Saturday, July 04, 2009

Chifungula finds ZNBC’s response to audit report not satisfactory

Chifungula finds ZNBC’s response to audit report not satisfactory
Written by George Chellah
Saturday, July 04, 2009 3:00:38 PM

AUDITOR General Anna Chifungula yesterday said some of the responses given by Zambia National Broadcasting Corporation (ZNBC) management to her office's audit report on the corporation are not satisfactory.

In an interview, Chifungula confirmed that her office had concluded the audit on ZNBC and that she was surprised that the audit report was published in The Post. She said her office had examined ZNBC management's response to the audit and some of the responses were not satisfactory.

"They sent to us responses which we have looked at and some of them we are not satisfied. Even their responses to me were a bit out of character, some of the language was very crude. Actually, even their clients some of them are writing really insulting letters to us after what you people published," Chifungula said. "It's just that I can't remember that client. We had one uncouth letter from one of them. They [ZNBC management] are entitled to their own responses and I am also complaining that I didn't like the tone of some of their responses."

The Auditor General's interim audit report on ZNBC revealed several financial irregularities, which include loses incurred amounting to K6 billion, tax evasion on retirement and gratuity and hefty board allowances among others.

According to the interim audit report obtained by The Post, in an internal minute dated November 12, 2008 the minister of information and broadcasting services approved the new sitting and quarterly allowances for the board.

"It was however observed that the quarterly and sitting allowances had been backdated to July 1, 2008. In this regard, the board members received arrears in the sum of K104,200,000.00," the report stated. "It was also observed that the board and its subcommittees met 44 times between March 2008 and March 2009. In this regard, a total of K384, 300,000.00 was spent on board allowances during the period in question."

But ZNBC management's response to the above irregularity was that the application for review of the board's quarterly and sitting allowances was made on July 30, 2007.

"In that letter, the board chairman was seeking the minister's approval for an upwards review of sitting allowances so as to approximate the level obtaining in other public media at the time," management stated. "The minister's approval was silent on whether or not the adjustments were effective from the date of the letter of the request. After debating the matter in the board meeting of November 17, 2008, the board was of the firm view that the adjustments were applicable from the date that the approval was sought from the minister."

On board allowances, management responded: "The correct position is that the 44 board meetings were held over a period of two years, i.e. from March 2007 to March 2009."

Barclays Bank head of government relations Augustine Seyuba chairs the ZNBC board. The other board members are information permanent secretary Emmanuel Nyirenda, Sr Rose Nyondo, Elias Mpondela, Joseph Chileshe, David Chimpinde and Bertha Lishomwa.

The report further showed that the corporation operated without a strategic plan up to the year ending 2008 and that a strategic plan covering the period 2009 to 2014 had however been put in place at a cost of K54, 045,312.

But in response ZNBC explained that, just like government, management was using its corporate budgets, which are prepared annually to run the corporation.

The report revealed that the corporation incurred losses of K1, 821,145,000 in 2006 and K5, 072,962,000 in 2007 and that interim results for 2008 showed that the situation was not likely to change.

"The losses are mainly attributed to staff costs which represented between 70 per cent and 80 per cent of turnover as opposed to the industry norm of 30 to 40 per cent," it stated.

In response, management agreed with the auditors that most of the financial resources were being spent on staff costs.

The report indicated that a review of the March 2009 payroll revealed that 43 per cent of the total payroll related to 74 management staff while 57 per cent related to 343 unionised staff.

Management's response was that: "whereas the auditors concentrated on the payroll issues, staff costs constitutes all costs including those paid outside payroll."

The audit report stated that the corporation's current assets were insufficient to cover the current liabilities.

And Chifungula said the forensic audit at the Ministry of Health headquarters had been concluded.

"We are now going to follow up these grants to find out if they reached at all," she said.

She said her office submitted the findings to the investigating wings yesterday.

"Since they commissioned it and we are doing it on their behalf. This is a forensic audit. It's for a specific purpose to help the investigators. And we attached the evidence," said Chifungula.

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