Role of Chartered Secretary in Ensuring Compliance for Non-Profits

THE ROLE OF THE CHARTERED SECRETARY AND ADMINISTRATOR IN
ENSURING COMPLIANCE WITH THE FINANCIAL AND OTHER REPORTING

OBLIGATIONS IN ENTITIES REGISTERED UNDER PART C OF CAMA
A PAPER PRESENTED BY
PATRICK C.N. OKPULOR

MSC, ACA, FCIS, FCCA
AT THE INSTITUTE OF CHARTERED SECRETARIES AND ADMINISTRATORS’ 2019 RIVERS STATE MANDATORY
CONTINUING PROFESSIONAL EDUCATION (MCPE)
ON THURSDAY, 21ST OF MARCH 2019
AT NBA COMPLEX, MOSCOW ROAD, PORT HARCOURT,

RIVERS STATE, NIGERIA.
AGENDA
In this session we shall:
 Make
few reflective comments on the Companies and Allied Matters Act
(CAMA)
 Givecloser look at the entities registered under CAMA Part C which is our
main focus
 Remind ourselves of who a Chartered Secretary and Administrator is and
how his/her towering profile fits into governance of not-for-profit
organizations (NFPOs)
 Explore
the role of the Chartered Secretary and Administrator to stakeholders
of NFPOs regarding financial and other regulatory reporting obligations.
Companies and Allied Matters Act (CAMA), In brief
 This is meant to refresh our minds on the evolution of companies legislation in

Nigeria.
 The companies ordinance, 1912 provides for the first time in Nigeria the procedure
for incorporating a Company by registration.
 Itsaim was to encourage the principles of collaborative business ventures in the
country.
 Due to expected upsurge of business activities at the end of the 1st World War
(WW1) in 1918, the companies ordinance, 1912 and the companies (Amendment
and Extension) Ordinance 1917 were consolidated and re-enacted as the
Companies Ordinance, 1922.
Companies and Allied Matters Act (CAMA), In brief (CONTD.)
 Itwas later amended by Companies (Amendment) ordinance, 1941 and the

Companies (Amendment) ordinance, 1954.
 In 1963, after independence, the ordinance was designated Companies Act.
 The Companies Decree No. 51 of 1968 was promulgated by the Military
Government. In 1980, it was re-designated as The Companies Act, 1968.
 In 1990, the Companies and Allied Matters Decree was promulgated by the then
Military Government, repealing the 1968 Act. It extended its spread to include not
only Companies, but other Allied Matters, and established the Corporate Affairs
Commission (CAC).
 The Decree was amended by Companies and Allied Matters (Amendment) Decree No.
32 of 1990, No. 46 of 1991 and No. 40 of 1992, all of which were incorporated in Cap.
C20, LFN 2004.
 Importantly, Part XVII of the 1990 Act – “Dealings on Companies Securities” was
transferred to the Investment and Securities Act Cap. 124, LFN 2004.
 CAMA is the principal legislation that regulates corporate entities registered in Nigeria.
 It was divided into three material parts as under:
- Part A: Sections 1 to 568 deals with Companies
- Part B: Sections 569 to 589 deals with business names, and
- Part C: Sections 590 to 612 deals with Incorporated Trustees.
 One of the Important provisions of CAMA is the office of Secretary. Section

293(1) says “every Company shall have a secretary”.
 Henceforth,All references to CAMA in this paper are to the Companies all Allied
Matters Act Cap. C20, LFN 2004, unless otherwise stated.
Companies and Allied Matters Act Part C
This part of the Act deals with Incorporated Trustees

 Priorto the inception of CAMA, registration of Incorporated trustees was under the
Land (Perpetual Succession) Act, Cap. 98, LN 1958.
 This 1958 Act was repealed by CAMA Section 611.
 Concerning Incorporated Trustees, Section 590(1) of CAMA provides:
Where One or more trustees are appointed by any community of persons bound together
by custom, religion, kinship or nationality or by anybody or by association of persons
established for any religious, educational, literary, scientific, social, development,
cultural, sporting or charitable purpose, he or they may if so authorized by the
community, body or association, (herein after in this Act referred to as the Association)
apply to the commission in the manner hereafter provided for registration under this Act
as a corporate body.
Companies and Allied Matters Act Part C (Contd)
 Section 590(2) says:

