RIOZIM is the latest Zimbabwean company to delay the publication of its financial results owing to a revamp in the country’s foreign exchange rate regime which has seen a number of firms fall foul of international accounting reporting standards.
The company, which mines gold, diamonds and coal, was due to report its interim results ended June. Commenting on the delay, RioZim company secretary, Eunice Mupanduki, said it was down to “… implications of policy pronouncements”.
These pronouncements “… had a significant impact on the underlying information that forms the basis of the company’s financials,” she said. The interim results will be published in a month.
In February 2019, the government of Zimbabwe reformed its exchange rate to a floated regime. It also introduced a new currency – the RTGS – following the separation of foreign currency earning accounts from those locally funded.
This resulted in a shift in the functional and reporting currency for listed Zimbabwean companies that have subsequently struggled to comply with strictures set down in the International Financial Reporting Standards (IFRS).
Bindura Nickel Corporation delayed the release of its financial results for the year to March, saying “… the audit review process” for that period had to be extended.
It elected to “review and adjust” the manner in which it had “recorded and reported” its financial statements following the monetary and exchange rate changes at the beginning of the year. Other listed companies such as Econet Wireless, Edgars Zimbabwe and Simbisa Brands have faced similar challenges.
Zimbabwe ruled out usage of foreign currencies such as the US Dollar, South Africa rand and others after re-introducing its own Zimbabwe dollar unit in June this year.
This has already impacted companies’ compliance with IFRS.
Audit companies have given adverse opinions and in some instances called for caution regarding the reliability of the financial statements for Zimbabwean companies.
Other company executives struggling to manage foreign currency denominated obligations, but may have received a reprieve after the government, through the central bank, asked companies to transfer foreign currency obligations to the Reserve Bank of Zimbabwe for settlement later.
In the past few years, Zimbabwe has also asked banks to transfer non-performing loans to a state asset management company, ZAMCO.