Oversight board gives Treasury Dept. an ultimatum

By The Star Staff

The Financial Oversight and Management Board (FOMB) is giving Treasury Secretary Francisco Parés Alicea 30 days to devise a plan that would accelerate the release of commonwealth audited financial statements.

Puerto Rico has not released audited financials for the years 2017, 2018, 2019.

“It is a top priority of the FOMB,” said Natalie Jaresko, the oversight board’s executive director, during a board hearing Wednesday. “It is a critical element to completing our mandate.”

Puerto Rico is supposed to issue audited financials 180 days after the end of the year, but the audited financial for 2017 is 1,097 days overdue, the 2018 audited financial is 732 days overdue and the 2019 audited financial is also overdue, Jaresko said.

Parés Alicea said he expected the 2017 audited financial to be published in August, the 2018 audited financial in April 2021 and the 2019 audited financial in January 2022.

During his explanation for the delay, the Treasury chief mentioned personnel shortages and lack of economic resources as the main reasons for the delay, but oversight board member Carlos García pressed upon Parés Alicea the urgency of dealing with the problem expeditiously and without making excuses.

“We are still behind in audited financial statements; the biggest issue here is accountability,” García said. “Unless you make every single agency accountable and [make clear] the cost and consequences of not doing reconciliations on time, this will be a recurring situation.”

Deeming the situation unacceptable, García called for a hearing 30 days from now to discuss the problem. Parés Alicea insisted that he needed more resources to complete the audits, but García told him he had “to think outside the box.”

At the start of the hearing, Jaresko said the oversight board has been holding recurrent meetings with the Treasury Department and government external auditors. To help expedite the 2017 and 2018 audits, the board said it required the government to make weekly updates and provide progress reports and other documents, including the contract with external auditors to ascertain the prompt delivery of the audits.

The oversight board said it provided the Treasury Department $1.6 million to hire staff accountants for the agency’s central accounting division to reduce the reliance on external contracts. It also provided up to $15,000 for incentives to employees if the 2017 audited financials are published soon and the 2018 audited financial statement draft is provided by November.

Parés Alicea provided a long list of reasons for the delays in releasing audited financials. That list of factors includes the 2017 hurricanes, the implementation of new accounting standards and the insolvency of the Government Development Bank. He said the Treasury Department’s central accounting division only has 27 employees, of which just one is a certified public accountant.

The 2017 audited financial is under review by accounting firm KPMG, but the portion of the report explaining the reason why the commonwealth remains a “going concern” has been a headache for auditors to write because of the bankruptcy process, Parés Alicea said.

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