Thursday, January 21, 2010

Zimbabwe Stock Exchange to start accrediting IFRS advisors to improve controls on listed firms

by Golden Sibanda

THE Zimbabwe Stock Exchange plans to start accrediting International Financial Reporting Standards advisors as it prepares to enforce stringent requirements on compliance by listed firms.

Presently, a ZSE panel of experts is responsible for checking for compliance with IFRS, which is compulsory for all listed companies worldwide.

IFRS compliance has become essential for ZSE-listed firms, particularly following the changeover from the Zimbabwe dollar to the US dollar as the most widely used currency of reference when transacting.

Compliance with IFRS would enhance accurate and correct presentation of companies’ financial accounts with all historical data on the performance of a listed firm properly disclosed in the accounts.

The standards are designed to ensure comparable balance sheet preparation and disclosure which publicly listed companies should use.

ZSE chief executive Mr Emmanuel Munyukwi said efforts were being made to engage W Consulting, a Johannesburg Stock Exchange-accredited IFRS advisory firm, which has spread tentacles into Zimbabwe and is linked to 18 of the 25 auditors for JSE-listed companies.

While it is compulsory for all listed companies to comply with IFRS, Mr Munyukwi said some companies that released their financial results for the last financial period did not do so.

Disclosure requirements under IFRS made it possible for external investors, who have dominated trade on the stock exchange since last year up to date, to access full data on ZSE firms.

The hyperinflationary effects of the past decade had seen most companies throw out of the window dictates of IFRS, which could not be met when inflation peaked to levels of over 231 million percent.

"Now we are going to have new sets of financial accounts which are IFRS compliant and companies such as W. Consulting will come in handy where we need stakeholders to assist with accreditation. South Africa (JSE) have accredited W. Consulting and we (ZSE) are looking at accrediting them as well," said Mr Munyukwi.

He said last year it was a mixed bag with regard to compliance with IFRS

by ZSE-listed firms, but most of the firms did comply and he expressed hope they would meet the requirements this year.

"Compliance is critical. Imagine a foreign investor wanting data about a company’s past performance and not being able to obtain it."

W. Consulting head of South African operations Mr Tapiwa Njikizana said IFRS compliance was critical for JSE-listed firms to attract and retain foreign investors’ participation on the local bourse.

"An investor sitting in China, Japan or somewhere else in Asia requires historical data about a company in order to make decisions.

"Without adherence to IFRS, he needs a lot of time to understand how and why certain things are done in Zimbabwe, but with IFRS he knows standards are uniform across the globe," he said.

The Institute of Chartered Accountants of Zimbabwe has fought hard to ensure that the country’s accounting profession remains accredited or recognised by the International Accounting Standards Board.

W. Consulting, in partnership with ICAZ, this week conducted a workshop with local firms on public-listed and small to medium enterprises’ compliance with international financial reporting standards.