Minnis: Cash-based accounting system ‘breeds mistrust’
The government’s present cash-based accounting system is “unsustainable and breeds mistrust”, said Prime Minister Dr. Hubert Minnis yesterday.
Minnis added that the cash-based system of accounting is “woefully” lacking in providing a complete and accurate review of financial activities and performance.
Minnis, who spoke at a Bahamas Institute of Chartered Accountants seminar, said the government has a working group facilitating the transition from a cash-based system to an accrual-based system of accounting and has produced a concept paper outlining the road map for the implementation of accrual based-accounting along with the implementation of International Public Sector Accounting Standards for budgeting, accrual accounting and financial reporting.
“The government’s resolve in this regard is underscored by the prominence we have given to fiscal responsibility, transparency and accountability in our governing mandate,” said Minnis.
“Moving to accrual-based accounting will ensure greater transparency and accountability in public sector finances, as well as a better monitoring of government debt and liabilities.”
Minnis said the potential harm of the absence of these “prudent practices” was exposed in the recent assessment of the fiscal outcome for FY2016/17.
“As we now know, high levels of unbudgeted expenditure arrears are poised to elevate the actual overall fiscal deficit some five times higher than originally budgeted.
The lack of transparency and accountability inherent in cash-based accounting is unsustainable and breeds mistrust,” he added.
Minnis said the International Monetary Fund will also be assisting the government in “defining a sound framework” to include controls of certain recurrent expenditures, pension reform and better managing subsidies for state-owned enterprises.