada, Finnfund of Finland, Norfund of Norway, Oikocredit, and Swedfund of Sweden.

The $295 million facility is earmarked to empower local small and medium-sized enterprises (SMEs), with a particular focus on underserved segments such as youth- and women-owned businesses, agricultural enterprises, and very small enterprises.

This significant infusion of capital aims to catalyze growth across various sectors, stimulate business development, create jobs, and deepen financial inclusion, aligning with Access Bank’s mission to drive progress and development throughout the continent and beyond.

The ceremony, held in the Netherlands, was attended by dignitaries including Oluremi Oliyide, Nigerian Ambassador to the Netherlands, and representatives from the Dutch government.

During the event, Roosevelt Ogbonna, MD/CEO of Access Bank Plc, expressed profound gratitude to FMO for their unwavering support and emphasized the bank’s commitment to becoming the world’s most respected African bank by adhering to global best practices and maintaining high standards of accountability.

“Today marks a significant milestone in our longstanding partnerships with FMO. This monumental syndicate Tier II Facility agreement underscores the deep-rooted trust and synergy among our institutions. This facility not only enhances our capital reserves but also strengthens Africa’s trade capabilities and export potential,” Ogbonna said.

“Putting these funds to use, we aim to catalyze growth across various sectors, stimulate business development, create jobs, and deepen financial inclusion.”

In his remarks, Michael Jongeneel, CEO of FMO, stated, “We extend our gratitude to our longstanding partner, Access Bank, and our syndication partners for their outstanding cooperation and collective effort in making this loan facility a reality. The syndicated loan provides significant support to SMEs in Nigeria, particularly underserved segments such as women and young entrepreneurs, aligning perfectly with our shared strategy to enhance financial inclusion and empower local entrepreneurs in the agribusiness and SME sectors.”

Marchel Gerrmann, representing the Dutch government, and members of the syndication partners—BII, Finnfund, and BlueOrchard—were among the distinguished guests who witnessed this historic agreement.

This landmark deal is set to bolster Nigeria’s private sector, providing much-needed support to SMEs and contributing significantly to the country’s economic development.

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Federal, State, Local Governments Receive N1.354 Trillion in July Disbursement

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FAAC

The Federation Account Allocation Committee (FAAC) announced that the disbursement to the federal, state, and local governments surged by N200 billion from N1.143 trillion in June to N1.354 trillion in July.

The FAAC, chaired by Wale Edun, the Minister of Finance and Coordinating Minister of the Economy, detailed the distribution of funds among the three tiers of government.

The Federal Government received N459.776 billion, while the states were allocated N461.979 billion.

Local Government Councils received N337.019 billion, and the Oil Producing States benefited from N95.598 billion as Derivation, which accounts for 13% of Mineral Revenue.

The FAAC communique highlighted the distribution breakdown, stating that N92.112 billion was set aside for the cost of collection, while a substantial N1.037 trillion was earmarked for transfers, interventions, and refunds.

The total revenue distributable for June 2024, amounting to N2.483 trillion, was derived from various sources, including Statutory Revenue of N142.514 billion, Value Added Tax (VAT) of N523.973 billion, N15.692 billion from the Electronic Money Transfer Levy (EMTL), N472.192 billion from Exchange Difference, and an Augmentation of N200 billion.

The communique also indicated that the gross revenue from VAT for June 2024 stood at N562.685 billion, an increase of N65.020 billion from the previous month’s N497.665 billion.

From this amount, N22.507 billion was allocated for the cost of collection, and N16.205 billion was designated for transfers, interventions, and refunds.

The remaining N523.973 billion was distributed among the federal, state, and local governments, with the Federal Government receiving N78.596 billion, the states N261.987 billion, and the Local Government Councils N183.391 billion.

Further, the FAAC reported a gross statutory revenue of N1.23 trillion for June 2024. From this amount, N68.951 billion was allocated for the cost of collection, and N1.021 trillion was set aside for transfers, interventions, and refunds.

The balance of N142.514 billion was distributed among the three tiers of government, with the Federal Government receiving N48.952 billion, the states N24.829 billion, Local Government Councils N19.142 billion, and N49.591 billion allocated to derivation revenue for mineral-producing states.

The Electronic Money Transfer Levy (EMTL) yielded N16.346 billion, which was distributed as follows: the Federal Government received N2.354 billion, the states N7.846 billion, Local Government Councils N5.492 billion, and N0.654 billion was allocated for the cost of collection.

Also, N472.192 billion from Exchange Difference was distributed, with the Federal Government receiving N224.514 billion, the states N113.877 billion, Local Government Councils N87.794 billion, and N46.007 billion allocated for derivation revenue.

An augmentation of N200 billion was also noted, from which the Federal Government received N105.360 billion, the states N53.440 billion, and Local Government Councils N41.200 billion.

The FAAC communique concluded by noting that the balance in the Excess Crude Account (ECA) stood at $473,754.57 as of July 2024.

This significant financial distribution reflects an upward trend in government revenues, providing a much-needed fiscal boost across all tiers of government amid ongoing economic challenges.

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