The Tribune

By NEIL HARTNELL

Tribune Business Editor

nhartnell@tribunemedia.net

The Bahamas Institute of Chartered Accountants (BICA) has warned the Government that its end-January deadline for Business Licence filing is “significantly challenging”, and threatens to “undermine” the quality of return certifications.

The accounting profession’s governing body, in a January 27 letter to Prime Minister Perry Christie, warned that the “impractical” deadline was counter to the Government’s desire to obtain assurance that company filings were accurate.

BICA called for the filing/certification deadline to be extended by two months to end-March, which is the same date by which businesses must pay their Business Licence fees to the Government.

The letter, which has been obtained by Tribune Business, suggested that there was still time to effect such a change, even though the January 31 returns filing deadline is now just two days away.

It warned that companies deemed to be in non-compliance would suffer in other areas, as Customs, for example, will refuse to clear imported goods for firms that do not possess a valid Business Licence.

“The timelines for submission and certification of financial information, namely revenue/turnover, by January 31, 2016, is significantly challenging,” BICA warned the Christie administration.

“Most businesses utilise the initial weeks of January, followed by their financial year-end, to properly close their financial records, which includes ensuring that all material transactions and balances are recorded in the correct financial period.

“In order to focus attention on the proper closure of financial records, and then have certain financial information certified by the end of January, is not practical for most businesses.”

The letter, written by Gowon Bowe in his capacity as co-chair of BICA’s technical committee, is almost a ‘mirror image’ of the position advanced by the private sector through the Bahamas Chamber of Commerce and Employers Confederation (BCCEC).

Mr Bowe chairs that organisation, which also wants the Business Licence return filing deadline pushed back until March 31.

The private sector believes the month allowed for companies to get their financial records in order post-year end is simply insufficient, even for those with a December 31 financial year-end.

They, too, will likely be unable to get their paperwork in order much before the filing deadline. This, in turn, increases the pressure on Bahamian accountants, who have to certify that the turnover figures submitted by the roughly 6,000 businesses with annual revenue greater than $100,000 are accurate.

The certification requirement demands that BICA-licensed accountants perform investigations and analysis, in accordance with international auditing standards, to verify the turnover figures submitted by their clients were accurate. The January 31 deadline almost inevitably means the process will be rushed.

“The professional standards that govern the exercise of certifying any financial information require minimum procedures, and with impractical deadlines there is a significant risk of such procedures not being carried out comprehensively, and the quality of certifications received being undermined,” BICA warned the Government.

“This is contrary to the apparent objective of independent certification, which is to gain comfort over the veracity of financial information submitted by businesses.”

Calling for the filing deadline to be put back to March 31, Mr Bowe and BICA said “the vast majority of businesses take pride in complying with laws and regulations”, and did not want to breach them because of an impractical deadline.

“Further, if businesses are deemed to not be in compliance, this could impact other business approvals that are required to operate as normal,” BICA added.

“A prime example would be approvals from the Department of Customs to continue to clear goods if a Business Licence is not obtained by January 31, 2016.”

One well-known BICA member, speaking on condition of anonymity, questioned why the Institute had waited until the ‘11th hour’ to raise the issue with the Government, given that its letter was sent just four days before the return filing deadline.

This, the accountant added, was despite everyone knowing there may be problems, given that the relevant Business Licence Act changes took effect last July.

“BICA has finally found a voice,” the accountant said. “There is no reason why this letter could not have been written from when changes were made to the legislation on July 1, 2015....

“Any accounting professional (as well as his/her clients) would have already experienced stress and frustrations trying to comply with an unreasonable deadline. So if the Prime Minister does allow an extension, it will not be any reason to be overjoyed that he listened, but rather late recognition of poor legislation.

“Anyone with basic business experience would know it is impractical to expect up to 6,000 businesses to be certified in 20 business days.”

They also questioned how the Business Licence Department was determining which accountants were ‘licensed’ to conduct the certifications, highlighting another potential flaw in the process.

“BICA has not yet gazetted the list of licensed accountants for 2016,” the accountant said. “BICA’s new legislation, which was passed by our government just a few months ago, indicates that the list of licensed accountants has to be gazetted by February.

“This is in conflict with the new Business Licence Act, which requires certification by January 31.”

BICA’s letter, meanwhile, also raised concerns that the Government had not specified the standards and “form of certification” to be followed by Bahamian accountants in verifying the accuracy of their clients’ turnover figures.

“There is uncertainty regarding the form, content and logistics of the certification process,” the Institute wrote.

“In past years, there was agreement between BICA and the revenue secretary regarding the nature of the attestation to be provided on Business Licence applications - namely financial information that should be subject to review procedures.”

BICA said new international accounting standards governing review engagements had been passed, and added: “There has been no updated consultation and agreement between the revenue secretary and BICA regarding the nature of attestation required to meet the requirements of certification in the Act.

“Several members have reported inquiring with the Department of Inland Revenue and the form of certification, as well as the appropriate professional standards to be followed, are not clearly defined in the responses.”

BICA called for “clarity” in terms of the standards, and certification form and mechanism, to be used. It also questioned how the accountant’s signature on the Business Licence application, and submission of the review report, would work now that filings had to be done online.

The Institute also called for the Department of Inland Revenue to define the financial reporting standards to be used in the Business Licence certification, as companies could currently use different ones.