Over the past two decades, corporate scandals most notably Enron and global financial crises have driven major reforms in financial reporting. For Public Interest Entities (PIEs), this led to the adoption of stronger ICFR frameworks like COSO 2013 Internal Control: Integrated Framework, reinforcing the need for transparency, accountability, and stakeholder trust. In Nigeria, the Financial Reporting Council (FRC) requires all Public Interest Entities to implement and report on the effectiveness of their ICFR. With the mandate effective from financial years ending on or after 31 December 2024. 2025 marks the second year of mandatory compliance. PIEs are reminded to maintain and annually assess their ICFR, ensuring ongoing transparency, accountability, and independent assurance.

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What Is ICFR and Why Does It Matter?

Internal Control over Financial Reporting (ICFR) refers to the processes and controls established by management to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements in accordance with applicable accounting standards.

ICFR Core Objectives

Ensuring transactions are recorded accurately to support the preparation of financial statements.
Providing assurance that receipts and expenditures are made only with proper authorization.
Safeguarding assets against unauthorized use, loss, or disposition.

While most organizations already maintain internal controls, what’s evolving is the benchmarking of these controls against globally recognized frameworks most notably, the COSO 2013 Internal Control – Integrated Framework. This shift enhances the effectiveness, consistency, and auditability of ICFR, ensuring that financial statements are not only accurate and complete but also compliant with international best practices.

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What does FRC expects from Public Interest Entities Management’s Responsibility

Management is responsible for the design, implementation, and annual certification of ICFR effectiveness. As mandated by the Financial Reporting Council of Nigeria (FRCN), this responsibility cannot be delegated to external auditors to preserve their independence. While internal audit or independent consultants may support the process, only management must assess and certify ICFR annually.

External Auditors’ Role

External auditors are required to independently review management’s ICFR assessment and issue a separate attestation report, without compromising their independence. This may be conducted as part of an integrated audit, which includes:

A distinct ICFR audit (with its own fee), and
A financial statement audit informed by ICFR conclusions.

Even if ICFR is ineffective, it doesn’t mean the financial statements are misstated but it may require more substantive testing and higher audit fees.

Read more: Financial Reporting in Nigeria: The Critical Role of ICFR

Call to Action

CEOs: Champion ICFR as a continuous, enterprise-wide Ensure it is adequately resourced and embedded into the organization’s governance and risk management framework not treated as a mere compliance checkbox.
CFOs: Lead continuous maintenance of ICFR and annual certification of ICFR. Ensure timely, evidence-based assessments and maintain clear documentation to support transparency and audit readiness.

External Auditors: Uphold independence by refraining from performing ICFR assessments. They should independently review and attest to management’s ICFR assessment as part of the integrated audit.

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Looking Ahead: Strengthening Trust Through Effective ICFR Implementation

As Nigeria’s regulatory landscape continues to evolve, the successful implementation of Internal Control over Financial Reporting (ICFR) stands as a defining marker of corporate integrity and governance maturity. For Public Interest Entities, this is more than a compliance exercise; it is a commitment to building investor confidence, enhancing financial transparency, and reinforcing accountability across all levels of the organization. In 2025 and beyond, organizations that embed ICFR into their governance culture will not only stay compliant but also position themselves as trusted leaders in financial reporting excellence.

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FRCN Requirements on Internal Control over Financial Reporting [ICFR]