Auditor-General Tsakani Maluleke’s office has warned that the SABC could experience negative operating cash flows until at least the next financial year.
JOHANNESBURG – Auditor-General Tsakani Maluleke’s office has warned that the SABC could experience negative operating cash flows until at least the next financial year and may have insufficient funds to cover its operational expenses, including salaries.
In a 15-page briefing note presented to the National Assembly’s standing committee on public accounts, the A-G states that it identified various indicators of concerning challenges, including continuing operating losses which are forecast over the next three years at the public broadcaster.
”Negative operating cash flows are forecast until at least the 2022 financial year. The forecasted decreases in operating cash flows resulted in concerns that insufficient cash may be available to adequately cover the minimum forecasted operating expenses, including the salary costs,” the noted added.
The note also said the identified indicators of concern raised the issue as to whether the SABC management made adequate disclosure in its financial statements.
The A-G also indicated that the SABC incurred a net loss of R530 million in the 2020/21 financial year, which was up from R511m in 2019/20, while net cash outflows from operations were R690m in 2020/21, down from over R1.2 billion in 2019/20.
According to the Auditor-General, these events or conditions, along with other matters, show that a material uncertainty exists that may cast significant doubt on the public broadcaster’s ability to continue as a going concern.
This has been blamed on declining revenues and a high cost base, despite reductions in costs as the SABC also operates in a competitive environment.
Communication Workers’ Union (CWU) president Clyde Mervin told Independent Media that its national office bearers would meet on issues relating to the SABC and release a statement afterwards.
Mervin also expressed the CWU’s concerns that each time there were challenges at the SABC, the solution to problems was always retrenchment.
The A-G has recommended effective implementation of the SABC’s turn-around plan, with specific focus on revenue generation initiatives and continuation of sustainable cost-reduction measures.
”Management needs to demonstrate value for money and initiatives to attract advertising from suppliers through increased viewer and listenership,” reads the briefing note.
The A-G has also flagged the R185m tender for the provision of security services awarded to Mafoko Security Patrols in August 2017. This, when the company didn’t score the highest preference points in contravention of the Preferential Procurement Policy Framework Act and without objective criteria to justify the decision.
This non-compliance is likely to result in a material financial loss as the price of the security service procured from the successful bidder was higher than the price submitted by the bidder that scored the highest preferential points.
”As at 31 March 2021, R113m has been paid on the contract. The public entity (SABC) will not be able to recover the likely financial loss from the supplier as the supplier is delivering the service in line with the signed contract,” the note added.
The matter is now with the Special Investigating Unit (SIU), which is seeking an order setting aside the award of the tender to Mafoko Security Patrols and to have the tender process be started afresh.
The SABC is not opposing the SIU’s review application and has undertaken that follow-up steps for consequence management will be instituted once the court case has been finalised.
SABC spokesperson Gugu Ntuli said: “As it has been able to do over the last two years, the SABC can confirm that it continues to meet all its obligations as and when due, and that it has relevant cash management processes in place to ensure that it continues to do so”.
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