Delta rebases balance sheet

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DELTA Corporation (Delta), Zimbabwe’s largest beverages manufacturer, says it has rebased its balance sheet from the United States (US) dollar to the RTGS dollar using the interbank market rate, even though this goes against the dictates of Statutory Instrument (IS) 33 of 2019.

This also comes at a time Finance minister Mthuli Ncube has rebased the country’s gross domestic product to $70 billion this year from $40 billion last year due to the adoption of a new currency. Government early this year directed that all assets and liabilities that were in US dollars immediately before February 20, 2019 should be translated to RTGS dollar at a rate of 1:1 to the greenback.
However, this made things difficult for reporting firms as it compromises their ability to comply with International Accounting Standards (IAS), in particular IAS 21 which deals currency translation.
Canaan Dube, Delta’s board chairman, said in order to comply with IAS 21 into the future, the company translated its statement of financial position — commonly referred to as the balance sheet — on February 22, 2019 at the commencement RTGS$ rate of 2,5 to the US dollar.
“All transactions post this date are translated in accordance with IAS 21 at the official interbank rate,” he said in the group’s results for the year ended March 31, 2019.
“The Company has recognised a net increase in assets of RTGS$297,7 million arising from the rebasing to RTGS$ which has been recorded as a non-distributable reserve.”
Mathlogonolo Valela, Delta’s executive director finance, justified the move saying it would make the books of the company more relatable going forward.
“The balance sheet has been translated to RTGS$ so that next year you will have a balance sheet that you can analyse and that you can talk to. This is the only way that we can climb out of this situation,” he told analysts last week.
“We are one of the first to report post the December year end and it was not easy for us to say we will report in this currency or the other because both ways we could not be compliant with the law.”
The Public Accountants and Auditors Board’s (PAAB) guidance to the accounting profession in April, which had noted the conflict between IAS 21 and IS 33 but still recommended compliance with the law, had however been prepared with a view to guide reporting for periods ending December this year.
The PAAB said it is currently preparing further guidance for periods ending after December 31, 2019.
Despite rebasing its balance sheet, Delta however stuck to the script in stating its profits “on the basis of the 1:1 in compliance with SI 33 and in recognition of the multiple exchange rates that were imputed in commercial transactions”.
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