Economist alarmed over Government/Auditor General impasse – Trinidad and Tobago’s image at risk

The content originally appeared on: Trinidad and Tobago Newsday

Economist Dr Vaalmiki Arjoon. –

UWI economist Dr Vaalmikki Arjoon says the ongoing controversy between Government and the Auditor General over the submission of the latter’s report on the 2023 public financial statements in Parliament needs to be dealt with, one way or another, or there could be serious risks to the economy.

On April 26, Finance Minister Colm Imbert succeeded in having a motion passed in the House of Representatives to extend the time to submit the public accounts to the Auditor General and the time for the Auditor General to submit a report on the accounts to Parliament, under Sections 24 (1) and 25 (1) of the Exchequer and Audit Act, respectively.

Imbert said this was necessary because his ministry’s officials detected a variance and understatement of approximately $2.6 billion in the 2023 public financial statements.

The same motion was passed in the Senate on April 29 by a 23 to six vote margin.

Auditor General Jaiwantie Ramdass has defended her conduct in the submission of her report on the 2023 public financial statements to Parliament, and in respect of information provided by the finance ministry on the $2.6 billion understatement.

In a statement issued via WhatsApp on May 1, Arjoon said, “It is imperative for this issue to be resolved at the earliest to forestall serious concerns about the credibility and accuracy of our reported fiscal performance in 2023 as well as our national accounting practices.”

He added that should there have been an understatement in the public revenues, especially one as significant as $2.6 billion, “It is possible that stakeholders may question the veracity of our reported fiscal performance in previous years and whether there were errors preceding this one.

“These are questions that will crop up not only for investors and the private sector, but also multilaterals and credit ratings agencies, as the question of credibility in government’s financial management and reporting may arise.”

For instance, he continued, “Disputes about the validity of the fiscal data could raise concerns for credit ratings agencies as they could view this as a governance risk and question the quality and accuracy of government reporting, potentially harming future ratings.”

He said multilaterals could question the integrity of Trinidad and Tobago’s fiscal reporting which in turn can hamper the country’s ability to raise financing from them, especially at attractive rates. Arjoon warned, “If this issue is not addressed at the earliest, there is the potential for trust in public fiscal institutions to be undermined.”

He said the Finance Ministry must adhere to the highest standards of financial reporting and transparency.

“It is only natural that the Auditor General would require supporting documentation to verify, within reason, the accuracy and completeness of the new revenues reported which the ministry should have little difficulty in providing going forward, given that they successfully received an extension from Parliament.”

But, he continued, “If, however, they fail to provide adequate documentation, it could further call into question the authorities’ commitment to good governance, and create an unfortunate perception among certain stakeholders, however misleading it may be, that someone was being disingenuous with the figures.”

Arjoon said this must be avoided at all costs.

He identified one benefit if the $2.6 billion revenue understatement is proven to be valid.

“This significantly narrows the fiscal deficit for the last fiscal year from $3.411 billion to $811 million.”

He said this could benefit Trinidad and Tobago from a credit-ratings perspective but warned this would only be the case if there is adequate evidence of an error.

Arjoon said funds of the magnitude Imbert mentioned in Parliament should never be allowed to slip through the cracks.

“To ensure the accuracy of the new electronic cheque-clearing system, which was blamed for the error, a more effective approach might have been to initially run it parallel with the old system.

“This would allow for thorough verification of the new system’s performance. Once confident in its reliability and functionality, the full transition could then take place, potentially averting the reported errors.”

In a statement in the Senate on April 29, Imbert clarified for the record that the national accounts to be audited are prepared, declared, certified and submitted by senior ministry officials including the permanent secretary and cosignees the controller of accounts and the treasury director.

Imbert denied Auditor General Ramdass’ claim that the updated accounts were backdated, saying ministry officials had shown him a copy of them.

“I was subsequently sent a copy of the statement of declaration and certification submitted by ministry officials to the Auditor General with the amended public accounts on April 16, 2024.

“From what has been shown to me, this statement of declaration and certification of the amended public accounts is dated April 16, 2024, and not January 31, 2024, as falsely alleged in the letter from Freedom Law Chambers. I have seen on that declaration, the April 16 one, the signatures of the permanent secretary in the MOF (Ministry of Finance), the controller of accounts and the treasury director and the date April 16, 2024, written in their own hands,” Imbert said.

Freedom Law Chambers is Ramdass’ slegal representative in this matter.