Principle 20 of the Nigerian Code of Corporate Governance 2018 ("NCCG Code"), issued by the Financial Reporting Council of Nigeria ("FRCN") outlines a ten-year period for the rotation of Auditors in public companies. However, the NCCG Code does not specify a rotation period for audit firms in the case of Joint Auditors.
Subsequently, the FRCN issued the Audit Regulation 2020 ("the Audit Regulation") and resolved the issue on the rotation period for Joint Auditors. The Audit Regulation applies to all Auditors, audit committee members and other assurance service providers, and is to be read in conjunction with all applicable laws, regulations, codes, rules standards, guidelines for inspection and monitoring procedure for auditors, audit committee members and other assurance providers, instruments of delegation with relevant professional bodies and requirements in relation to Audit in Nigeria.
Regulation 9 of the Audit Regulation provides for the mandatory audit firm rotation for Auditors of public interest entities, which sets a maximum period of fifteen years for the rotation of Joint Auditors. Specifically, Regulation 9.3 states that:
"Audit firms shall disengage after continuous service to a company for ten (10) years while a joint Audit arrangement shall be for a maximum period of 15 years".
To ensure consistent application of regulations in the Nigerian Capital Market, the Securities and Exchange Commission ("SEC") mandates all public companies and Capital Market Operators to comply with the Audit Regulation issued by the FRCN.
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