Oando Plc, a prominent indigenous energy firm, has announced a delay in the release of its 2024 Audited Financial Statements (AFS), missing the regulatory deadline of March 31, 2025. The company attributes this postponement to two key factors: the intricate integration of the financial records of the newly acquired Nigeria Agip Oil Company (now Oando Energy Resources Nigeria Limited or OERNL) and the expanded Internal Controls Over Financial Reporting (ICFR) requirements mandated by the Financial Reporting Council of Nigeria (FRC). Oando has assured stakeholders that the AFS is expected to be finalized and filed by May 30, 2025.
The acquisition of Nigeria Agip Oil Company represents a significant strategic move for Oando, expanding its footprint in the energy sector. However, this acquisition has also introduced complexities into the financial reporting process. Integrating OERNL’s financials into Oando’s consolidated statements necessitates aligning accounting policies, mapping charts of accounts, and merging legacy IT systems, specifically SAP and Oracle Fusion. Although substantial progress has been made, Oando cites pending responses from ENI, the former parent company of Nigeria Agip Oil Company, regarding crucial financial data as a contributing factor to the delay. The company emphasizes that the complete integration of OERNL’s financials is critical due to its substantial impact on the overall group financial results, making its completion a prerequisite for finalizing the audit.
Adding to the complexity is the FRC’s revised ICFR guidelines issued in July 2024. These updated guidelines broadened the definition of Public Interest Entities to encompass government licensees and companies with an annual turnover exceeding N30 billion. This change has brought several Oando subsidiaries, including the newly acquired OERNL, under the purview of these expanded requirements. Consequently, the 2024 audit requires additional scoping and testing for these subsidiaries. The more stringent ICFR process, involving attestations from key executives such as the Group Chief Executive and Group Chief Financial Officer, as well as independent auditors, is expected to extend the timeline, with completion anticipated by the end of March 2025.
Oando’s management has affirmed its commitment to actively overseeing the audit process to ensure timely resolution of all outstanding issues. The company is working closely with its auditors to mitigate further delays and maintaining continuous communication with regulatory bodies regarding the revised filing timeline. This proactive approach underscores Oando’s dedication to transparency and compliance while navigating the complexities arising from the acquisition and the evolving regulatory landscape.
The delay in filing the 2024 AFS, while unexpected, can be viewed as a consequence of Oando’s strategic growth and the dynamic regulatory environment. The integration of a major acquisition like OERNL is inherently complex, demanding significant time and resources to ensure accurate and compliant financial reporting. Furthermore, the FRC’s revised ICFR guidelines reflect a global trend towards stricter financial oversight, particularly for entities operating in strategically important sectors like energy. These factors combined have contributed to the extension of the audit timeline.
Oando’s proactive communication with stakeholders, outlining the reasons for the delay and providing a revised timeline, demonstrates a commitment to transparency. While delays can raise concerns, the company’s proactive engagement with regulators and auditors suggests a dedicated effort to navigate these challenges effectively and deliver a comprehensive and accurate AFS as soon as practicable. The situation underscores the intricate balancing act companies face between pursuing growth through acquisitions and adhering to increasingly complex regulatory requirements. The outcome of this process will be a key indicator of Oando’s ability to effectively manage these competing demands and maintain stakeholder confidence.
