NetOne Audit Details Financial Chaos and Control L...

NetOne Audit Details Financial Chaos and Control Lapses

NetOne CEO Raphael Mushanawani

ZimNow Reporter

An audit by the Auditor-General has revealed a host of serious issues at NetOne Cellular (Private) Limited, raising concerns about the state-owned mobile network operator's financial health, governance, and control environment.

The 2023 audit report issued a qualified opinion due to non-compliance with international accounting standards and highlighted a going concern issue, as the company reported a massive loss and its liabilities significantly exceeded its assets.

The company recorded a substantial loss of ZWL768.3 billion for the year, and its total liabilities exceeded its total assets by a staggering ZWL922.2 billion at year-end. This precarious financial position led the auditor to conclude that a "material uncertainty exists that may cast significant doubt on the Company's ability to continue as a going concern."

In addition to its financial performance, the company was found to be non-compliant with IFRS 13-"Fair Value Measurement." The report noted that a prior valuation of property and equipment, which was translated from USD to ZWL, did not adhere to the standard, making it impossible for the auditor to determine the extent of the necessary financial adjustments.

The audit revealed several lapses in internal controls and governance. The most pressing issue was the theft of airtime valued at ZWL723.4 million and USD310,500. A significant portion of this theft, specifically ZWL634 million, was attributed to employees, and the stolen airtime has not been fully recovered. This points to a major breakdown in the company's controls over airtime generation, handling, and storage.

Other material issues noted in the report include that NetOne failed to account for ZWL197,011 in output Value Added Tax on employee motoring benefits.

The audit also noted that the company was posting journals without sufficient supporting documents, a practice that increases the risk of fraud and error going undetected.

Ineffective lease management:

Internal controls over lease management were ineffective, with lease liabilities being miscalculated and two leases for base stations being omitted entirely from the company's records.

Vacant key posts:

Several key management positions, including roles in IT Security and Data Analytics, were vacant and being filled in an acting capacity, which could compromise service delivery and decision-making.

The audit also followed up on previous years' findings, noting that while some issues have been addressed, others, such as the renewal of expired leases and the resolution of a legal case concerning a residential property, remain only partially resolved.