SABC chided for irregular spending
The auditor-general has blasted the SABC for not taking appropriate steps to prevent irregular expenditure and for failing to bring those responsible for the financial mess to book.
The broke public broadcaster was slapped with a qualified audit opinion for the 2018/2019 financial year. It received a disclaimer the previous financial year, which is the worst possible audit outcome.
The SABC’s annual report tabled in parliament on Monday shows that it incurred irregular expenditure of R5.2bn, up from R4.9bn the previous year.
In the annual report, auditorgeneral Kimi Makwetu raised doubt about the broadcaster’s going concern status and noted that it was still not able to generate sufficient cash to meet its financial obligations. Its current liabilities exceed its current assets by R875m, he said.
The SABC ended the 2018/ 2019 financial year with an audited loss of R482m. Losses have decreased over the past number of years from R1bn in 2016/2017, to R744m in 2017/2018. But indications are that it will continue to record losses for the foreseeable future after posting a R192.3m loss in the first quarter of the 2019/ 2020 financial year.
It ended the financial year with a cash balance of R72m. Total revenue was R6.45bn, which was R1bn (14%) below the budget of R7.48bn.
As it stands, the SABC is technically insolvent. Its dwindling revenue means it is unable to service its debt of R2bn.
The dire financial position means that it is struggling to invest in content and to acquire crucial sports rights. It confirmed that it would not broadcast the Rugby World Cup on TV, though it struck a last-minute deal to broadcast four of the Springboks’ games on radio, as well as the two semifinals.
It has asked for a R3.2bn government guarantee to stay afloat and pay off some of its debt, but its bid for funding has so far been unsuccessful, largely due to its failure to meet some of the Treasury’s conditions.
Makwetu said that effective and appropriate steps were not taken to prevent irregular expenditure, as required by the Public Finance Management Act. The full extent of the irregular expenditure could not be quantified. Most of the irregular expenditure disclosed in the financial statements was caused by competitive bidding processes not having been followed.
Disciplinary steps were not taken against the officials who had incurred and/or permitted irregular, fruitless and wasteful expenditure, as required by the act, said Makwetu.
Also, effective and appropriate steps were not taken to collect all TV licence revenue due, as required by the act.
The biggest revenue generator (advertising revenue) decreased from the prior year by R241m (5%) which resulted as the major effect in its profitability. TV licence fees reported for the year amounted to R968m. This represents a “fee evasion rate of 69% (2018: 72%) of the known TV licence holders not paying their licence fees”, the public broadcaster said in the annual report.