NBC bosses paid N$1.5m above legal limits, Kandjeke finds

Executives at the Namibian Broadcasting Corporation (NBC) were remunerated up to N$1.5 million above approved remuneration bands, in violation of the Public Enterprises Governance Act (PEGA), and without the required concurrence from the relevant minister, Auditor-General Junias Kandjeke has revealed.

The finding is contained in NBC’s audit report for the financial year ended 31 March 2024. Kandjeke issued an adverse audit opinion, stating that, due to the significance of the matters outlined, the financial statements do not present a true and fair view of NBC’s financial position as at 31 March 2024, nor of its financial performance and cash flows for the year.

The conclusion was reached in accordance with International Financial Reporting Standards (IFRS) and the Namibian Broadcasting Corporation Act, according to the report tabled in Parliament last week.

Pay above approved bands

“The auditors noted that some members of management were remunerated N$1 480 090 above the remuneration bands as per Section 4 of the Public Enterprises Governance Act, 2019 (Act No. 1 of 2019),” Kandjeke wrote.

The Act requires that the remuneration and service benefits of a public enterprise’s chief executive officer and management staff be determined by the board, with the concurrence of the relevant minister and in line with ministerial directives.

“The Corporation has not obtained the minister’s concurrence as required by the Act,” he added.

In the previous financial year, managers at NBC were reportedly remunerated up to N$750 000 above the approved bands, in contravention of the same Act.

Going concern under pressure

The latest audit report further notes that NBC’s remuneration practices do not comply with a government gazette dated 16 April 2018.

Auditors also drew attention to NBC’s financial position, which reflects net current liabilities of N$191 438 397 (2023: N$168 569 429). According to note 29 of the annual financial statements, NBC’s ability to continue operating as a going concern depends on the availability of adequate government subsidies. The audit opinion, however, was not qualified on this matter.

Kandjeke further reported that NBC failed to conduct an impairment assessment of non-financial assets valued at N$231 537 526 (2023: N$245 368 275), despite budgeting for future operating losses and net cash outflows.

As a result, auditors were unable to obtain sufficient appropriate audit evidence regarding the recoverable amount of those assets, as required by International Accounting Standard 36 (IAS 36).

Accounting and compliance lapses

NBC received operational subsidies of N$310 310 000 (2023: N$372 549 000) from the Ministry of Information and Communication Technology. These were accounted for as government grants in the statement of comprehensive income rather than as equity in the statement of changes in equity, as required by International Accounting Standard 20 (IAS 20), given that the government acted in its capacity as shareholder.

Consequently, auditors said they could not obtain sufficient appropriate audit evidence regarding the presentation and disclosure of shareholder funding and related financial statement areas.

The report also notes that NBC was unable to provide supporting vouchers for expenditure amounting to N$64 465 650, posted in the statement of comprehensive income in relation to a clean-up account established in 2009. Nor could it provide proof of condonation by Treasury in terms of the State Finance Act.

Further concerns were raised over leave provisions. While NBC’s human resources policy allows employees to carry forward up to 90 leave days, the corporation only provided for up to 45 days, citing a pending legal declaration by the Labour Commissioner.

However, NBC has not amended its policy regarding settlement of up to 90 leave days upon termination or retirement. No legal opinion was provided to substantiate the significant judgements made in measuring leave pay in terms of International Accounting Standard 37 (IAS 37).

As a result, auditors were unable to confirm the completeness and valuation of trade and other payables, provisions and related financial statement areas.

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