Central Bank of Nigeria
and Nigeria
Deposit Insurance Corporation
Invitation for the Submission of Expression of Interest
For The Provision of Consultancy Services on the
Implementation of International Financial Reporting
Standards (IFRS) and Basel II in the Nigerian
Banking Sector
Introduction
The Central Bank of Nigeria, in line with its mandate of promoting a sound financial system in Nigeria, and in consonance with the ongoing reforms in the Nigeria banking system, has commenced full preparation at ensuring that the banking system in Nigeria fully comply with the requirements of Basel II and gradually migrate to Basel III by end 2012.
Furthermore, the Federal Government of Nigeria’s directive on mandatory adoption of International Financial Reporting Standards (IFRS) for all listed and significant public-interest entities by January 1, 2012. has informed the need for the CBN, as the apex regulator of the banking system in Nigeria, to provide the necessary guidance and direction to the banking industry for orderly migration of financial reporting from the Nigerian/Local GAAP to IFRS.
Accordingly, the Central Bank of Nigeria (CBN), in collaboration with the Nigeria Deposit Insurance Corporation (NDIC), has commenced efforts to guide the industry towards full implementation of IFRS and Basel II, with timelines of January 1, 2012 and December 31 , 2012, respectively.
2. Expression of Interest for the Provision of Consultancy Services on the Implementation of IFRS in the Nigerian Banking Sector
The CBN/NDIC desires to engage a competent and knowledgeable Consultant or firm of Consultants on IFRS implementation in the Nigerian banking sector.
The successful applicant shall be resident within the CBN for the duration of the implementation period, in order to guide the banking sector, towards a seamless and orderly implementation of IFRS in Nigeria. The choice of the firm/Consultant will be based on proven, successful and verifiable IFRS conversion record in jurisdiction(s) similar to Nigeria.
a.) PROPOSED RESPONSIBILITIES OF THE CONSULTANT
The Consultant will be required to:
i. Carry out clear and unambiguous assessment and documentation of the industry readiness, impact of IFRS, and identification of specific infrastructure required to support an organized industry-wide conversion to IFRS. The assessment will amongst others include the:
- Regulatory framework
- Legislation/legal framework
- Skill gaps and training requirements
- Enabling environment
- Technology, including changes to source systems and ledgers
ii. Specify the benchmark, in line with best practices, for each of the items stated in (i) above.
iii. Advise the CBN/NDIC IFRS Implementation Committee on the modalities for effective migration and timelines.
iv. Propose practical and reasonable means of closing the identified gaps in the implementation of IFRS, including capacity building for supervisors/regulators (but shall not be directly involved in providing training services).
v. Provide a well sequenced conversion/migration plan with cost implications.
vi. Be actively involved in the implementation process by providing the required support from the commencement to the conclusion of the IFRS Implementation Project in the Nigerian financial services industry, including post implementation reviews.
vii. Be also responsible for the implementation of IFRS in CBN/NDIC as reporting entities.
viii. Coordinate and support the actual rollout stages to compliment the work of the CBN/NDIC’s Implementation Committee.
ix. Determine how the conversion to IFRS would affect regulatory agencies’ policies and contractual arrangements (including debt covenants) that are currently based on local GAAP.
3. Expression of Interest for the Provision of Consultancy Services On the Implementation of Basel II in the Nigerian Banking Sector
The CBN/NDIC desires to engage a competent and knowledgeable Consultant or firm of Consultants to assist with implementation of Basel II in the Nigerian banking sector. The successful applicant shall be resident within the CBN for the duration of the implementation period, in order to guide the banking sector, towards a seamless and orderly implementation of Basel II and the eventual migration to Basel III. The choice of a firm/consultant will be based on proven, successful and verifiable implementation of Basel II in jurisdiction(s) similar to Nigeria. Also, it is a requirement that the organization (including the key resources to be deployed for the exercise) must have actively participated in their referenced Basel II implementation exercise.
In choosing the Consultant that would assist in the implementation of Basel II and III in the Nigerian banking sector, preference would be accorded a Consultant with proven technical and working knowledge of the Basel Capital Accord requirements and who had successfully facilitated the implementation of Basel II in jurisdiction(s) similar to Nigeria.
3.1 Proposed Responsibilities of the Consultant
The Consultant will be required to:
a. Coordinate the conduct of an initial Baseline Survey of the Nigerian banking system to ascertain the level of implementation of any segment of the Basel II and III Framework. The assessment will, amongst others, include the determination of the following:
- Risk Management Framework and infrastructure in place:
- Strength of Internal Controls and Compliance function.
- Methodology used-in ascertaining capital adequacy;
- Robustness of IT infrastructure;
- Available skills and expertise;
- Number of years of loss data available;
- Data completeness and revalidation; and
- Adequacy and robustness of overall credit and collateral management.
b. Specify the benchmark, in line with best practices, for each of the items stated in (a) above.
c. Offer advice on capacity building in relation to the project. The Consultant is specifically expected to advise on the types of training programme to undertake, identify competent resource persons and exposure/attachment to similar jurisdictions where Basel II/III is fully implemented;
d. The Consultant is to facilitate and closely coordinate the workings of the Technical Committee and the various Workgroups set up by the CBN/NDIC IFRS/Basel II Steering Committee to ensure early completion of their assigned roles;
e. Facilitate, coordinate and ensure early preparation of all the Consultative Papers for exposure to stakeholders:
f. Incorporate all comments and inputs on the Consultative Papers by stakeholders and ensure their early finalization:
g. Coordinate and monitor the parallel runs of the Basel II and III frameworks in the banking system;
h. Coordinate an interactive forum with stakeholders to discuss weaknesses/gaps arising from the parallel run;
i. Facilitate the finalization of the Basel II & III Implementation Framework;
j. Closely monitor the live implementation of the Framework for a minimum period of one year; and
k. Put in place structures towards the adoption of Basel II & III.
4. Requirements from Interested Firms/Individuals </strong
