Cash-strapped NBC doled out staff loans left, right and centre

THE Namibian Broadcasting Corporation granted its former Director General, Gerry Munyama, an interest-free loan of N$100 000 during his employment there, it has emerged.

This is one of a number of revelations on the inner workings of the NBC – detailed in the Auditor General’s report for the 2003-04 financial year and tabled in the National Assembly last week. The report highlights the NBC’s precarious financial position and questions whether the broadcaster can be deemed operational.During the period under review, the national broadcaster was operating on a deficit of N$27 million.But its poor financial control systems have led auditors to believe that it could be even deeper in the red.In the case of Munyama’s loan, he was to repay the N$100 000 in equal instalments from January 2004 until the end of his employment contract, but instead of being classified as a liability, the NBC wrote it up as an expense.Auditors said they were concerned that this could affect the recovery of the loan.Munyama was forced to resign from the NBC at the end of last year, after he allegedly transferred N$345 995,88 of the corporation’s money to an executive account for his own use.GOING CONCERN? The NBC’s losses followed the receipt of a State subsidy of N$103,9 million during that financial year.”The corporation’s continued operations are dependent upon receiving larger subsidies from the State until such time as it can operate profitably.These conditions create doubt as to whether the Corporation is a going concern,” was Auditor General Junias Kandjeke’s opinion when he signed off on the audit report in December.Auditors found that the corporation’s management lacks control over its debt, stock and assets across the country, or even its bank accounts for that matter.Auditors were unable to verify the accuracy of its reported N$227 million in fixed assets because the assets register was neither up to date, nor is the corporation making adequate provision for the depreciation of assets.Of the 43 issues of concern identified by the auditors, they rated 36 as high risk.Although the broadcaster had drawn up a risk-assessment policy, it had not been approved by management and was not being implemented, the auditors found.They found that the root of most of the problems lay with the finance department, and identified high-risk weaknesses in the current accounting system and management’s lack of control over their departmental budgets.Failure to pay over employees’ tax contributions to the Receiver of Revenue at various times since 2001 led to the corporation raking up an additional debt of N$12 million in penalties.The audit found that there were four bank accounts with a value of N$30 000 in the NBC’s name, which the Finance Department said it never knew existed.Verifying their existence to auditors, Bank Windhoek said only the former Finance Controller had access to them.”The auditors noted that the finance department is not adequately staffed to meet the needs of the NBC.As a result, weaknesses were identified which led to a disclaimed audit opinion.The finance department is very crucial and should be staffed by people with strong financial backgrounds.This will ensure that the NBC’s financial affairs are run on a healthy basis,” says the report.The audit found that a variety of accounting practices were not being followed accurately.Because of this, the corporation had no accurate record of what it was owed for advertising and rental of their transmitters, and has no policy to cover bad debts.It also had no accurate record of the replacement value of fixed assets or the amount it had received in sponsorships.As the NBC’s payroll is not integrated into the financial system, staff who owe the corporation money are listed as having a credit balance.Staff owe the corporation nearly N$2 million, but the lack of supporting documentation made it impossible for auditors to verify the accuracy of this figure.Three former employees who had signing rights on NBC cheques retained these rights after their resignation.Management said it had informed the bank at the start of that financial year to remove those signatories from the authorisation list.The audit noted that the NBC operated under very high risk by having virtually no control over its assets.No depreciation had been calculated to determine their replacement value, while the fixed-assets register listed items such as cellphones that could not even be traced.Management was also unable to explain to auditors why the books reflected that fixed assets to the value of nearly N$400 000 had been sold during the year under review, but the official dealing with the sale of assets said none was sold during 2003-04.”It is strongly recommended that proper investigations are performed regarding the existence of fixed assets all over Namibia,” said the report.A former employee responsible for sales lost the corporation N$135 000 during the 2003-04 financial year.According to the NBC credit policy, the account of a cash customer is opened in the name of the sales agent and not the debtor.As a result the NBC has been unable to track who owes the money and the audit recommended that action be taken against the former employee, even if no longer in the NBC’s employ, to recover the money.Over and above the accounting shambles, the corporation has no business continuity plan because only a few individuals actually understand and can operate the accounting system.Management told the auditors that it planned to acquire a new accounting system and have known for years that the system is inappropriate.Another high-risk area identified in the audit is a lack of budgetary monitoring.It was found that management was making departmental and financial decisions without knowing the financial position of their department and no comparisons were being made between the budget and actual expenses.The Finance Department, it emerged, had not been sending out regular budgetary reports