The South Africa Auditor-General Tsakani Maluleke has cautioned that the South African Broadcasting Corporation (SABC) may have negative operating cash flows until the next financial year and may have insufficient funds to cover operational expenses, including salaries.
In a 15-page briefing note to the National Assembly’s standing committee on public accounts, the A-G claims to have uncovered several concerning challenges, including the public broadcaster’s continued operating losses, which are expected to continue for the next three years.
“Negative operating cash flows are expected until at least the 2022 fiscal year. Concerns that insufficient cash would be available to fund the minimal forecasted operational expenses, including salary costs, arose as a result of the expected decreases in operating cash flows,” according to the note.
The detected indicators of concern, according to the note, raised the question of whether the SABC’s management made proper disclosure in its financial statements.
The SABC’s net loss for the 2020/21 financial year was $35.1 million, up from $33.9 million in 2019/20, according to the A-G, while net cash outflows from operations were US$45.8 million in 2020/21, down from nearly US$79.6 million in 2019/20.
According to the Auditor-General, these occurrences or conditions, combined with others, suggest a material uncertainty that may cast significant doubt on the public broadcaster’s capacity to continue as a going concern.
The above mentioned has been attributed to decreased revenues and a high-cost base, despite expense reductions due to the SABC operating in a competitive environment.
The A-G has advised that the SABC’s turnaround plan be implemented effectively, focusing on revenue generation initiatives and the continuation of long-term cost-cutting measures.
The briefing note reads, “Management must demonstrate value for money and initiatives to attract advertising from suppliers through increased viewer and listenership.”