“Upon being so registered by the commission, the trustee or trustees shall
become a corporate body in accordance with the provision of section 596 of this
part of this Act.”
Companies and Allied Matters Act Part C (CONTD.)
Implications of Incorporated trustees:

 The trustees jointly become a body corporate in perpetual succession.
 They have the power to sue and be sued.
 The corporate status is conferred on the trustees rather than the organization.
This contrasts with the case of a company, where the corporate status is on the
company itself.
 The trustees on behalf of the organization are empowered to contract in the same
form and manner as an individual. They can acquire, hold and transfer any
property on behalf of the organization.
Implications of Incorporated trustees (Contd):

 These organizations are variously called non-profit organizations(NPOs), not-for-
profit organizations(NFPOs), non governmental organizations (NGOs), Charities,
Public Benefit Entities (PBEs). They are not expected to engage in any business and
trading activities for the aim of making profit.
 They depend on grants, donations, subscriptions and do not distribute profit by way
of dividends or bonuses to members.
 They can also operate without registration by taking advantage of Section 40 of the
1999 Constitution of the Federal Republic of Nigeria which guarantees freedom of
assembly and association with others. However, such unregistered organizations
may not attract grants from donors and will not qualify for tax exemption. They do
not merit further mention in this paper.
 Associationsthat could pass the test of registration under CAMA Part C should
have objectives for the advancement of:
- Religious - Cultural
- Educational - Sporting, or
- Literary - Charitable
- Scientific
- Social
- Development
Who Is a Chartered Secretary and Administrator ?
 A Chartered Secretary and Administrator is a person who has passed the prescribed
rigorous examinations of the Institute of Chartered Secretaries and Administrators
of UK or Nigeria.
 Isautomatically moved to graduate status, gains required relevant experience and
has been formally inducted and admitted as a member of the prestigious Institute.
 He is very comfortable with words – A man of letters, or if you like, a
‘’wordsmith’’, yet, he/she is not afraid of figures.
 By education, training and experience, he excels in financial administration,
pension administration, insurance administration, administration of human
resources, legal affairs, and unarguably an expert in corporate governance as well
as company secretarial administration.
Who Is a Chartered Secretary and Administrator ? (CONTD.)
 A person with positive impact in corporate board effectiveness.

 Hisprofessional body is one of the three professions named in CAMA section
295(a) from which public limited companies appoint company secretaries.
 He
is accredited by the Corporate Affairs Commission to transact business with the
Commission.
what Job title will fit a Chartered Secretary and Administrator In a Not-For-Profit
Organization?
 Most Not-For-Profit Organizations in Nigeria are of small and medium sized

entities. Even the few that may be big operate very tight budget for sustainability.
 Whatever the job title, he/she will not just act as a Secretary to the Board of
Trustees and the Governing Council, Core Group, etc. but is responsible for
general administration, finance and accounting, auditing and any other
administrative activity delegated to him by the governing body.
 This position will enable him/her to co-ordinate and control other experts below
him dealing with accounting, finance, HR, budget and treasury. He himself reports
directly to the governing council, or the CEO.
 The way this position will fit into his enormous role will become clear as we move
to the core of this paper.
The role of the Chartered Secretary and Administrator in ensuring
compliance with financial and other reporting obligations…
 The duties of the Secretary are contained in CAMA sec. 298(1) (a) to (d). The
secretary in a not-for-profit organization will render all the reports in part C, from
registration to dissolution, with changed nomenclatures, as contained in
Companies Regulations 2012, Sections 65 to 77.
 Hewill be responsible for keeping of proper books of accounts to aid consistent
accountability.
 Beyond the statutory minimum reporting obligations, he will be saddled with
enormous financial and other reporting responsibilities to donors, funders, grantors
and other stakeholders who may require reports in different special formats.
compliance with financial and other reporting obligations…
 One essential element of governance is dealing with stakeholders.

