Unifying Nigeria's Sectoral Corporate Governance Regimes Through A National Code Of Corporate Governance For The Private Sector

Lastly, the Code mandates that no company shall subject a whistleblower to any detriment[43] and any employee who has suffered any detriment by reason of disclosure made pursuant to the provisions of this Code shall be entitled to compensation and/or reinstatement provided that in the case of compensation, the employee's entitlement shall be computed as if he had attained the maximum age of retirement or had completed the maximum period of service, in accordance with his condition of service[44].

External Audit:

The Code introduces mandatory engagement of Joint External Auditors by Listed and Significant Public Interest Entities for their statutory audit[45]. This requirement may lead to increased costs of procuring audit services for the relevant companies without guaranteed outcome of improved quality. More importantly, the definition of Public Interest Entities is inconsistent with the definition ascribed to that term in the FRCN Act. Thus, the Code will need to be revised to bring same in conformity with the provisions of the law.

The Code also provides for a maximum period of ten (10) years for retention of services of an external audit firm (with the option of re-appointment after seven (7) years)[46]. Where an external auditor’s aggregate or cumulative tenure has already exceeded ten (10) years at the date of commencement of the Code, such auditor shall cease to hold office as an auditor of the company at the end of the financial year in 2016[47]. Thus, any audit firm that has worked any company for ten (10) years or more without rancor and/or a dip in the quality of their services, must by this Code, cease to act as the company’s external auditors, at the end of year 2016, without more.

Undoubtedly, this provision of the Code on disqualification of auditors is at variance with the provisions of CAMA, which already prescribe circumstances under which persons may be disqualified from being appointed as external auditors. The Code will most definitely, need to be revised in order to align same with the provisions of CAMA.

The Code stipulates that where the Board and/or Statutory Audit Committees make recommendations for the appointment, re-appointment or removal of an external auditor, such recommendation can only be overridden by a seventy-five per cent (75%) vote of the Board’s full membership and the fact of and override should be disclosed in the annual report[48].

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[43] Section 18.11 of the Code
[44] Section 18.13 of the Code
[45] Section 19.2.1 of the Code defines, “Listed and Significant Public Interest Entities” as entities whose market capitalization is not less than N1billion and/or whose annual turnover is not less than N10billion.
[46] Section 19.3 of the Code
[47] Ibid
[48] Section 19.10 of the Code