Online Reporter
Nelson Gahadza
Senior Business Reporter
The Public Accountants and Auditors Board has called for stronger financial reporting, audit quality and regulatory oversight, saying improving the accuracy and transparency of financial statements is critical to restoring and sustaining investor confidence in Zimbabwe’s capital markets.
The call was made at a Financial Reporting Quality Workshop held in Harare this morning under the theme, “Lessons Learnt from PAAB Financial Statements Reviews and Updates on IFRS Developments,” which brought together financial statement preparers, auditors, audit committee members, regulators, tax specialists and other market participants.
The workshop followed PAAB’s 2026 desktop review of selected financial statements of listed entities for the 2025 reporting period, conducted as part of the regulator’s mandate to promote high-quality financial reporting and credible audit reporting.
PAAB director of standards Mr Webster Sigauke said the review showed that while the quality of financial reporting had improved, significant work remained to achieve clean audit opinions across all listed entities.
“We had 70 percent or over 70 percent of those financial statements that we reviewed having clean opinions, which is a very good number. However, we still have some work which we need to do on the 29,4 percent, close to 30 percent, which we still had opinions which were given by auditors which were not clean opinions,” he said.
He said PAAB’s objective was to ensure that the remaining deficiencies were addressed before they became recurring problems, with the regulator targeting 100 percent clean opinions among listed companies by 2027.
“This session is for us to really sit down and say how can we fix those numbers that were incorrect, what work needs to be done and how can we collectively work as a profession to make sure that we enhance that quality and we want to achieve 100 percent clean opinions for all the listed entities by the time that we reach 2027,” he said.
One of the major issues identified in the financial statement reviews related to functional currency assessments, particularly the transition by companies from the local currency to the United States dollar amid Zimbabwe’s multi-currency environment.
Mr Sigauke said currency-related matters accounted for a significant proportion of the findings raised by auditors, with some companies having challenges in correctly accounting for changes in their functional currencies.
“The most issues which were raised by auditors were related to currency issues that we experienced from the period 2022 to 2023 and 2024,” he said.
The workshop also examined the accounting treatment of Treasury Bills, particularly challenges associated with determining their fair value in the absence of an active secondary market.
Mr Sigauke said institutions such as banks, insurers and pension funds holding Treasury Bills could face valuation challenges because the instruments might have to be sold at a discount when liquidated.
“The accounting standards require that you reflect the value at which you can liquidate it and not simply the value which is sitting on the face. So, those are some of the challenges that were also noted whereby the value which has been put on those treasury bills becomes questionable,” he said.
On Insurance companies, he said there were particular challenges associated with the implementation of IFRS 17, the international accounting standard governing insurance contracts.
Mr Sigauke said the standard required significant investment in systems and actuarial models, with some insurers facing difficulties in making the necessary investments.
“It is a very complex accounting standard which requires significant investments in new models and systems that they need to use. So, we have had some insurance companies which did not manage to invest in those systems,” he said.
The workshop further considered hyperinflation accounting, an issue that remains relevant to Zimbabwe’s financial reporting environment.
Mr Sigauke said the decision on when Zimbabwe could cease applying hyperinflation accounting would depend on both quantitative and qualitative indicators, including cumulative inflation and confidence in the currency.
He said the three-year cumulative inflation measure remained important, with the effects of the 2024 currency devaluation continuing to influence the assessment.
“Once we cross over this year, we will no longer be looking at 2024 because we will now be looking at the three years being 2025, 2026 and 2027. So, what it means is if inflation is stable for the rest of 2026 into 2027 like we are seeing right now, what it means is that we will now be sitting with a cumulative inflation which is quite low,” Mr Sigauke said.
He, however, cautioned that sustained stability was necessary before a definitive decision could be made, noting that the three-year test was designed to establish whether economic and policy stability was durable.
Other issues discussed at the workshop included expected credit losses, fair value measurement, audit reporting quality, emerging tax matters and sustainability reporting readiness.
The regulatory workshop also provided updates on developments in International Financial Reporting Standards (IFRS), the Sustainability Reporting Roadmap, listing requirements and preparations for the upcoming ESAMMLG Anti-Money Laundering and Counter-Terrorist Financing Mutual Evaluation.
PAAB also highlighted the growing role of artificial intelligence in financial reporting and auditing, stressing that technology should complement rather than replace professional judgement, ethics and quality control.
The regulator urged preparers, auditors and audit committees to use the findings of the financial statement review to strengthen the next reporting cycle, with particular emphasis on clearer disclosures, better-documented accounting judgements and stronger oversight.
