Consortium of Civil Society Organizations on Social &Economic
Justice Motto: Promoting Socio-Economic Reforms
Address: 2 Fofanah Lane Jui Grafton Highway Opposite Kossoh Town Freetown
Contact: +23279135659/23278452339
Email: socialeconomicjustice2002@gmail.com, socialeconomicj5@gmail.com
PRESS RELEASE
INSURANCE SECTOR FRAUDULENT PRACTICES:
5 DAYS ULTIMATUM TO ICASL TO CLEAR ITSELF AND MEMBER
AUDIT FIRMS FROM INDICTMENT.
The Consortium of Civil Society Organisations on Economic and Social Justice are
using this medium to inform the general public that we are giving the Institute of
Chartered Accountants of Sierra Leone (ICASL) 5 days ultimatum to explain to us
whether the Institute itself and its member audit firms are not culpable in the
Monumental Insurance Industry Fraud and Non Compliance with Insurance Act of
Sierra Leone 2016 and Financial Engineering brought to the public attention last
week.
Upon receipt of serious complaints about the fraudulent operations of the
International Insurance Company with very strong supporting evidences. On 13th
September 2021, we wrote to International Insurance Company SL Limited,
SLICOM, ICASL and BDO, the Audit Firm that was auditing International Insurance
and concealing the true financial position of the Company
ICASL has not deemed it fit to respond to our letter with needed explanation.
Meanwhile, BDO responded using their Lawyer to threaten us. We are therefore,
using this medium for fairness to prevail on ICASL to state its position
on the matter.
The involvement of ICASL is based on the following information.
- ICASL was formed by an Act of Parliament on 12th May 1988 with an
overarching mandate to promote and regulate the accountancy
profession in Sierra Leone and to ensure integrity, objectivity,
independence, confidentiality and professionalism in the accounting
profession ICASL license and regulate Audit - Therefore, ICASL licenses and regulates audit practices in the Sierra Leone
and International Insurance Company were given UNQUALIFIED (clean)
Audit Reports in all these years despite these monumental concealments.
How was that possible? - We also have evidence of a formal request made in 2017 to ICASL for the
Review of International Insurance Company Financial Statements. We will
like to know what was the outcome of ICASL review, who did the
investigation, their findings and Conclusion. - Why were the fraudulent insurance practices and auditing opinions not
sanctioned to serve as deterrent to others? We are aware that KPMG
South Africa were sanctioned for concealment involving the Firm of former
South African President. Arthur Anderson a leading US Audit Firm was
held liable for audit negligence in expressing an Unqualified Audit Opinion on
Financial statements with several concealments - Following the complaints, The Consortium has examined sample Audited
Financial Statements of 4 Leading Insurance Companies operating a Life
Assurance Scheme with UNQUALIFIED Audit Opinion in the country and
compare same with a sample audited financial statement of a leading
Insurance Company from Nigeria. The gaps are wide; key observations are:
Life Assurance Funds were not adequately accounted for. The Life
Assurance Premium was not accounted for and the liabilities arising
from the accrued Life Benefits were not even mentioned or provided
in the financial statements.
We did not see clearly Investments for Life Assurance Funds
disclosed separately.
The Investment Income reported for Life Funds is ridiculous and
misleading as Life Assurance thrives on efficient investments and
optimal returns on Life Assurance Investments. Bearing in mind that
the prevailing treasury bill rates in the country has been in excess of
20% for 365 days for several years. - The Consortium also examines the level of compliance of the audited
statements mentioned above with the Insurance Act of Sierra Leone 2016,
again the non-compliance issues are too many to be ignored. We noted with
dismay failure to comply with section 37 of Insurance Act by not clearly
disclosing Reserves in the Statement of Financial Position (Balance Sheet) as
shown below:
- (1) An insurer shall establish and maintain in respect of each class of insurance
business-
(a) reserves for unexpired risks;
(b) reserves for outstanding claims; and
(c) contingency reserves to cover fluctuations in securities and variations in statistical
estimates.
2(c) in the case of reserves for outstanding claims, the reserves shall be equal to the
total estimated amount of all outstanding claims together with a further amount
representing twenty percent of the estimated amount of outstanding claims in respect of
claims incurred but not reported at the end of the last preceding year; and
(3) An insurer shall maintain with respect to the life insurance business–
(a) a general reserves fund which shall be credited with an amount equal to the net
liabilities on policies in force at the time of the actuarial valuation; and
Please note we are only highlighting areas of the Insurance Act meant to protect Policy
Holders in term of Claims payment and Life Assurance Benefits
- From the few financial statements reviewed we are estimating that about 100
Billion Leones Life Assurance funds may not have been accounted for by
Insurance Industry in the country from 2010 till date comprising of Life
Assurance Premium and accrued benefits. With International Insurance
Company SL to account for more than 30% of that amount.
We are therefore, calling on ICASL to provide us with sufficient reasons not to
believe they colluded, abated and aided the fraudulent Insurance practices. and
refusal to address genuine complaints of External Auditor’s Professional negligence
in the Insurance Industry of Sierra Leone.
We believe no meaningful progress can be made without accountability, and if the
future of our generation and children are to be protected, we must evolve a
system that hold key players and regulators accountable for their actions today
that will impact on us today and in the future.
Mohamed Kamara
Consortium Chairman
