NAWEC Board Of Directors

By Awa B. Bah

DT Associates, an independent audit firm, appeared before the National Assembly Select Committee on Public Enterprises to present NAWEC’s financial report 2015.

It is indicated in their summary, that they have audited the financial statements of NAWEC as at 31ST December 2015 clearly indicating the status of the financial positions, statement of profit and loss and statement of cash flows, with significant accounting policies, financial summary and other explanatory information.

Emphasizing on their audit report, the auditors said the financial statements indicate that NAWEC has incurred cumulative losses in the year 2015, of D5.8 Billion; that Company’s liabilities exceeded its assets by net D3.6 billion, resulting in deficit in shareholders’ equity, of D4.1 billion; that the Company defaulted in settling the existing bond of D1.9 billion, resulting in the restructuring of the agreement in 2016. This according to the auditors, undermines the Company’s ability to continue as liquidity constraints increased. According to the auditors, these financial statements do not include adjustments that arise from the uncertainty of the Company’s ability to continue as a viable entity; that the audit report shows that the inventory started with a carrying value of D304 million as at 31st December 2015 and noted a difference of D10 million between the stock valuation report and the general ledger balance. This difference the auditors noted, was not recorded, reconciled or corrected by the Company’s management. The auditors said D6.9 million was charged as provision on slow moving goods but that the basis of provision was not provided or supported with a list of the identified slow moving stocks. According to the auditors, a test conducted during the audit period, noted some stock items were wrongly priced resulting in an overstatement of the stock value by D19 million; that net receivable balance said was D909 million in 2015, with a difference of D 54 million between the receivable listing from the billing system and the amount recorded in the financial statement; that provision for bad and doubtful debt, was charged at a flat rate of 15% on current receivables, amounting to D 63 million. This they said was not in line with the current provision policy of NAWEC and was not supported with a debtor’s age listing; that they were not provided with sufficient information and justifications to enable them determine the valuation and completeness of receivables, recorded in the financial statement.

On payables, the auditors said their report indicated a payable balance of D636 million on the financial statement from the audit, noting that the total payable listing was greater than the recorded general leger balance by D13 million. This difference they said, was not reconciled for correction by NAWEC management; that the listing also included a total debit balance of D26 million which could not be explained by the management and they could not carry further tests on payables as they were not provided with the supplier’s statement, for a selected samples of D607 million. According to them, it shows a total difference of D31.8 million between the records of the Company and the accounts confirmed by the suppliers. This difference they said was not reconciled or explained by the Company’s management and that other audit procedures could not be performed to ascertain the existence and completeness of the recorded payable balance.

For cash and Bank, the auditors said a balance of D95 million and overdrawn bank balance of D120 million, reflected in the financial report; that from the audit test of cash and bank balance, reconciliation shows an amount of D890 million that was not cleared up to the time of the financial report; that a total difference of D173 million between the adjusted bank balance and the general ledger balance, were not reconciled. It was reported that the auditors were unable to establish the completeness and valuation of the cash balance, with a significant reconciling difference. They also reported that they could not determine the possible adjustments that might have been necessary in 2015.

The auditors noted that NAWEC’s management failed to show evidence resulting in the completeness of the existing balance of loans, because there were no other procedures to ascertain them.

It could be revealed that the government of the Gambia exempted NAWEC from the payment of yearly tax to GRA through the public enterprise and the utilities holding corporation act. In the financial report, it shows D178 million was recomputed in the VAT payable but a difference of D73 million was noted between the amounts recorded in the general ledger which balanced is higher in the auditors’ computation. The auditors reported that they were not convinced with the NAWEC Management’s explanation that it was related to system error. The auditors also reported that they were unable to ascertain the accuracy of the VAT reported in the financial statement.

Reporting on the exchange loss/gain, a difference of D184 million was noted between the stock and valuation report on the amounts recorded in the general ledger, with adjustment by management. An additional difference of D8 million was noted between the ING Euro in the general ledger and bank statement balance. It was also reported that the auditors were unable to obtain sufficient information and justification for the journals provided, to determine the appropriateness of these adjustments. They reported that D975 million was meant to settle Euro financing, Euro Africa and Global Trading Group but the basis according to the auditors, cannot be determined. The said that other audit procedures used could not be performed to ascertain the occurrence of this account balance.

Commenting on the financial report, auditors concluded that due to the significance of the matters discussed, shows that the financial statement did not give a true and fair view of the financial position of NAWEC in the year 2015; that NAWEC has kept books of accounts that are not in agreement with the financial and income statement position, that is generally accepted in accounting principles and the Companies Act of 2013.

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