WILLEMSTAD - The Court of Audit has rejected the 2019 annual accounts. The liabilities, expenditures, and revenues in 2019 have not been established in accordance with legislation and regulations. The financial statements also do not give a true and fair view of the financial position of Curaçao as of December 31, 2019 and the result for 2019.
The liabilities, expenditures and revenues do not correspond to the established national budget. The overrun amounts to a total of 178.1 million guilders. This was already the case in 2018 and it even involved more money: 278 million guilders.
Ministries
Once again, the Ministry of Health, Environment and Nature contributed the most to the exceedance (73 percent). In total, this concerns 97.3 million guilders (2018: 99 million). 64 percent of the budget overrun is caused because 51.9 million guilders budgeted revenues for Finance have not been realized. In 2018, that was 110 million guilders (89 percent).
Legal regulations
The Court also reports that the obligations and expenditure have not been established in accordance with relevant statutory regulations. In total, an amount of 357.6 million guilders (2018: 354 million) appears to have been spent unlawfully. A large part of this, 256.8 million guilders (2018: 262 million) has been spent on subsidies. Provided without the required grant decisions and transfers totaling 39.2 million (2018: 59 million) paid without the underlying agreements.
The expenditures and receipts of which it is uncertain whether they originated in accordance with the relevant legal regulations amount to a total of more than 3 billion guilders, almost the same as in 2018. According to the Court of Audit, this is mainly because almost 1.4 billion guilders in tax revenue generated by internal control is not sufficient, as in 2018.
Not a true picture
The annual accounts also do not give a true and fair view of the financial position of Curaçao as of December 31, 2019 and the result for 2019. The annual accounts have not been prepared in accordance with all the relevant provisions of the National Ordinance on Accountability 2010. For example, the budget changes are not explained in the annual accounts, just like in 2018.
This contains 26.1 million guilders (2018: 34 million) in fidelity errors and almost 5.5 billion guilders (2018: 3 billion) in fidelity uncertainties.
The errors mainly relate to incorrect write-offs of a receivable from FKP (Social Housing Foundation) of 24.5 million and a small loan. The fidelity uncertainties of almost 5.5 billion are also largely caused by the uncertainty surrounding the tax income of 1.4 billion guilders.
The Court of Audit says that the annual accounts do not give a true and fair view of the financial management conducted, just as in 2018.It contains errors amounting to a total amount of 561.8 million guilders (2018: 665 million) and more than 8.6 billion in uncertainties (2018: six billion). For the sake of a true and fair view, the annual accounts may not contain more than ANG 17 million in errors and / or uncertainties.
Financial management
The above problems and shortcomings, according to the Court, are because financial management is not orderly and cannot be checked, as in 2018.
The ministries do not yet meet the minimum requirements of orderliness and verifiability prescribed in the National Ordinance Financial Management. For example, there is no required segregation of duties, there is no proper internal management of income and the internal control functions of the ministries are not adequately fulfilled. The performance of the required internal controls, such as checking the data processed in the administrations, is also not in order.
The drafting of national decrees and ministerial regulations for the further elaboration of, among other things, procedures for the institution of recovery, collection, discharge, and restitution of receipts other than taxes is inadequate, as well as the inclusion of a report 'Management of real estate' as separate note accompanying the annual accounts, just as in 2018, according to the Court of Auditors.
Parliament
In 2018, Curaçao indicated that it will bring and keep its financial management in order. As the (ultimate) touchstone of this, its annual accounts for the 2021 service year will be adopted in a timely manner and accompanied by a qualified auditor's report. Apparently, little has changed.
To achieve this, the government has drawn up a step-by-step plan. During the audit of the Court of Audit, it was found that the realization of the solutions in this respect is behind schedule, as was the case last year.
According to the Court of Audit, it is now up to Parliament. The latter must request the government to provide it with the necessary information on the budget overruns of 277 million guilders so that it can assess these before adopting the 2018 annual accounts, including the budget changes.
Parliament must also ensure that the Minister of Finance and the Council of Ministers follow up the recommendations of the Court of Audit as soon as possible and consider the objective of a qualified auditor's report on the 2021 annual accounts.
