The Fiscal Board requires the audited financial statements of the government



The administration of Wanda Vázquez Garced You will have 30 days to present to the Fiscal Oversight Board (JSF) a concrete plan to publish, within approximately 12 months, the government’s audited financial statements (CAFR) for fiscal years 2017 to 2019.

The demand of the tax agency occurred, for the first time yesterday, when the president of the JSF, José B. Carrión, and the director and former president of the Government Development Bank (BGF), Carlos M. García, They also announced their respective resignations from the tax agency..

Both resignations would be the first of what appears to be – according to sources in this newspaper – a reconfiguration of the tax agency four years after its creation through the federal law promise.

The White House confirmed last night to The new day said scenario. “Multiple Board members have expressed interest in leaving the Board in the near future, and the White House has begun working with congressional leaders to chart a path for the board to continue its important work, “said an official from the administration of Donald Trump.

Reacting to Carrión and García’s resignations, the official, who asked not to be identified, also gave a boost to Promesa, adding that the JSF “plays an important role in improving the situation and the long-term fiscal health of Puerto Rico, after decades of neglect, debt and broken promises. “

Yesterday, Carrión and García’s resignations overshadowed what could be described as one of the most decisive public hearings for government management purposes since the creation of the JSF. The conclave could also be a glimpse of what Puerto Rico would see with a reconfiguration within the fiscal body.

Since Promesa entered into force, the directors of the JSF had the responsibility of requiring the government to disclose financial statements, but it was not until yesterday – almost four years after their appointments – that the fiscal entity dedicated time to the matter at a hearing. public dedicated to the topic.

According to sources in this newspaper, the new path that “traced” by Congress and the White House could result in a new JSF made up of “hard line” people in budgetary and fiscal matters.

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“Now is not the time for excuses, it is the time to demand action,” said Garcia, rebuking the Secretary of the Treasury, Francisco Parés Alicea, and the government’s chief executive officer and chief financial officer (CFO), Omar J. Marrero.

The government of Ricardo Rosselló Nevares it had committed to the JSF to publish the CAFR 2017 one year ago and the other reports this year and the next.

Visibly upset, Garcia said it is time for the government to “think outside the box” and comply with what represents a statutory requirement for debt issuers in the US municipal government and also a requirement in the federal Promesa law.

According to the JSF, the delay in the publication of the CAFR by the government is chronic. Puerto Rico must publish its financial statements on May 1 after the close of each fiscal year.

In contrast, the CAFR for fiscal year 2017 has a delay of 1,097 days and that for fiscal year 2018 marks a delay of 732 days. Meanwhile, the CAFR 2019 should have been published 367 days ago and, since last Tuesday, the countdown began to publish the CAFR 2020.

After the former Secretary of the Treasury Raúl Maldonado to become secretary of the Interior, the official stripped that agency of its role as CFO of the government under the premise that the government would do what was necessary if such functions were supervised from Strength.

The JSF has spent nearly four years advocating for Puerto Rico to create the CFO Office, in order to unify the government’s accounting tasks without making any progress. After the forced departure of Rosselló Nevares, such functions were disarticulated, something that yesterday the executive director of the Board criticized, Natalie Jaresko.

Marrero, who acts as government representative to the JSF, is also the executive director of the Financial Advisory Authority and Fiscal Agency (Aafaf) and CFO.

By 2022, CAFR 2019

“I am not satisfied either,” Parés Alicea replied to García just after revealing that it would take the government another two years to publish the CAFR 2019.

“I am not going to lie to the members of the Board,” added the Secretary of the Treasury, insisting that the proposed work schedule is the most reliable projection that the agency has according to the resources it has.

According to Parés Alicea, the CAFR 2017 has already been delivered to KPMG for its corresponding opinion, and should be published in mid-August. By the end of November, the Treasury must have a “robust” draft of CAFR 2018 to be published in April of next year, and it would not be until January 2022 when CAFR 2019 would be published.

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“That is completely unacceptable,” Garcia said.

Given the situation, the tax agency unanimously decided to give the government 30 days, which Parés Alicea and Marrero agreed to without any major objections.

The decision of the JSF was maintained despite the fact that, a few minutes before, Parés Alicea recounted the juggling he has done to give order to a process characterized by all kinds of mishaps.

Parés Alicea highlighted that, although the CAFRs are lacking, the government has currently published some 44 financial reports that offer a recent and broad idea to the investment community, one of the most critical voices in the management of financial disclosure in Puerto Rico.

Parés Alicea indicated that the government has not taken its feet off the plate when facing three natural disasters since 2017 and the pandemic of the coronavirus.

He added that the government must produce an encompassed radiograph of a structure with 96 agencies and 75 financial entities without having the resources to do so, and that it has even been forced to apply new accounting pronouncements in matters such as the impact of pension payments on the financial situation of the agencies.

Parés Alicea added that even recruiting and retaining the right staff is uphill because of government limitations to offer more competitive salaries.

The picture that Parés Alicea painted looks so discouraging that the official admitted that the Government’s Central Accounting division in the Treasury – made up of only about twenty employees – suffers from a problem of constant resignations and only has a licensed public accountant. The resources that complement accounting tasks in the Treasury are in the hands of consultants such as Deloitte & Touche, it was indicated.

Consequences to those who fail

In an attempt to offset the situation, the JSF approved an incentive program that includes a $ 1,500 bonus to employees if they manage to publish the financial statements in certain periods of time.

However, without ambiguity, García insisted that it is time to apply concrete measures, something in which the director Andrew Biggs agreed.

According to Biggs, who published on his Twitter account that Puerto Rico will achieve little if its political class continues to promote public governance comparable to Cuba and Mexico, the state of Louisiana was flooded by Hurricane Katrina and its government barely took weeks in relation to the deadline to publish your financial statements at that time.

García suggested that Parés Alicea and Marrero consider suspending funds or postponing requests for assistance from agencies that are unwilling to do their duty.

“Puerto Rico will never leave Promesa,” said Garcia, referring to the financial disclosure requirement established in federal law.

During the hearing, the JSF also offered a narrative about the certified budget that it had unveiled before and gave details of the fiscal plans approved last Monday, including the plans of public corporations and the 10 municipalities that are part of the JSF pilot plan to straighten the finances of the municipalities.

José A. Delgado contributed to this report.

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