Published On: Fri, Apr 1st, 2022

Audit Chamber gives negative opinion about 2019 financial statements

PHILIPSBURG — The General Audit Chamber confirms in its compliance audit of St. Maarten’s financial statement for the year 2019 what has been a headache ever since the territory obtained autonomy within the kingdom – and probably longer: the country’s financial management is a mess and the only perspective for improvement is the execution of the country package.

Here are some hard figures: on the balance sheet (totaling a bit over 1.6 billion guilders, or close to $894 million) there is uncertainty about 522 million ($291.6 million or 32 percent) of the total. There is also uncertainty about 56 million ($31.2 million), or 14 percent, of the 473 million ($264.3 million) in expenditures for the year 2019. In other words: the Audit Chamber could not establish whether those 56 million guilders were spent according to the law.

The report notes that financial statements are “supposed to show the net financial results for a specific year.” To get an accurate picture, the statements must obviously be complete, accurate and auditable. That is not St. Maarten’s reality: “Over the past ten years, this information has been deficient, resulting in a disclaimer of opinion,” the audit report states.

The chamber concludes that the financial statements for 2019 “contain irregularities and deficiencies” and that they “do not represent a true and fair representation of the financial position as of December 31, 2019, and the income and expenses for 2019.”

Finance Minister Ardwell Irion did not use the opportunity to react to the contents of the audit report. In the preface of the financial statements however, he notes that the position head of accounting was vacant in 2019 and that in 2022, it is still vacant.

The Audit Chamber found that the government’s liability for the cost of living adjustment worth 123 million guilders ($68.7 million) to be paid at a future date has not been accounted for as a provision on the balance sheet. This, the report notes, is a “material reliability error.” The Chamber furthermore observed liability errors up to 9 million guilders ($5 million).

“Given the total scope of the errors, we issue a negative opinion on the 2019 financial statements,” the report states.

The Chamber also found deficiencies that have a negative impact on an auditor’s unqualified opinion in all ministries. The auditors found inadequate structure and functioning of internal procedures and a lack of adequate audit information related to goods and services, the cost of social services and scholarships, grants and transfers. The settlement of suspense accounts for tax revenue is not transparent and there is inadequate internal control of refunds. There is also an inadequate structure and functioning of internal procedures related to wages and salaries, the auditors found.

The conclusion is painful for the whole government: “There are inadequate internal audit procedures in every ministry. This has resulted in material uncertainties with a significant impact on the financial statements.”

On March 23, financial supervisor Cft sent a letter to finance Minister Irion about the annual financial accounts for the years 2013-2018. “Financial management in St. Maarten has been inadequate for years,” Cft-chairman Prof. dr. Raymond Gradus states in this letter, that furthermore notes that the SOAB (the government’s accounting bureau) has issued a negative opinion about the reliability and legality of the financial statements for 2013-2018.

“The financial statements 2013-2018 have not been composed based on current legislation and they do not give a true impression of St. Maarten’s financial situation.”


Related articles and links:
Opinion piece “Guilty by doing nothing
General Audit Chamber audit report for 2019
CFT letter to Minister of Finance