Former administration pre-election report generally compliant with Fiscal Responsibility Act
NASSAU, BAHAMAS — An investigation by accounting firm Deloitte into the Minnis administration’s pre-election report showed the previous government failed to disclose some $821.5 million in liabilities and unfunded obligations of the government.
This number is significantly more than the $108.8 million disclosed in the former administration’s pre-election report.
Prime Minister Philip Davis tabled the Deloitte & Touche report in Parliament yesterday as he presented the 2021/2022 Mid-Year Budget statement in Parliament and insisted that the Minnis administration’s reporting “fell woefully short of the standard required by law”.
He said the government failed its legal and moral duties to be as transparent as practically possible, in order that it might be held accountable for its decisions and actions.
Davis questioned: “Are we to assume that all these invoices and unfunded obligations magically appeared in less than two months after the election?”
He furthered that many vendors have chosen not to co-operate in providing even the most basic information, or continue to stall and attempt to frustrate efforts to determine who received public funds, in what amounts, for what purpose and under what terms.
“This is extremely unwise, and I advise those vendors who are called on to provide any information to their dealings with public funds to cooperate,” he said.
“Failing which, anxious consideration will be given to the options available to compel cooperation.”
Among those unbudgeted obligations include: $255.3 million in debt and interest payments related to the government taking over the legacy debt of BPL; $17.7 million for the Office of the Attorney General to settle outstanding legal claims; $129.5 million in unfunded contract obligations for the Ministry of Public Works; $23.0 million in bills for water purchased by The Water and Sewerage Corporation; and $34.2 million for the Ministry of Tourism including a significant amount of unpaid bills for Bahamasair.
The investigation was conducted to compile the government’s outstanding accounts payable as of September 16th 2021 and review the 2021 pre-election economy and fiscal update dated August 27th, 2021.
The company was engaged to see whether the report was in compliance with the Fiscal Responsibility Act, 2018.
It noted that while the pre-election report was “generally compliant” with the act, there were areas such as revenue and expenditure forecast that were partially compliant and new spending and outstanding stock of arrears that was not in compliance.
It explained that as it relates to the arrears there is a fundamental difference in the interpretation of the act between the former financial leadership with responsibility for reporting and the current one.
Under the Minnis administration, senior leadership was not of the view that the report should include total payables or arrears for State-Owned Enterprises.
“It is our view that pre-election and other periodic reports and updates, to be meaningful, should provide a reasonable assessment of the obligations of the government,” the report read.
“The stock of arrears should be reported, as stated in the FRA “for all government entities” which for us would include the SOEs. It is also our view that any significant unbudgeted obligations should be brought to the governments attention in a timely manner.”
The report also found that the two mid-year reviews produced since the enactment of the legislation and prior to the pre-election report were not in compliance with the FRA.
It noted that Ministry of Finance officials admitted this was an “oversight”. The company noted that the FRA lacks clarity and requires an expansion on definition of terms.
“This deficiency is impacting the effectiveness of the reporting process,” the report said.
It recommended that the government make amendments to the act along with a compilation of a comprehensive guidance document.
It also recommended that the government should give serious consideration on how it can efficiently achieve its goal of implementing an accrual system and adopting International Public Sector Accounting Standards (IPSAS).
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