 Stakeholders are those individuals or groups that depend on the organization to
fulfill their own goals, and on whom the organization depends.
 The chartered secretary and administrator in a NFPO will be dealing with the
following stakeholders among others:
Those named in the constitution as the trustees

whose particulars have been submitted to
Board of Trustees Corporate Affairs Commission before the
Incorporation.
compliance with financial and other reporting obligations… (CONTD.)
This is the strategic apex. They formulate

The Governing Council policies/strategies and are held accountable by
regulators, donors and other stakeholders.
Executive employees who ensure the

organization’s objectives are met. The execute
Management Team strategies and policies made by the governing
council
The General workforce, the field workers,

Staff and Volunteers project executives
Those who are members, who pay

Members subscriptions, donations, fees to ensure
sustainability
These could be local or international. Western

Donors/Grantors/ Governments through their embassies United
Sponsors State Agency for International Development
(USAID) etc. They give grants to the NFPOs,
monitor projects to ensure performance.
Those who supply goods and services

Suppliers necessary for the NFPOs to carry out their
activities e.g. IT supplies.
Those that compete for donors in the same

Other NGO/NFPO markets.
Those who receive the services – the

Clients/ Beneficiaries/ communities and the less privileged, enjoy
Communities water from boreholes and electricity, among
others.
Umbrella organisation for NGOs e.g. CAN,

Network of NGOs PFM, NNNGOs, Supreme Council for Islamic
affairs etc
They facilitate payments, receive donations

and grants for the organization and act as
Bankers investment vehicles, and ensures SCUML
Registration as a condition for opening bank
account for NFPO
To cover fund raising invents and provide

channels for disseminating information and
Media report on activities of the organizations in the
public interest.
Managing Stakeholders
 Strategic decisions are affected by the expectation of the stakeholders.
 The influence of stakeholders from the array of above will vary widely. To reduce
conflict, the chartered secretary and administrator will have to map the
stakeholders for more efficient and effective management.
 Stakeholder mapping identifies the power of stakeholders in other to understand
the dynamics of priorities.
Compliance with Financial Reporting and Other Reporting obligations: What the
Chartered Secretary and Administrator should know
 FinancialReporting provides preparers, donors/sponsors, regulators and other
stakeholders with consistent way to describe and understand the financial
performance of an entity.
 InNigeria, there are many credible NFPOs managed by competent and honest
people and contributing to development efforts in various areas.
 However, recent reports suggest that there is a proliferation of NFPOs containing
the good, the bad and the ugly. For instance from July 2016 to June 2017, 10,003
NFPO were registered with the Corporate Affairs Commission (CAC)
What the Chartered Secretary and Administrator should know (contd):

 Notsurprisingly, some commentators have argued that NFPOs in Nigeria have
become a channel to funnel disproportionate share of development aid into their
pockets and their overseas bank accounts.
 Thus, the need for probity and accountability has made financial reporting
obligations inevitable and mandatory.
 From regulatory standpoint, CAMA Sec 607(1) deals with annual returns which
must be submitted to CAC not earlier than 30th June and not later than 31st Dec,
and show particulars of properties held by the corporate body during the year,
among other things.
What the Chartered Secretary and Administrator should know (contd)

 The Act does not mention, financial position, income and expenditure, statement of cash flow
and audited accounts.
 However, CAC’s Companies Regulations 2012, Sec. 73(3) requires that the annual returns
shall be accompanied by the audited account of the association. Audited Accounts for NFPO
shall comprise of Statement of Financial position, Income and Expenditure Account,
Statement of Cash flow and relevant note. It will also contain Narrative reports.
 Sec 77(1) of the Companies Regulations 2012 stipulates that Books of accounts showing
income and expenditure, sources of income, assets and liabilities of the association should be
kept.
 Similarly, payments are made for fees during incorporation Sec 65(1). Change of name of
incorporated trustee, Sec 67(1)(i), change of object and amendment of constitution Sec 68(1)
(g), change or appointment of Trustees Sec 69(1)(h)(i) etc.

