Ipec to accredit auditing firms to disclose malpractices
HARARE – The Insurance and Pensions Commission (Ipec) is working towards accrediting companies that audit the insurance market in order to bring an obligation for disclosure of some key matters that are often left out.
The Commission’s Head of Pensions Josphat Kakwere told an ICAZ/IPEC seminar Tuesday that the accreditation is akin to a gate pass into the insurance space, which means that auditors will have an obligation to disclose everything in particular malpractice issues.
“We are just saying companies should be registered with Ipec because the Public Accounting and Auditors Board (PAAB) would have dealt with qualifications and other things already. We are putting an obligation for you to disclose what is not right which you may not disclose due to your clauses with the paymaster (the companies),” he said.
Ipec regulates the insurance and pensions industry. As at December 2017, the pensions industry’s asset value was in excess of $4 bln while a total of $223 mln was paid in form of benefits in 2017.
Kakwere said due to the non-disclosure agreements that may have been entered into between the auditors and the company, some issues that are glaring were being left out.
“Some auditors highlight that if not given permission, they don’t bring up the issues even in the key audit matters,” he said.
On the other hand, Kakwere said there is a worrying trend that pension funds are being shortchanged on their investments. He said the return on investments is not being done clearly, indicating that pension funds may be losing some funds through that. He added that the fund administration costs which are around 28 to 30 percent were an issue that should be looked at.
Kakwere said Ipec had introduced reforms to ensure that pensions become relevant as opposed to the current levels of the monthly payouts.
According to Hope Mulilo, Manager Pensions Payroll and Short term Benefits Payment NSSA, pension funds have in most cases made various unsound investment decisions that have resulted in loss of pensioners’ value.
She said in some cases, they are sold land and buildings, and fork out money but are not given the title to such investments.
In addition to that, she said the going concern status of many pension funds is being affected by distressed companies as well as high asset concentration. In some cases, 90% assets of pension funds are in the property market, which are difficult to liquidate. FinX
