Financial Statement Audit in Nigeria: Requirements and Timing

Financial statement audits are central to corporate compliance, credibility, and tax accountability in Nigeria. Both local companies and multinational enterprises (MNEs) must adhere to statutory audit requirements to operate within the law. Understanding which businesses require audits, why the auditor’s opinion matters, and how to plan and execute the audit process is essential for staying compliant and credible.

Classes of Businesses Required to Audit Financial Statements

All companies in Nigeria are subject to audit requirements, but the intensity of regulatory obligations varies:

1. Public Companies:  

Public companies; whether local or MNE subsidiaries, must present audited financial statements annually. These audits protect shareholders, ensure transparency, and maintain market confidence.

 

2. Private Companies:  

Medium and large private companies, including local entities and foreign-owned subsidiaries, must audit their accounts. Audits ensure accurate reporting, regulatory compliance, and reliable documentation for tax filings and statutory submissions.

 

3. Small Companies:

Even companies qualifying under the “small company” status, whether local or part of an MNE structure, are required to prepare audited financial statements. Regulatory requirements may be less cumbersome than for larger companies, but they cannot file tax returns without an auditor’s opinion, properly stamped with ICAN certification. This ensures that submitted tax returns are accurate, compliant, and verifiable by the Revenue Service.

4. Regulated Entities and Companies Seeking Financing:

Banks, insurance companies, pension fund administrators, fintechs, and other regulated entities must audit accounts according to sector-specific regulations. Similarly, companies; local or MNEs seeking loans, investments, or government approvals are expected to present audited financial statements to satisfy third-party due diligence.

 

Failing to conduct a required audit exposes businesses to penalties, delayed filings, and reputational risks.

 Why the Auditor’s Opinion Matters

The auditor’s opinion confirms whether financial statements present a true and fair view of a company’s financial position. Its significance is heightened for both local businesses and MNEs:

  Regulatory Compliance: Audited accounts with a proper ICAN-stamped opinion are mandatory for filing tax returns and statutory submissions.

 Investor Confidence: Investors, lenders, and partners rely on auditor-verified financials for strategic decisions.

 Corporate Governance: The opinion demonstrates adherence to accounting standards, internal controls, and transparency.

Qualified, adverse, or disclaimer opinions signal financial reporting weaknesses, triggering regulatory review, audit follow-ups, and potential delays in approvals or financing.

 Timing of the Audit Process

The audit process aligns with the company’s financial year end. For most Nigerian businesses, this is 31 December:

Pre-Year-End Preparation: Reconcile accounts, review financial policies, and collate documentation before year end.

Post-Year-End Audit: Begins once books are closed. Early scheduling ensures timely completion and smooth filing.

Proper timing ensures audits are completed efficiently and tax returns are filed on schedule, particularly for MNE subsidiaries with global reporting timelines.

Typical Audit Duration

Audit duration depends on company size, complexity, and preparation level:

Small, well-prepared companies: 2–4 weeks

Medium-sized businesses: 4–8 weeks

Large or regulated entities (including MNE subsidiaries): Several months

Delays often result from incomplete documentation, unresolved reconciliations, or weak internal controls.

Key Audit Requirements and Documentation

Successful audits depend on complete, accurate, and accessible documentation:

  Trial balances and general ledger

  Bank statements and reconciliations

  Revenue schedules and invoices

  Expense records and payment evidence

  Fixed asset register and depreciation schedules

  Inventory records where applicable

  Tax computations and prior filings

  Corporate approvals, board minutes, and ICAN-stamped auditor’s opinion

Incomplete documentation increases audit queries, extends timelines, and may negatively affect the auditor’s opinion.

Preparing Effectively for an Audit

Preparation begins before year end. Businesses that maintain accurate records, resolve compliance issues early, and align reporting with regulatory expectations complete audits faster and receive clean auditor opinions.

Key preparation steps:

  Regularly reconcile accounts

  Resolve tax obligations promptly

  Maintain supporting documents and approvals

  Review accounting policies for consistency

  Ensure ICAN certification of auditor’s opinion for statutory filing

Staying Compliant in Nigeria’s Corporate Space

Audited financial statements are non-negotiable for regulatory compliance. Both local companies and MNEs:

Cannot file tax returns without an ICAN-stamped auditor’s opinion

Must maintain accurate documentation to withstand scrutiny from regulators, tax authorities, and investors

Benefit from early audit preparation to avoid delays, penalties, and reputational risks

Final Position

Financial statement audits are a legal and operational requirement for all companies in Nigeria. Even small entities, despite lighter regulatory obligations,   must have audited financial statements with an ICAN-stamped auditor’s opinion before filing tax returns  . Both local and multinational businesses benefit from understanding audit requirements, planning for timing, and maintaining complete documentation to stay compliant, credible, and audit-ready.