Accountant Criticizes Govt's Decision

Details

Economy

Wednesday, 07 March 2012 02:30

By caribarena news

Antigua St John's - The government’s decision to “leapfrog” Antigua’s 2007-2009 accounts could have far-reaching implications, according to Institute of Chartered Accountants of the Eastern Caribbean (ICAEC) representative Cassandra Simon.

Simon noted that the country’s account balance is carried forward, and does not stand on its own, so the government’s move to finalize the 2010 books without first doing those for prior years is a recipe for ruin.

“It is a dangerous precedent that is being set," she said. "If government is going to say we are going to forget about the old one and move forward, then private enterprises can say the same… You don't have a balance coming in on its own. A balance is carried forward. So if the balance carried forward is incorrect, then the result cannot be correct."

The accountant added, “If you are going to come forward and then go back, what you may have is a situation that we call in accounting a ‘prior period adjustment’."

This means the 2010 books would likely need to be changed after balancing those for 2007-2009, which could land the country in the same boat the finance ministry is trying to get out of.

Simon explained that when banks do not have immediate access to a client's deposit and withdrawal records, it puts a cap on the amount the client can withdraw.

“Without that information, they don't know how much money you have available. So they would say to you this is as much as you can withdraw, so it covers them that even if you withdraw more than you have available, the loss to them is not that great,” she said.

Finance Minister Harold Lovell did not specify whether the government had used a prior period adjustment in completing the 2010 books now up for audit. He said the government intended to have all the financial records ready before the presentation of the next budget.

The minister justified the government’s decision to skip 2007-2009 by suggesting that a more realistic picture of the country’s current accounts could be generated.

But Simon said, “I think they need to come up with a better explanation than that, because if a private sector person says they don't have the old records and can’t find it, government would do a tax assessment on them to the best of their judgment. They would pull a figure from the sky and it could be exorbitantly large. And if you do not have the records, then you can't prove it and you have to pay their figures."


She also pointed out that the government had already gone to Parliament and extended the date for the effect of the new income tax system to March 31.

“What the government has to understand is that government administers the income tax system and private entities are mandated that three months after the year’s end, they are required to file," the accountant said. "If government mandates that for private entities, and they cannot do it for themselves, even after numerous extensions, it comes down to a point where private entities can say ‘well if government isn’t doing it, why should I?'”

She suggested that the government pull the beam out of its own eye before looking at others.

See related stories:

Govt Leapfrogs to 2010 Accounts

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