ZSE receives qualified audit opinion due to valuation issues

Tapiwanashe Mangwiro

The Zimbabwe Stock Exchange (ZSE) received a qualified opinion from its auditor, Grant Thornton, for its 2023 annual financial statements.

A qualified opinion indicates the auditor believes the financials are generally fair, but with some exceptions.

In this case, Grant Thornton identified non-compliance with International Financial Reporting Standards (IFRS) 13 regarding “fair value measurement” for an unlisted investment in Chengetedzai Depository Company (CDC).

The company valued its 111,945 shares at $1.02 billion, but the valuation method used did not fully consider relevant market information.

While this issue was deemed material, it wasn’t considered pervasive to the overall financial statements.

Grant Thornton also noted a potential risk of fraud related to revenue recognition based on International Standard on Auditing (ISA) 240 (Revised).

This suggests a risk that revenue might be overstated. The auditor considers this a significant risk and a key audit matter.

Despite the audit opinion, ZSE’s inflation-adjusted profit rose significantly in 2023.

The company reported a 303.84 percent increase to $6.83 billion compared to $1.69 billion in 2022.