Dr Olugbenga Coker talks to the audience of Business in Africa Pays: Nigeria about protecting your Nigerian business interests through effective accounting. You can listen to the audio recording of this presentation on our website here: http://businessinafricapays.com/accounting-for-business-operations-in-nigeria/ Or visit our homepage: http://www.businessinafricapays.com

1. Accounting for Business
Operations in Nigeria:
Opportunities & Challenges
Olugbenga Coker PhD FCCA FCA

2. Introduction - The Nigeria
Business Environment
High
Rate of Unemployment
Dependence on Oil Revenue
Dependence on Imports
Huge Infrastructure deficit
Security Concerns
Corruption
Strong Local Financial Institutions

3. The aim of Business
Profitability;
wealth maximisation
Profit = Revenue - Cost (Operating, other)
Other cost◦ Cost of Compliance
◦ Taxation
◦ Internal Control

4. Compliance- Relevant legislations
•
•
•
Companies and Allied Matters Act
The Foreign Exchange Act 1995
– Allows repatriation of profit, dividends, capital, etc
The Nigerian Investment Promotion Commission
Act 1995
– Established the NIPC to co-ordinate, promote and
facilitate domestic and foreign investments into
Nigeria except
– guarantees that ‘no enterprise shall be nationalized ‘
– Allows 100% ownership
– investment listed under the ‘Negative ‘ lists
– covered by the Nigerian Cabotage Acts
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5. Investment Opportunities
 Infrastructure
 Power – Generation, Transmission & Distribution
 Transportation – Rail, Air, Road
 Agriculture & Agro Allied
 Services
 Telecommunication
 Health Care Services
 Banking & Financial services
 Tourism/Hospitality
 Education
 Waste Management & Treatment
 Mineral Mining
 Manufacturing
 Pharmaceuticals, Textiles & Garments, Automobiles,
 Oil & Gas (up-and down-stream operations)
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6. The regulatory environment
Incorporate
local subsidiary or branchRegister with the Corporate Affairs
Commission
Obtain business permit from NIPC
◦ -14 days/24Hrs
Obtain
Certificate of Capital Importation for
repatriation purposes
If manufacturing or exporting - obtain
SONCAP certification for products
(Standards Organization of Nigeria Conformity Assessment Programme )

7. The regulatory environment
File Annual Accounts
with the CAC
Nigeria has adopted the IFRS◦ Comparability, consolidation, monitoring
Exemption
for SMEs:
◦ Turnover < £2m or assets < £0.8m
◦ Foreign companies don’t qualify
Availability
of professional support
◦ >40,000 chartered accountants (ICAN)
◦ Reasonable cost of compliance

8. Taxation
Enforced by the 3 tiers of GovernmentFederal, State, and Local governments.
Collectible
◦
◦
◦
◦
◦
by the Federal Government
Companies income tax;
Withholding tax on companies;
Petroleum Profit Tax;
VAT ; Education tax
Personal Income Tax- Non residents
Collectible
by State Governments:
◦ Pay-As-You-Earn (PAYE) – Residents
◦ Road taxes; Business premises registration
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9. Taxation
◦ Companies Tax - 30%
◦ Low VAT regime – 5%
◦ Investment in Infrastructure – may
qualify for investment allowance
◦ Capital Allowance for Specific activities
◦ Enforcement- Tax Clearance
Certificates
◦ Access to good professional advice
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10. Internal Controls
Protecting
your Assets
◦ Security of Capital
◦ Profitability

11. Internal Controls
What
is IC?
 Policies & Procedures
 Designed by Management to:
Safeguard
the assets
Ensure reliability of financial
information
Ensure compliance
Promote efficient and effective
operations.

12. Internal Controls
Why
Internal Control is particularly
important?
◦ The nature of the business
◦ the social, cultural and legal environment.
◦ Challenges & limitations

13. Designing Internal Control Systems
Do
a Risk Assessment
 Identify areas of greatest risk
 Susceptibility to fraud & error
 Information system failure, staff practices
 Changes in regulations
 Design: Cost proportional to risk
Establish
the Control Environment
◦ Set the tone-Values; attitude; ethics
◦ Communication, leading by example
Specify
Control Activities
Monitor and Review

14. Internal Control Activities
Preventive
& detective
 Delegation of authority and responsibility
 Separation of duties-transaction lifespan
 Record keeping- Cashbook, sales, inventory,
fixed assets, payroll
 Purchase authorisation-Account payable Revenue, accounts receivable, banking
 Personnel policies and procedures
 Security- Physical & Technical
 Reconciliation- bank; cash-count; stock

15. Internal Control
Issues
for Smaller Entities
 Owner sets the control environment
 Values, diligence, presence
 Controls may be informal and carried out
by a few persons
 The benefit of a control activity should be
more than the cost
 A code of conduct communicated
informally or (preferably) written
 Use of company assets; record-keeping;
complying with laws; giving and receiving gifts

16. Questions