Federal Insurance PLC’s auditor flagged more than Tk11.7 crore in long-outstanding receivables from insurance agents, saying the amount had remained uncollected for several years and recovery was doubtful.
The listed insurer said in a disclosure that auditor Md Kamal Uddin, Senior Partner of Toha Khan Zaman & Co, Chartered Accountants issued a qualified opinion and an “Emphasis of Matter” paragraph in the audit report for 2025.
According to the auditor, the company recorded Tk11.70 crore as receivables from insurance agents under “agent balance” in its financial statements.
As the recovery was doubtful, it could materially overstate the company’s assets.
The audit report also highlighted Tk2.44 crore in outstanding premiums that remained unrecovered or unadjusted.
Outstanding premium refers to insurance premium income the company expects to receive from policyholders or related parties.
The auditor said the amount might require adjustment, meaning premium receivables could also be overstated.
Federal Insurance has also yet to establish a gratuity fund recognised by the National Board of Revenue, with employee gratuity benefits currently paid on a cash basis.
A gratuity fund is a reserve created by companies to pay employee retirement and service benefits in an organised manner.
The auditor said the absence of a recognised fund could materially understate employee benefit liabilities and was not compliant with the Labour Act 2006.
The report also disclosed an unclaimed dividend account worth Tk50.93 lakh.
In addition, the auditor highlighted Tk1.42 crore in collection control accounts, Tk34.46 lakh in advances against miscellaneous claim payments and Tk7.10 crore in prepaid expenses.
The company disclosed the basis and status of those advances in the financial statements, according to the auditor.
The audit report also referred to the company’s non-application of International Financial Reporting Standard (IFRS) 17 relating to insurance contracts.
IFRS 17 is an international accounting standard designed to improve transparency and consistency in insurers’ financial reporting.
Federal Insurance shares closed 0.81 per cent down to Tk24.6 on the Dhaka Stock Exchange on Monday.
