The management and board of directors of International Energy Insurance Plc (IEI) have to explain to investors and the regulatory authorities about some accounting shenanigans.
It is important to note that the insurer would have posted a loss after tax of N146.04 million for the year ended December 2022 if the preparers of the books had included management expenses of N770.39 million. Instead, they reported a profit of N615.46 million.
Such misrepresentation of financial statements either deliberately or inadvertently misleads investors and the general public. There is a clear distinction between: Error, irregularities, and fraud.
A material misstatement nearly ruined Toshiba Corp, whose owners and managers were accused of window dressing. In 2015, the Tokyo based company overstated pre-tax profit by 230 percent billion yen ($1.59 billion) and it got delisted from the stock exchange in 2023.
The omission of the expense item means IEI’s profit surged by 157 percent to N1.58 billion as at December 2023.
There is also a nebulous item. While the company categorised claims as an expense in the notes to the 2023 financial statement, it recognized it as recoverable in the profit and loss account. This needs some explanations because if claims is an expense deductions, then the 2023 profit ought to have been smaller.
IEI has been stricken by recurring losses that led to technical insolvency as the liabilities exceed total assets. In short, it posted a negative shareholders’ fund of N10.38 billion as at December 2023.
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