Former Executive Secretary and Chief Executive Officer of the Financial Reporting Council of Nigeria (FRC), Jim Osayande Obazee, has accused the Central Bank of Nigeria (CBN) of engaging in what he described as deceptive accounting, fraudulent financial reporting, weak corporate governance and possible earnings management in its 2025 financial statements.
Obazee made the allegations on Tuesday while delivering a speech at the commissioning of the FRC’s headquarters in Lagos, calling on the Council to urgently obtain and review the CBN’s full audited financial statements and recommend the withdrawal and restatement of the accounts if his observations are confirmed.
The former FRC chief also questioned the CBN’s decision to publish only summary consolidated and separate financial statements for the year ended December 31, 2025, without making the full audited accounts available to the public.
“The questionable issues in these financial statements are nothing but shocking, brazen and vexatious,” Obazee said.
He alleged that if the summary accounts published by the CBN were the same financial statements submitted to the President and the National Assembly under Section 50 of the CBN Act, the apex bank had “deceived the President and the National Assembly.”
Obazee said the joint auditors, EY and KPMG, had stated that the summary financial statements were not a substitute for the full audited financial statements and did not contain all disclosures required under applicable financial reporting rules.
According to him, the auditors also disclosed that the full financial statements received an unmodified opinion with an emphasis of matter relating to non-compliance with Section 38 of the CBN Act and the basis of accounting, while key audit matters contained in the full report were excluded from the summary released to the public.
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“Keeping the CBN 2025 audited Consolidated and Separate Financial Statements and the joint Auditors’ Report thereon, under these circumstances, as a CBN internal preserve is fraudulent and an intolerable disservice to Nigerians and to the government,” he said.
A major concern raised by Obazee was the CBN’s disclosure that its 2025 figures were prepared using the CBN Financial Reporting Manual, while the 2024 accounts were prepared under IFRS Accounting Standards and the FRC Guideline.
The CBN, he noted, stated that the figures for the two years were “not comparable.”
Obazee argued that this meant users could not rely on apparent year-on-year changes in the financial statements to assess the bank’s financial position or performance.
“This is tantamount to cooking the ‘books’ and having an illusion of grandeur,” he said.
He questioned why comparative figures were retained without restatement and called for an explanation of the adjustments required to move from the previous IFRS basis to the CBN’s new financial reporting framework.
Obazee also raised concerns about what he described as conflicting accounting policies, particularly in the treatment of foreign exchange gains and losses and the Derivative and Foreign Exchange Revaluation Account, or DFERA.
He said the DFERA balance of N13.712 trillion made it one of the highest-risk areas of the CBN’s accounting policies and called on management to explain clearly which foreign exchange items were recognised in profit or loss and which were recorded through the revaluation account.
The former FRC chief also alleged that some of the CBN’s accounting policies created the potential for earnings management.
He pointed to the CBN’s policy allowing certain liquidity management costs, including interest expenses on open market operations, to be deferred as assets and amortised for up to four years.
“This policy creates a clear potential for timing-based earnings management,” Obazee said.
He questioned how much of such expenditure was capitalised in 2025 and what the CBN’s reported profit would have been if the costs had been recognised immediately as expenses.
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Obazee also drew attention to the sharp rise in CBN instruments outstanding, which increased to about N48.703 trillion in 2025 from a non-comparable figure of N24.270 trillion.
He said an N8.345 trillion line described as “deferred interest and cost” required urgent reconciliation with the CBN’s policy on deferred liquidity management expenditure.
He further raised questions about advances and overdraft facilities granted to the Federal Government, particularly an exposure of about N2.977 trillion disclosed in the accounts.
Obazee argued that the disclosures raised questions about the CBN’s compliance with Section 38 of the CBN Act, which governs temporary advances to the Federal Government.
He also questioned why the CBN reported nil interest income on the overdraft facility, arguing that the treatment could understate the bank’s interest income.
“It is deceptive to have said that the applicable interest income is NIL,” he said.
Obazee further alleged weaknesses in the CBN’s corporate governance structure, questioning the roles played by the Governor in management, internal control, the approval of the financial reporting manual and the approval of the financial statements.
“Where is Corporate Governance in all of this?” he asked.
He also raised questions about the dates and signatures on the published financial statements, alleging that there were integrity concerns over changes made to corporate information after the accounts were authorised.
“The only plausible reason is that the signing of the Financial Statements was backdated to 26 February 2026,” he said, while calling for forensic questions to be raised about the version-control process and whether the auditors reviewed the final published document.
On auditor independence, Obazee questioned the provision of internal control over financial reporting services by EY and KPMG while the firms also provided assurance on the CBN’s management assessment of its internal controls.
He said the arrangement did not by itself prove an auditor-independence violation but raised an “obvious self-review threat question.”
Obazee urged the FRC to intensify its inspection and investigation activities using trained full-time staff rather than consultants, saying financial statements being issued by some public institutions “leave much to be desired.”
He advised the Council to immediately request both the CBN’s summary and full audited financial statements for review.
“At the FRC, however, I would like to advise the Council to request the CBN to forward the summary and the full audited financial statements to you, as a matter of urgency, for review and thereafter recommend that the said financial statements be withdrawn and restated, to give ‘true accounts’,” he said.
Obazee said the recommendation should stand unless his observations were found not to exist in the CBN’s 2025 summary consolidated and separate financial statements.
The former FRC chief also called on the Council to investigate concerns surrounding the financial statements of the Nigerian National Petroleum Company Limited (NNPCL), following reports of concerns by the National Assembly over N210 trillion in the company’s accounts.
He said the FRC should demand the NNPCL financial statements, review them, and provide Nigerians with “a proper closure.”
Obazee made the remarks as the FRC honoured him by naming its Inspections and Investigation Room after him at the commissioning of its Lagos headquarters.
Alex is a business journalist cum data enthusiast with the Pinnacle Daily. He can be reached via ealex@thepinnacleng.com, @ehime_alex on X