 However, NFPOs have many Stakeholders particularly the donors/sponsors who
demand accounting reports regularly to enable them monitor the performance of
projects which they are funding, financial reporting obligations to donors can be
very stringent and compulsory.
 Agreements with some donors may involve submitting accounting and financial
reports in a specified format. Compliance with this is a major condition for
continuing support.
 Regulatory authorities in Nigeria are lax in enforcing reporting obligations, while
international donors like United Nations agencies, United State Agency for
International Development among others are very stringent with compliance.

 Other legislations that govern NFPOs in Nigeria are:
- The Companies Income Tax (Amendment)Act (CITA) 2007
- Taxes and Levies (Approval list of Collection) Act 1998
- Value Added Tax Amendment Act
 Another regulatory agency that regulate financial reporting in Nigeria is Financial
Reporting Council of Nigeria established by Financial Reporting Council of
Nigeria Act No. 6, 2011.

 Section 24 of FRCN Act explains the role of the Directorate of Accounting Standards-
Private sector shall:
(a) Develop accounting and financial reporting standards to be observed in the preparation
of financial statements in the private sector and small and medium scale enterprise.
(b) Promote the general acceptance and adoption of such standards by preparers and users
of financial statements.
(c) Promote compliance with the accounting standards developed or reviewed by the
directorate.
(d) Review from time to time the Accounting Standards developed in line with the
prevalent social, economic and political environment.

 Section 24 explains the role of the department of Accounting Standard Private
sector shall: (Contd)
(e) Promote compliance with accounting and financial reporting standards adopted
by the council.
(f) Promote in the public interest accounting and financial reporting Standards to be
observed in preparation of financial statement of public interest entities and
(g) Perform such other duties which is in the opinion of the board are necessary or
expedient to ensure efficient performance of the functions of the council.

 Given the above, which accounting standard govern the preparation and
presentation of financial reporting in NFPOs in Nigeria? There seems to be no
consensus to this question today.
 Some NFPOs apply the Nigeria’s statement of accounting standards (SAS), some
use International Financial reporting (FRS) or International Financial Reporting
Standards for Small and Medium sized (IFRSfor SMEs) both issued by
International Accounting Standards Board (IASB). Yet, other use International
Public sector statement of Accounting Standards (IPSAs) issued by International
Public Sector Accounting Standards Board – An arm of International Federation of
Accounts (IFAC).
 Nigeria adopted International Financial Reporting Standards which now
supersedes previous national GAAP called Statement of Accounting Standards
(SAS)

 NASB has been replaced with Financial Reporting Council of Nigeria (FRCN)
established by FRCN Act No 6, 2011.
 The Federal Executive Council (FEC) approved the road map which FRCN
implemented in 2012 by phased adoption of IFRS from 2012 to 2014 for
companies.
 In 2015, FRCN CEO/Executive Secretary announced that Not-For-Profit
organization in Nigeria could also company with IFRS.
 He
disclosed that IASB had classified Nigeria as an IFRS country. He did not state
whether it would be full IFRS, or IFRS for SMEs issued by IASB in 2009.

 IFRS for SME, is not written for NFPOs, but taking advantage of the window in it
that mandates additional disclosure when compliance with its specific
requirements are insufficient to enable users understand the effect of a particular
transaction, events and conditions.
 Providing additional Not-For-Profit specific information forms part of compliance
with the SME standard.
 Ideally,Nigeria NFPOs should adopt IFRS for SMEs to cope with the multi-
faceted reporting demands of donors and sponsors, particularly in this era of
globalization and competitiveness.
 This will achieve standardization and enhance comparability both within and
across borders.