to the various departments unless they were requested.As a result, departments were unable to assess their budgets against actual expenditure.Management said a staffing problem had made it difficult to produce monthly management reports.During the financial year under review, the auditors were of the opinion that the NBC had to make provision for bad debts of another N$4 million over and above the N$3 million it had provided for.Auditors also struggled to verify whether directors had honestly earned their fees, because the minutes of seven meetings held during 2003, and a further four in 2004, could not be found.”The failure to keep proper minutes might cause the Corporation not to implement decisions that were taken by the board, since they are not properly documented,” said the audit.The audit noted with concern that management was unable to explain why the minutes were missing, despite several attempts to get to the bottom of the matter.Although the corporation has an internal auditor, the external audit found that this department had not been focusing any of its attention on identifying the control weaknesses in the systems and taking steps to correct them, but rather had been engaged in “corrective (reactionary)” work.Management defended the internal auditor’s office, saying that since his appointment, he had been forced to concentrate on forensic investigations he had been assigned to carry out.The audit also picked up that the corporation had suffered financially because of outdated human-resources policies, for which employees took it to court.Management pledged at the time to revise its staffing policies.* LINDSAY DENTLINGER THE Namibian Broadcasting Corporation granted its former Director General, Gerry Munyama, an interest-free loan of N$100 000 during his employment there, it has emerged.This is one of a number of revelations on the inner workings of the NBC – detailed in the Auditor General’s report for the 2003-04 financial year and tabled in the National Assembly last week.The report highlights the NBC’s precarious financial position and questions whether the broadcaster can be deemed operational.During the period under review, the national broadcaster was operating on a deficit of N$27 million.But its poor financial control systems have led auditors to believe that it could be even deeper in the red.In the case of Munyama’s loan, he was to repay the N$100 000 in equal instalments from January 2004 until the end of his employment contract, but instead of being classified as a liability, the NBC wrote it up as an expense.Auditors said they were concerned that this could affect the recovery of the loan.Munyama was forced to resign from the NBC at the end of last year, after he allegedly transferred N$345 995,88 of the corporation’s money to an executive account for his own use.GOING CONCERN? The NBC’s losses followed the receipt of a State subsidy of N$103,9 million during that financial year.”The corporation’s continued operations are dependent upon receiving larger subsidies from the State until such time as it can operate profitably.These conditions create doubt as to whether the Corporation is a going concern,” was Auditor General Junias Kandjeke’s opinion when he signed off on the audit report in December.Auditors found that the corporation’s management lacks control over its debt, stock and assets across the country, or even its bank accounts for that matter.Auditors were unable to verify the accuracy of its reported N$227 million in fixed assets because the assets register was neither up to date, nor is the corporation making adequate provision for the depreciation of assets.Of the 43 issues of concern identified by the auditors, they rated 36 as high risk.Although the broadcaster had drawn up a risk-assessment policy, it had not been approved by management and was not being implemented, the auditors found.They found that the root of most of the problems lay with the finance department, and identified high-risk weaknesses in the current accounting system and management’s lack of control over their departmental budgets.Failure to pay over employees’ tax contributions to the Receiver of Revenue at various times since 2001 led to the corporation raking up an additional debt of N$12 million in penalties.The audit found that there were four bank accounts with a value of N$30 000 in the NBC’s name, which the Finance Department said it never knew existed.Verifying their existence to auditors, Bank Windhoek said only the former Finance Controller had access to them.”The auditors noted that the finance department is not adequately staffed to meet the needs of the NBC.As a result, weaknesses were identified which led to a disclaimed audit opinion.The finance department is very crucial and should be staffed by people with strong financial backgrounds.This will ensure that the NBC’s financial affairs are run on a healthy basis,” says the report.The audit found that a variety of accounting practices were not being followed accurately.Because of this, the corporation had no accurate record of what it was owed for advertising and rental of their transmitters, and has no policy to cover bad debts.It also had no accurate record of the replacement value of fixed assets or the amount it had received in sponsorships.As the NBC’s payroll is not integrated into the financial system, staff who owe the corporation money are listed as having a credit balance.Staff owe the corporation nearly N$2 million, but the lack of supporting documentation made it impossible for auditors to verify the accuracy of this figure.Three former employees who had signing rights on NBC cheques retained these rights after their resignation.Management said it had informed the bank at the start of that financial year to remove those signatories from the authorisation list.The audit noted that the NBC operated under very high risk by having virtually no control over its assets.No depreciation had been calculated to determine their replacement value, while the fixed-assets