WILLEMSTAD - The Court of Audit has rejected the 2018 financial report. Obligations, expenditures, and revenues in 2018 have not been incurred in accordance with laws and regulations. The financial report also does not provide a true and fair view of the financial position of Curaçao as per 31 December 2018 and the result for 2018.
Obligations, expenditure, and revenue do not correspond to the adopted national budget. The exceedance amounts to a total of 278 million guilders.
Ministries
The Ministry of Minister Suzanne Camelia-Römer, Health, Environment and Nature contributes the most to the exceedance (65%). In total it concerns 99 million guilders. Minister Zita Jesus-Leito, with her Ministry of Transport and Transport, exceeded 24 million, 16 percent of the total. The Ministry of Economic Development spent 12 million guilders more than was budgeted (8%).
On the revenue side, the Ministry of Finance was unable to raise 110 million guilders (89%), as was budgeted.
Legal regulations
The Court also reports that obligations and expenditures have not been incurred in accordance with relevant legal regulations. In total, an amount of 354 million appears to have been wrongfully spent. A large part of this has been spent on subsidies for a total amount of 262 million guilders. Provided without the required grant decisions and transfers totaling 59 million paid without the underlying contracts.
The expenditure and revenues of which it is uncertain whether they have occurred according to the relevant statutory regulations amounts to almost three billion guilders. According to the Court of Auditors, this is mainly because nearly 1.4 billion guilders in tax revenues due to internal control is not enough.
Not a true picture
The annual report also does not provide a true and fair view of the financial position of Curaçao as per 31 December 2018 and the result for 2018.
The annual report has not been prepared in accordance with all relevant provisions of the National Ordinance on Accountability 2010. For example, the budget changes are not explained in the annual report.
It contains 34 million guilders in errors and 3 billion guilders in uncertainties. The errors relate to, among other things, unjustified direct bookings on equity for the provision of bad debts totaling 16 million guilders and an incorrect accounting of 13 million guilders as a subsidy. The uncertainties of 3 billion guilders are also largely caused by the uncertainty surrounding tax revenues, 1.4 billion guilders.
The Court of Audit says that the financial report does not give a true and fair view of the financial management conducted. It contains errors amounting to a total amount of 665 million guilders and almost 6 billion guilders in uncertainties.
For the sake of a true and fair view, the annual accounts may not contain more than 17 million guilders 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 monitored.
The ministries do not yet meet the minimum requirements of orderliness and verifiability that are prescribed in the National Ordinance on Financial Management. For example, no required segregation of duties has been done, there is no adequate internal control of the income and the internal functions of the ministries have not been sufficiently filled. Performing the required internal controls, such as checking the data processed in the financial administrations, is also not in order.
The drawing up of national decrees and ministerial regulations to further elaborate procedures for the establishment of collection, discharge, and return of non-tax revenue is below standard, as well as the inclusion of a report "Management of the real estate as a separate note to the annual accounts, according to the Court of Auditors.
Parliament
In 2018, Curaçao indicated that it will organize and keep its financial management in order. As the (ultimate) touchstone of this, its annual report for the 2021 year of service will be adopted in time and provided with a qualified auditor's report.
The government has drawn up a step-by-step plan to achieve this. During the Court's audit, it was found that the realization of the solutions is behind schedule.
According to the Court of Auditors, it is now up to parliament. It must request the government to provide it with the necessary information about the budget overruns of 277 million guilders so that it can assess these overruns before proceeding with the adoption of the 2018 annual accounts, including the budget changes.
Parliament should also ensure that the Minister of Finance and the Council of Ministers follow the recommendations of the Court of Auditors as soon as possible, taking account of the objective of a qualified audit opinion on the 2021 annual report.
