DIRECTORS’ RESPONSIBILITIES STATEMENT
The Directors are required by the Microfinance Act [Chapter 24:29] and the Companies and Other Business Entities Act [Chapter 24:31], to maintain adequate accounting records and are responsible for the content and integrity of the financial statements and related financial information included in this report. It is their responsibility to ensure that the financial statements fairly present the state of affairs of the MicroBank as at the end of the financial period and the results of its operations and cash flows for the financial year then ended, in conformity with International Financial Reporting Standards.
The Microbank’s financial statements are prepared with the aim of complying fully with International Financial Reporting Standards (IFRSs). Only partial compliance has been achieved for 2023. The IFRS Conceptual Framework, provides that in applying fair presentation to the Microbank financial statements, entities should go beyond consideration of the legal form of transactions and other factors impacting on the financial statements to also consider the underlying economic substance therein. The Microbank has prepared its financial statements in terms of IAS 29 in non-compliance with IAS 29 paragraph 1 which states that IAS 29 shall be applied to the financial statements of any entity whose functional currency is the currency of a hyperinflationary economy. The Microbank determined its functional currency as the USD and to comply with regulatory requirements, International Accounting Standard 29: “Financial Reporting in Hyperinflationary Economies” has been applied to the financial statements whose United States of American Dollar US$ functional currency is not a subject of hyperinflation in Zimbabwe.
The Microbank has an investment of US$5 million with the Reserve Bank of Zimbabwe relating to twenty-year zero-coupon bonds. These investment securities have been carried at their face value in the statement of financial position in non- compliance with IFRS 9, Financial Instruments, paragraphs 5.1 and 5.2.1 which require that such financial instruments be measured at their fair value at initial and subsequent measurement. This is due to lack of observable market information for the investment securities. Consequently the MicroBank’s investment securities, profit or loss for the period, retained earnings and the capital position are materially overstated. This has resulted in accounting treatment adopted in the 2023 financial statements, being different from that which would have been adopted if the Microbank had been able to fully comply with IFRS. As such, directors and management have been unable to produce financial statements which in their view would be true and fair and urge users of the financial statements to exercise due caution.
The Directors acknowledge that they are ultimately responsible for the system of internal financial control established by the MicroBank and place considerable importance on maintaining a strong control environment. To enable the Directors to meet these responsibilities, the Board set standards for internal control aimed at reducing the risk of error or loss in a cost effective manner. The standards include the proper delegation of responsibilities within a clearly defined framework, effective accounting procedures and adequate segregation of duties to ensure an acceptable level of risk. These controls are monitored throughout the Microbank and all employees are required to maintain the highest ethical standards in ensuring the Microbank’s business is conducted in a manner that in all reasonable circumstances is above reproach. The focus of risk management in the Microbank is on identifying, assessing, managing and monitoring all known forms of risk across the Microbank. While operating risk cannot be fully eliminated, the Microbank endeavours to minimise it by ensuring that appropriate infrastructure, controls, systems and ethical behaviour are applied and managed within predetermined procedures and constraints.
The Directors are of the opinion, based on the information and explanations given by management that the system of internal control provides reasonable assurance that the financial records may be relied on for the preparation of the financial statements. However, any system of internal financial control can provide only reasonable, and not absolute, assurance against material misstatement or loss. In preparing the financial statements, the Directors are responsible for assessing the Microbank’s ability to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless they either intend to liquidate the Microbank or to cease operations, or have no realistic alternative but to do so.
The Directors have assessed the ability of the Microbank to continue operating as a going concern and believe that the preparation of the financial statements on a going concern basis is still appropriate. The external auditors are responsible for independently auditing and reporting on the Microbank’s financial statements. The financial statements and related notes have been audited by the Microbank’s external auditors and their report is presented. The audited annual financial statements were approved by the Board of Directors on 14 October 2023 and are signed on its behalf by: