ACCOUNTS OF ANTIGUA AND BARBUDA

Transcription

1 REPORT OF THE Director of Audit ON THE ACCOUNTS OF ANTIGUA AND BARBUDA FOR THE YEAR ENDED 31 st December, 2010

2 TABLE OF CONTENTS SECTION PAGE Acknowledgment 2 Director of Audit Report 3 Statement of Assets and Liabilities. 7 Statements of Revenue and Expenditures 9 Statements of Actual & Estimated Revenue. 12 Statements of Special Fund. 19 Statements of Deposits. 20 Statements of Public Debt 22 Statements of Contingent Liabilities 24 Statements of Advances 26 Notes to the Financial Statements.. 27 Introduction. 28 The Nature and Scope of the Audit 29 Audit Findings. 35 APPENDICES Authorities of Expenditures... A E Status of Financial Statements of Statutory Bodies/Agencies.H 1

3 ACKNOWLWDGEMENT I would like to express my gratitude and sincere appreciation for the work and support of the Audit Staff, whose dedicated efforts have permitted the completion and submission of this report. I also wish to thank the staff of the Government Printing Office for their cooperation and courtesies extended to the Director of Audit and Staff. 2

4 GOVERNMENT OF ANTIGUA AND BARBUDA Office of the Director of Audit St Mary s and Temple Streets St John s, Antigua and Barbuda, W.I. Tel: 1 (268) /1 Fax: 1 (268) audit@antigua.gov.ag Ref: No 29 th November 2013 AUDITOR S REPORT To: The Honourable Members of the House of Parliament Report on the Financial Statements I have audited the accompanying Public Accounts of the Government of Antigua and Barbuda as at December 31, 2010 which comprised Statements of Assets and Liabilities, Revenue and Expenditures, Special Fund, Deposit Funds, Public Debt, Contingent Liability and Advances as required by the Finance Administration Act, 2006 section 56. Management s Responsibility for the Financial Statements Under Part IX, 56 (2) of the Finance Administration Act, the Accountant General is responsible for preparing, maintaining and ensuring that a proper system of accounts is established and all public monies are accountable for and reflect the financial position of Antigua and Barbuda at the end of the financial year. Section 56 (2) of the aforementioned Act requires the Accountant General, to sign and certify the Public Accounts and submit these statements to the Director of Audit, not later than six (6) months after the end of every financial year. The Accountant General s responsibilities include the maintenance of adequate accounting records and internal controls relevant 3

5 Report of the Director of Audit on the Public Accounts of Antigua and Barbuda for the Financial Year ended 2010 to determine if these Public Accounts are free from material misstatements due to error or fraud in accordance with International Financial Reporting Standards. Auditor s Responsibility The Director of Audit s responsibility is to express an opinion on these Public Accounts and the audit was guided by the International Standards for Supreme Audit Institutions (ISSAI) issued by the International Organization of Supreme Audit Institutions (INTOSAI). The Audit was conducted using tests and other procedures that are considered necessary for reporting as required by the Constitution of Antigua and Barbuda section 97 subsection 2b. The audit involved performing procedures to obtain audit evidence to support the amounts and disclosures in the Public Accounts. An Audit assessment is based on the auditor s judgment in determining the risk of material misstatement of the Public Accounts as well as the appropriateness of accounting policies used and the reasonableness of accounting estimates made by management as well as evaluating the overall presentation of the Public Accounts. Because of the matters described below in the Basis for Disclaimer of Opinion paragraph, I am unable to obtain sufficient appropriate audit evidence to provide a basis for an audit opinion. Basis for Disclaimer of Opinion Due to a scope limitation in respect to non submission of supporting documents and records and a number of accounts balances that could not be substantially verified, a disclaimer opinion is given for the 2010 Public Accounts. I was unable to attest to the accuracy of the opening bank accounts balances due to the fact that misstatements that had a material effect were discovered over the period ( ) and were not adjusted in the 2010 financial statements. My disclaimer opinion was based on the audit procedures, treatment and reporting requirement on the opening bank account balances as outlined in the International Standards of Supreme Audit Institutions (ISSAI) standards 1510 and ISA 705. Additionally, an amount of $81,664, which represents recurrent and capital expenditures did not have the required supplemental appropriation approval by the Parliament, therefore the processing and subsequent payment of these warrants over a number of years can be regarded as an illegal activity. Presented below are our findings on the accounts with scope limitations or issues relating to balances: 4

6 Assets Cash in Bank $6,473, Liabilities Accounts Payable $118,651, Revenue Passenger Facility Charge $18,845, Cruise Passenger Tax $ 5,735, Import Duties $3,870, Consumption Tax $14,545, Import Duties $10,871, Miscellaneous Receipts $13,892, Expenditures Special Warrants $81,528, Balances Disclaimer of Opinion Account Balances before 2004 $1,306,770, Because of the significance of the matters described in the Basis for Disclaimer of Opinion paragraph, I am not able to obtain sufficient appropriate audit evidence to provide a basis for an audit opinion. Additionally, I cannot state that the Public Accounts of the Government of Antigua and Barbuda are presented fairly as at December 31, 2010 in accordance with the stated accounting policies of the Government of Antigua and Barbuda. I cannot determine if these statements are consistently applied as in previous years therefore I do not express an opinion on the financial statements.. Dean Evanson DIRECTOR OF AUDIT St Mary s and Temple Streets St John s 29 th November

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29 REPORT OF THE DIRECTOR OF AUDIT ON THE ACCOUNTS OF ANTIGUA AND BARBUDA FOR THE YEAR ENDED INTRODUCTION DECEMBER 31, This report is made to the Honourable Minister of Finance, the Economy and Public Administration in accordance with Section 97(5) of the Constitution of Antigua and Barbuda. It does not report on the Ministerial/Divisional Accounts for the year ended December 31, The comments herein are accordingly confined to matters arising out of the Annual Financial Statements for the year ended December 31, 2010, submitted by the Accountant General. 1.2 The principle functions and responsibilities of the Director of Audit as provided in Section 97(1) of the Constitution of Antigua and Barbuda, which came into force on November 1, 1981 are as follows: - The Director of Audit shall - a) Satisfy himself that all monies that have been appropriated by Parliament and disbursed have been applied to the purposes to which they were so appropriated and that the expenditure conforms to the authority that governs it; and b) At least once every year audit and report on the public accounts of Antigua and Barbuda, the accounts of all officers and authorities of the Government, the accounts of all courts of law in Antigua and Barbuda (including any accounts of the Supreme Court maintained in Antigua and Barbuda), the accounts of every Commission established by this Constitution and the accounts of the Clerk to the House and the Clerk to the Senate. 1.3 The Director of Audit shall have the power to carry out audits of the accounts, balance sheets and other financial statements of all enterprises that are owned or controlled by, or on behalf of, Antigua and Barbuda. 1.4 The Director of Audit and any officer authorized by him shall have access to all books, records, returns, reports and other documents, which, in his opinion relate to any of the accounts referred to in sub-sections (2) and (3) of this section. 1.5 The Director of Audit shall submit every report made by him in pursuance of this section to the Minister for the time being responsible for Finance, who shall, after 28

30 receiving such report, lay it before the House not later than seven (7) days after the House next meets. 1.6 If the Minister fails to lay a report before the House in accordance with the provisions of sub-section (5) of this section, the Director of Audit shall transmit copies of that report to the Speaker, who shall as soon as practicable, present them to the House. 1.7 The Director of Audit shall exercise such other functions in relation to the accounts of Government, the accounts of other authorities or bodies established by law for public purposes or the accounts of enterprises that are owned or controlled by or on behalf of Antigua and Barbuda as may be prescribed by or under any law enacted by Parliament. 2. THE NATURE AND SCOPE OF THE AUDIT 2.1 Neither the Constitution of Antigua and Barbuda, 1981 nor the Finance Administration Act, 2006 define the scope of the audit examinations to be carried out. Accordingly, the manner in which the audit examination is to be carried out is left to the discretion of the Director of Audit. In this respect, it has been found practicable to carry out the examinations by way of a series of test checks varying in content and depth as are considered to be appropriate in enabling him to fulfill his functions. 2.2 In the meantime, the Revised Finance and Audit Act No. 29/1982 which elaborated upon the Constitutional provisions did not come into operation until January 1,1985. Under this enactment, the Director of Audit is enjoined to satisfy himself that: (a) (b) (c) (d) All reasonable precautions have been taken to safeguard the collection and custody of revenue and that the law, directions and instructions relating thereto have been duly observed; Expenditure has been incurred with due regard to economy and to the value obtained; That public monies other than those which have been appropriated have been dealt with in accordance with proper authority; and Adequate regulations, directions and instructions exist for the guidance of accounting officers and accountable officers. 2.3 With a view to dispel certain chronic misconceptions regarding the role of the Director of Audit, I must point out that the normal audit procedures employed are 29

31 designed primarily for the purpose of forming an opinion on the accounts. They are not intended to disclose each and every accounting error, nor for that matter, fraud, and the audit report cannot be regarded as a comprehensive statement of all weaknesses that exist or of all improvements that might be made. Indeed, it is primarily the responsibility of Accounting Officers (Permanent Secretaries) and Heads of Department/Divisions to ensure that effective systems of internal controls and safeguards are in place within their respective Ministries/Divisions so as to prevent and detect the occurrence of errors and fraud. 2.4 The Accountant General in her capacity as Chief Accounting Officer is required under The Finance Administration Act, 2006 section 56 (2) (a) prepare the Public Accounts for the financial year in accordance with generally accepted accounting principles as determined in writing by the Minister, accounting for all public money and showing fully the financial position of Antigua and Barbuda at the end of that financial year. 3 PUBLIC ACCOUNTS 3.1 The Public Accounts as outlined in the Finance Administration Act, 2006 subsection (1) shall include:- a) a summary statement of revenue and expenditure of the Consolidated Fund by standard object code; b) a statement of assets and liabilities; c) a comparative statement of actual and estimated revenue by details object code; d) a statement of each Special Fund; e) a statement of the balance in each Deposit Fund; f) a statement of investment showing the funds on behalf of which the investment were made; g) a statement of public debt and accumulated sinking funds h) a statement of the balance in any fund, other than a sinking fund, for which provision is made by or under an Act; i) a statement of contingent liabilities of the Government; j) a statement of balances on advance accounts from the Consolidated Fund and Deposit Funds analyzed under the various categories set out in section 35(1); 30

32 k) a statement of arrears of revenue by detailed object code; l) a statement of losses of cash and stores; m) the summary statements referred to in section 19(1) and n) any other statements that the House may require. 3.2 Section 97 (2) b of the Constitution of Antigua and Barbuda requires the Director of Audit to at least once every year to audit and report on the Public Accounts of Antigua and Barbuda, the accounts of all officers and authorities of the Government, the accounts of all courts of law in Antigua and Barbuda (including any accounts of the Supreme Court maintained in Antigua and Barbuda), the accounts of every Commission established by this Constitution and the accounts of the Clerk to the House and the Clerk to the Senate. 3.3 The Director of Audit is required under Section 97 (5) of the Constitution of Antigua and Barbuda to submit every report made by him in pursuance of this section to the Minister for the time being responsible for Finance who shall, after receiving such report, lay it before the House not later than seven (7) days after the House next meets. 3.4 After the Public Accounts are laid before the Parliament, they are referred to the Public Accounts Committee which has the responsibility to examine and submit a report on the Public Accounts and the Director of Audit Report to the Parliament. The Accountant General, Director of Audit and Representatives of the Government attend these Public Accounts Committee meetings and provide advice, testimony and other information as requested by the Committee. 3.5 I have audited the 2010 Public Accounts as outlined in the Constitution of Antigua and Barbuda and the Finance Administration Act, 2006 except for the accounts of Statutory Bodies. These Bodies for the most part are audited by private firms in accordance with their enabling Acts. Appendix H highlights the status of Audited and Unaudited Financial Statements of Statutory Bodies for the year under review. AUDIT APPROACH 31

33 Audit Approach Report of the Director of Audit on the Public Accounts of Antigua and Barbuda for the Financial Year ended The audit of the Annual Accounts of the Government of Antigua and Barbuda for the year ended December 31, 2010 marked the beginning of a transition from a traditional voucher-based audit of the accounts to a risk-based, materiality-driven approach. 4.2 The planning materiality was set at $5 million dollars representing 0.6 percent of total expenditure for the year under review. Based on previous years experience, the risk of the accounts containing material misstatements was rated as high. Significant issues/risks arising from audits of the accounts of 2006 and previous years include: Inability to determine the amount of revenue arrears; most entities do not submit the required returns Supplementary Estimates to cover appropriation over expenditures not approved Bank account reconciliations not prepared Increase in the value of outstanding cheques Advances not written off Dormant balances and suspense accounts Unauthorized bank overdraft Inaccurate reporting of the public debt Unsubstantiated increases/decreases in recurrent expenditure/revenue Audit procedures Expenditure 4.3 Lead sheets, variance analyses and schedules were prepared when available and necessary. Variance analysis was conducted to verify the reasonableness of the 2010 figures. Since the financial statements for 2009 were not presented or available, variances for the number of government employee s, for the number of pensioners and a predictive analysis could not be completed based on the lack of the required information. A variance analysis of the General ledger producing expenditure amounts greater than $500, were subjected to further analysis. Based on prior knowledge that an increase in the amounts of transaction in the accounting period known as "period twelve" (12) and "period thirteen" (13) resulted in an 32

34 increase in sample size for expenditure and journal vouchers for the periods mentioned above. Revenue 4.4 Revenue amounts in the financial statements were compared to figures obtained from different revenue departments. A comparative analysis of the revenue figures received from the generated ministries and the figures on the 2010 financial statements showed variances which are explained in our findings. Assets and Liabilities 4.5 Amounts on the 2010 financial statements (Statement of Assets and Liabilities and Consolidated Statement of Revenues and Expenditures) were traced to the trial balance provided by the Accountant General. All balances and transactions exceeding $500, (ten percent (10%) planning materiality) were considered for verification procedures as well. Also, certain high-risk transactions were selected for verification. This included expenditures and journal vouchers in "periods twelve (12) and thirteen (13)". Contingent Liability 4.6 Pending and threatening litigation were confirmed with the Attorney General s office. Advances 4.7 Advances and deposit accounts were verified to supporting documentation and inquiries were made as deemed necessary. Electronic Software Freebalance, SIGTAS and CASE. 4.8 Freebalance, SIGTAS and CASE are computer based systems used by the Government of Antigua and Barbuda at the Treasury Department, the Inland Revenue Department and the Customs and Excise Department respectively. The aforementioned departments used these systems to record transactions which include receipts from revenue, payments and warrants which form the core for the preparation of the Public Accounts. Reconciliation of SIGTAS and CASE 4.9 It is of vital importance for the integrity of the accounts/financial statements of the Government of Antigua and Barbuda that the transactions transferred from SIGTAS and CASE to Freebalance agree. A review of my findings of the 33

35 reconciliation process has clearly showed that there are differences between the figures from SIGTAS and Freebalance. 34

36 AUDIT FINDINGS 5. STATEMENTS OF ASSETS AND LIABILITIES Cash in Bank Accountant General 5.1 As at 31 st December 2010, the financial statements presented by the Accountant General had a Cash in hand balance of $21, which agreed with the Internal Auditor report dated January 3, However, $6,473, which represents revenue collected on the December 31, 2010 was not lodged at the Royal Bank of Canada until January 1, It can therefore be concluded that Cash in Hand as at the December 31, 2010 should be a combination of both amounts. In my opinion, the Cash in Hand as presented in the financial statements for the period under review does not fairly present the correct figure. Bank Balances 5.2 The Cash at Banks which amounted to ($55,986,470) represent regular and savings accounts, fixed deposits accounts, overdrafts accounts and short term money market instruments. However, as stated in the notes to the Financial Statements: "the opening balances were derived by using the actual cash balances of various banks accounts as of 31st December 2009 and adjusting the amounts by the known uncashed/unretired cheques and deposits in transit". 5.3 The process identified in the notes to the financial statements shows that the Accountant General is relying on the accuracy and completeness of the bank statements. However, based on past history in respect to postings to incorrect government bank accounts, I cannot rely wholeheartedly on the accuracy of the bank statements. 5.4 As outlined in ISSAI 1510 audit procedures opening balances section 5: "The auditor shall obtain sufficient appropriate audit evidence about whether the opening balances contain misstatements that materially affect the current period's financial statements" 5.5 Therefore, I cannot give an opinion on this accounting method used by the Accountant General. 35

37 Imprest 5.6 According to the Finance and Administration Act, 2006 Part V, Division 2 section 36 (1) and (2) states: (1) "Subject to the regulations, the Accountant General may on the authority of an impress warrant issued under the hand of the Minister issue imprests from the Consolidated Fund to accounting officers for the purpose of making payments of small amounts that cannot conveniently be made through the Treasury." (2) "Any accounting officer to whom an imprest has been issued pursuant to subsection (1) shall retire that imprest not later than the end of the financial year in which the imprest was issued or, if some earlier date is specified in the imprest warrant or by the Accountant General, not later than that earlier date." 5.7 As at December 31, 2010, the Treasury Department, Ministry of Finance the Economy and Public Administration had forty (40) imprest holders in the amount of $6,221, However, only $6,023, were retired during the period under review. There were three (3) imprest holders who were in violation of the aforementioned regulation. 5.8 Unretired imprests on the government accounts give misleading information based on the fact that unretired imprests may be fully or partially expensed in the previous year. It is therefore recommended that all imprests be retired at the end of the financial year in order to negate any possible unusual accounting of these accounts. 5.9 I must commend the Accountant General on her efforts to hold Department responsible and instilling accountability and responsibility on Heads of Departments. Savings Bank 5.10 The earliest available documented evidence of the existence of the St John's Savings Bank of Antigua and Barbuda is the Savings Bank Act of 1846 enacted and ordained by the Governor, Council and Assembly of Antigua and address the rules and regulations established for the management of the institution. The Savings Bank Act has being subsequently amended with the last amendment set out in Chapter 395 of the Laws of Antigua and Barbuda, Saving Banks Act of August 26,

38 Report of the Director of Audit on the Public Accounts of Antigua and Barbuda for the Financial Year ended The activities of the Saving Bank have remained unchanged for decades. On July 27, 2004, approximately ninety one percent (91%) of the accounts were inactive. The last sets of transactions were carried out in Despite the fact that the accounts remained dormant over the decades, they are still gaining interest at 2.5% yearly On the September 27, 2002, $4,681, was transferred to the Government general revenue fund from investment made with Crown Agents on behalf of the Government Savings Bank. The Audit Department is unaware of any Cabinet decision that approves such transactions in accordance with the law, neither can I verify that the assets were in excess of more that fifteen percent of the liabilities to depositors Therefore, since the Savings Bank can be categorized as non-existent, it is recommended that the required Parliamentary process be implemented so that the closure of this institution can be realized. Accounts Payable 5.15 As at December 31, 2010 the Statement of Assets and Liabilities reported Accounts Payable as $12,543, An exercise was conducted to review the outstanding payables and it was revealed that at the end of the financial year Ministries still had commitments to suppliers. Additionally, as at December 31, 2010, there were 7,582 outstanding cheques at the Treasury Department with a value of $118,651, Therefore, I am of the opinion that the Accounts Payable figure of $12,543, reported in the Statements of Assets and Liabilities is not fairly stated It is recommended that as at December 31 of any year, outstanding cheques that are not paid to customers are accounted for and treated as accounts payable. 6. STATEMENTS OF REVENUE 6.1 Total Recurrent and Capital Revenue for the financial year 2010 amounted $841,085, I am unable to compare the revenue collected in the financial year 2010 with the previous year simply because they were not prepared and presented to the Director of Audit. Actual information on the performance of the individual revenue items with either surplus or shortfall was not shown in the Financial Statements presented by the Accountant General. 37

39 Report of the Director of Audit on the Public Accounts of Antigua and Barbuda for the Financial Year ended No Detailed Statements of Revenue by Ministries were presented to the Director of Audit for review. The Recurrent Revenue statements presented by the Accountant General combined all Revenue collected under specific categories. Therefore, based on our audit approach, a variance analysis was conducted on amounts greater than $5,000, when comparing the revenue figures generated by the ministries with the amounts represented on the financial statements. 6.3 The following amounts represent large differences between the totals compared on the statement from the Treasury Department and the totals obtained from the Revenue Departments. These figures relate to budget vs actual. Income Tax Revenue $5,634, Cruise Passenger Tax $5,750, Passenger Facility Charge (PFC) $18,845, The difference in the balance in the PFC account when comparing with the Treasury figures is primarily due to the fact that monies received from IATA is recorded directly on the books of the Inland Revenue Department at the ABI Bank Limited. This account is a restricted account which is primarily used for the maintenance of the V.C. Bird International Airport under the supervision of the Antigua and Barbuda Airport Authority. Consumption Tax $14,545, Antigua and Barbuda Sales Tax $10,871, Miscellaneous Receipts $13,892, Amounts not reconciled with revenue departments are placed in Miscellaneous Receipts account. 6.4 In light of the above, I am confident that the revenue stated in the financial statements are understated, therefore, I cannot state that the total revenue figure in the Statements of Revenue and Expenditure is fairly stated. 7 STATEMENTS OF EXPENDITURE 7.1 A comparative statement of actual and estimated expenditure for the financial year was not presented for review, however, information taken from the budget estimate and the consolidated statement of revenue and expenditure for the year 38

40 ended 2010 show a recurrent budget of $886,478,273 while the actual expenditure was $822,255, The estimated amount for capital expenditure for the financial year according to the budget estimate was $90,151,654 whereas actual capital expenditure was $34,019, Based on our calculation, the materiality figure was set at $500, and above for the examination of expenditure vouchers. The relevant vouchers were physically examined and compared with the information provided by the Treasury Department through it s Financial Management System - Freebalance. 7.4 Audit examination of the relevant vouchers revealed that the internal control for the system is very weak. My observation revealed that information recorded in Freebalance from Department s vouchers were created and approved by the same officer at the Treasury Department and most often without a second approval. For example, sixty two (62) transactions for the Ministry of Health Central Board of Health were reviewed and seventy-five percent (75%) of the transactions were created and approved by the same individual. 7.5 Freebalance is designed in such a way that the officer who creates the voucher should not be the same officer who is allowed to do either the 1 st or 2 nd approval; this should be done by two other officers. It must be borne in mind that separation of duties is paramount for good accounting practices and enhances transparency and accountability. 7.6 Of all the vouchers for the year in review, one hundred (100) vouchers had values of $500, or more. This was observed during the physical examination. However, the extract from Freebalance produced a total of 135 vouchers of the same value. This is evident that there are differences in the information extracted from Freebalance and the actual information produced as a result of the physical examination. There is need for the information to be identical since the differences in information will result in an over or understatement of the accounts. 7.7 It was observed that vouchers were posted under the incorrect Department Head and also vouchers paid in February 2011 were stamp as being paid in And finally, the Freebalance voucher numbers and the manual voucher numbers were different for the same transaction. 7.8 In light of the above, we are of the opinion that the information is not fairly stated. This is evident based on the fact that of the four percent (4%) transactions reviewed in Freebalance, our findings revealed that there were discrepancies with thirty percent (30%) of this amount. 39

41 Report of the Director of Audit on the Public Accounts of Antigua and Barbuda for the Financial Year ended 2010 Supplementary provisions 7.9 During the year under review there were one hundred and eighty-four (184) Special Warrants totaling $81,528, As stated in the Finance Administration Act, 2006 section 27 (a) and (b): 27 If in respect of any financial year it is found that the amount appropriated by the appropriation Act for any purpose is insufficient or that a need has arisen for expenditure for a purpose to which no amount has been appropriated by that Act, whether or not a special warrant has been issued - (a) (b) A supplementary estimate showing the sums required shall be laid before the House; and When the supplementary estimate has been approved by the House, a supplementary appropriation Bill shall be introduced in the House providing for the issue of such sums from the Consolidated Fund and appropriating them to the purposes specified therein Based on the aforementioned, no supplementary appropriation for any Special Warrants was presented to the House for approval. Therefore, $81,528, issued as Special Warrants were done without the required approval. The aforementioned amount which was executed without parliamentary approval has a material effect on the financial statements, therefore, I am unable to give an opinion During the year under review, there were two hundred and thirty-three Virement warrants totaling $24,738, Virement warrants are used by Ministries/Departments to transfer funds from one programme head to another. Surplus/Deficit for the Year under review 7.12 A review of the statements indicate that the Consolidated statements of revenue and expenditure for the year ended 31st December 2010 showed a surplus of $18,830, This figure which is represented in the financial statement by the Accountant General does not present the true financial picture of the accounts for the Government of Antigua and Barbuda, therefore the balance is not fairly presented. 40

42 Report of the Director of Audit on the Public Accounts of Antigua and Barbuda for the Financial Year ended STATEMENTS OF ACTUAL & ESTIMATED REVENUE 8.1 It was also observed that three (3) revenue items, namely Environmental Tax, Money Transfer Levy and Passenger Facility Charge were posted to the incorrect account in the Comparative Statement of Actual & Estimated Revenue for the year under review. These were in amounts of $3,136,161.00, $1,462, and $458, respectively. 9. STATEMENTS OF SPECIAL FUND 9.1 The Statement of Special Fund/Account as at 31st December 2010 showed a balance of EC$1,154, This amount represents the following: Description Amount Reserve A/C Financial Institutions $439, Statutory Deposits - Insurance Companies $707, Crown Agents - JCF $7, TOTAL $1,154,473, As stated in the note from the Accountant General: "Special Fund/Accounts Opening balances to be adjusted on the completion of the 2009 Financial Statements." 9.3 This clearly indicates that the Special Fund/Account consist of amounts for the financial year 2010 only and does not reflect the correct balance of the fund. In my opinion, the aforementioned total represents fairly the balance in the Special Fund/Account for the Financial year 2010 only, it does not represent the true picture of the Fund and therefore it is not fairly stated. 10. STATEMENT OF DEPOSITS 10.1 As at December 31, 2010, the Statement of Deposit funds reported a balance of $596, This amount represents net flows only for the financial year 2010 since the closing balances for the financial year 2009 was not taken into consideration. It can be therefore concluded that the statement of deposits as at December 31, 2010 for the Government of Antigua and Barbuda does not represent a true picture of deposit balances "as at December 31, 2010." 41

43 Report of the Director of Audit on the Public Accounts of Antigua and Barbuda for the Financial Year ended Additionally, as outlined in the Finance and Administration Act, 2006, Part VI, section 45 (5) that states: " A Deposit Fund that is unclaimed for five (5) years shall, subject to the provisions of any laws, cease to be a Deposit Fund and shall accrue to the Consolidated Fund, but the Minister may direct the refund of the amount of the Deposit Fund or any part of it to a person who subsequently satisfies the Minister that he is entitled to it." 10.3 As at the date of this report, deposit accounts balances that has been inactive for more than five (5) years are presented in paragraph Some of the balances in the aforementioned paragraph however, are active as observed with the financial statements for The inactive balances/amounts which are unreconciled by Ministries/Departments with the Accountant General, should be placed in the consolidated fund or seek approval from the Cabinet of Antigua and Barbuda to be written off Based on the aforementioned, I am unable to express an opinion on the statement of deposits balances. 11. STATEMENT OF PUBLIC DEBT 11.1 The total Public Debt-domestic and external for the period under review amounted to $2,155,199,837. Total Domestic stock was at December 31, 2010 amounted to $1,256,510,943, whereas the External debt stock amount to $898,688, Domestic debt servicing for the year under review amounted to $131,365, whereas External Debt servicing amounted to $49,981, No information was provided for previous years therefore a comparison is unavailable A breakdown of interest and principal payments in 2010 on the Government of Antigua and Barbuda debt stock is presented below. Domestic stock Debt External Stock Debt Total Interest and Principal payments Interest payment $37,103, $23,984, $61,087, Principal payment $94,261, $25,997, $120,259, TOTAL $131,365, $49,981, $181,347,

44 11.4 Additionally, the Domestic principal and interest arrears for the period under review amounted to $15,398,129 and $1,918,659 respectively. The external principal and interest arrears for the period under review amounted to $103,329,053 and $76,080,418 respectively. The figures presented above clearly indicate that the Government of Antigua and Barbuda was not servicing its external debts As shown above, the Government of Antigua and Barbuda paid $181,347, in interest and principal payments for the financial year 2010 which also included arrears payments on its debts. The principal and interest arrears on the debt stock were significant and without the proper treatment of these arrears can lead to a greater indebtedness for the country. I am quite satisfied with the information presented in the financial statements on the Government of Antigua and Barbuda debt stocks and can reasonable state that they are fairly presented. 12. STATEMENT OF CONTINGENT LIABILITIES 12.1 The Accountant General reported Contingent Liabilities of $395,030, as at December 31, This amount included external principal arrears of $89,910,000 and Domestic principal and interest arrears of $311,898 and 394,967 respectively, 12.2 However, the total amount represents loan guarantees mainly to Statutory Bodies. As at December 31, 2010, twenty-seven (27) loan guarantees are on the account of the Government of Antigua and Barbuda for eleven (11) Statutory Bodies Contingent Liabilities for previous years were not submitted to the Office of the Director of Audit, therefore no comparative analysis can be completed The Accountant General did not submit with the financial statements for the period under review, pending or threatened litigations against the Government. Therefore, since the figure of $2.49 million dollars and twelve (12) pending litigations obtained from the Attorney General which represent judgment against the Government are significant, it can be stated that the Statements of Contingent Liabilities are not fairly presented It is therefore recommended that for future reporting requirement that pending and threatened litigations against the Government are included in the financial statements. 43

45 Report of the Director of Audit on the Public Accounts of Antigua and Barbuda for the Financial Year ended STATEMENTS OF ADVANCES 13.1 As at 31 st December 2010, the table below show Advances Other Governments which represents payment or receipt of pension and gratuity from other Governments The amount in table 1 represents the balances for the financial year 2010 only. The balance does not take into consideration the previous years, therefore, the figures presented below do not represent a true picture of the Governments liabilities or assets Additionally, for the period under review, the Audit department was not furnished with a reconciliation statement of these accounts in respect of pensions paid on behalf of the ten (10) countries listed below or of amounts reimbursed from any country. Based on the time period on the presentation of the financial statements, the audit department did not send out a confirmation letter to the respective countries. Therefore, I am unable to verify the year-end balances. Table 1 Governments Balance as at Anguilla $1, Barbados $51, British Virgin Islands 19, Dominica $3, Grenada ($24,413.71) Montserrat $35, St Kitts $80, St Lucia $4, St Vincent $3, Trinidad & Tobago ($20,425.44) TOTAL $155,

46 Report of the Director of Audit on the Public Accounts of Antigua and Barbuda for the Financial Year ended According to the Finance and Administration Act, 2006 Part V, Division 2 section 35 (1) and 35 1 (f) which states: (1) "Subject to this section, the Accountant General may under the authority of an advance warrant issued under the hand of the Minister, from the Consolidated Fund or from money held as Deposits, make advances of money - (1) (f) "to a public officer for such purposes as may be prescribed by General Orders in an amount not exceeding % of the recurrent revenue in the annual estimates or such other amount as may be prescribed, but the aggregate of such advances in the financial year shall not exceed % of the recurrent revenue in the annual estimates." 13.5 Government employees benefit from this section of the Act in which personal loans under the following categories namely medical treatment, funeral expenses, education expenses, purchase of vehicles and domestic expenses are granted to them As at 31 st December 2010, Table 2, presented below list the personal advances granted to public servants. Interest on these personal loans as at 31 st December 2010 amounted to $352, Personal - Advances Advance - Issued in 2010 Payment in Advance 2010 Balance as at Medical $292, $38, $253, Domestic $4,490, ,578, $912, Vehicle $296, $207, , TOTAL $5,079, ,823, $1,256, Table For the period under review, a reconciliation statement was not submitted for the individual accounts, however, a breakdown of the individual accounts was provided. From the records provided it was observed that there were delinquent accounts. Based on our findings, I am reasonably assured that the statement of advances for public servants are fairly presented. 45

47 Report of the Director of Audit on the Public Accounts of Antigua and Barbuda for the Financial Year ended STATEMENT OF INVESTMENT 14.1 As at the date of this report, no statement of Investment for the Government of Antigua and Barbuda was presented as outlined in the Finance and Administration Act, 2006 Part IX subsection 4 (f) The Audit Department is quite aware that the Government of Antigua and Barbuda has investments in local and regional companies. The Government of Antigua and Barbuda has shares in the Leeward Island Air Transport (LIAT) limited and the West Indies Oil Company (WIOC) Limited, therefore, it is quite relevant that the 2010 financial statements has a material deficiency I am recommending that the Accountant General ensures that all Government investments are supported by the required documented evidence. 15. STATEMENT OF LOSSESS OF CASH AND STORES 15.1 As at the date of this report, no statement of losses of cash and stores were presented as outlined in the Finance and Administration Act, 2006 Part IX subsection 4 (l). The Audit Department has recognized that over the last couple of years that Permanent Secretaries and Heads of Departments are not submitting statements of losses of cash and stores reports to the Accountant General These is no documented evidence that the responsible Ministries/Departments are actively investigating cases with a reasonable conclusion as the result Based on the above statement, the presentation of the 2010 public accounts are incomplete. 16. BANK RECONCILIATIONS 16.1 As at December 31, 2010, the Government of Antigua and Barbuda had fortyfour (44) active bank accounts. Not all of the bank accounts were reconciled monthly. Six (6) bank accounts did not have the bank reconciliation breakdown that shows the difference between bank and book balances Additionally, bank reconciliation for six (6) bank accounts were not provided to Audit for scrutiny even though there was a balance on the account as at December 31,

48 Report of the Director of Audit on the Public Accounts of Antigua and Barbuda for the Financial Year ended The following discrepancies were observed in the bank reconciliations provided by the Treasury Department: An account at ABIB in which $3,177, was on the bank statements and no reconciliation was presented. An account at ABIB was closed in October 2010, however, the financial statements had a balance of $119, An account at ECCB in which $137,523, was accounted for on the financial statements, however, the trial balance presented had a balance of $80,036, No explanation was provided for this large discrepancy. An account at ACB in which the bank and book balances had $1,560,513.91, whereas the financial statements presented had $1,960, It can be therefore concluded that the entire bank reconciliation process was not completed based on our sample. An opinion on this process cannot be given since the process has a material effect on the financial statements. 17. NOTES TO FINANCIAL STATEMENTS 17.1 The notes presented in the Financial Statements for Antigua and Barbuda for the year ended 2010 was quite lacking. As noted above, the Accountant General responsibilities include the maintenance of adequate accounting records and internal controls relevant to determine if these Public Accounts are free from material misstatements due to error or fraud in accordance with International Financial Reporting Standards. Additionally, it is the responsibility of the Accountant General to list and outline the basis of preparation and summary of significant accounting policies of the financial statements Therefore, I am unable to determine the following: Basis of Preparation Statement of Compliance Use of Estimates and Judgments Standards, Interpretation and Amendments used Summary of significant accounting policies 47

49 Policies used to treat and record cash and cash equivalents, accounts receivable, accounts payable, revenue recognition, unrealized exchange (losses/gains), investments, borrowing costs. Financial risk factors - credit, liquidity and market risks 17.3 Based on the above factors, it is my opinion that the notes to the 2010 Financial statements are quite inadequate and does not provide enough information on the financial statements, therefore, its presentation cannot be relied upon. 18. UNAUTHORISED REMOVAL OF BALANCES 18.1 The presentation of the 2005 Public Accounts by the Accountant General revealed that hundreds of millions of dollars were removed from various balance sheet line items. Presented below are amounts that were removed from the accounts of the Government of Antigua and Barbuda without the required authority The Audit of the 2008 Accounts once again revealed major differences between the balance submitted by the Accountant General and the balances calculated by the Director of Audit. These balances were omitted from the Annual Accounts as of January 1, 2005 and the 2008 balances are submitted herewith. Account Treasury Balances Audit Balances Differences ($) ($) ($) Personal Advances 4,516, *27,520, ,004, Other Balances (Advances) 1,098, *308,929, ,830, Abnormal Balances (Advances) Dormant Balances (Advances) (8, ) *(20,644,825.94) (11,985,983.02) Nil *12,754, ,754, Dormant Balances (Deposits) Nil *13,912, ,912,

50 Other Balances (Deposits) Report of the Director of Audit on the Public Accounts of Antigua and Barbuda for the Financial Year ended 2010 Social Security-Employee 11,495, *96,557, ,061, Social Security-Employer 25,023, *220,421, ,397, Medical Benefit-Employer 15,098, *152,873, ,774, Medical Benefit-Employee 24,975, *154,674, ,699, Education Levy 13,338, *50,541,608,11 37,202, Abnormal Balances (Deposits) Development Aid Suspense Account Miscellaneous Suspense Account (32,557,403.57) *(120,397,548.87) (87,840,145.30) 921, , Nil 12,762, *107,530, ,768, Development Aid (CD&W) Nil *1,059, ,059, Other Special Funds 7,917, *17,041, ,124, Savings Bank (5,262.23) *3,976, ,970, Sugar Industry Fund (L.W.F.) Nil *(9,351.64) (9,351.64) Development Fund-Dormant Balances (Advances) Development Fund (Deposit Balances) Nil *52,144, ,144, ,806, *300,094, ,901, Statement of Losses 971, , Nil TOTALS 88,364, ,330,330, ,306,770, *Audit balance is greater than Treasury balance Based on the above, the 2010 Annual Accounts as presented by the Accountant General do not represent a true and fair picture, therefore, I am unable to give an opinion, since a material effect on the statement is quite evident. 49

51 Report of the Director of Audit on the Public Accounts of Antigua and Barbuda for the Financial Year ended STATUS OF STATUTORY BODIES FINANCIAL STATEMENTS AND AUDITS Analysis of Status 19.1 As outlined in Appendix H of this report, the Government of Antigua and Barbuda either owns or controls thirty (30) State Owned Enterprises. These corporations or agencies are either established by statute or by law whose initial investment came from the Government consolidated fund. However, for the period under review (2010), 42% of the listed Statutory Corporation received funding by a Government subvention In May 2012, a written request was sent to all statutory bodies seeking their last three (3) years of audited financial statements. The results of my review indicated that while several statutory bodies have current audited financial statements and are to be commended, others do not. In fact, 12 statutory bodies were one to four years in arrears, and 5 were five or more years in arrears. Further, no response to my request and repeated follow-ups was received from five (5) statutory bodies These results should be of concern to parliamentarians. Many of these statutory bodies receive sizable subventions from government and audited annual financial statements provide assurance that this funding was used as intended. As well, up-to-date financial statements are needed to inform the government of any contingent liabilities that statutory bodies have recognized and that may represent a potential liability to the government All statutory bodies should bring their financial statements and audits up to date by December 31, Those statutory bodies that have not received unqualified audit opinions should develop an action plan to correct identified accounting and financial reporting deficiencies as quickly as possible In conclusion, I would like to point out that it is imperative that the House of Representatives and the general public hold these bodies accountable for disclosing their financial positions and the presentation of audited accounts The Government of Antigua and Barbuda is making every effort to bring the Public Accounts up to date and the statutory bodies are encouraged to do likewise Finally, I must mention the outright refusal of four (4) statutory bodies to provide financial statements to this office even after discussion with the Attorney General's office to comply with the request. 50