New Era technically insolvent

THE New Era Publication Corporation was criticised for the lack of accounting for unexplained adjustments and bad debts written off, while being dubbed technically insolvent.

The corporation’s management was yesterday hauled before the parliamentary standing committee on public accounts to explain their financial statements.

According to the auditor general’s report for the 2016/17 financial year, the corporation’s financial statements do not fairly present the financial position of the New Era Publication Corporation (NEPC) as at 31 March 2017, and its financial performance and cash flow for the year so ended.

Committee chairperson Mike Kavekotora wanted an explanation to the N$13,8 million unexplained adjustments, N$10,2 million bad debts which were written off without approval, and overstated amounts. He furthermore questioned why they were outsourcing to private firms to do their financial books while having a finance department.

New Era’s acting chief executive officer, Benjamin Jakobs, said the adjustments were necessary to correct the 2017 financial year’s equity and other balances due to errors and omissions on the financial statements.

Jakobs noted that there was documentary proof of the adjustments made, which could be verified with their internal or external auditors.

However, committee members Nico Smit, Dudu Murorua and Salmon Fleermuys were not satisfied with their reasoning that the unexplained adjustments were simply “omissions”.

Smit said it is because of these errors and omissions that the country is in this economic crisis, adding that this was not the first time that the corporation has had to explain the mismanagement of funds, and the same response is given each time.

“Don’t you think it is high time that people like you who have been appointed in this position as CEOs should be held personally liable for mismanaging a company?” he asked.

Murorua also questioned whether the N$14 million adjustment was done because of human error, or fraudulently.

“Do you want us to believe that the amount of N$14 million can be explained by saying that these were just errors and omissions? We know that is the easiest way of explaining something like that, but how do you want us to believe that these were genuine errors and omissions, and there were no fraudulent activities or transactions?” he queried.

Responding to the issue of bad debts which were written off, Jakobs said it was a grammatical error in their letter to the auditors.

“It was in fact not written off, but it was just provided for. Our books currently reflect that no bad debts were written off,” he stated, adding that they are making provision to pay their debts.

He explained that the N$10,2 million was a bad debt expense on the income statement, while another figure of N$10,9 million being querried is provision for doubtful debts, which is money the corporation is unlikely to collect from its clients. Jakobs said the corporation is not battling with competency issues, but the attitudes of staff members.

“The competency is not the best, but we have the required one. The challenge is the attitude,” he said, adding that they are dealing with bad attitudes through corrective action such as verbal and written warnings as well as disciplinary hearings.

During the hearing, chief financial officer Beatus Amadhila’s ability was also questioned since the corporation was outsourcing their financial work to firms such as E&Y and Hamilton Accounting Firm. The corporation’s revenue for 2017 was N$29 million, garnered from newspaper sales and advertising, which was a decrease from the N$35 million they made in 2016.

The NEPC used to receive an average N$20 million from the government every year. However, it was trimmed down to N$15 million this financial year.