Rupali Life Insurance Company Limited has received a qualified opinion from its auditors regarding its financial statements for the year that ended on December 31, 2022.
The audit report highlighted significant discrepancies and issues that cast doubt on the accuracy of the company's financial health.
The primary concern revolves around the discrepancy in the cash at bank balances. The company's ledger shows a balance of Tk 85.79 crore, whereas the bank statements reflect only Tk 40.13 crore.
Although the management provided reconciliation statements, these included unreconciled transactions dating back over six months, some as far back as 2012.
The auditor raised such objections after reviewing Rupali Life’s financial report as of December 31, 2022, and the information was disclosed on the Dhaka Stock Exchange website recently.
The company is scheduled to release its financial report this time with the 2023 dividend, but it is yet to be finalised.
Another issue raised by the auditors is the outstanding premium amounting to Tk 73.09 crore. Of that, Tk 44.55 crore was received in January 2023, but the recoverability of the remaining balance is uncertain. Despite this uncertainty, the company has not made any provisions as required under IFRS-9.
The auditors also found that an advance payment of Tk 3.72 crore was made against a land purchase for Rupali Life General Hospital Ltd, a company that does not legally exist.
Furthermore, the agent balance of Tk 24.98 crore has been carried forward for an extended period and appears to be irrecoverable. No provisions have been made for these amounts either, contrary to IFRS-9 requirements.
A discrepancy was noted as well in the fixed deposit accounts with International Leasing and Financial Services Limited (ILFSL). According to a letter from ILFSL dated January 4, 2022, the total outstanding balance was Tk 82.61 lakh. However, the company reported only Tk 68.16 lakh under the head of fixed deposits in its financial statements.
Additionally, a principal amount of Tk 55 lakh from a fixed deposit matured in 2020 remains unsettled. ILFSL offered shares in lieu of the fixed deposit on October 26, 2022, but Rupali Life Insurance has not yet made a decision on this offer.
The auditors further noted that they received bank confirmations for only Tk 2.61 crore out of the Tk 85.79 crore reported as cash at the bank.
Rupali Life Insurance Company Secretary Amirul Islam was contacted over the phone several times for comments on this matter but he did not receive the calls.
The qualified opinion issued by the auditors indicates that except for these matters, the financial statements present a true and fair view of the company's financial position. However, the highlighted discrepancies and lack of compliance with IFRS-9 provisions are significant concerns for stakeholders, sources said.
Rupali Life Insurance has yet to issue a statement addressing the auditors’ findings. The company's management will need to take swift action to rectify these issues and restore confidence among investors and policyholders, they added.
Financial performance
Rupali Life Insurance has reported a substantial financial deficit in its life revenue account for the third quarter (July to September) of 2023, as well as for the year-to-date period ending on September 30, 2023.
The company's financial performance has notably declined compared to the same periods in 2022.
For Q3 of 2023, Rupali Life Insurance reported an excess of total expenses, including claims, over total income (deficit) amounting to Tk 33.48 crore. This marks a significant downturn from the corresponding period in 2022, where the company experienced an excess of total income over total expenses including claims (surplus) of Tk 76 lakh.
The financial results for the nine months ending on September 30, 2023, further highlighted the company's challenges.
The excess of total expenses, including claims, over total income (deficit) was reported at Tk 33.34 crore. This contrasts starkly with the same period in 2022, where the company recorded an excess of total income over total expenses including claims (surplus) of Tk 2.64 crore.
As of September 30, 2023, the Balance of Life Insurance Fund stood at Tk 473.44 crore, reflecting a net decrease of Tk 57.65 crore from Tk 531.09 crore on September 30, 2022.
