News / National
NetOne's going concern status at risk
17 Jul 2024 at 06:51hrs | Views
NetOne Private Limited, a telecommunications company in Zimbabwe, has been identified as technically insolvent and at risk of being unable to sustain its operations, according to a recent report. Released by acting Auditor-General Rheah Kujinga, the report revealed that as of 2022, NetOne's liabilities exceeded its assets by ZWL$32 billion.
Kujinga highlighted, "The company's total liabilities surpassed its total assets by ZWL$32 billion, with current liabilities exceeding current assets by ZWL$20.9 billion (compared to ZWL$20.5 billion in 2021)." She emphasized that these conditions indicate significant uncertainty about NetOne's ability to continue operating as a going concern.
In addition to financial challenges, NetOne experienced a decline in active subscribers, recording a 5.52% decrease in the first quarter of 2024, down to 4,017,167 subscribers. The company's market share also contracted by 6.66 percentage points, falling to 11.84% in the same period.
The firm reported a staggering loss of ZWL$40 billion for the fiscal year ending December 31, 2022, exacerbating its financial woes from a ZWL$31 billion loss in the previous year. Kujinga attributed part of NetOne's difficulties to ineffective debt management practices, noting discrepancies in the handling of post-paid customer accounts with outstanding balances.
Furthermore, the auditor flagged issues with forex conversions used in financial reporting, impacting the accuracy and comparability of NetOne's financial statements between 2021 and 2022. Despite these challenges, Kujinga clarified that the effects of non-compliance with International Accounting Standards were considered significant but not pervasive to the financial statements.
In response to the audit findings, NetOne committed to addressing unaccounted cash deposits and upgrading its software systems to enhance performance monitoring and data management capabilities. These efforts aim to mitigate financial vulnerabilities and ensure compliance with regulatory standards moving forward.
Kujinga highlighted, "The company's total liabilities surpassed its total assets by ZWL$32 billion, with current liabilities exceeding current assets by ZWL$20.9 billion (compared to ZWL$20.5 billion in 2021)." She emphasized that these conditions indicate significant uncertainty about NetOne's ability to continue operating as a going concern.
In addition to financial challenges, NetOne experienced a decline in active subscribers, recording a 5.52% decrease in the first quarter of 2024, down to 4,017,167 subscribers. The company's market share also contracted by 6.66 percentage points, falling to 11.84% in the same period.
The firm reported a staggering loss of ZWL$40 billion for the fiscal year ending December 31, 2022, exacerbating its financial woes from a ZWL$31 billion loss in the previous year. Kujinga attributed part of NetOne's difficulties to ineffective debt management practices, noting discrepancies in the handling of post-paid customer accounts with outstanding balances.
Furthermore, the auditor flagged issues with forex conversions used in financial reporting, impacting the accuracy and comparability of NetOne's financial statements between 2021 and 2022. Despite these challenges, Kujinga clarified that the effects of non-compliance with International Accounting Standards were considered significant but not pervasive to the financial statements.
In response to the audit findings, NetOne committed to addressing unaccounted cash deposits and upgrading its software systems to enhance performance monitoring and data management capabilities. These efforts aim to mitigate financial vulnerabilities and ensure compliance with regulatory standards moving forward.
Source - newsday