register listed items such as cellphones that could not even be traced.Management was also unable to explain to auditors why the books reflected that fixed assets to the value of nearly N$400 000 had been sold during the year under review, but the official dealing with the sale of assets said none was sold during 2003-04.”It is strongly recommended that proper investigations are performed regarding the existence of fixed assets all over Namibia,” said the report.A former employee responsible for sales lost the corporation N$135 000 during the 2003-04 financial year.According to the NBC credit policy, the account of a cash customer is opened in the name of the sales agent and not the debtor.As a result the NBC has been unable to track who owes the money and the audit recommended that action be taken against the former employee, even if no longer in the NBC’s employ, to recover the money.Over and above the accounting shambles, the corporation has no business continuity plan because only a few individuals actually understand and can operate the accounting system.Management told the auditors that it planned to acquire a new accounting system and have known for years that the system is inappropriate.Another high-risk area identified in the audit is a lack of budgetary monitoring.It was found that management was making departmental and financial decisions without knowing the financial position of their department and no comparisons were being made between the budget and actual expenses.The Finance Department, it emerged, had not been sending out regular budgetary reports to the various departments unless they were requested.As a result, departments were unable to assess their budgets against actual expenditure.Management said a staffing problem had made it difficult to produce monthly management reports.During the financial year under review, the auditors were of the opinion that the NBC had to make provision for bad debts of another N$4 million over and above the N$3 million it had provided for.Auditors also struggled to verify whether directors had honestly earned their fees, because the minutes of seven meetings held during 2003, and a further four in 2004, could not be found.”The failure to keep proper minutes might cause the Corporation not to implement decisions that were taken by the board, since they are not properly documented,” said the audit.The audit noted with concern that management was unable to explain why the minutes were missing, despite several attempts to get to the bottom of the matter.Although the corporation has an internal auditor, the external audit found that this department had not been focusing any of its attention on identifying the control weaknesses in the systems and taking steps to correct them, but rather had been engaged in “corrective (reactionary)” work.Management defended the internal auditor’s office, saying that since his appointment, he had been forced to concentrate on forensic investigations he had been assigned to carry out.The audit also picked up that the corporation had suffered financially because of outdated human-resources policies, for which employees took it to court.Management pledged at the time to revise its staffing policies.The report highlights the NBC’s precarious financial position and questions whether the broadcaster can be deemed operational.During the period under review, the national broadcaster was operating on a deficit of N$27 million.But its poor financial control systems have led auditors to believe that it could be even deeper in the red.In the case of Munyama’s loan, he was to repay the N$100 000 in equal instalments from January 2004 until the end of his employment contract, but instead of being classified as a liability, the NBC wrote it up as an expense.Auditors said they were concerned that this could affect the recovery of the loan.Munyama was forced to resign from the NBC at the end of last year, after he allegedly transferred N$345 995,88 of the corporation’s money to an executive account for his own use.GOING CONCERN? The NBC’s losses followed the receipt of a State subsidy of N$103,9 million during that financial year. “The corporation’s continued operations are dependent upon receiving larger subsidies from the State until such time as it can operate profitably.These conditions create doubt as to whether the Corporation is a going concern,” was Auditor General Junias Kandjeke’s opinion when he signed off on the audit report in December.Auditors found that the corporation’s management lacks control over its debt, stock and assets across the country, or even its bank accounts for that matter.Auditors were unable to verify the accuracy of its reported N$227 million in fixed assets because the assets register was neither up to date, nor is the corporation making adequate provision for the depreciation of assets.Of the 43 issues of concern identified by the auditors, they rated 36 as high risk.Although the broadcaster had drawn up a risk-assessment policy, it had not been approved by management and was not being implemented, the auditors found.They found that the root of most of the problems lay with the finance department, and identified high-risk weaknesses in the current accounting system and management’s lack of control over their departmental budgets.Failure to pay over employees’ tax contributions to the Receiver of Revenue at various times since 2001 led to the corporation raking up an additional debt of N$12 million in penalties.The audit found that there were four bank accounts with a value of N$30 000 in the NBC’s name, which the Finance Department said it never knew existed.Verifying their existence to auditors, Bank Windhoek said only the former Finance Controller had access to them.”The auditors noted that the finance department is not adequately staffed to meet the needs of the NBC.As a result, weaknesses were identified which led to a disclaimed audit opinion.The finance department is very crucial and should be staffed by people with strong financial