Value Added Tax (VAT) was introduced by the Federal Government of Nigeria and is provided for by the Value Added Tax Decree 102 of 1993 which became effective in 1994 which requires manufacturers, wholesalers, importers and suppliers of VATable goods and services to be registered within six months of commencement of business.
Such a registered person is expected to charge and collect VAT on supplied goods and services. The amount collected constitutes the VAT output.
On the other hand, a purchaser of VATable goods and services is also expected to pay VAT of 5% on the goods and services supplied to him. These constitutes the VAT input. While the difference between the output and the input represents the amount payable to the FIRS (Federal Inland Revenue Service).
Therefore, the amount is payable where the output tax exceeds the input tax. And where the input exceeds the output tax, this may be claimed from the revenue.
However, VAT is an offshoot of the sales tax but some significant inhibiting factors are;
The frequency of returns discourages taxpayers from complying and VAT returns are supposed to be filed every month with the attendant cost to the taxpayer.
The emphasis placed on tax collection has discouraged a number of taxpayers especially with the fact that all VAT outputs are chargeable to tax but not all inputs are allowed for the tax purpose.
The apparent lack of transparency on the part of the tax authority. Queries will usually be raised where the VAT input exceeds the VAT output because of the reluctance of tax authority to refund taxpayers.
Taxpayers consider VAT as an additional burden on them and will sometimes avoid buying VATable products if they are aware that it is being charged.
The poverty level of the general populace which has eroded their economic power of purchase.
These and much more represents the factors inhibiting the administration and collection of Value Added Tax in Nigeria which the Federal Government needs to note.
Internal Control over Financial Reporting (ICFR) is a fundamental component of sound corporate governance for Public Interest Entities (PIEs). It provides reasonable assurance that financial transactions are accurately recorded, authorized, and reported in accordance with applicable accounting standards and regulatory requirements. By embedding effective preventive and detective controls throughout financial processes, ICFR strengthens the integrity, completeness, and accuracy of financial statements, thereby reducing the risk of material misstatements arising from error or fraud.
Driving Investor Confidence and Stakeholder Trust
Reliable financial reporting is critical to maintaining the confidence of investors, regulators, creditors, and other stakeholders. An effective ICFR framework demonstrates management's commitment to transparency, accountability, and financial discipline. This enhances the credibility of published financial information, supports informed decision-making by capital market participants, and reinforces the reputation of PIEs as responsible stewards of public and shareholder resources
Mitigating Regulatory and Compliance Risk
Given the heightened regulatory oversight applicable to Public Interest Entities, robust ICFR plays a vital role in ensuring compliance with financial reporting obligations and governance requirements. Well-designed and effectively operating controls enable organizations to identify and address deficiencies proactively, reduce the likelihood of regulatory breaches, financial penalties, and reputational damage, and support timely remediation where control weaknesses are identified. Ultimately, a strong ICFR framework promotes operational resilience, strengthens governance, and contributes to the long-term sustainability of the organization.
Navigating Nigeria's ICFR Requirements
The Financial Reporting Council (FRC) of Nigeria issued the Guidance on Management Report on Internal Control over Financial Reporting (ICFR) in November 2022, pursuant to Section 7(2)(f) of the Financial Reporting Council of Nigeria Act, 2011 (as amended). The Guidance introduced mandatory annual management assessment and reporting on the effectiveness of Internal Control over Financial Reporting for Public Interest Entities (PIEs), with independent auditor attestation.
Category
Mandatory ICFR Reporting Timeline
Public Companies
Effective for annual reports beginning 31 December 2023
Other Public Interest Entities (Private PIEs)
Effective for annual reports ending on or after 31 December 2024
Government/Public Sector Agencies
Originally effective for 31 December 2024, with a one-year waiver granted by the FRC. Mandatory submission now applies to 2025 audited financial statements filed in 2026.
How PML Professional Services Supports Your Organization
PML Professional Services provides end-to-end ICFR advisory, implementation, and review services designed to help Public Interest Entities achieve sustainable compliance while strengthening financial governance. Leveraging deep expertise in governance, risk management, internal controls, and financial reporting, our team works collaboratively with management to build an efficient and risk-based ICFR framework aligned with regulatory expectations and internationally recognized leading practices.
Our ICFR service offerings include:
ICFR readiness assessments, including enterprise-wide gap analysis and implementation planning.
Risk assessment and control framework development, including process mapping, Risk and Control Matrices (RCMs), and ICFR documentation aligned with the COSO Framework.
Control testing and evaluation, covering both design and operating effectiveness of key financial reporting controls.
Control deficiency identification and remediation support, including management assessment and ICFR reporting.
Independent ICFR reviews and continuous compliance support to ensure ongoing regulatory compliance and control maturity.
At PML Professional Services, we recognize that ICFR compliance extends beyond meeting regulatory requirements, it is an opportunity to strengthen governance, enhance operational discipline, improve investor confidence, and establish a resilient financial reporting environment capable of supporting long-term organizational growth.
