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Highlanders' financials: Something is STINKING!

by Staff reporter
25 Feb 2023 at 07:02hrs | Views
HIGHLANDERS Football Club's bonafide members will have to wait a bit longer to receive audited financial statements for the year ending December 31, 2022 after it emerged that the auditors are yet to receive documents they requested.

The club failed to produce audited financial statements at their January 29 Annual General Meeting and revealed that external auditors needed between three to four weeks to complete work.

An emergency meeting involving Highlanders' executive, board and the auditors was held on Wednesday where the club's executive said they need four months to separate the US dollar and local currency on their financials.

It is not clear whether the joint meeting was a follow-up to the report to management (RTM) which is written before the audit opinion. It is in the RTM where the auditors seek clarification on grey areas highlighted.  The auditor might ask for additional supporting documents or clarification and in the case of Highlanders, they asked for Bosso to present in US$ before they could come up with the audit opinion.

Should Bosso fail to address the auditor's requests, there's a danger that they might have an adverse audit opinion.

The sticking point of the audit, according to impeccable club sources, is on preferred functional currency, with the auditors demanding that since 70 percent of the club's revenue or expenditure is in United States Dollars, it is only proper that the financials are reported in foreign currency.

In demanding that Highlanders break down foreign and local currency on their financials, the auditors' are backed by international accounting standard 21 (IAS 21). The objective of IAS 21 is to prescribe how to include foreign currency transactions and foreign operations in the financial statements of an entity and how to translate financial statements into a presentation currency.

Highlanders, whose financials are presented by the treasurer, Busani Mthombeni, had presented all their financials in local currency, with the US dollar converted to local currency.

The Bosso treasurer, according to finance experts, could be right on his side as his stance is provided for under IAS 29. If using local currency, then inflation-adjusted accounts, bringing values to current value as at year-end should be indicated.

Financial experts argue that if the auditors are demanding financials to be broken down into US dollars and local currency, then Highlanders should do that as delays leave an impression that "there's something fishy" in their books which they are trying to hide.

"The clash is unnecessary, Highlanders should simply do what the auditors are demanding because even the Reserve Bank of Zimbabwe Governor (John Mangudya) citing the need to align monetary policy with the dual currency structure of the economy, said it was high time domestic inflation reflected the significant foreign currency inflows in the economy through adopting the blended rates as the country's reference inflation.

"Why should Highlanders report in local currency when more than 70 percent of their transactions are in foreign currency? What are they trying to hide?

"If their finances are okay, then adjusting them to US dollars shouldn't take more than two weeks," said a finance expert who spoke on condition of anonymity.

Highlanders' auditors reportedly asked on Wednesday why the treasurer needs up to the end of April to present the US dollar financials, with the board also registering its displeasure on the executive's preferred timeline.

The auditors also reported at the joint meeting that a member of the executive committee (name withheld) threatened to fire them before the January 29 AGM, saying that if the auditors did not sign off the audited finances they would lose Bosso as their client. Sources said the auditors blatantly told the joint meeting that they will not be bullied and will carry out their mandate without fear.

The financial expert said the clash between Highlanders and the auditor would have been avoided had the two parties held an initial audit during the year.

"Looking at the fact that a new treasurer (Mthombeni) came in last year, the club should have had an initial audit where both parties, club representatives and auditors should have agreed on fundamentals which included the start of the audit and its end, justifying why they needed a longer period if they needed one. They could have ironed out all these issues on reporting currency and if the treasurer felt that there were fraudulent areas like abuse of or missing funds, he would have pointed that out during the initial audit," said the audit expert.

Mthombeni, elected last year, took over the position from Donald Ndebele who stepped down after serving two consecutive terms.

At last month's AGM, Mthombeni reportedly never uttered a word as members were breathing fire over the absence of the audited financial statements.

It was however, not the first time that the financials could not be presented to members during the AGM as that also once occurred when Ndebele was the club's treasurer and when Odiel Nkomo was in charge of the Bosso finances.

Mthombeni during his campaign promised to modernise the Highlanders finances when he defeated Xolisani Moyo to the position but after what tranposition, but were wondering if they had voted for the right candidate.

Highlanders never responded to written questions, with the club stating that a press release will be issued today.

Source - The Chronicle