A federal high court in Lagos has restrained the Financial Reporting Council of Nigeria (FRC) from taking any action, sanction or measure against KPMG Professional Services.
Ibrahim Buba, the presiding judge, ruled that the FRC must maintain status quo pending the hearing and determination of the suit filed by the applicants.
Chuka Ikwuazo, prosecuting counsel, urged the court to restrain the respondents from taking any sanction, while accelerating the suit filed in lieu of the ‘originating processes’ in the matter.
The interim order was the second granted by the court against the FRC, within 48 hours.
On November 4, Buba also ordered the FRC to maintain the status quo in a related case filed by StanbicIBTC.
KPMG filed an application for the enforcement of their fundamental rights following the FRC letter of 26 October 2015, which it called a final notice and its ‘regulatory decision’ on the financial statements of StanbicIBTC Holdings Plc for 2013 and 2014.
The FRC in one of its regulatory decisions had suspended Ayodele Othihiwa, a partner at the firm, “until the investigation as to the extent of the negligence of KPMG Professional Services is ascertained”.
KPMG and Othihiwa, had claimed that FRC’s decision not only violated their constitutional right to fair hearing but also section 62(2) of the financial reporting act.
The section states that FRC shall “notify the professional whose conduct, act or omission is under investigation of the nature of the complaint and it shall summon or hear the professional”.
The applicants contended that FRC and its executive secretary, Jim Obazee, did not only breach this section, but they also breached section 15(2) b of the FRC act, which states that “a technical and oversight committee shall review sanctions to be meted out to any professional accountant, professional or public interest entity”.
KPMG and Othihiwa further claimed that even where the technical and oversight committee had ratified the decision of the FRC, the council had failed to exhaust the provisions of its own law, by allowing them to exercise their right of appeal to the technical committee and by subjecting its decision to the approval of the FRC board.
The FRC has no board at the moment, as its board was dissolved in July.
Buba adjourned the case to November 12, 2015 for the hearing of the motion for interlocutory injunction.