International Journal of Finance and Accounting 2016, 5(3): 146-157 DOI: 10.5923/j.ijfa.20160503.02 Financial Reporting Council of Nigeria and the Future of Accounting Profession in Nigeria Wilson E. Herbert 1,* , Iheanyi O. Anyahara 2 , Eunice N. Okoroafor 3 , Francis Onyilo 1 1 Department of Accounting, Banking & Finance, Baze University, Abuja, Nigeria 2 Financial Reporting Council, Lagos, Nigeria 3 Department of Accounting, Veritas University, Abuja, Nigeria Abstract Following the spate of financial scandals and the global financial crises implicating accountants and accounting practice, the global accounting community responded through the International Financial Reporting Standards (IFRS) and the Financial Accounting Standards Board (FASB in the USA) by substantially raising the levels of ethical and reporting conduct. Correspondingly, there has been a raft of national corporate governance initiatives and legislations designed to evolve efficient professional accounting practice, especially in processing of financial information and related financial reports. This is the contextual genesis of the Financial Reporting Council (FRC) Act No. 6 of 2011. In effect, the Act was Nigeria’s response to this global concern with the aim of providing a comparative institutional governance mechanism to address the challenges that prospectively define the future of accounting profession in Nigeria. The Act marked the end of voluntary self-regulation of professional accountancy bodies and the beginning of formal, mandatory oversight under the ambit of the Financial Reporting Council. The FRC Act was designed to reshape the Nigerian accounting profession and practice through the trichotomy of regulatory mandate: (a) monitoring professional service areas from the platform of professionalism and legislation, (b) aligning these services with international best practices, and (c) improving investor confidence. Five years after its operational commencement, it is apropos to appraise its efficacy. The operational dynamics of the FRC are already having a significant impact on the Nigerian accounting profession. Keywords Audit Expectation gap, Financial Reporting Council, Future of Accounting Profession, Nigeria 1. Introduction The spate of corporate scandals in the late 1990s to early 2000s, which culminated in the dizzying collapse of Enron Corp, WorldCom and several national and international companies, not only implicated the accounting profession but also de facto led to the failure of one of the five largest audit and accountancy partnerships in the world, Arthur Andersen. Prior to Enron’s bankruptcy filing in December 2001, the firm was widely regarded as one of the most innovative, fastest growing, and best managed businesses in the United States. Just as the world was grappling with the challenges of the raft of corporate governance failures created by these scandals and bankruptcies, the global economy was visited by the 2008/2009 financial crises. These events shook the global foundation of integrity upon which both business and the accounting profession are founded. These events also exposed the effects of corporate managers’ egregious obsession with pursuit of profit maximization. These global accounting scandals presented * Corresponding author: weherbert12@gmail.com (Wilson E. Herbert) Published online at http://journal.sapub.org/ijfa Copyright © 2016 Scientific & Academic Publishing. All Rights Reserved the most audacious opportunity for the birth, in the United States, of the Sarbanes-Oxley Act of 2002, which brought into effect the Public Company Accounting Oversight Board (PCAOB). The regulation, which has forced the profession to rethink its most fundamental principles and practices, is being replicated in many countries. In Nigeria, the Financial Reporting Council (FRC) Act No. 6 of 2011 was promulgated for that purpose. The defunct Nigerian Accounting Standards Board was thus replaced by the Financial Reporting Council of Nigeria. Three important responsorial upshots were discernible. First, the Sarbanes-Oxley Act of 2002 was created in the U.S. to strengthen disclosure and increase the penalties for financial manipulation. Second, these events raised global consciousness of degeneration of business ethics. In response, the global accounting community responded through the International Financial Reporting Standards (IFRS) and the Financial Accounting Standards Board (FASB in the USA) by substantially raising the levels of ethical and reporting conduct. Third, and very importantly, corporate boards of directors were required to inject greater independence in its membership composition, thereby ensuring greater monitoring through greater audit and assurance mechanisms, and quickly penalizing and replacing