Africa
Civil society organization considers Bank of Mozambique “discredited”
The inconsistencies in the financial statements of the Bank of Mozambique are worrying and may set a bad precedent for commercial banks and other financial institutions operating in the national financial system, warned the CDD. The civil society asks the central bank to clarify the guarantees it has put in place to ensure that there is no conflict of interest in the treatment it gives Kuhanha.
The Center for Democracy and Development (CDD), a Mozambican civil society organization, considers that the Bank of Mozambique “worsens the discredit” of the regulator, after an audit disagreed with the financial statements of the institution.
The auditing firm PWC refuted, in particular, the omission of the Bank of Mozambique, in the 2018 balance sheet, in relation to the consolidation of the pension fund accounts of the employees of the regulator Kuhanha, with the argument that “there is no relevant economic sense that justifies the consolidation.”
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The financial statements of the Bank of Mozambique are under question
For the CDD, the justification of the Mozambican financial regulator and the other flaws found in the 2018 accounts show the “discredit” in which the institution finds itself.
“The non-consolidation of Kuhanha’s accounts in the 2018 financial statements by the Bank of Mozambique worsens a climate of suspicion and discredit in relation to the regulator that has existed since 2017,” stated the analysis of the DDC.
The organization recalled that also in 2017 the auditor expressed reservations about the quality of the accounts of the regulator.
The DDC requires the Bank of Mozambique to clarify the guarantees it has put in place to ensure that there is no conflict of interest in the treatment it gives Kuhanha, since this entity purchased Banco Moza in 2017.
“How to ensure transparency and impartiality in this process? How does the regulatory triangle [Bank of Mozambique], supervised [Kuhanha] and supervised [Moza Bank] function?”
Transparency is extremely important in financial markets
The DDC pointed out that the proper functioning and efficiency of financial markets also depend on the image of transparency and integrity that financial institutions, including the central bank, convey to the public and companies.
“In addition to being a bad example as a regulator and supervisor of the financial system, the lack of transparency in the actions of a central bank can damage its reputation and limit the efficiency of monetary, exchange rate and financial policy,” reads the analysis.
The continued inconsistencies in the financial statements of the Bank of Mozambique are worrying and may set a bad precedent for commercial banks and other financial institutions operating in the national financial system, warned the CDD.
According to the independent audit report, “the individual and consolidated financial statements do not present the financial position of the bank and its subsidiaries in a proper manner.”
In the document, WB management considers that “there is no relevant economic sense to justify the consolidation” of Kuhanha.
“Only the subsidiary Sociedade Interbancária de Moçambique (Simo) was considered in the consolidation perimeter, since its object of activity [the country’s ATM network] is framed within the functions of the central bank,” it stated.
In the report, Kuhanha is classified “as a public interest entity, within a sector of activity regulated by the Mozambique Insurance Supervisory Institute and, as such, subject to regular independent audits,” added the central bank.
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(Featured image by stevepb via Pixabay)
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First published in Africa 21 Digital, a third-party contributor translated and adapted the article from the original. In case of discrepancy, the original will prevail.
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