Financial Reporting Council of Nigeria (FRCN) revokes Rule 4

The Financial Reporting Council of Nigeria, FRCN, revokes its Rule 4 that requires a company to get an approval or register specific transactions with the relevant statutory body in Nigeria before an entity can report such transaction in audited accounts. Rule 4, which emerged in 2016, restricted businesses from recognizing specific expenses in their financial statements without when the contracts were not registered with relevant regulatory bodies. 

In the recent case between Stanbic IBTC Holdings Plc v FRCN & Anor, the Court of Appeal (COA) however affirmed that a contract is still valid and legal without a NOTAP approval. More details of this case are available here. Thus, the decision of FRCN to revoke Rule 4 supports COA’s judgment. 

Henceforth, companies can accrue for certain expenses that are pending registration or approval with the regulatory body. The revocation of Rule 4 is effective 11 July 2019 and will apply prospectively.