Unifreight Africa Revenue Recognition Flagged For ...

Unifreight Africa Revenue Recognition Flagged For Potential Fraud

Audrey Galawu

Assistant Editor

Unifreight revenue recognition in the 2023 annual report has been flagged as an area of concern for potential fraud, prompting the need for specialised audit attention.

The audit, conducted by Grant Thornton indicated a suspected risk of fraud specifically related to revenue recognition as required by the International Standard on Auditing (ISA 240 Revised).

“There is a risk that the revenue is presented at amounts higher than what has been actually generated by the group.

“Revenue from contracts with customers is recognised when services are delivered to the customer at an amount that reflects the consideration to which the group expects to be entitled in exchange for those services.

“The group also has revenue generated from prepacks and driving schools. These goods and services are paid for in advance. The group recognises revenue when payment is received,” reads the auditors’ comments.

The ISA 240 (Revised) deals with an auditor's responsibility to consider fraud in the audit of financial statements. It requires the auditor to maintain an attitude of professional skepticism recognising the possibility that a material misstatement due to fraud could exist, notwithstanding the auditor's past experience with the entity about the honesty and integrity of management and those charged with governance;

The group reported revenue of ZWL$201 billion, a substantial increase from a restated ZWL$9 billion in 2022.

Profit of ZWL$192 billion was largely attributed to improvements in operating margins, which rose from 0% in 2021 to 2.56% in 2022, and further to 20.6% in 2023.

“The significant improvement in 2023 was driven by the management team’s aggressive pursuit of cost containment strategies, coupled with the deployment of an additional 50 FAW 380FT Truck Tractors with Afrit Tautliner Trailers into the local and cross-border market,” said group chairman Peter Annesley.

The EBITDA stood at ZWL$119 billion up from ZWL$10 billion in 2022, while net profit of ZWL$141 billion was recorded, a significant turnaround from the previous year’s loss.

Unifreight transported 38 million kilograms of tobacco from the regional floors for the period under review, a 70% increase from the previous year, which not only solidified market leadership but also contributed significantly to revenue growth.

CEO, Richard Clarke acknowledged the introduction of the ZWG, which he said has contributed to the stabilisation of prices and reduced the volatility that businesses have been grappling with.

“This stability is crucial for planning and executing long-term business strategies.

“The new currency has improved liquidity in the market. With better access to a stable currency, businesses have been able to manage their cash flows more effectively, ensuring smoother operations and transactions.

“The introduction of a currency backed by tangible assets has increased confidence among investors and the business community. This confidence is vital for attracting both local and foreign investments, which are essential for economic growth,” he said.