Published On: Wed, Jun 30th, 2021

Audit Chamber presents devastating report about 2017 financial statements

PHILIPSBURG — The country’s 2017 financial statements contain “numerous errors and uncertainties,” the General Audit Chamber writes in its compliance audit St. Maarten Financial Statements 2017. “Expenditures were made for which no funds were budgeted, and income was not realized, or was below budget. We conclude that the 2017 financial statements do not provide a true representation of the government’s financial position as of December 31, 2017.”

The auditors note that both the 2017 budget and the financial statements of the same year do not contain the information required by the National Accountability Ordinance (NAO). “If the budget is not drawn up in accordance with the NAO, it cannot serve as a standard for the financial statements.”

The auditors found reliability errors in the financial statements worth 225 million guilders ($125.7 million), stemming from financial fixed assets, short term debt, income, tax collection and personal expenditures. The total includes 112 million ($62.6 million) for cost of living adjustment to be paid at a later date.

“There are insufficient internal checks and controls to ensure that the recording of the results of processes for the purchase of goods and services, granting of subsidies, payment of salaries, and the assessment and collection of taxes and fees are correct and complete,” the report states. “The government does not sufficiently check whether the rules are followed.”

The blame for all these shortcomings does not fall on the current government, because the report notes that deficiencies in financial reporting have been around since St. Maarten became an autonomous country in the kingdom on October 10, 2010. Expenditures related to wages and salaries, procurement of goods and services, tax collection, the government health insurance arrangement (OZR) and subsidies are labeled as “inherently flawed or inadequate” in the report.

The government is also ignoring the deadlines for submitting financial reports. The financial statements for each calendar year have to be submitted by September 1 of the following year. The 2017 financial statements were presented to the General Audit Chamber on June 11, 2021 – almost three years too late. “As a result, these financial statements are rendered impractical as an accountability tool for parliament and therefore also the taxpayer,” the report states. “In addition, there is no improvement compared to previous years.”

In this respect, the Audit Chamber aims to set an example for other stakeholders. After receipt of a report from the government accounting bureau Soab about the financial statements, the Chamber has six weeks to send its own report to parliament. The Chamber received the Soab-report on June 11 and sent its report to parliament well within the deadline, on June 30.

At the end of the report the Audit Chamber presents a devastating picture of the financial state of affairs. Uncertainties (meaning that their accuracy cannot be established) in a combination of the balance sheet, reported expenditures and reported revenue represent a value of 1.249 billion guilders ($697.8 million) on a total of 2.565 billion ($1.4 billion – 49 percent).

Revenue was reported as 407 million ($227.4 million), but the Audit Chamber labeled 357 million ($199.4 million – 88 percent) as “uncertain.” Of 568 million ($317.3 million) in expenditures, 441 million ($246.4 million) is “uncertain.”


Related links:
Opinion piece: Financial Chaos
Press release General Audit Chamber St. Maarten
Audit report Financial Statements 2017