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Auditor raises concerns on Takaful Islami Ins financial report

Re-insurance portfolio premiums worth Tk3.97cr unrecovered since 2019
Staff Correspondent
23 Jun 2024 21:15:28 | Update: 23 Jun 2024 21:15:28
Auditor raises concerns on Takaful Islami Ins financial report
— Courtesy Photo

A concerning financial discrepancy has been revealed in the auditor's opinion of the listed company, Takaful Islami Insurance Limited.

A re-insurance portfolio premium amounting to Tk 3.97 crore has remained unrecovered since December 31, 2019. The insurer has not yet made any provisions for the recovery of this substantial receivable, raising concerns over potential financial mismanagement and a lack of prudence in maintaining fiscal responsibility.

The auditor raised such objections after reviewing the company's financial report as of December 31, 2023, and the information was disclosed on the DSE website on Sunday.

Additionally, a qualified opinion, typical after a professional audit, indicates that the information provided may be limited in scope or that the company's adherence to generally accepted accounting principles may be questionable.

Regarding the discrepancies, Takaful Islami Insurance Chief Financial Officer (CFO) Mohammad Mamunul Islam told The Business Post, "All information has been given to the concerned organisations during the audit period. Then they mentioned the issue, and we will check it."

This unresolved receivable has remained stagnant on the company's balance sheet for over four years, creating increasing concerns among stakeholders and industry analysts.

The absence of any provision for recovery indicates a potential oversight in financial risk management, which could have severe implications for the company's financial health and its shareholders. The auditor, in his opinion, also mentioned that the company produced the FDR statement itself for the audit period.

The auditor states, "We have issued confirmation letters for the Fixed Deposit Receipts (FDRs) to the respective branches of the banks tied to the issue. However, we did not receive any confirmation until the signing date of the audit report.

"Therefore, we could not provide any reasonable assurance about the reliability of the balance amount," the auditor noted.

Regarding this, Mamunul said, "I cannot exactly say the total number of FDRs in 2023 at this moment as I am not at the office."

The 2023 audit report is yet to be published on the company's website. However, the insurer's FDR at the end of December 31, 2022, was shown at Tk 3.26 crore, and it was at Tk 3.40 crore at the end of December 31, 2021.

Q1'24 performance

Takaful Islami Insurance Limited posted a 2.70 per cent increase in its earnings in the first quarter, which ended on March 31, when compared to the numbers recorded in the same quarter of the previous year.

Also, the company, in a recent DSE filing, states that its earnings per share (EPS) stood at Tk 0.38 in the period, up from Tk 0.37 recorded in the same period a year earlier.

As of March 31, the insurer's net asset value (NAV) per share stood at Tk 19.26 against Tk 19.27 recorded on December 31, 2023.

As of May 2024, sponsors and directors jointly held 46.44 per cent, institutions 20.24 per cent, foreign investors 0.06 per cent, and the general public 33.26 per cent shares of the company.

At the Dhaka Stock Exchange, the trading price of the insurance company was Tk 32.90 per share on Sunday.