 Importantly, NFPOs accounting differs from the commercial/trading entities accounting
dealing with NFPOs accounting.
 For example, instead of Income Statement and other comprehensive Income, we have
Income and Expenditure Account or some other names used in different jurisdictions.
 The adoption of IFRS for SME will require some guidance due to the marked difference
between commercial entities and NFPOs.
 ACCA issued such guidance in 2015 called “Companion guide for Not-For-Profits to
International Financial Reporting Standard for Small and Medium sized entities (IFRS for
SMEs)
 The guidance bridges the gap of the differences between IFRS for (SMEs) and the specific
accounting needs of NFPOs.
 Few selected GAAPs applicable to NFPOs across nations are shown below.
National/Jurisdictional Regimes of GAAP for NFPOs
No charity regulator, and no account standard

Australia for NFPOs in Australia. But efforts are being
made to produce one. NFPOs issue Special
Purpose Financial Reports (SPFR) which do
not comply with GAAP.
Two Accounting standards are in place. One

produced by Public Sector Accounting
Canada Standard Board (PSASB) for NGOs
controlled by government, the second
developed by Canadian Accounting Standard
Board (AcSB) for NFPOs classified as private
sector.
National/Jurisdictional Regimes of GAAP for NFPOs (CONTD.)
In Japan, there are nine different types of

NFPOs, and accounting practices differ
Japan among them. Japanese Institute of Certified
Public Accountants (JICPA) has
recommended to introduction of a common
accounting framework for NFPOs.
Charitis and PBEs are required to file financial

reports to New Zealand’s Department of
New Zealand Internal Affairs. No requirement to comply
with accounting standards.
There is no major accounting standard setter

in South Africa. No accounting standard for
South Africa NFPOs. Such organisations rely on
International Financial Reporting Standards.
In Switzerland Foundation for Accounting

Reporting issued Swiss GAAP RPC 21
focusing on accounting requirements for
Switzerland
NFPOs.
The UK has a well developed Carity

United Kingdom (UK) Statement of Recommended Practice (SORP)
for application in entities so classified.
Like the UK, the USA has well developed

accounting standard for NFPEs. Fully
identified as: ASU 2016-14 Not-for-Profit
United States of
Entitied (Topic 958): Presentation of Financial
America (USA)
Statements of Not-for-Profit Entities.
Challenges
 NPOfinancial reporting practices vis-à-vis Internatonal Standards have received
comparatively little or no attention in the academic literature.
 NPO sector is a heterogeneous mix of orgs with accountability relationships to a
diverse range of stakeholders that have different needs.
 Sheer breadth of the sector is a challenge for financial reporting standard setters.
 The differences between public and private NPOs makes IPSAS to need
adaptation to be applicable to NPOs.
Challenges (Contd)
 Due to the rapid increase in the influence of NPO and their reliance on third party
funding, interest into how they measure and manage performance has intensified.
 Performance reporting is jurisdiction – specific. Often NFPOs prepare reports to
different types and styles depending on the audience for that information.
 Financialreporting differs according to users, audiences and lack of homogeneity
within a particular country.
 Financial reporting is inconsistent between countries due to lack of international
financial reporting standards for NFPOs.
Challenges (Contd.)
 Concern about money laundering and financing of terrorism has been focused on
criminal and financiers ability to establish and utilize NFPO to clean and move
money around the world.
 Additionally, huge fraud in NFPO has reinforced the need for greater reporting and
disclosure requirements P21
 In Africa, NFPO accounting system is under developed.
The way Forward

 Development of globally converged financial reporting standards for NPOs would
facilitate the accountability of different sizes and structure of operating at different
levels (national, regional or International) and engaging in different activities from
operational to advocacy.
 Standardswould incorporate and account for sector-specific transactions that are
not evident within the For-Profit sector, e.g. Non – exchange transactions.
 There should be shared understanding, commonly known terms or agreement for
NFPOs. Financial reporting so that donors beneficiaries and global networks can
use this information appropriately.
The way Forward (Contd).

