Nigeria does not have any national auditing standards. Companies are recommended to use the International Standards on Auditing (ISAs), according to the assessment of accounting and auditing environment in Nigeria conducted by the World Bank in 2004. However, the Institute of Chartered Accountants (ICAN), whose members use ISAs, has advised that Nigerian compliance with ISAs is optional but not required. The World Bank noted that compliance with existing auditing requirements is weak, ethical requirements for auditors are not in line with international standards, and enforcement mechanisms are inadequate outside of the banking sector. One major recommendation was the creation of an independent oversight body responsible for the adoption and enforcement by public interest entities of accounting and auditing standards that are based on international standards. The World Bank also recommended developing simplified reporting requirements for Small and Medium-size Enterprises. Following the 2004 assessment, the World Bank and Nigerian authorities agreed on an action plan to introduce ISAs in Nigeria by March 2005. However, as of October 2007, no information on the actual implementation of the action plan is publicly available.

General Overview

From November 2003 to March 2004, the World Bank conducted a review of accounting and auditing practices in Nigeria in order to evaluate the weaknesses and strengths of the accounting and auditing requirements, and to review the reporting requirements against actual practices. This review involved the participation of representatives from the Nigerian regulatory, supervisory, and industry bodies. International Financial Reporting Standards (IFRSs) and International Standards on Auditing (ISAs) were used as the benchmarks for assessing national standards. As a result of the assessment, a Report on the Observance of Standards and Codes (ROSC) was published by the World Bank in June 2004, and was later discussed in a Country Stakeholders Workshop in September of the same year. An action plan to improve the accounting and auditing framework in Nigeria was agreed upon based on the findings and recommendations of the report. Per this action plan, the World Bank and the Nigerian authorities decided to introduce ISAs in Nigeria by March 2005. However, as of October 2007, there is no indication that the plan has been implemented.

The legal framework for auditing requirements in Nigeria is based on the Companies and Allied Matters Act (CAMA) of 1990. CAMA empowers the Registrar of Companies at the Corporate Affairs Commission to monitor compliance with reporting requirements and impose sanctions in cases of non-compliance. The Nigerian Stock Exchanges Act of 1961, Institute of Chartered Accountants of Nigeria Act of 1965, Nigerian Deposit Insurance Corporation Act of 1988, Banks and Other Financial Institutions Act of 1991, Association of National Accountants of Nigeria Act of 1993, Investments and Securities Act of 1999, Securities and Exchange Commission Rules and Regulation of 1999, Nigerian Insurance Act of 2003, and the Nigerian Accounting Standards Board Act of 2003 supplement the CAMA in regulating financial reporting requirements for different types of companies. Although it acknowledged the work done to reduce legislative inconsistencies, the World Bank ROSC pointed out that there remained "a situation where several bodies review and approve the audited financial statements of some companies before they are published. In some cases, the regulators have differed in their assessments of the quality of financial statements. There is a need, therefore, to streamline financial reporting and auditing requirements, harmonize regulatory arrangements, and codify them as a separate law" (pp. 1-2). The World Bank further noted that although CAMA required audits to be conducted according to generally accepted auditing standards, "in the absence of an authoritative clarification of what is meant by "generally accepted," different auditors use their own judgment in deciding the applicable standards" (p. 2).

The responsibility for ensuring compliance with accounting and auditing requirements lies with the Central Bank of Nigeria (CBN) for banks and nonbanking financial institutions, the National Insurance Commission (NAICOM) for insurance companies, and the Securities and Exchange Commission (SEC) and Nigerian Stock Exchange for the securities market. In addition to the CAMA, financial reporting requirements for banks are specified under the Banks and Other Financial Institutions Act of 1991. However, the World Bank noted that the CBN's ability to monitor compliance with the reporting requirements is constrained by the "outdated functions...reduced capacity" (p. 9). For the insurance sector and the securities market, the World Bank pointed out similar weaknesses in the regulatory and supervisory regime. NAICOM, which derives its power from the Nigerian Insurance Act of 2003, mandates compliance with Institute of Chartered Accountants in Nigeria (ICAN) auditing standards. However, the World Bank noted that NAICOM lacked "capacity to monitor compliance with financial reporting requirements" (p. 9). Disclosure and reporting requirements for listed companies are regulated by the SEC and the Stock Exchange. Listed companies must have their audited financial statements approved by the Stock Exchange, and the World Bank noted that "de-listing is the only sanction for noncompliance" (p. 9).

Under the ICAN Act of 1965, the ICAN has the authority to issue Nigerian auditing standards. However, at the time of the World Bank assessment, it had not issued any auditing standards primarily because of its inadequate resources. Moreover, compliance with existing auditing requirements is weak, and the ethical requirements for auditors are not in line with international standards. Overall, the World bank concluded, "these factors, as well as poor accounting education and training, have contributed to weaknesses of the financial reporting and auditing regime" (p. ii). The report further noted that, "there is no separate statutory regulator of the audit profession" (p.4). ICAN is the main examining body for the certification of chartered accountants and has the licensing authority for public auditing professionals. As specified in the CAMA, only ICAN members can be appointed statutory auditors. ICAN is listed as a member on the International Federation of Accountants (IFAC) website.

The Principles

ISA 200 Objective and General Principles Governing an Audit of Financial Statements (effective 2006)

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According to the 2004 World Bank report, Nigeria does not have national auditing standards, and compliance with ISAs is not mandatory.

ISA 210 Terms of Audit Engagements (effective 2006)

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According to the 2004 World Bank report, Nigeria does not have national auditing standards and compliance with ISAs is not mandatory.

