FRC Unveils Valuation Regulations To Enhance Financial Reporting Integrity

The Financial Reporting Council of Nigeria (FRC) is set to release valuation regulations in the country as part of efforts to ensure transparency, accountability, mitigating risks and building integrity in Nigeria’s financial markets

Speaking at a Stakeholder Engagement Session in Lagos, the chief executive officer and executive Secretary, Dr Rabiu Olowu stressed the importance of regulating valuation processes to engender trust in the country.

According to him, financial reporting is the cornerstone of trust in the Nigerian market and economy. “The proposed regulations aim to ensure that valuations reflect the true financial position and performance of entities, influencing key decisions such as resource allocation, investment strategies, and compliance with regulatory frameworks.”

The proposed regulations aim to standardise valuation practices, mitigate the risks of subjective judgments, and enhance the reliability of financial statements. Pointing out that valuation is beyond assigning a monetary value to assets or liabilities, he said the proposed valuation regulations are designed to address the need for consistency, clarity, and reliability in the valuation process, ensuring that financial statements reflect the true financial position and performance of an entity.

Olowu noted that accuracy of “valuations is vital, as financial reporting influences key decisions, from the allocation of resources to investment strategies, mergers and acquisitions, regulatory compliance, and tax assessments. Moreover, in an increasingly globalised and interconnected economy, the ability to compare financial statements across borders demands a robust and universally accepted framework for valuation.”

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Stating that the valuation of assets and liabilities is an area that directly influences financial decisions, economic policies, and market behaviour, Olowu said the quality, reliability, and accuracy of valuation in financial statements directly impact investors, businesses, regulators, and the broader public.

The FRC chief noted that the valuation regulation which is set to become effective next year will provide clear guidelines that will reduce ambiguity and foster consistency across valuations.  The proposed valuation regulation is also expected to enhance transparency, improve accountability, mitigate risks and incorporate global best practices to position Nigeria as a competitive and credible financial market.

Dr. Olowu emphasised that robust valuation standards are particularly crucial in today’s interconnected global economy, where comparability and consistency across borders significantly influence investment decisions.

“This session marks a milestone in our journey to enhance the financial reporting landscape. We remain steadfast in our mission to uphold the principles of integrity and trust that underpin a resilient financial system,”  he stated.