BY BEN BILUA
THE Solomon Airlines had been running on a loss in 2016, audit report of the State Owned Enterprise (SOE) reveals.
The report highlights that Solomon Airlines has been operating on loss before tax, meaning that the company expects more losses if taxes are paid.
According to the report, Loss before tax income recorded in 2015 is 33,856,033 and 15,852,501 in 2016 while working capital deficiency (excluding revenue received in advance) was at 76,417,782 in 2015 and 65,574,319 in 2016.
It is stated in the report that the company has been facing lots of issues, and that contributes to the breakdown of its financial status.
The Auditor General Office found matters that nearly choke up the SOE in 2016 are as follows; inventory issues, withholding tax issues, untimely preparation and review of reconciliation, Cash at bank and reconciliations issues, lack of control of outer station travel agents, Revenue and receivables issues, Aircraft, property, plant and equipment issues, Air Traffic Liability, Purchase and payables, Excess annual area risks, Goods and Services Tax (GST) receivable and Information technology setbacks.
“These issues have contributed to the company facing significant losses and faces cash flow difficulties though improvement in the financial performance during the year,” the report stated.
The report said that the company failed to produce realistic budget proposals which prompted uncertainty on the ability of the company to continue operating and generating profit.
It adds, “… and raises questions on whether the use of the going concern assumption is appropriate in the preparation of the financial statements.
“We note that despite the Company being in losses for consecutive years, budgets are optimistically prepared to show profit.
“Management should be realistic in their preparation of the budget and forecast, these are the recommendations made by the Auditor General’s Office.”