ISA 220R Quality Control for Audits of Historical Financial Information (effective 2005)

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According to the 2004 World Bank report, Nigeria does not have national auditing standards and compliance with ISAs is not mandatory.

ISA 230R Documentation (effective 2006)

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According to the 2004 World Bank report, Nigeria does not have national auditing standards and compliance with ISAs is not mandatory.

ISA 240 The Auditor’s Responsibility to Consider Fraud in an Audit of Financial Statements (effective 2004)

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According to the 2004 World Bank report, Nigeria does not have national auditing standards and compliance with ISAs is not mandatory.

ISA 250 Consideration of Laws and Regulations in an Audit of Financial Statements (effective 2004)

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According to the 2004 World Bank report, Nigeria does not have national auditing standards and compliance with ISAs is not mandatory.

ISA 260 Communications of Audit Matters With Those Charged With Governance (effective 2004)

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According to the 2004 World Bank report, Nigeria does not have national auditing standards and compliance with ISAs is not mandatory.

ISA 300 Planning an Audit of Financial Statements (effective 2004)

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According to the 2004 World Bank report, Nigeria does not have national auditing standards and compliance with ISAs is not mandatory.

ISA 315 Understanding the Entity and Its Environment and Assessing the Risks of Material Misstatement (effective 2004)

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According to the 2004 World Bank report, Nigeria does not have national auditing standards and compliance with ISAs is not mandatory.

ISA 320 Audit Materiality (effective 2004)

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According to the 2004 World Bank report, Nigeria does not have national auditing standards and compliance with ISAs is not mandatory.

ISA 330 The Auditor’s Procedures in Response to Assessed Risks (effective 2006)

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According to the 2004 World Bank report, Nigeria does not have national auditing standards and compliance with ISAs is not mandatory.

ISA 402 Audit Considerations Relating to Entities Using Service Organizations (effective 2004)

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According to the 2004 World Bank report, Nigeria does not have national auditing standards and compliance with ISAs is not mandatory.

ISA 500 Audit Evidence (effective 2004)

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According to the 2004 World Bank report, Nigeria does not have national auditing standards and compliance with ISAs is not mandatory.

ISA 501 Audit Evidence - Additional Considerations for Specific Items (effective 2004)

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According to the 2004 World Bank report, Nigeria does not have national auditing standards and compliance with ISAs is not mandatory.

ISA 505 External Confirmations (effective 2004)

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According to the 2004 World Bank report, Nigeria does not have national auditing standards and compliance with ISAs is not mandatory.

ISA 510 Initial Engagements — Opening Balances (effective 2004)

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According to the 2004 World Bank report, Nigeria does not have national auditing standards and compliance with ISAs is not mandatory.

ISA 520 Analytical Procedures (effective 2004)

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According to the 2004 World Bank report, Nigeria does not have national auditing standards and compliance with ISAs is not mandatory.

ISA 530 Audit Sampling and Other Selective Testing Procedures (effective 2004)

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According to the 2004 World Bank report, Nigeria does not have national auditing standards and compliance with ISAs is not mandatory.

ISA 540 Audit of Accounting Estimates (effective 2004)

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According to the 2004 World Bank report, Nigeria does not have national auditing standards and compliance with ISAs is not mandatory.

ISA 545 Auditing Fair Value Measurements and Disclosures (effective 2004)

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According to the 2004 World Bank report, Nigeria does not have national auditing standards and compliance with ISAs is not mandatory.

ISA 550 Related Parties (effective 2004)

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According to the 2004 World Bank report, Nigeria does not have national auditing standards and compliance with ISAs is not mandatory.

ISA 560 Subsequent Events (effective 2006)

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According to the 2004 World Bank report, Nigeria does not have national auditing standards and compliance with ISAs is not mandatory.

ISA 570 Going Concern (effective 2004)

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According to the 2004 World Bank report, Nigeria does not have national auditing standards and compliance with ISAs is not mandatory.

ISA 580 Management Representations (effective 2004)

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According to the 2004 World Bank report, Nigeria does not have national auditing standards and compliance with ISAs is not mandatory.

ISA 600 Using the Work of Another Auditor (effective)

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According to the 2004 World Bank report, Nigeria does not have national auditing standards and compliance with ISAs is not mandatory.

ISA 610 Considering the Work of Internal Auditing (effective 2004)

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According to the 2004 World Bank report, Nigeria does not have national auditing standards and compliance with ISAs is not mandatory.

ISA 620 Using the Work of an Expert (effective 2005)

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According to the 2004 World Bank report, Nigeria does not have national auditing standards and compliance with ISAs is not mandatory.

ISA 700 The Auditor’s Report on Financial Statements (effective 2006)

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According to the 2004 World Bank report, Nigeria does not have national auditing standards and compliance with ISAs is not mandatory.

ISA 701 Modifications to the Independent Auditor's Report (effective 2006)

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According to the 2004 World Bank report, Nigeria does not have national auditing standards and compliance with ISAs is not mandatory.

ISA 710 Comparatives (effective 2004)

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According to the 2004 World Bank report, Nigeria does not have national auditing standards and compliance with ISAs is not mandatory.

ISA 720 Other Information in Documents Containing Audited Financial Statements (effective 2004)

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According to the 2004 World Bank report, Nigeria does not have national auditing standards and compliance with ISAs is not mandatory.

ISA 800 The Auditor’s Report on Special Purpose Audit Engagements (effective 2006)

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According to the 2004 World Bank report, Nigeria does not have national auditing standards and compliance with ISAs is not mandatory.