Independent Communications Authority of SA (Icasa) CEO Themba Dlamini has moved to explain the decision by the auditor-general once again to submit a qualified audit of the telecommunications and broadcasting regulator’s annual financial statements. The authority has asked for “condonation” from government in an effort to stop it from receiving a qualified audit in future years.
Icasa again attracted a qualified opinion in the 2011/2012 financial year because the auditor-general was “unable to obtain sufficient, appropriate audit evidence” to show that R793m the authority says it received from licensing and administrative fees was correct. It also couldn’t confirm the accuracy of an amount of R801m owing to national treasury as disclosed in the Icasa annual report.
“Due to the lack of controls over the invoicing and collection of licence fee revenue, the entity’s records did not permit the application of alternative audit procedures and, consequently, I was unable to determine whether any adjustments to the national revenue fund receivable and resulting payable figures were necessary,” the auditor-general says in its report.
The authority has asked for “condonation”, which would “lessen the severity” of the finding, Dlamini says.
He says the qualified audit relates to Icasa’s problematic spectrum management system. He says an interface issue between regulatory agency’s “JDE system”, which generates financial reports, and “Spektrum”, which manages details about licences, led to the problems.
“The challenge has been, if you go back two or three years, you don’t know what you’re looking at in terms of data because you don’t know if it’s garbage or not,” he tells TechCentral. “When Spektrum was introduced, it was based on an old mainframe system and since then it has never been upgraded to the extent that it is compatible with systems like JDE.”
This means there is not reliable information to conduct an audit, hence the auditor-general’s qualified report. “We have proposed to the minister to condone the prior years so that when we get audited, we get audited for the current financial year. The moment you keep going back, you have a permanent qualification,” Dlamini says.
In addition, Icasa has had to revisit regulations around general licence fees, which were based on the gross profit reported by the companies it regulates. This, Dlamini says, resulted in some companies supplying incorrect information, which affected Icasa’s audit opinion. “We have reviewed that regulation to move away from gross profit to a turnover approach,” he says. “It has been endorsed by our audit risk committee and by the council.”
Dlamini says an Icasa finance turnaround plan was established to look at the auditor-general’s findings and this plan is “zooming into every activity that is affecting that finding. The [Icasa] council gets a weekly update on the finance turnaround plan [and] we have agreed that we will have a broader [and] cleaner administration approach.” — (c) 2012 NewsCentral Media