Title deeds for property belonging to the National Communications Network (NCN) with a net book value of $487.3 million were not available for the audit of the company’s 2016 financial statements and a fixed asset register was not maintained, according to NCN’s 2016 annual report.
As a result, Auditor General Deodat Sharma reported that chartered accountants Nizam Ali and Company, who audited the financial statements of NCN as at December 31st, 2016, issued a qualified opinion.
Apart from the unavailability of the title deeds and the failure to maintain the fixed register, the report noted that the company “only recognised annual depreciation charge on additions to fixed assets during the year.”
As a result, both Sharma and Nizam Ali and Company said they were “therefore uncertain of the ownership, existence and valuation of non-current assets stated at $1,893,221,569 and depreciation charge of $16,651,215 in the financial statement.”
According to the report, land was valued at $84.008 million; buildings, $425.6 million; furniture and fixtures, $73 million; equipment, $1.2 billion; motor vehicles, $83.8 million; work in progress, $2.7 million, all accounting for over $1.893 billion.
The auditors also drew attention “to note 24 of these financial statements which explains that the company’s current liabilities exceed its assets by $107,844,249.” As a result, they said further operation of the company is dependent on the ongoing financial support of its principal owner, that is, the State.
The NCN report for 2016 would be its first full year under the APNU+AFC government.
Noting that the company’s financial statements were prepared using the “going concern” basis of accounting, they said, except as described in note 24, the management “has not identified a material uncertainty that may cast significant doubt on the entity’s ability to continue as a going concern, and accordingly none is disclosed in the financial statements.
Based on the audit of the financial statements, they said, they have not identified “such a material uncertainty but they could not guarantee the company’s ability “to continue as a going concern.”
In “Other Information,” which management is responsible for, the report said it comprised all the information included in the company’s 2016 annual report but does not include the financial statements and auditor’s report thereon. In their opinion, they said, their opinions on the financial statements do not cover the other information and they do not express any form of assurance thereon.
Management was responsible, they said, for preparing the financial statements in accordance with International Financial Reporting Standards (IFRS) and for such internal control as management determines is necessary to enable the preparation of financial statements that are free from material misstatement, whether due to fraud or error.
Except for their “Basis for Qualified Opinion,” they said in the report that all material respects of the financial position of NCN at the end of December 2016, and its financial performance and its cash flows “give a true and fair view” according to IFRS.
Meanwhile, the report noted that NCN’s operating revenue in 2016 was $384.6 million compared with $421.8 million in 2015, a decrease of $37.1 million or about 8.809 per cent. The operating revenue for 2014 was $432.083 million, a decrease of $10.2 million or about 2.376 per cent.
In 2016, the gross profit was $308.8 million and net profit after taxation was $22.9 million, while earning per share was 10 cents. No dividends were proposed.