CFI Holdings Limited auditors Baker Tilly Chartered Accountants Zimbabwe have flagged its continued non-compliance to the Zimbabwe Stock Exchange (ZSE) listing requirements despite the expiry of the five-year moratorium granted to the firm by the bourse.
Trading in the securities of CFI was suspended on January 2 2018 for failure to comply with the free float requirements and some corporate governance related matters under the ZSE listing requirements.
However, in 2018, ZSE lifted the suspension saying it was satisfied that CFI has regularised its corporate governance shortcomings as required under the listing requirements, giving the company a five-moratorium to address the free float requirements.
But in its independent auditors report accompanying the groups’ financial year 2023 results, Baker Tilly said the agricultural concern remains non-compliant.
“On 11 October 2021, an indefinite suspension on the ZSE due to non-compliance with listing requirements was lifted with a five-year moratorium to allow the entity to address the free float requirements,” the report reads in part.
“Notwithstanding the lifting of the suspension by the ZSE, CFI Holdings Limited remains non-compliant with regards listing requirements around free float threshold, appointment of a substantive chief executive officer and financial director.”
The bourse hinted on annual review of progress on regularisation of this requirement.
This is also coming at a time the auditor raised a concern that the accompanying inflation adjusted financial statements have not, in all material respects, been properly prepared in the manner required by the Companies and Other Business Entities Act (Chapter 24:31).
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Baker Tilly flagged material misstatements in the group’s financial statements due to non-compliance with IAS 21: The effects of changes in Foreign exchange rates.
“The effects of misstatements due to non-compliance with IAS 21 on the prior year financial statements and opening balances have not been quantified.
“As the prior year financial statements have not been restated in accordance with International accounting standards 8 “Accounting Policies, Changes in Accounting Estimates and Errors” (IAS 8), the misstatements on the prior years’ income statements is still carried forward in the current retained earnings balance,” the auditor said.
The group also failed to comply with IFRS 13: Fair Value Measurement, with the auditor saying management has not carried out a revaluation of their property, plant and equipment from the 2019 financial year.
FRS 13 prescribes a hierarchy of inputs to use in the determination of fair values, priority being given to quoted prices in an active market.
“We noted that property, plant and equipment for the group has an active market and market prices are determinable,” the report said.
It added: “Consumer price indices do not reflect the assumptions that market participants would use when pricing the assets and do not take into account the condition and location of the assets.
“Property, plant and equipment is a significant element of CFI Holdings Limited’s financial statements and thus the impact of the noncompliance was considered material for the year ended 30 September 2023. The consumer indices do not represent the true fair value of the assets.”
