Towards a Common Reporting financial accounting systems and financial framework for banks in Nigeria

As the banking reforms under way in Nigeria from one phase to another, each new situation presents its own challenges. While some likely impacts of the reforms can be predicted with certainty, others emerge with the passage of time. On December 31, 2009 Joint New Year has become a reality. The banks have submitted their financial data projects CBN. The CBN needs to confirm the integrity and completeness of financial reports before approving them. This presents yet another set of challenges for the regulator as this time, they can be no excuses.

One of the reasons advanced crises of some Nigerian banks had to do with inaccurate financial reporting. It is produced, which in some loss of financial institutions not only declared profits, but dividends paid from the funds of depositors. The multiplier effect of such actions on the financial future of a company / bank is more than you can imagine. With the common end of the year and the adoption of International Financial Reporting Standards, a golden opportunity has arisen for the CBN to correct these anomalies.

First, it is important that banks send in their reports using a common financial reporting system framework. This will facilitate the comparison of banks' financial results over time and against that of other banks and the industry itself. The risk-based assessment of the financial relationship is thus simplified. It may be necessary for the CBN to further improve the quality of financial reports of banks beyond what already exists.

Secondly, it is essential that the 'examination' of banks conducted by the CBN in this trail does not just focus on verifying data integrity. There is a pressing need to focus also on the integrity of the financial system of each bank. Recalling the popular phrase of 'Garbage In, Garbage Out', data integrity, it focuses mainly on the correctness and completeness of data, while the integrity of the financial system is concentrated beyond the data to all other key elements of the structure of financial information. The integrity of the financial system is far more holistic and reliable. To this end, a set of parameters to verify the integrity of the system may be required. The financial regulator must avoid a situation of garbage in garbage out of financial data, which basically make inaccurate information resulting from the use of such data.

In addition to the above, perhaps it is time for the introduction of a common financial framework accounting system for Nigerian banks. The panel should recommend the basic fundamentals or elements upon which the entire infrastructure financial accounts of all banks should be based. This will no doubt take into account the nature of banking services in Nigeria. Recommendations for the capacity of charts of accounts, account classifications, internal control systems, financial accounting software, operating procedures / manuals and the like must be of primary importance in this goal. Above all, it is important that the whole system is simplified.

The Nigerian government intervention that led to the injection of 620 (620) banking Naira billion stimulus package is certainly unprecedented. But the real challenge has to do with the implementation of other corrective measures needed to put the financial sector on road to recovery, growth and stability. Some of the above recommendations may be necessary regulatory changes. While some may argue that these measures will make the industry much more sophisticated, it is important to note that, if simplicity is seen as a guiding principle of the reform measures of the banks, the complications are therefore eliminated .......