Acting Auditor General Deodat Sharma documented a number of uncertainties in the accounts of the National Communications Network (NCN) over 2007 and 2008, resulting in qualified opinions for both years and among these was $733M in fixed assets which could not be validated as a register was not maintained during this period.
NCN has been at the centre of a political storm over the axing of its budget subvention by the opposition in April. The opposition has been displeased with the way NCN is operated. The 2007 and 2008 reports were laid in parliament on Thursday.
In his audit report, contained in the 2008 annual report of NCN, Sharma said that included in the Balance Sheet is the amount of $733.753 million, representing fixed assets. “A fixed asset register was not maintained during the period under review. In addition, it was noted that the NCN Inc. did not implement and maintain a master and sectional inventory during the year of audit. As a result, the completeness, accuracy and validity of the amount of $733.753 million representing fixed assets, could not be satisfactorily determined,” he noted in the audit report.
It was also noted that the sum of $214.879 million is shown in the balance sheet as Accounts Receivable. “However, an approved, documented policy to substantiate the amount of $86.684M shown as inactive debtors was not presented,” the report said, adding that this amount remained unchanged when compared with 2007. As a result, the completeness, accuracy and validity of the amount shown as Accounts Receivable could not be determined.
The report said that despite repeated requests, a policy for the provision and write off of bad and doubtful debts approved by the Board of Directors was not presented for audit verification.
“However, it was noted that a provision of 40.34% of total debtors was made in 2008, compared with 37.47% in 2007. In addition, a total of 862 debtors accounts reflected credit balances totalling $23.896 million as at 31 December 2008,” the report said.
It noted that a sum of $42 million is stated in the income statement as depreciation charges for the year. “However, it was noted that the Company charged a fixed amount and failed to [correspond with] the rates stated in note 5(b) of the financial statements. As a result, the amount stated as depreciation is understated and the amounts stated as fixed assets and net profit are overstated,” said the report.
With regard to the 2007 accounts, the Auditor General said that for 2007 loans and advances are stated in the financial statements at a net amount of G$630.369M after provision was made for bad and doubtful debts.
“The provision of G$7.015 billion remained substantially unchanged from year to year. Management has indicated that they have commenced an exercise to reassess the fair value of the securities which comprise principally of real estate. They are also carrying out an exercise to establish the existence of securities. On completion of the foregoing, adjustments are likely to be made to the provision for bad and doubtful debts. In view of the above I am uncertain as to the provision for bad and doubtful debts of G$7.015B and the amount for loans and advances of G$630.369M,” the Auditor General reported.
The report noted that in 2007, the Guyana National Co-operative Bank (GNCB) transferred to receivables from GNCB Property Holdings Inc. an amount of G$525.692 million, representing the net book value of properties vested in GNCB Property Holdings Inc. “The Guyana National Co-operative Bank did not account for this transaction when the vesting took place. As a result of the vesting, adjustment should have been made on the ‘revaluation reserve’ and the consideration for the properties vested should have been accounted for. I am therefore unable to express an opinion to the revaluation reserve of G$886.226 million and the amount of G$525.692 million stated as receivables from GNCB Property Holdings Inc,” it said.
The report said that no provision was made for corporation tax and property tax for the year 2007 and as a result, the completeness, accuracy and validity of the amount of G$36.101M stated in the balance sheet as taxes payable and, the amount of G$37.037 million stated as profit for the year then ended could not be determined,” the report said.
