Auditor general Junias Kandjeke has expressed great concern about how the Karakul Board of Namibia is running its affairs after the company recorded losses for four consecutive financial years.
In his audit opinion for the financial year ending March 2022, Kandjeke said the board is at risk of sustaining its operations which could force them to tap into its reserves, leading to a depletion of funds.
He said the fund made losses despite incurring fixed contractual agent fee expenses and collected levies. “The board is recommended to ensure that its operations are remodelled in proportion to funds from levies and other operations for sustainability,” said Kandjeke.
He said the audit which was conducted based on accounting policies applicable to ongoing concerns, made use of the board’s financial statements.
“This basis presumes that funds will be available to finance future operations and that the realisation of assets and liabilities contingent obligations and commitments will occur in the ordinary course of business,” said Kandjeke.
He further said the financial results could have been hurt by the ongoing Covid-19 pandemic.
“This ongoing global pandemic and subsequent global and local economic lockdowns are affecting all the major economic and financial markets,” said Kandjeke.
The report further notes that virtually all industries are facing challenges associated with economic conditions resulting from efforts to address them.
As the pandemic ensues globally and locally, all entities are experiencing a cross-functional impact on their business relating to financial reporting operational concerns, and supply chain management.
“The continuation of these circumstances could result in an even broader economic downturn that could have a negative impact on the financial results of the organisation. An estimate of the financial effects of this event cannot be made at this stage,” said Kandjeke. He said the directors are however of the opinion that “as of the signature date of the financial statement, no significant impairment provisions are required to write down the value of assets”.
“The directors are also not aware of any other undisclosed actual or contingent liabilities that existed at the reporting date due to this event,” said the auditor general.
Other notes made by the auditing experts are that there have been no significant changes in interest and price risk management policies and processes since the prior reporting period.