NBC: Losses piling up
The state-owned broadcaster’s financial woes, like its accounting practices, are worsening.
Jo-Maré Duddy – The NBC’s management ignored tender conditions set by its board and entered into a N$24.5-million contract for a full maintenance vehicle lease in its 2016 financial year.
“The approval of the lease does not make economic business rationale,” Auditor-general Junias Kandjeke says in the 2015 and 2016 report of the state-owned broadcaster, which was tabled in Parliament last week.
The tender evaluation committee of the NBC shortlisted one company with a contract price of N$24.6 million for approval by the board. The board accepted the proposition on condition that the price was renegotiated to a maximum of N$21.5 million. If such renegotiations were unsuccessful, the tender had to be re-advertised, the board said.
Management not only entered into an agreement which was N$3 million more expensive, but agreed to reduce the number of vehicles in the contract from 89 to 62. They also changed the contract from a full maintenance lease to a non-maintenance lease without board approval.
This misstep is one of several irking the AG, who once again expressed an adverse audit opinion about the NBC’s financial records. An adverse opinion, according to Investopedia, “is a professional opinion made by an auditor indicating that a company's financial statements are misrepresented, misstated and do not accurately reflect its financial performance and health”.
On 31 March 2016, the NBC reported a net deficit of more than N$75.2 million, while its accumulated losses exceeded N$802.8 million.
Bailout
During the year under review, the taxpayer had to pump about N$266.7 million in operational funding into the SOE, nearly 13% more than in the 2015 book-year. The broadcaster could only generate about N$81.6 million in own revenue in 2016, down from N$90.1 million in 2015.
According to the auditors, the NBC “does not have proper control over TV licence books and recognise TV license revenue based on bank deposits”. The NBC’s income statement shows TV licensing revenue of nearly N$21.9 million for 2016, about 8% less than in 2015. Decoder sales came in at nearly N$4.6 million, down 12% from the previous year. The auditors noted that 2 000 decoders were reported missing to the NBC board in the 2016 financial year.
About 75% of the NBC’s liabilities in the financial years under review were statutory obligations. “The corporation did not settle these liabilities on time, resulting in penalties and interest, which could be avoided,” Kandjeke says.
The NBC’s books show that it owed the Receiver of Revenue nearly N$57.7 million in capital on employees’ income tax (PAYE), while the penalties and interest on the outstanding tax exceeded N$78.7 million. Penalties and interest on import value-added tax (VAT) amounted to about N$9.9 million.
Staff costs
The NBC had 582 employees at the end of its 2016 financial year, the same as in 2015. Staff and retirement benefit cost increased by 9.2% to about N$221.4 million from 2015. Remuneration for non-executive directors, however, jumped by 10.1% to N$744 370.
S&T expenses soared by nearly 34% to N$8.4 million, while fees for freelancers and artists were up 23% to more than N$9.5 million.
Records
Other issues the auditors frowned upon was the unexplained write-off of assets to the tune of nearly N$48.4 million and the absence of a fixed asset register. The auditors also noted “with great concern” that several accounting standards were not adhered to.
The auditors performed a deed search and found that an erf in Klein Windhoek and one at Oshakati belong to the NBC. However, the erven weren’t recorded in the NBC’s books. In another instance, an erf at Oshakati was valued at N$21 million, but its insurable value was N$2 million.
The auditors could not verify the existence of Huawei proof of delivery worth nearly N$56.5 million, as the NBC couldn’t identify its location.
“The approval of the lease does not make economic business rationale,” Auditor-general Junias Kandjeke says in the 2015 and 2016 report of the state-owned broadcaster, which was tabled in Parliament last week.
The tender evaluation committee of the NBC shortlisted one company with a contract price of N$24.6 million for approval by the board. The board accepted the proposition on condition that the price was renegotiated to a maximum of N$21.5 million. If such renegotiations were unsuccessful, the tender had to be re-advertised, the board said.
Management not only entered into an agreement which was N$3 million more expensive, but agreed to reduce the number of vehicles in the contract from 89 to 62. They also changed the contract from a full maintenance lease to a non-maintenance lease without board approval.
This misstep is one of several irking the AG, who once again expressed an adverse audit opinion about the NBC’s financial records. An adverse opinion, according to Investopedia, “is a professional opinion made by an auditor indicating that a company's financial statements are misrepresented, misstated and do not accurately reflect its financial performance and health”.
On 31 March 2016, the NBC reported a net deficit of more than N$75.2 million, while its accumulated losses exceeded N$802.8 million.
Bailout
During the year under review, the taxpayer had to pump about N$266.7 million in operational funding into the SOE, nearly 13% more than in the 2015 book-year. The broadcaster could only generate about N$81.6 million in own revenue in 2016, down from N$90.1 million in 2015.
According to the auditors, the NBC “does not have proper control over TV licence books and recognise TV license revenue based on bank deposits”. The NBC’s income statement shows TV licensing revenue of nearly N$21.9 million for 2016, about 8% less than in 2015. Decoder sales came in at nearly N$4.6 million, down 12% from the previous year. The auditors noted that 2 000 decoders were reported missing to the NBC board in the 2016 financial year.
About 75% of the NBC’s liabilities in the financial years under review were statutory obligations. “The corporation did not settle these liabilities on time, resulting in penalties and interest, which could be avoided,” Kandjeke says.
The NBC’s books show that it owed the Receiver of Revenue nearly N$57.7 million in capital on employees’ income tax (PAYE), while the penalties and interest on the outstanding tax exceeded N$78.7 million. Penalties and interest on import value-added tax (VAT) amounted to about N$9.9 million.
Staff costs
The NBC had 582 employees at the end of its 2016 financial year, the same as in 2015. Staff and retirement benefit cost increased by 9.2% to about N$221.4 million from 2015. Remuneration for non-executive directors, however, jumped by 10.1% to N$744 370.
S&T expenses soared by nearly 34% to N$8.4 million, while fees for freelancers and artists were up 23% to more than N$9.5 million.
Records
Other issues the auditors frowned upon was the unexplained write-off of assets to the tune of nearly N$48.4 million and the absence of a fixed asset register. The auditors also noted “with great concern” that several accounting standards were not adhered to.
The auditors performed a deed search and found that an erf in Klein Windhoek and one at Oshakati belong to the NBC. However, the erven weren’t recorded in the NBC’s books. In another instance, an erf at Oshakati was valued at N$21 million, but its insurable value was N$2 million.
The auditors could not verify the existence of Huawei proof of delivery worth nearly N$56.5 million, as the NBC couldn’t identify its location.
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