backgrounds.This will ensure that the NBC’s financial affairs are run on a healthy basis,” says the report.The audit found that a variety of accounting practices were not being followed accurately.Because of this, the corporation had no accurate record of what it was owed for advertising and rental of their transmitters, and has no policy to cover bad debts.It also had no accurate record of the replacement value of fixed assets or the amount it had received in sponsorships.As the NBC’s payroll is not integrated into the financial system, staff who owe the corporation money are listed as having a credit balance.Staff owe the corporation nearly N$2 million, but the lack of supporting documentation made it impossible for auditors to verify the accuracy of this figure.Three former employees who had signing rights on NBC cheques retained these rights after their resignation.Management said it had informed the bank at the start of that financial year to remove those signatories from the authorisation list.The audit noted that the NBC operated under very high risk by having virtually no control over its assets.No depreciation had been calculated to determine their replacement value, while the fixed-assets register listed items such as cellphones that could not even be traced.Management was also unable to explain to auditors why the books reflected that fixed assets to the value of nearly N$400 000 had been sold during the year under review, but the official dealing with the sale of assets said none was sold during 2003-04.”It is strongly recommended that proper investigations are performed regarding the existence of fixed assets all over Namibia,” said the report.A former employee responsible for sales lost the corporation N$135 000 during the 2003-04 financial year.According to the NBC credit policy, the account of a cash customer is opened in the name of the sales agent and not the debtor.As a result the NBC has been unable to track who owes the money and the audit recommended that action be taken against the former employee, even if no longer in the NBC’s employ, to recover the money.Over and above the accounting shambles, the corporation has no business continuity plan because only a few individuals actually understand and can operate the accounting system.Management told the auditors that it planned to acquire a new accounting system and have known for years that the system is inappropriate.Another high-risk area identified in the audit is a lack of budgetary monitoring.It was found that management was making departmental and financial decisions without knowing the financial position of their department and no comparisons were being made between the budget and actual expenses.The Finance Department, it emerged, had not been sending out regular budgetary reports to the various departments unless they were requested.As a result, departments were unable to assess their budgets against actual expenditure.Management said a staffing problem had made it difficult to produce monthly management reports.During the financial year under review, the auditors were of the opinion that the NBC had to make provision for bad debts of another N$4 million over and above the N$3 million it had provided for.Auditors also struggled to verify whether directors had honestly earned their fees, because the minutes of seven meetings held during 2003, and a further four in 2004, could not be found.”The failure to keep proper minutes might cause the Corporation not to implement decisions that were taken by the board, since they are not properly documented,” said the audit.The audit noted with concern that management was unable to explain why the minutes were missing, despite several attempts to get to the bottom of the matter.Although the corporation has an internal auditor, the external audit found that this department had not been focusing any of its attention on identifying the control weaknesses in the systems and taking steps to correct them, but rather had been engaged in “corrective (reactionary)” work.Management defended the internal auditor’s office, saying that since his appointment, he had been forced to concentrate on forensic investigations he had been assigned to carry out.The audit also picked up that the corporation had suffered financially because of outdated human-resources policies, for which employees took it to court.Management pledged at the time to revise its staffing policies.* LINDSAY DENTLINGER THE Namibian Broadcasting Corporation granted its former Director General, Gerry Munyama, an interest-free loan of N$100 000 during his employment there, it has emerged.This is one of a number of revelations on the inner workings of the NBC – detailed in the Auditor General’s report for the 2003-04 financial year and tabled in the National Assembly last week.The report highlights the NBC’s precarious financial position and questions whether the broadcaster can be deemed operational.During the period under review, the national broadcaster was operating on a deficit of N$27 million.But its poor financial control systems have led auditors to believe that it could be even deeper in the red.In the case of Munyama’s loan, he was to repay the N$100 000 in equal instalments from January 2004 until the end of his employment contract, but instead of being classified as a liability, the NBC wrote it up as an expense.Auditors said they were concerned that this could affect the recovery of the loan.Munyama was forced to resign from the NBC at the end of last year, after he allegedly transferred N$345 995,88 of the corporation’s money to an executive account for his own use.GOING CONCERN? The NBC’s losses followed the receipt of a State subsidy of N$103,9 million during that financial year. “The corporation’s continued operations are dependent upon receiving larger subsidies from the State until such time as it can operate profitably.These conditions create doubt as to whether the Corporation is a going concern,” was Auditor General Junias Kandjeke’s opinion when