Tapiwanashe Mangwiro
IN a move aimed at enhancing financial transparency and standardisation, the Public Accountants and Auditors Board (PAAB) and the Securities and Exchange Commission of Zimbabwe (SECZIM) have embraced the recent Monetary Policy Statement (MPS) directive mandating the use of Zimbabwe Gold (ZiG) as the presentation currency for financial reporting.
This policy shift, as outlined in the PAAB’s latest technical paper, marks a significant milestone on Zimbabwe’s financial landscape, reinforcing investor confidence and ensuring a uniform approach to corporate reporting.
The PAAB, a statutory body overseeing the accountancy profession in Zimbabwe, has underscored the importance of aligning financial reporting with international standards while complying with national monetary policies.
According to the board’s latest paper, all entities, irrespective of their functional currency, must present financial statements in ZiG for periods ending on or after December 31, 2024.
“Entities must follow guidance from IAS 21 paragraphs 38-43, ensuring that financial statements are translated using the Reserve Bank of Zimbabwe’s official exchange rates. This will enhance comparability and promote consistency in financial reporting,” the PAAB states.
By leveraging the framework provided by the International Financial Reporting Standards (IFRS), the PAAB ensures that the translated reports maintain accuracy and credibility.
This commitment to best practices reinforces the nation’s economic stability, while paving the way for broader acceptance of ZiG in corporate and investment circles. The MPS is pushing the national agenda of de-dollarisation by 2030, as a gradual shift to a mono-currency is being pursued by the central bank. This move is seen as a starting point.
Reserve Bank of Zimbabwe (RBZ) Governor Dr John Mushayavanhu told the Parliamentary Portfolio Committee on Budget and Finance that the MPS enhances the stability of ZiG and the economy.
He said: “We are doing everything in accordance with stabilising the ZiG currency. Looking at the de-dollarisation road map, the main important thing is that the 2030 deadline to dissolve multi-currency is what we are working with, whereby we will have zero transactions in foreign currency.”
According to International Accounting Standard 21 (IAS 21) terms, the functional currency is the currency of the primary economic environment in which an entity operates.
This is typically the currency in which the business earns revenue and incurs expenses. For many Zimbabwean companies, the functional currency remains the US dollar due to its widespread use in transactions.
On the other hand, the reporting or presentation currency is the unit in which an entity presents its financial statements.
Following the 2024 MPS, all Zimbabwean entities must use ZiG as their reporting currency, regardless of their functional unit.
On its part, SECZIM notified issuers that “pursuant to Paragraph 21 of the First Schedule of the Securities and Exchange Act (Chapter 24:25) and paragraph 194 of the Monetary Policy Statement presented by the RBZ Governor on 6 February 2025, that every licensed person must adopt a common presentation currency, ZWG, for reporting purposes, with immediate effect, including for the 2024 audited financial statements”.
“Any licensed person facing challenges complying with this directive may approach the Commission for further guidance,” reads the SECZIM statement in part.
The move to a unified presentation currency has received strong support from financial experts. An experienced auditor from a leading local firm, who commented on condition of anonymity, said the move is good for economic formalisation.
“Requiring all entities to report in ZiG is a crucial step towards economic formalisation. It simplifies financial analysis for investors and regulators, making corporate performance more transparent and directly linked to national economic trends,” he said.
The auditor emphasised the benefits of standardisation, stating that it minimises disparities from multi-currency reporting.
“This transition fosters financial discipline and minimises disparities caused by multiple reporting currencies. It reassures stakeholders that Zimbabwe is committed to clear and consistent financial reporting standards, which is essential for attracting investment,” he added.
From an economic standpoint, the policy direction is seen as a strategic move to enhance the credibility of ZiG.
“Mandating ZiG as the presentation currency is excellent for the local unit. It signals confidence in the currency and encourages wider adoption, helping to stabilise exchange rate fluctuations and build trust in the financial system,” said economic analyst Mr Namatai Maeresera.
Despite the overwhelming positive reception, some auditors have raised concerns regarding the potential implications of reporting in ZiG while using another functional currency, such as the US dollar.
One auditor, who preferred to remain anonymous, said it only serves the law and not the true standing of the company.
“While ZiG reporting fulfils regulatory requirements, it may not always reflect the true value or performance of a company, especially for entities operating primarily in USD. There is a risk that exchange rate fluctuations could distort financial statements, making it difficult to compare historical data accurately,” she said.
