NASSAU, BAHAMAS- The Fiscal Responsibility Council (FRC) stays that that implementation of accrual basis accounting should be treated as an “urgent priority,” by the government as it highlighted outstanding Government obligations and limitations in cash-based reporting.
“These circumstances underscore the significance of how cash basis accounting – the current accounting method employed by the Government, differs from accrual basis accounting… The FRC is of the view that implementation of accrual basis accounting which aligns with the established general principles of responsible fiscal management should be an urgent priority,” the FRC said in its report on the mid-year budget.
The FRC noted that while mid-year spending based on actual-to-planned expenditure ratios suggested spending broadly aligned with planned levels, “unpaid invoices represent goods and services and capital expenses undertaken by the Government over the July to December 2025 period, but not yet honoured.”
The report stated that based on unpaid invoice totals provided in the Mid-Year Review, the Government owed vendors and suppliers $21 million in recurrent expenses and $59.9 million in capital expenses.
It further noted that taking actual payments and due bill payments into account, recurrent expenditure totalled $1,679.3 million or 48.7 percent of the budgeted allocation, while capital expenditure including unpaid invoices amounted to $251.6 million or 67.4 percent.
The FRC also reported arrears of $60.5 million carried over from the previous fiscal year, noting that outstanding balances suggested unbudgetted expenditure for the current fiscal year and implications for the fiscal balance.
The report added that cash basis accounting does not recognise expenditures until they are paid, whereas accrual basis accounting recognises expenditures when they are incurred, providing a more comprehensive view of Government financial position.
The FRC also noted that unclassified current transfers to non-financial public corporations amounted to $281.7 million, reflecting an 11.4 percent increase over the FY2024/25 budgetary commitment.
The FRC consists of five members, appointed by the Governor General on the advice of the Minister of Finance. The current membership of the FRC, whose appointments took effect on 15th October, 2024, consists of Christel Sands-Feaste, Chairman, Dr. Gezel Farrington, Member, Stefan Knowles, Rupert Pinder and Pedro Rolle.