 With the growth of NFPOs to assist community development in developed and
lesser developed countries, later national standard will be cost effective way to
ensure accountability of theses NGOs and would lead to savings in terms of audit
and regulatory effort.
 Quality reporting increases donors trust and confidence in NFPOs when they see
that their donations have been directed appropriately.
 Toachieve quality financial reporting in the sector there should be high levels of
education for preparers, trustees, governing council members and staff in NPO
accounting systems.
Conclusion
Finally
 Successful NFPOs in Nigeria give priority attention to financial and other
obligations to donors, sponsors for sustainability, while not ignoring obligations to
local regulators.
 Paradoxically, major donors are International organizations based in western nations
like USAID, Norwegian Refugee Council, the UK Department for International
Development, etc. but most receivers of aids/donations are based in Africa
(including Nigeria)
 To set the pace and stand out from the crowd, the Chartered Secretary and
Administrator should broaden his knowledge base – into the digital word and every
emerging trend in the sector.
 The market in the sector is evolving with huge opportunities. Chartered secretaries
and Administrators should retool, position themselves to take advantage.
Thank
YOU
References
ACCA (2015), Companion Guide for Not-for-Profits to the International Financial

Reporting for Small and Medium-sized Entities (IFRS for SMEs)
CCAB (2014), International financial reporting for the not-for-profit sector. Final Report
of a study commissioned by CCAB
FGN (2004), Companies and Allied Matters Act, Cap C20, LFN
FGN, (2011), Financial Reporting Council of Nigeria Act, No. 6, 2011
FASB (2016) ASU 2016-14 Not-for-Profit Entities (Topic 958):Presentation of
Financial Statements of Not-for-Profit Entities
IASB (2009) International Financial Reporting Standard for SMEs
Orojo, J. O. (2008), Company Law and Practice in Nigeria (5 Th Edition), Durban,
LexisNexis
Smith, D. J. (2013), Corruption, NGOs, and Development in Nigeria.

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THE ROLE OF THE CHARTERED SECRETARY AND ADMINISTRATOR IN

ENSURING COMPLIANCE WITH THE FINANCIAL AND OTHER REPORTING

PATRICK C.N. OKPULOR

ON THURSDAY, 21ST OF MARCH 2019

AT NBA COMPLEX, MOSCOW ROAD, PORT HARCOURT,

 This is meant to refresh our minds on the evolution of companies legislation in

 Itwas later amended by Companies (Amendment) ordinance, 1941 and the

 One of the Important provisions of CAMA is the office of Secretary. Section

This part of the Act deals with Incorporated Trustees

 Section 590(2) says:

Implications of Incorporated trustees:

Implications of Incorporated trustees (Contd):

 A person with positive impact in corporate board effectiveness.

 Most Not-For-Profit Organizations in Nigeria are of small and medium sized

 One essential element of governance is dealing with stakeholders.

Those named in the constitution as the trustees

This is the strategic apex. They formulate

Executive employees who ensure the

The General workforce, the field workers,

Those who are members, who pay

These could be local or international. Western

Those who supply goods and services

Those that compete for donors in the same

Those who receive the services – the

Umbrella organisation for NGOs e.g. CAN,

They facilitate payments, receive donations

To cover fund raising invents and provide

What the Chartered Secretary and Administrator should know (contd):

What the Chartered Secretary and Administrator should know (contd)

What the Chartered Secretary and Administrator should know (contd)

What the Chartered Secretary and Administrator should know (contd)

What the Chartered Secretary and Administrator should know (contd)

What the Chartered Secretary and Administrator should know (contd)

What the Chartered Secretary and Administrator should know (contd)

What the Chartered Secretary and Administrator should know (contd)

What the Chartered Secretary and Administrator should know (contd)

What the Chartered Secretary and Administrator should know (contd)

No charity regulator, and no account standard

Two Accounting standards are in place. One

In Japan, there are nine different types of

Charitis and PBEs are required to file financial

There is no major accounting standard setter

In Switzerland Foundation for Accounting

The UK has a well developed Carity

Like the UK, the USA has well developed

The way Forward

The way Forward (Contd).

ACCA (2015), Companion Guide for Not-for-Profits to the International Financial

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