The Tribune

By NATARIO McKENZIE

Tribune Business Reporter

nmckenzie@tribunemedia.net

A Cabinet Minister yesterday said it would take five years to fully phase-in accrual accounting to the Government’s financial management, while acknowledging that the current cash-based method has “severe limitations”.

During his contribution to the 2015/2016 mid-year Budget debate, Michael Halkitis, minister of state for finance, sought to dismiss the suggestion that the Budget figures are suspect because the Government does not currently use an accrual accounting system.

“If you are moving to accrual-based accounting to give you a true picture of what the Government owes into the future, and what they can expect to get in the future, there are some things that you have to do,” Mr Halkitis said, “and a part of it is getting rid of this thing where we put a line for everything in the Budget.

“There are ways that you have to classify. When we changed the presentation last year we got accused of trying to hide things. In changing those classifications, those are steps towards moving towards internationally-accepted accounting principles.”

Mr Halkitis. added that the Government, via a committee involving the Treasury in conjunction with the Bahamas Institute of Chartered Accountants (BICA), has been working towards development and publication of a concept paper that would set out a road map towards accrual accounting. That concept paper, according to Mr Halkitis, will be made public shortly.

“For anyone to insinuate that the Government has done nothing, and is doing nothing, to implement accrual accounting as a basis for public sector accounting  for the Bahamas is false,” the Minister said.

“The Government readily acknowledges the need for reform to public sector accounting, leading to the adoption of international public accounting standards. Public sector accounting for the Bahamas government has always been prepared on a cash basis, and the accounts which comprise this mid-year presentation have been prepared on the same basis  from prior years.

“The Government also acknowledges that based on the cash basis of accounting,  all of the Government’s assets and liabilities are not accounted for and disclosed,” the Minister continued.

“It has therefore recognised that the cash basis has severe limitations, and the financial statements produced from this basis have limited usefulness to the international rating agencies, banks and investors, as well as  limited usefulness to the Government for decision-making.

“We recognise that we have to modernise, and we are doing it. A part of doing it is some of the changes in the format that we have been doing with the Budget.”