Necsa ignores reporting rules

EMBARRASSING: 2 DISCLAIMERS FROM AG

The South African Nuclear Energy Corporation (Necsa) only published its 31 March 2018 annual report in February last year.

The 2018 annual report wasn’t of much value. The auditor-general (AG) was not able to obtain sufficient audit evidence to verify anything, and was thus obliged to issue a disclaimer of opinion.

This year, Necsa has slid even further. It hasn’t even produced its annual report. The AG’s report for the year ended 31 March 2019, has, however, been made publicly available, and it does not bode well for Necsa. The AG has again issued a disclaimer of audit opinion for lack of evidence.

There is a question mark as to whether Necsa still has going concern status, as the AG was not able to obtain sufficient evidence to verify the “reasonableness of cash flows”.

The AG was not provided with written evidence from the board of directors that the accounts were prepared in accordance with IFRS (International Financial Reporting Standards) and that the AG had been given relevant information and access.

Necsa did not have adequate systems of internal control.

The AG could not find sufficient evidence to verify the decommissioning and decontamination stage 1 liability for 2019 of R3.6 billion due to the “numerous limitations placed on the expert in performing the calculations”.

The status of the accounting records were such that the AG could not verify revenue, the cost of sales at fluorochemicals producer Pelchem (Necsa’s wholly-owned subsidiary), other operating expenses, other financial assets, deferred income, the decommissioning and decontamination stage 2 liability and asset, trade and other payables at Pelchem, other income, trade and other receivables, investment income, inventories or finance costs.

What an embarrassment.