NBC in red- Books in shambles

The Namibian Broadcasting Corporation this week during a second public hearing on its finances, revealed and admitted the improper handling of revenue generated from advertising, which was not approved or authorized.
The national broadcaster’s, Director General, Stanley Simata, answering to a parliamentary committee on public accounts admitted that during his appointment, the national broadcaster was in disorder and in transition while merging accounts for services rendered.
The consolidation of the billing systems was part of a financial clean-up that the auditors found increased the difference between the March 2012 and March 2013 budget to over one million dollars. No supporting documentation other than the journal entries were presented during the audit.
The “accounting clean-up” for the monthly reconciliation of the broadcaster’s bank accounts was not done. This the Office of the Auditor General found was due to long-outstanding reconciling entries which were not cleared or resolved at year end.
The Auditor General’s report states that the “ non-performance of bank reconciliations on a monthly basis represents the non-adherence to a vital control procedure with regard to proper overall financial control.”
At the center of debate was the barter transactions between the NBC and an advertiser that provided content for broadcasting in exchange for aired advertising. Simata said that the NBC TV service was at a point where they could not afford to buy programmes to broadcast.
“The only practical solution for this shortage of content was to enter into an agreement with the advertiser that was also a content provider” Simata said.
Supporting documents for the advertising transactions amounting to close to N$2,5 million, could not be furnished. A further amount of N$2 million could not be paper-trailed for paid TV advertising. Radio advertising client contracts were also found to be missing for transactions totaling over N$1.2 million. Documents for radio advertising billing to the amount of N$428,350 could also not be provided. The Office of the Auditor General, during an audit on the NBC’s books by PKF Namibia, part of a global network of independent auditing firms, found the broadcaster could not account for N$7,836,600 of credit notes that were approved by management.
According to the Auditor Generals report, from the majority of the sampled credit notes tested, no authorization documentation or copies of the invoices relating to the credit notes could be provided. “It was evident that no management authorization is in place for credit notes,” the report read.
The Auditor General found that income received does not form part of the two merged billing systems which lead to no debtors being created. “No controls are in place regarding TV license books and the reconciliation of issues and returns of such books.” The manually-controlled book for pro forma invoices is missing. Creditor reconciliations were not performed for this reason. A balance of N$6,520,228 could not be verified as no creditor statements as of March 2013 were available.
Adding to the lack of bookkeeping, the creditor’s balance as per the accounting records compared to the creditor’s statements for Huawei Technologies Ltd, found an unaccounted amount of N$24 million. “No creditors reconciliation was performed on the foreign creditor amount of Huawei Technologies Ltd. The balance as per the creditors agreeing indicated a debit balance amounting to $651,377.”
The appointed auditing firm, PKF Namibia, recommended that the NBC Board ensures that a complete register of all barter agreements entered into is to be maintained and updated on a regular basis, advising the “creation of a database where all barter agreements entered into are logged, signed copies are maintained in electronic format and a summary of the applicable accounting entries that result from the specific barter agreements, are logged. It was further recommended that the NBC Board should review and approve the barter agreement transactions to be accounted for in the general ledger prior to logging these in the proposed database.