Tuesday, August 11, 2020

Release of Commonwealth Audited Statements Delayed

By on April 1, 2016

SAN JUAN — The commonwealth’s audited financial statements for fiscal year 2014 have once again been delayed amid the ongoing fiscal developments affecting Puerto Rico, Caribbean Business has learned.

The long-awaited financial reports were expected to be released during the first week of April by independent auditors KPMG, but the process has suffered yet-another setback, and it remains to be seen how long it would now take to deliver the reports.

At least two meetings have been held in La Fortaleza this week to discuss the matter, Caribbean Business has confirmed. For the past several weeks, Chief of Staff Grace Santana has been leading the discussions over the audit process, with the participation of government officials and KPMG representatives.

La Fortaleza has yet to respond to a request made Tuesday by Caribbean Business for the latest information on the matter following this week’s meetings.

When CB asked Monday, Gov. Alejandro García Padilla and Santana reiterated that the government didn’t owe any information to the auditors at that time. Nevertheless, they acknowledged certain commonwealth components have yet to finish their auditing processes, including the Government Development Bank (GDB) and two of the commonwealth’s retirement systems.

The fiscal situation of the government bank could be one element affecting the delivery of the commonwealth’s audited statements, which need to include an updated snapshot of the bank’s fiscal health. Moreover, as first reported by CB, La Fortaleza could be on the brink of presenting debt-moratorium legislation in an effort to protect government services amid looming large debt payments and uncertainty over favorable federal action.

During the recent legal battle between the Puerto Rico government and retail giant Walmart, a KPMG executive asserted it would take an additional eight weeks to finish the process once the commonwealth delivers all the necessary documents and completes the process on its end. Since late January, government officials said the commonwealth had delivered all pending documents, thus triggering the eight-week period to release the report.

While originally due last May, government officials have pointed to a number of reasons that have delayed the statements’ release, including the commonwealth’s quick-changing fiscal situation, which has prompted the government’s independent auditors, KPMG, to ask for additional projections and disclosures.

“We are not hiding anything. The situation is as bad as we are explaining,” GDB Chairwoman & President Melba Acosta told Congressional staff earlier this year after briefing them on the island’s latest fiscal developments. “We have tried to put as much information as we can so the market understands where we are at.”

In mid-February, the Puerto Rico Treasury Department released a draft of the commonwealth’s financial statements for fiscal 2014 — a 370-page document that includes unaudited and preliminary financial information about the government bank and the retirement systems, all of which have been facing bleak fiscal prospects. Noting the severe crisis affecting Puerto Rico as a whole, the document reiterates the possibility of measures that could affect creditors, such as further and more significant defaults, and other emergency measures, if the island fails to address its fiscal woes on time.   

“Trust me, 2014 is going to be the same…[they] are not going to be beautiful financial statements. They haven’t been for I don’t know how many years,” GDB’s Acosta stated in February.

Various sectors, including high-ranking Republican members of Congress, have called for the release of the audited statements in order to have a complete, independent picture of the island’s financials. What’s more, recent draft legislation presented by the GOP in the lower chamber calls for completing the independent audit process before allowing the commonwealth access to debt-restructuring tools.

“[Audited statements] should be ready before the bill is approved,” the governor said.

KPMG

KPMG’s Miguel Venta testifies Feb. 16 at a Senate hearing on the auditing process of the island’s financial statements for fiscal 2014, while GDB President & Chairwoman Melba Acosta and Treasury Secretary Juan Zaragoza await their turn.

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