Auditor-General Tsakani Maluleke has found the SABC finances in such a mess that she could not express an opinion when she conducted an audit on its 2022-23 financial statements.
The worst audit opinion known as a disclaimer is a regression from the qualified audit opinion the public broadcaster obtained in the prior year.
“I was unable to obtain sufficient appropriate audit evidence to provide a basis for an audit opinion on these financial statements,” Maluleke said in her report contained in the annual report tabled in Parliament.
In her report, Maluleke said the SABC incurred a profit loss of R1.127 billion as at March 31, 2023 and its current liabilities exceeded the current assets by R612 million.
“The public entity was, therefore, commercially insolvent because it was not able to pay its debts as and when they were due, even though its assets exceeded its liabilities. Additionally, I was unable to obtain sufficient appropriate audit evidence to confirm the reasonableness of the cash flow forecasts for the public entity’s viability in the foreseeable future.
“Consequently, I was unable to confirm or dispel whether it is appropriate to prepare the financial statements using the going concern assumption,” she said.
Maluleke also said the public broadcaster recognised TV licence fees of R741m of the total licence fees billed of R4.651 billion.
“In management’s judgment, it is not probable that the economic benefits associated with these transactions will flow to the public entity to meet the recognition criteria.”
The audit report said the SABC was a defendant in a number of lawsuits.
“The ultimate outcome of these matters could not be determined currently, and no provision for any liability that may result was provided for in the financial statements,” the A-G noted.
Maluleke put the blame for the state of affairs on the SABC management and the board for not establishing a social and ethics committee.
“An audit committee was not established by the accounting authority, as required by section 51(1)(a)(ii) of the Public Finance Management Act (PFMA) for the full year under review.”
Maluleke noted with concern that the absence of the board at SABC had an impact on the effectiveness of governance and oversight.
President Cyril Ramaphosa appointed the board in April, six months after the term of the previous board expired.
Board chairperson Khathutshelo Mike Ramukumba said although the SABC had stabilised and numerous gains could be reported, the growth phase that should have followed remained elusive.
“This can be attributed to increasing external and internal adverse circumstances that affected the corporation’s ability to generate revenue and consequently its liquidity and solvency.”
Ramukumba noted with concern that the liquidity and solvency risk has escalated to breaking point, with the continued unfunded cost of public mandate.
“The high TV Licence payment evasion rate is now more than ever critical that the funding model for the corporation is eventually overhauled.
“As we take the baton from the previous board, financial sustainability is the biggest challenge the corporation faces and this is therefore a priority focus of this board,” Ramukumba said.
Chief finance officer Yolande van Biljon confirmed that the SABC reported a net loss after interest and tax of R1.13bn and negative cash flows from operating activities amounted to R631m while cash reserves decreased by R709m.
“The ability of the corporation to maintain its going concern status is high risk though, with the risk expected to increase in the short term, several interventions have taken place in an effort to keep the risk manageable,” Biljon said.
She also said the current funding model did not provide the necessary means to enable the SABC to address the current financial distress.
In her report, Maluleke said she was unable to obtain sufficient appropriate audit evidence that disciplinary steps were taken against some of the officials who had incurred and/or permitted irregular expenditure in prior years.
“This was because investigations into irregular expenditure were not performed, as required by section 51(1) (e) (iii) of the PFMA.”
The financial statements submitted for auditing were not prepared in accordance with the prescribed financial reporting framework.
“Material misstatements of disclosure items identified by the auditors in the submitted financial statements were corrected, but the supporting evidence not received resulted in the financial statements receiving a disclaimer of opinion,” Maluleke explained.
Cape Times
