A recent auditor’s report has raised concerns about the financial statements of Vanguard Life Assurance Limited and Fidelity Life Assurance of Zimbabwe Limited, both of which are subsidiaries of Zimre Holdings Limited.
The report, prepared by Grant Thornton, expresses an adverse opinion on the inflation-adjusted consolidated financial statements of Zimre Holdings Limited, citing significant matters that impact the fairness and accuracy of the financial statements.
The report highlights two key issues: the non-compliance with International Financial Reporting Standard (IFRS) 17 – Insurance Contracts, and the inclusion of unaudited financial statements of Vanguard Life Assurance Limited in the consolidated financial statements of Fidelity Life Assurance of Zimbabwe Limited.
Regarding IFRS 17, the report notes that Fidelity Life Assurance of Zimbabwe Limited is still in the process of upgrading its accounting, administration, and IT infrastructure to align with the requirements of the standard.
As a result, the company utilised simplified models in accounting for insurance contracts, which may not accurately reflect the financial position and performance of the company.
“In preparing these consolidated inflation adjusted financial statements, Fidelity Life Assurance of Zimbabwe Limited utilised simplified models in accounting for insurance contracts and these do not track onerous and profitable contracts at policy level.
“Once the upgrade of the accounting, administration and IT infrastructure align with the requirements of IFRS 17 is complete, significant adjustments may have to be made to the amounts recognised in these financial statements with respect to the Group’s insurance contracts,” the auditors noted.
Accordingly, the auditors were unable to determine the adjustments that might be necessary to the following financial statements line items:
Insurance revenue, insurance service expenses, insurance finance expenses for insurance contracts issued and insurance reserve, and 5. Insurance contract liabilities.
Furthermore, the report states that the unaudited financial statements of Vanguard Life Assurance Limited were included in the consolidated financial statements of Fidelity Life Assurance of Zimbabwe Limited, which may not have been properly adjusted and disclosed.
The auditor’s report cited that these matters may have a significant impact on the financial statements and that the financial effects of the non-compliance have not been determined.
The report also notes that the auditor was unable to satisfy themselves that all necessary adjustments and disclosures have been made to the unaudited financial statements of Vanguard Life Assurance Limited.
“These consolidated financial statements include the financial position, financial results and cash flows of Fidelity Life Assurance of Zimbabwe, a significant component of Zimre Holdings Limited.
“The consolidated financial statements of Fidelity Life Assurance of Zimbabwe include unaudited financial statements of Vanguard Life Assurance Limited, a subsidiary of Fidelity Life Assurance of Zimbabwe.
“As a result, we were unable to satisfy ourselves that all necessary adjustments and disclosures have been made to the unaudited financial statements of Vanguard Life Assurance Limited, and consequently to the consolidated financial statements of Fidelity Life Assurance of Zimbabwe Limited for the year ended 31 December 2023.
“The opinion of Fidelity Life Assurance of Zimbabwe Limited for the year ended 31 December 2023 is modified in respect of this matter.
“Accordingly, we were unable to determine the effect this might have on the consolidated financial statements of Zimre Holdings Limited for the year ended 31 December 2023,” Grant Thornton noted.
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