A Pathway to Clean Audit Opinions (IAS 21, IAS 29)

January 2020

Chengetai Mashavave

How did we get here

− Currency issues: USD v bond note (gedye)

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Inflationary pressures

Surrogate currency that became real

Confidence levels deteriorated

Store of value

Formulation of audit opinions

− Sufficiency and appropriateness of audit evidence

− materiality

− IFRS v laws & regulations

− Type of opinion (driven by primary users/purpose)?

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- Unqualified (emphasis of matter?)

- Qualified

- Adverse

- Disclaimer

IAS 21 considerations: 2020 and beyond

• Primary / functional currency; change from ZWL?

• Transition from USD to ZWD: Oct 2018 to Mar 2019 and IAS 21 v IAS Zim (S.I. 33 and other related pronouncements)

• Exchange rates used (plus NOCLAR effects)

− Settled transactions (spot rate)

− Unsettled transactions

− Supreme Court ruling and effects on “forex debts”

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IAS 29 considerations: 2020 and beyond

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• Currency is hyperinflationary (521% in Dec 2019) – currency is here “to stay”

• IAS 29 to be applied to AFS from 1 July 2019 – PAAB and ICAZ guidance issued(comparatives could have misstatements?)

• General price index to be applied from beginning of FY as if the entire period is hyperinflationary

• IAS 29 – primary accounts

• Cost/benefit of applying IAS 29 and requirements/preferences of primary users of accounts? (incl ZIMRA)

Route back to IFRS compliance

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• Application of IFRS 1 “First Time Adoption of IFRS”

• CY + 2 PY balance sheets

Current year effects of PY misstatements (IAS 21 ‘uplifted’ by IAS 29)?

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