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Auditors issue adverse report on Zifa financials

By Sikhumbuzo Moyo

Independent auditors have issued an adverse opinion on the Zifa financials after the national association used the rate of 1:1 in its report, which constitutes a departure from requirements of the International Accounting Standards 21.

Zifa executive committee member in charge of finance Philemon Machana and ZIFA boss Felton Kamambo
Zifa executive committee member in charge of finance Philemon Machana and ZIFA boss Felton Kamambo

PNA Chartered Accountants’ report reflects a concern about the accuracy of the financial data presented by Zifa as it does not conform to the International Financial Reporting Standard.

The financials were prepared ahead of the Zifa annual general meeting slated for December 31 following its postponement from December 19.

PNA Chartered Accountants also blasted the association for presenting financials for Zifa Private Limited, a company established to acquire by purchase, lease, exchange movable and immovable property, yet it failed to furnish auditors with the share certificates, share register book, minutes of the annual general meeting of the company and company tax returns.

“Consequently, we could not satisfy ourselves concerning any changes in the ownership structure of Zifa (Private) Limited or any unrecorded liabilities of the company as at 31 December 2019,” wrote the auditors in their report.

“Although the board members acknowledge that there was a functional currency change and that the rates of exchange rate between the USD and local currency was not 1:1, they have maintained their functional currency as ZWL and have presented the financial statements in ZWL using an exchange rate of 1:1.

This constitutes a departure from the requirements of IAS 21, and therefore the financial statements have not been prepared in conformity with IFRS.

Had the association applied the requirements of IAS 21, many of the elements of the accompanying separate financial statements would have been materially impacted and therefore the departure from the requirements of IAS 21 is considered to be pervasive.

The financial effects on the separate financial statements of this departure and need for adjustments under IAS 29 ‘Financial Reporting in Hyperinflationary Economies’ have not been determined,” said the auditors.

The Zifa executive committee member in charge of finance Philemon Machana now has the huge task of explaining why the association blatantly breached internationally acceptable accounting standards in preparing its financials.

“By sticking to an exchange rate of 1:1 there is a high risk of securing USD, say from Fifa; hold onto it and offload what you only want for the purposes of payments at a rate higher than 1:1 (and) in the process giving a distorted financial statement,” said a financial expert.

The auditors’ adverse report and Zifa financials will be deliberated on by delegates at the association’s AGM on December 31. The Chronicle