Auditor General reveals mess at Air Botswana
Isaac Pinielo | Friday February 13, 2015 15:48
The report says the airline had not complied with all the financial provisions of the Air Botswana Act, which requires its revenues to be sufficient enough to produce a reasonable rate of return.
Air Botswana’s financial performance for the financial year ended March 31, 2014 has deteriorated year-on-year as it recorded a loss of P99.99 million, compared to P75.84 million in the previous year, and P47.12 million the year before.
The airline’s revenue, including a government grant of P63.36 million, was P406.21 million, compared to P389.05 million in the previous year.
Total expenditure was P506.21 million for the year under review compared to P464.89 million in the previous year. The working capital position for the airline as at March 31, 2014 showed current assets of P79.95 million and current liabilities of P206.78 million that resulted in a net current liabilities position of P126.84 million. Further to the company’s woes, the Auditor General, Pulane Letebele revealed that an employee was overpaid gratuity by P23, 592 due to incorrect calculations.
The report noted that although Air Botswana management affirmed this mistake, they had not indicated what course of action they proposed to take for the recovery of the overpayment.
It was also noted that an amount of P513, 000 had been recorded as a prepayment even though the items ordered were received before the year-end.
The auditors also noted that P2.5 million was erroneously posted to the year under review when the transaction occurred after year-end.
Other issues that were of concern to the auditors were inconsistencies in computation of write-back of unutilised tickets and their related taxes at year-end.
Management had written back the taxes based on the average number of months taken to utilise the ticket without being supported by a detailed list.
The auditors observed that the airline had recorded a cost of P3.8 million relating to an engine sent for overhaul during the year, but the repair/overhaul was only done and engine retuned after year-end, which was contrary to international accounting standard No 37 since a liability for the service provided arose after year-end. There were also concerns that overhaul records for property, plant and equipment were not maintained in detail to show costs, accumulated depreciation and utilisation of engines or aircrafts. It was revealed that in the year under review, an ATR 72-500 aircraft was sold for which management did not write-off the unutilised overhaul costs of P1.5 million. No detailed records of unutilised overhaul costs were maintained, according to Letebele.Moreover, the auditors noted that Air Botswana’s payroll system did not accurately record leave as it recorded leave based on the date when applied for, rather than when taken. “This process would cause the leave records to be inaccurate and the leave liability provision may be misstated,” said the Auditor General. He however indicated that the management has resolved to consult system vendors to solve the anomaly.