accounting and auditing presentation · rosc a&a report report on observance of standards and...

1. ROSC review issues on the institutional framework for

financial reporting in Zimbabwe

2. Press statements for Listed Entities and adherence to ZSE

Agenda

2. Press statements for Listed Entities and adherence to ZSE

Listing Requirements

3. Summary of the key issues from various technical

committees of ICAZ

4. IFRS update – Changes o look out

ROSC A&A report

� Report on Observance of Standards and Codes (“ROSC”) - Accounting and Auditing

� Joint initiative of the World Bank and IMF� Joint initiative of the World Bank and IMF

� Focuses on the Institutional framework, strengths and weaknesses in the accounting and auditing environment

� The report outlines principles based recommendations for strengthening the A&A environment

� Auditor independence is impaired in some cases even for large listed companies (scepticism from certain regulators)

ROSC A&A report – findings

� Poor application of fair value standards and over reliance on the uncorroborated work of “experts” – IAS 16 an IAS 40

� Inadequate disclosures for some companies including listed companies (e.g. - IAS 1, IFRS 8, IAS 24)(e.g. - IAS 1, IFRS 8, IAS 24)

� Range of compliance in pension funds and insurance companies ranged from very poor quality to high quality

� Large non-listed private companies had very low levels of compliance with IFRS and were prepared by staff with inadequate expertise

� Amendment of Companies Act and other financial legislation

� Compulsory review or audit of (no suggestions) of banks, insurance companies and listed companies.

ROSC A&A report – findings

� Variances existed between ISA and practices on the

ground (ISQC 1, IAS 220,230, ISA 330, ISA 620, ISA 705)

Boards and management of Companies believe that it is � Boards and management of Companies believe that it is

the responsibility of the external auditors to decide on

accounting policies and to prepare the financial

statements

Financial Statements – common errors and omissions

� Inconsistency between financial statements and other information disclosed in the financial statements (e.g.- going concern).

� IFRS 7 (Financial Instruments) - application and disclosures generally � IFRS 7 (Financial Instruments) - application and disclosures generally considered to be for banking entities

� IFRS 8 (Operating Segments) – Segment information disclosed in the financial statements is not consistent with other disclosures

� IAS 1 discussion of significant judgments and estimation uncertainties

� IAS 24 – Inadequate disclosures relating to related party transactions

Financial Statements – common errors and omissions

� Inconsistency between press statements and the annual

reports that are published

Zimbabwe Listing Requirements – Press Statements

� Inconsistency between press statements and the annual reports that are published

� Every listed company must prepare interim reports (Press Releases) in accordance with (IFRS) and these must be published within 3 months of the year end.

� The name of the auditor must be given. Audit report need not be attached unless it has been modified.

� If the report of the auditor is not included in the published report, it shall state that the report of the auditor is available for inspection at the company’s registered office.


� In most instances, at the time of the Press Release, theaudit procedures will not have been completed as thefinancial statements will not have been drafted.audit procedures will not have been completed as thefinancial statements will not have been drafted.

� ISA 700 requires the auditor to form an opinion on thecomplete set of financial statements.

� Auditors should not be able to allow their name andthe fact the accounts are “audited” to be publisheduntil thy have signed off on a complete set of financialstatements


� In consultation with the ZSE, SEC, ZAPB, PAAB werecommended the following:

� Only if a complete set of financial statements has beenprepared and an audit opinion issued can the Pressprepared and an audit opinion issued can the PressStatement be referred to as “audited”.

� If the auditor is satisfied that sufficient work has beenperformed to issue a review opinion then the pressrelease can be referred to as “reviewed’.

� The type of the audit opinion issued should be cited inthe press release.

� Compliance will be monitored through the ZSE MP, APCreviews and and Practice reviews


� In consultation with the ZSE, SEC, ZAPB, PAAB we recommended thefollowing:

� Only if a complete set of financial statements has been� Only if a complete set of financial statements has beenprepared and an audit opinion issued can the Press Statementbe referred to as “audited”.

� If the auditor is satisfied that sufficient work has been performedto issue a review opinion then the press release can be referredto as “reviewed’.

� The type of the audit opinion issued should be cited in the pressrelease.

� Compliance will be monitored through the ZSE MP, APC reviews andand Practice reviews

Other technical matters – insurance and pensions

�Position paper which addresses the issueson:

� Policy holder liabilities technical� Policy holder liabilities technicalinsurance reserves

� Treatment of changes in policy holderliabilities

� Treatment of uncollectible premiums inline with IAS 39 requirements

� Life Companies annual valuations andadditional disclosures recommended

Other technical matters – Tax and other legislation

�Fiscalisation practical challenges� Issue of ITF 263’s (tax clearance cert)�Customs and exercise�Customs and exercise�New draft taxation act�CPD:�Current challenges�Thin capitaliation and transfer pricing� Internatonal tax planning�ZIMRA investigations

Taxation – keep a close watch!

“Subject to authorisation from the Ministerand the CG and to the satisfaction of aMagistrate, an officer without previousMagistrate, an officer without previousnotice, at any reasonable time during theday enter premises and conduct a searchincluding the opening or causing to openany article that he suspects contains itemshe is searching for. The officer can seizeand retain such items”

Other technical matters

�Implementation of IPSAS

�Public Finance Management Act�Public Finance Management Act

IFRS changes

�Amendments to IFRS 7, ‘Financialinstruments: Disclosures’ on derecognition– 1 July 2011– 1 July 2011

�Amendment to IFRS 1, ‘First timeadoption’, on fixed dates andhyperinflation – 1 July 2011

�Amendment to IAS 12, ‘Income taxes’ ondeferred tax – 1 January 2012

�Amendment to IAS 19, ‘Employeebenefits’ - 1 January 2013

IFRS changes

� IFRS 9 (Financial Instruments) – 1 Jan 2013

� IFRS 10 (Consolidated Financial Statements) - 1 Jan20132013

� IFRS 11, ‘Joint arrangements’ – 1 January 2013

� IFRS 12, ‘Disclosures of interests in other entities’ – 1January 2013

� IFRS 13, ‘Fair value measurement’ – 1 January 2013

� IAS 27 (revised 2011), ‘Separate financial statements– 1 January 2013

� IAS 28 (revised 2011), ‘Associates and joint ventures’– 1 January 2013

July 2008 - Inflation

January 2009 –

Introduction of multi-

currency trading

The road to full IFRS

compliance – 2010 and

beyond…

The road to full IFRS

compliance – 2010 and

beyond…

July 2008 - Inflationreached trillion %and is no longerpracticallymeasurable

Slide 21

Q & AQ & A

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