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FMHL challenges audit report | Business Times

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First Mutual Holdings Limited (FMHL), a publicly traded life assurance company, has contested the results of a forensic audit conducted by BDO Chartered Accountants at the request of the Insurance and Pensions Commission (IPEC), the industry watchdog, Business Times can report.



After conducting the audit in 2022,  BDO found that First Mutual Limited, an FMHL subsidiary, had neglected to keep the assets of policyholders and shareholders separate.


But, Sheila Lorimer, the company secretary for FMHL, issued a warning to shareholders, stating that the firm disagreed with the forensic auditor’s (BDO Chartered Accountant) allegations that it had broken the law.

Apparently, FMHL has filed an urgent application at the High Court to have the IPEC corrective order reviewed.


“FML respectfully disagrees with the findings in the BDO report and in the IPEC Corrective Order and believes its submissions were not properly considered. Interpretations of fact, accounting standards, legal and actuarial principles, as well as currency conversion issues are in dispute.


“FML is seeking input from independent third-party professionals in a bid to resolve the areas of disagreement. Accordingly, the boards of both FML and FMHL are exploring all avenues to find a way forward.


“Meanwhile, in order to protect FML’s legal rights, an application for review of the Corrective Order has been filed with the High Court,” Lorimer said.


She said notwithstanding the institution of legal proceedings, which has become unavoidable to safeguard FML’s rights, both FML and FMHL will continue to work with the regulator and with the parent Ministry (of Finance, Economic Development and Investment Promotion) to resolve the issues.


According  to Lorimer, as per previous cautionary announcement dated January  12 2024, IPEC performed a forensic investigation on First Mutual Life Assurance Company  arising from the asset separation exercise initiated by IPEC.


Based on the conclusions of the forensic auditor, BDO, FML received a Corrective Order from IPEC. The Order requires FML’s shareholders to make large payments to policyholders in US dollars and Zimbabwean dollars for actual and potential losses that the auditors have determined to have occurred.

According to IPEC, the aim of these asset separation legislation was to prevent the transfer of assets from policyholders to shareholders and vice versa. Therefore, the asset separation exercise served the objective of ensuring that the legal requirements were followed.
The program, according to the regulator, aims to promote compliance with asset separation regulations and quantify misallocated assets and assign them to their rightful owners in order to foster good governance  in the insurance and pension sector.

According to Lorimer  the company is still dedicated  to protecting and serving  its policyholders  while weighing  the interests of all stakeholders.



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