he signed off on the audit report in December.Auditors found that the corporation’s management lacks control over its debt, stock and assets across the country, or even its bank accounts for that matter.Auditors were unable to verify the accuracy of its reported N$227 million in fixed assets because the assets register was neither up to date, nor is the corporation making adequate provision for the depreciation of assets.Of the 43 issues of concern identified by the auditors, they rated 36 as high risk.Although the broadcaster had drawn up a risk-assessment policy, it had not been approved by management and was not being implemented, the auditors found.They found that the root of most of the problems lay with the finance department, and identified high-risk weaknesses in the current accounting system and management’s lack of control over their departmental budgets.Failure to pay over employees’ tax contributions to the Receiver of Revenue at various times since 2001 led to the corporation raking up an additional debt of N$12 million in penalties.The audit found that there were four bank accounts with a value of N$30 000 in the NBC’s name, which the Finance Department said it never knew existed.Verifying their existence to auditors, Bank Windhoek said only the former Finance Controller had access to them.”The auditors noted that the finance department is not adequately staffed to meet the needs of the NBC.As a result, weaknesses were identified which led to a disclaimed audit opinion.The finance department is very crucial and should be staffed by people with strong financial backgrounds.This will ensure that the NBC’s financial affairs are run on a healthy basis,” says the report.The audit found that a variety of accounting practices were not being followed accurately.Because of this, the corporation had no accurate record of what it was owed for advertising and rental of their transmitters, and has no policy to cover bad debts.It also had no accurate record of the replacement value of fixed assets or the amount it had received in sponsorships.As the NBC’s payroll is not integrated into the financial system, staff who owe the corporation money are listed as having a credit balance.Staff owe the corporation nearly N$2 million, but the lack of supporting documentation made it impossible for auditors to verify the accuracy of this figure.Three former employees who had signing rights on NBC cheques retained these rights after their resignation.Management said it had informed the bank at the start of that financial year to remove those signatories from the authorisation list.The audit noted that the NBC operated under very high risk by having virtually no control over its assets.No depreciation had been calculated to determine their replacement value, while the fixed-assets register listed items such as cellphones that could not even be traced.Management was also unable to explain to auditors why the books reflected that fixed assets to the value of nearly N$400 000 had been sold during the year under review, but the official dealing with the sale of assets said none was sold during 2003-04.”It is strongly recommended that proper investigations are performed regarding the existence of fixed assets all over Namibia,” said the report.A former employee responsible for sales lost the corporation N$135 000 during the 2003-04 financial year.According to the NBC credit policy, the account of a cash customer is opened in the name of the sales agent and not the debtor.As a result the NBC has been unable to track who owes the money and the audit recommended that action be taken against the former employee, even if no longer in the NBC’s employ, to recover the money.Over and above the accounting shambles, the corporation has no business continuity plan because only a few individuals actually understand and can operate the accounting system.Management told the auditors that it planned to acquire a new accounting system and have known for years that the system is inappropriate.Another high-risk area identified in the audit is a lack of budgetary monitoring.It was found that management was making departmental and financial decisions without knowing the financial position of their department and no comparisons were being made between the budget and actual expenses.The Finance Department, it emerged, had not been sending out regular budgetary reports to the various departments unless they were requested.As a result, departments were unable to assess their budgets against actual expenditure.Management said a staffing problem had made it difficult to produce monthly management reports.During the financial year under review, the auditors were of the opinion that the NBC had to make provision for bad debts of another N$4 million over and above the N$3 million it had provided for.Auditors also struggled to verify whether directors had honestly earned their fees, because the minutes of seven meetings held during 2003, and a further four in 2004, could not be found.”The failure to keep proper minutes might cause the Corporation not to implement decisions that were taken by the board, since they are not properly documented,” said the audit.The audit noted with concern that management was unable to explain why the minutes were missing, despite several attempts to get to the bottom of the matter.Although the corporation has an internal auditor, the external audit found that this department had not been focusing any of its attention on identifying the control weaknesses in the systems and taking steps to correct them, but rather had been engaged in “corrective (reactionary)” work.Management defended the internal auditor’s office, saying that since his appointment, he had been forced to concentrate on forensic investigations he had been assigned to carry out.The audit also picked up that the corporation had suffered financially because of outdated human-resources policies, for which employees took it to court.Management pledged at the time to revise its staffing policies.