Rainbow Tourism Group auditor raises concerns over...

Rainbow Tourism Group auditor raises concerns over property valuation

Nyashadzashe Ndoro

In a recent audit report, BDO Zimbabwe Chartered Accountants, the independent auditors for Rainbow Tourism Group, cast doubt on the company’s property and equipment valuations, raising concerns about the subjectivity of the process and the economic environment’s impact.

The report states: “The determination of the value of property and equipment was considered to be a matter of significance due to the inherent subjectivity of the key assumptions and judgements that underpin the process thereon due to the heightened uncertainties in the economic environment.”

RTG’s property and equipment are valued at ZWL 268 351 971 022 (USD$1.9 billion), according to the report. An independent valuation exercise was conducted at year-end, with independent valuers assessing immovable property and equipment, while directors handled movable assets.

The auditors highlighted the subjectivity inherent in the valuation process, particularly regarding the selection of a spot exchange rate “in the prevailing economic environment”.

BDO Zimbabwe Chartered Accountants responded by stating: “We obtained an understanding of the approach followed by the independent valuers and directors through discussions with them.”

They further elaborated on the steps taken to assess the work performed, including reviewing valuation methods, assessing the integrity of models used, and evaluating the accuracy and completeness of the valuation model’s inputs.

The report, however, downplays the significance of “other information” such as the Chairman’s Statement and the Director's Report, stating: “Our opinion on the Financial Statements does not cover the other information and we do not express any form of assurance or conclusion thereon.”

This, the auditors say, raises questions about the transparency of RTG’s financial reporting, especially considering the substantial value assigned to property and equipment.

The auditors concluded that the Group’s consolidated inflation-adjusted financial statements for the year ended December 31, 2023, present fairly, in all material aspects, the financial position of the Group, its financial performance and its cash flows.