SABC losses could be much more than R977m recorded - AG

Cape Town – The magnitude of the monetary losses at the SABC may be even greater than the R977m recorded in their annual financial statements for 2016/17, the portfolio committee on communications has heard. 

The Auditor General (AG) briefed the committee on Tuesday on the annual reports of the department of communication, the Government Communication and Information System (GCIS) and the entities reporting to the department.

Corporate executive at the AG Alice Muller said their audit couldn’t determine what the SABC actually owed its creditors because its invoices weren’t captured daily.

This meant that the SABC’s expenditure could actually be more.

Last month, during a meeting of the standing committee on finance, it was revealed that Treasury considered a bailout of a R3bn guarantee for the SABC.

The AG’s report reads that the entity was commercially insolvent on March 31 because it could not pay its debt and notes that the SABC applied for a government guarantee after the financial year-end. 

“I was unable to obtain sufficient appropriate audit evidence for the entity’s viability in the foreseeable future; consequently I was unable to assess the reasonability of the going concern assumptions used by the entity, which forms the basis for the current preparation of the financial statement,” reads Auditor-General Kimi Makwetu’s report.

“In our view, they are not a going concern in the foreseeable future,” Muller told the committee.

Furthermore, the SABC received a qualification on its reported irregular spending. This means there are material misstatements in specific amounts, or there is insufficient evidence for the AG to conclude that specific amounts included in the financial statements are not materially misstated, according to its website.

The financial statements report irregular expenditure of R4.4bn, of which the most is brought over from previous years. 

Muller said the amount in the financial statements could be more, or it could be less.

The AG identified the following concerns at the SABC: 

- Over the past three years there has been a decline in revenue and an increase in expenditure of the entity which has caused the entity to operate at a loss;

- The decline in revenue and cash collections has put the cash reserves of the entity under distress;

- Creditors not recorded also exasperate the ability to know the full extent of the financial distress;

- As at March 31 2017, the entity was commercially insolvent because it was not able to settle its liabilities as and when they are due, even though its assets exceed its liabilities.

The AG puts the regression in the SABC’s audit finding down to:

- A poor control environment due to leadership instabilities and vacancies in key executive positions;

- Long list of suspensions and personnel acting in positions;

- High dependency on consultants to resolve previous year’s qualification areas without implementing strong policies, procedures and transferring of skills;

- No action plans and monitoring being in place to implement internal audit recommendations;

- No performance management systems being in place thus there were no adequate processes to implement consequence management and hold personnel accountable.

The root causes the AG wants addressed are the slow response by political leaders, oversight, management and the instability in key positions and the lack of consequences for poor performance and transgressions.

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