Appointment of Auditor (Nigeria)

An Appointment of Auditor in Nigeria records the appointment of auditor and the particulars that give it legal effect.

CAMA 2020 requires every company that is not exempted under Section 394 (small private companies) to have its financial statements audited annually by a qualified auditor. Section 401 of CAMA 2020 governs the appointment, removal, and resignation of auditors. The auditor is appointed by shareholders at the AGM by ordinary resolution, and the Appointment of Auditor letter formalises this appointment and sets out the engagement terms.

The Financial Reporting Council of Nigeria (FRCN), established under the Financial Reporting Council of Nigeria Act 2011, regulates the audit profession for public interest entities (PIEs) in Nigeria — which include companies listed on the Nigerian Exchange Group (NGX), banks and other financial institutions regulated by the Central Bank of Nigeria (CBN), insurance companies regulated by the National Insurance Commission (NAICOM), and pension fund administrators regulated by the National Pension Commission (PenCom). Auditors of PIEs must be registered with the FRCN, and audits of PIEs must be conducted in accordance with International Standards on Auditing (ISA) and the FRCN's Code of Ethics for Professional Accountants.

The Institute of Chartered Accountants of Nigeria (ICAN) and the Association of National Accountants of Nigeria (ANAN) are the primary professional bodies for accountants and auditors in Nigeria. Membership of ICAN or ANAN is a prerequisite for statutory audit work. The major global accounting networks operating in Nigeria include KPMG Professional Services, Deloitte Nigeria, PricewaterhouseCoopers (PwC) Nigeria, Ernst & Young Nigeria, and BDO Nigeria.

For companies regulated by the CBN, NAICOM, or PenCom, the regulator may impose additional requirements on the appointment, independence, and rotation of auditors. The CBN, for example, requires banks to rotate their audit firms every ten years and to obtain CBN approval before appointing or removing their external auditors.

The legal framework governing the Appointment of Auditor (Nigeria) in Nigeria draws on several key statutes and regulatory bodies. Under Nigerian law, the Companies and Allied Matters Act 2020 (CAMA) regulates corporate entities through the Corporate Affairs Commission (CAC). The Labour Act (Cap L1 LFN 2004) and the National Industrial Court of Nigeria (NICN) govern employment disputes. The Nigeria Data Protection Regulation (NDPR) 2019 and the Nigeria Data Protection Commission (NDPC) protect personal data. The Federal Inland Revenue Service (FIRS) administers tax obligations under the Companies Income Tax Act. The Federal High Court and state High Courts have jurisdiction over civil matters. Parties executing a Appointment of Auditor (Nigeria) in Nigeria should confirm the document reflects current law, including any amendments enacted since the original drafting date. The Companies and Allied Matters Act (CAMA) 2020 sets the foundational requirements.

A Nigeria Appointment of Auditor letter is required whenever a company appoints or re-appoints an audit firm to conduct the statutory audit of its financial statements.

All public companies registered under CAMA 2020 must appoint an auditor at each AGM under Section 401, and the appointment must be formalised by an Appointment of Auditor letter confirming the scope of the audit, the applicable standards, the fee, and the auditor's independence.

Newly incorporated private companies whose directors exercise the power under Section 401(3) of CAMA 2020 to appoint the first auditor (before the company holds its first AGM) need an appointment letter to formally engage the audit firm.

Banks and financial institutions regulated by the Central Bank of Nigeria (CBN) must notify the CBN of all auditor appointments and changes, and the Appointment of Auditor letter serves as the documentary evidence of the appointment submitted to the CBN Banking Supervision Department.

Companies listed on the Nigerian Exchange Group (NGX) are required by the NGX Rulebook and the Securities and Exchange Commission (SEC) Rules to maintain audited financial statements prepared by FRCN-registered auditors, and the Appointment of Auditor letter is a key component of the annual reporting cycle.

Private equity-backed companies — particularly those funded by international investors through Lagos Angel Network, the Lagos-based Ventures Platform fund, or international VCs — are required by their investors to appoint recognised audit firms and to provide the Appointment of Auditor letter as confirmation of the engagement before each financial year-end.

Parties in Nigeria should prepare a Appointment of Auditor (Nigeria) proactively rather than waiting for a dispute to arise. Courts interpret agreements based on the written terms rather than oral representations. Under Nigerian law, the Companies and Allied Matters Act 2020 (CAMA) regulates corporate entities through the Corporate Affairs Commission (CAC). The Labour Act (Cap L1 LFN 2004) and the National Industrial Court of Nigeria (NICN) govern employment disputes. The Nigeria Data Protection Regulation (NDPR) 2019 and the Nigeria Data Protection Commission (NDPC) protect personal data. The Federal Inland Revenue Service (FIRS) administers tax obligations under the Companies Income Tax Act. The Federal High Court and state High Courts have jurisdiction over civil matters. Where the transaction involves regulated activities, prior approval from the relevant authority may be required before execution.

A Nigeria Appointment of Auditor letter should contain the following key elements.

Parties: The company's full legal name, RC number, and registered address; the audit firm's full legal name, ICAN membership number, FRCN registration number, and office address.

Appointment basis: Reference to the shareholder resolution passed at the AGM (or director resolution for first auditor appointments) under Section 401 of CAMA 2020, and the financial year to which the audit relates.

Scope of audit: Confirmation that the audit will cover the company's financial statements prepared in accordance with the applicable financial reporting framework — IFRS (for public interest entities) or IFRS for SMEs (for eligible smaller companies) as adopted by the Financial Reporting Council of Nigeria (FRCN) — and that the audit will be conducted in accordance with International Standards on Auditing (ISA).

Independence declaration: The audit firm's confirmation of its independence from the company under Section 404 of CAMA 2020 and the FRCN Code of Ethics — confirming that no officer, employee, or business partner of the firm has a relationship with the company that compromises independence.

Access rights: The audit firm's rights of access to the company's books, records, accounts, and personnel as provided by Section 403 of CAMA 2020, which entitles auditors to access all information and explanations necessary for the performance of the audit.

Audit fee: The agreed fee in Nigerian Naira (NGN), whether quoted as a fixed fee or a time-and-materials estimate, including the basis for any variation if the scope of work expands.

Deliverables: The audit opinion and the auditors' report compliant with ISA 700 (for standard audits) and ISA 701 (Key Audit Matters for listed companies), to be delivered within the agreed timetable.

Signature: Signed by the company's authorized director or company secretary and countersigned by the audit firm's engagement partner.

Additional compliance elements for a Appointment of Auditor (Nigeria) used in Nigeria include: Under Nigerian law, the Companies and Allied Matters Act 2020 (CAMA) regulates corporate entities through the Corporate Affairs Commission (CAC). The Labour Act (Cap L1 LFN 2004) and the National Industrial Court of Nigeria (NICN) govern employment disputes. The Nigeria Data Protection Regulation (NDPR) 2019 and the Nigeria Data Protection Commission (NDPC) protect personal data. The Federal Inland Revenue Service (FIRS) administers tax obligations under the Companies Income Tax Act. The Federal High Court and state High Courts have jurisdiction over civil matters. Forms-legal.com provides this template as a starting point for Nigeria-compliant documentation.