The auditor of Padma Islami Life Insurance has not found necessary documents in favour of the financial information what the life insurer has presented in its financial statement for the year ended in December 2022.
In this situation, the publicly traded company’s auditor has expressed concerns how the insurer would continue its operations without ensuring financial transparency.
As per the auditor’s note, the insurer showed a negative life insurance fund of Tk 233.89 crore as on December 31 last year, while its operating cash flow was Tk 38.23 negative.
These financials, along with other matters indicate that a material uncertainty exist in the company that may peril the insurer’s ability to continue as a going concern, the auditor in a qualified opinion said.
A qualified opinion is a statement issued after an audit is completed by a professional auditor, suggesting that the information provided is limited in scope or the company has not maintained all the generally accepted accounting principles.
Earlier in June, in order to safeguard the interests of Islami Life Insurance’s policyholders, the insurance regulator appointed an observer to the company’s board.
The auditor said that the company’s opening balance of outstanding premium of TK 15.45 crore was adjusted with the premium income of 2022, but the amount should be adjusted with the opening balance of the year’s life fund.
Meanwhile, the auditor could not confirm the insurer’s bank balance of Tk 2.57 crore out of the total amount of Tk 13.68 crore because of the absence of supporting documents.
The company showed the previous year’s adjustment of Tk 189.54 crore under the provision of claim expenses with the opening balance of life fund and opening balance of claim liability of 2022.
It also showed the previous year’s adjustment of Tk 20.91 crore under provision of premium income with the opening balance of life fund and opening balance of bank balances of 2022.
But, the auditor said in the qualified opinion that they could not confirm the previous year’s total adjustment of Tk 210.45 crore due to the non-availability of authentic documents.
The auditor has also drawn attention to Padma Islami Life’s financial statement of 2022 saying the company had shown a Sadaka fund Tk 4.34 crore at the end of 2022, but they (auditor) did not observe any specific investment against this fund.
The company has a long-term borrowing (non-interest bearing) of Tk 149 crore as on December 2022, but the auditor could not ensure the authenticity of this debt because they could not avail of any balance confirmation letter from lenders against this debt.
The auditor also observed that the company paid in advance for the purchase of two floors (9th, 10th) of the Padma Tower which is located in the capital, but they did not get documents on registration deed, mutation and other necessary issues except the advance payment deed till 17 July this year.
Besides, the insurer showed a fixed deposit of Tk 2.55 crore in the last year’s financial report, which also the auditor could not confirmed because of the supporting documents.
Financial status
Padma Islami Life Insurance did not recommend any dividend for its shareholders for the year ended in December 2022.
The life insurer also reported a drop in net premium income in the January-March quarter of 2023, as per a DSE disclosure.
Its life fund stood at Tk 239.79 crore negative as on March 2023, compared to Tk 13.17 crore in the same period the year before.
Padma Islami Life Insurance debuted on the stock market in 2012.
Its shares closed at Tk 41.20 each of the DSE on Tuesday.
The government held a 31.56 per cent stake in the company, while institutes owned 16.93 per cen,t and the public 51.51 per cent as on July 31, 2023.
