Republic Insurance PLC received a qualified audit opinion for 2025 after its auditor raised concerns over Tk79.97 crore in unconfirmed receivables from state-owned reinsurer Sadharan Bima Corporation, along with gratuity funding gaps and accounting standard violations.
The auditor also included an “Emphasis of Matter” paragraph in the audit report for the year ended December 2025, citing issues related to financial asset impairment recognition and employee benefit obligations.
According to the audit report, Republic Insurance reported receivables of Tk79.97 crore from Sadharan Bima Corporation and payables of Tk6.05 crore to the state-owned reinsurer.
The auditor said balance confirmation requests regarding the transactions had been sent but no confirmation was received by the date of signing the audit report.
The report also identified non-compliance with International Financial Reporting Standard 9, or IFRS 9, which governs the recognition of expected credit losses on financial assets.
According to the audit findings, Republic Insurance did not immediately recognise an expected credit loss of Tk63.92 lakh related to deposit clearing and short deposits in its profit and loss account.
Instead, the company adopted a board-approved policy to distribute the loss evenly over seven years.
The auditor said the approach resulted in understated expenses and overstated assets in the current reporting period.
The audit further found that the insurer did not fully comply with the Bangladesh Labour Act, 2006 in relation to gratuity benefits for employees who had completed more than 10 years of service.
According to the auditor, the gratuity liability disclosed in the financial statements reflected only provisions accumulated over the last few years and did not account for the company’s full long-term obligations to employees.
Although Republic Insurance made an additional provision during the year following revised salary structures, the auditor said the adjustment remained inadequate because earlier years’ liabilities had not been reassessed using updated salary levels.
The company’s financial statements showed a gratuity provision of Tk84.18 lakh.
However, the balance maintained in the designated gratuity bank account stood at Tk7.1 lakh, leaving a funding shortfall of Tk77.08 lakh against the recognised liability.
