FRC Penalises 33 Audit Firms On Rule 14 Violation, Flags 9 For Non-registration

The Financial Reporting Council of Nigeria (FRC) has sanctioned 33 audit firms for violating its regulatory requirements, particularly Rule 14 on Non-Compliance with Laws and Regulations (NOCLAR).

The Council also identified nine audit firms that failed to register with the FRC and contravened Rule 14, raising concerns about compliance with the framework governing external auditors and reporting entities, it stated on Wednesday.

Under Rule 14, external auditors must ensure that their clients comply with applicable FRC laws, regulations, codes, rules, and guidelines that affect their financial statements and operations. Before signing audit opinions, auditors must confirm that the reporting entity and all relevant signatories have fulfilled their statutory obligations to the Council by emailing [email protected].

The FRC stated that auditing a public interest entity (PIE) without the required registration is a regulatory offence. The Council said it is relying on its statutory powers under the FRC Act to strengthen compliance and accountability across the profession.

The sanctions mark a shift from regulatory sensitisation to enforcement, following continued non-compliance. The Council said enforcement of Rule 14 will continue through intensified monitoring, inspections and appropriate sanctions against non-compliant firms and practitioners.

Investors rely on audited financial statements to assess corporate earnings, financial positions and governance risks. Stricter enforcement of audit rules could improve confidence in reported results, especially if it leads to higher-quality audits and fewer compliance failures.