Cft remains critical of St. Maarten’s annual account

PHILIPSBURG — It is uncertain that the 2021 annual account presents an accurate picture of St. Maarten’s financial position, Drs. Lidewijde Ongering, the chairlady of financial supervisor Cft writes in a letter dated November 30 to Minister of Finance Ardwell Irion.

In her letter, Ongering refers to findings of the Foundation Government Accounting Bureau (SOAB) and the General Audit Chamber who both came to the same conclusion. St. Maarten has indicated that it will continue to work on the improvement of the quality of financial management together with the Temporary Work Organization (TWO)

The 2021 annual account does not indicate how St. Maarten will compensate the deficit in future budgets. It does show however  that St. Maarten closed the year with a deficit of 96 million guilders ($53.6 million). That is 145 million ($81 million) lower than the projection in the 2021 budget.

The Cft notes that this seemingly positive result (revenue was 57 million guilders or $31.8 million above budget) is due to contributions from the trust fund for the reconstruction of the airport, the donation of several assets by the National Recovery Program Bureau and other contributions from the Netherlands.

Expenditures were 88 million guilders ($49.2 million) below budget, due to lower expenditures on goods and services and corona support measures.

The Cft-letter is not all bad news. The financial supervisor notes for instance that St. Maarten had made progress with establishing its annual accounts. “It is positive that the clean-up actions have resulted in visible results of available control-information. However, significant improvements are lacking.”

The 96 million guilders deficit remains within the maximum allowed deficit of 174 million ($97.2 million).

The Cft will send a separate message to the Kingdom Council of Ministers and to St. Maarten about the connection between the maximum allowed deficit on cash-basis and the realized deficit based on accrual accounting.

Cash basis accounting recognizes revenue and expenditures at the time when cash is received or paid out. Accrual accounting recognizes income at the time the revenue is earned and records expenditures when liabilities are incurred, regardless of when cash is received or paid.