NCN’s current assets overshadowed by $96M in liabilities

Audited financial statements show

– entity’s future dependent on financial support from Govt

The National Communications Network (NCN) financial reports for the year 2015 have raised questions about the state of the entity’s finances, showing that as of the end of the year the company had excessive liabilities.

The company’s total assets for that year were $1.369 billion, including current assets of $90.931 million and non-current assets of $1.278 billion. This is a decline from the previous year’s figure. According to the report, the company’s current liabilities exceeded its assets by some $96.6 million.
Current assets are considered to be cash and cash equivalents, inventories and amounts it would have billed its customers. Non-current assets, on the other hand, include NCN’s property and equipment.
In the report, Auditor General Deodat Sharma noted that title deeds for property with a net book value of $474.5 million were unavailable. In addition, it was found that a fixed asset register was not maintained by the company.
“Further, the company only recognised annual depreciation charge on additions to fixed assets during the year,” he had stated. “I was, therefore, uncertain of the ownership, existence and valuation of non-current assets stated at $1.8 billion and depreciation charge of $881.1 million in the financial statement.”
Nizam Ali and Company Chartered Accountants, who also audited the financial statements, had noted the existence of 24 financial statements explaining the company’s current liabilities exceeding its assets by $96.6 million.
When the coalition Government had launched a forensic audit into NCN back in 2015, the financial state of the company was one of the things examined. It had found, among other things, that NCN did not maintain a fixed asset register since 2015.
Auditors had reported that the company made attempts to outsource oversight of the fixed asset register, with little success. Because of the amount of accounting work, company officials had advised that they would be unable to undertake the management of the fixed asset register.

Recommendations
The report of the forensic auditors had contained a number of recommendations for NCN to improve its operations. These recommendations had included having systems implemented to ensure that all statutory audits are completed on a timely basis.
It was also recommended that the company carry out a complete verification of all non-current assets, which should form the basis for the preparation of an up-to-date fixed asset register; establish a definitive credit policy, which should be documented and approved by the Board of Directors; and establish a debt collection committee with specific responsibility to collect all outstanding debts within six months.