Rupali Insurance Company Limited's (RICL) financial operations have come under scrutiny following the release of its audit report for the year ending on December 31, 2023.
Conducted by an independent auditor, the report contains "Emphasis of Matters" and "Other Matter" paragraphs, highlighting significant discrepancies and regulatory non-compliance that demand immediate attention from stakeholders.
One of the major concerns identified involves Tk 50 lakh recorded as an advance for purchasing 5,00,000 shares of Royel Denim Limited at Tk 10 each. This amount has remained unresolved for an extended period, with RICL neither receiving the shares nor adjusting the advance, according to the report published on the Dhaka Stock Exchange website.
Another critical issue is the unpaid dividend amounting to Tk 1.81 crore. However, as of December 31, 2023, the designated dividend bank account holds only Tk 68 lakh, resulting in a shortfall of Tk 1.14 crore.
This discrepancy violates Section 28(1) of the Dhaka Stock Exchange (Listing) Regulations 2015, which mandates maintaining sufficient funds for dividend payments. The shortfall indicates a potential liquidity problem and failure to comply with regulatory requirements.
Furthermore, the audit report revealed that RICL’s management expenses exceeded the permissible limit, set by Section 63 of the Insurance Act 2010 and the associated SRO 2018, by Tk 74.60 lakh.
This over-expenditure could have significant implications for RICL’s financial health and its standing with regulatory authorities. The breach of statutory limits on management expenses necessitates a thorough review of the company's cost management practices, say sector insiders.
The auditors also highlighted a concerning figure of Tk 15.58 crore reported under "Others Payable," which includes Provident Fund (PF) payable, PF Loan and PF Contribution. Despite regulatory requirements to maintain separate PF accounts and submit audited financial statements to the Income Tax Authorities, the auditors did not receive any PF accounts.
Additionally, there were no noted receipts from the Fund’s forfeiture account, casting doubts on the company's compliance with the Financial Reporting Council (FRC) notification dated July 7, 2020. This lack of transparency and potential non-compliance could have serious repercussions for employee benefits and the company's reputation.
Financial statement Discrepancies were also found in the share business operated through 8 BO accounts in six securities companies. Specifically, the balance with Sterling Stock & Securities Ltd was shown as Tk 3,792 in the portfolio statement ledger, whereas the financial statements reflected a liability of Tk 36.32 lakh.
In the "Other Matter" paragraph, the auditors emphasised that while the directors and management are responsible for all other information in the annual report, their audit opinion does not cover this information. However, the auditors are required to check for consistency with the financial statements and they reported no material misstatements in this regard.
Q1 of 2024
Meanwhile, Rupali Insurance Company has reported a slight increase in its Earnings Per Share (EPS) for the first quarter (January-March) of 2024.
The company's EPS rose to Tk 0.36 for Q1 of 2024, up from Tk 0.35 in the same period last year. This represents a year-over-year growth of approximately 2.86 per cent.
While the increase in EPS reflects positively on the company’s profitability, RICL experienced a decline in its Net Operating Cash Flow Per Share (NOCFPS). The NOCFPS dropped to Tk 0.34 for Q1 of 2024, compared to Tk 0.49 in Q1 of 2023.
In terms of the company's Net Asset Value Per Share (NAVPS), there was a slight improvement. The NAVPS stood at Tk 20.76 as of March 31, 2024, up from Tk 20.45 as of December 31, 2023.
