Cft: "Improvement of financial management is required"
A substantial improvement is required in the financial management of the public entities Bonaire, Sint Eustatius and Saba, is the observation of the College financieel toezicht Bonaire, Sint Eustatius and Saba (Cft BES) in its sixth half-year report which was presented on February 16th to the minister of Interior Affairs and Kingdom relations (Binnenlandse Zaken en Koninkrijksrelaties - BZK).
The Board of financial supervision (Cft) remarks that in the most recent period little progress was made in the area of the budget process and the financial management.
This is in particular the case for the relatively smaller public entities Sint Eustatius and Saba.
The Board states that a sound budgetary process is dependent on good financial management. Even without losing sight of the many important steps that have been taken since the start of the state reform, the fact remains that the public entities still face great challenges.
Cft indicates in its report its understanding for the fact that the transition towards becoming public entities costs a lot of time and that this transition is very demanding for the public entities. However, at the same time it is also important to continue denominating the areas where necessary steps still need to be taken.
In every aspect of the financial management improvements are necessary, such as liabilities and budget management, budget and liabilities administration, execution reports, the planning and control cycle, Corporate Governance, the subsidies policy, the audit year plan and the land policy.
Considering that the capacity (of personnel) is limited on the islands, the Board stipulates together with the public entities three or four priorities per year. Since there are differences in the progress made by the public entities, the agreements also differ per island.
Starting 2012 the budgets of the public entities have to comply with the Decree on budget and accountability public entities BES (BBV BES). With regard to Saba, the Board made use of its competence to suspend all relevant components of this Decree. In the first quarter of 2012 Saba will still compose the budget in conformity with the BBV BES.
In November 2011, upon request of the minister of BZK, the execution of the 2011 budget and the 2012 budget of Sint Eustatius were placed under Preceding Supervision (Voorafgaand Toezicht – VT).
This was done because it was expected that 2011 would conclude with a deficit of approximately USD 1.4 million, but also because of the quality of the financial administration and the financial management.
The first experiences with the VT are positive and Cft expects that in the third execution report the expected deficit will not have increased further.
The 2010 financial statements of Bonaire and Saba have been provided with a negative opinion by the accountant. The control of the 2010 financial statement of Sint Eustatius is almost finalized and it is expected that the account will abstain from submitting an opinion. Without reliable accounting information it is impossible to get a complete view of the public finance and to guarantee the reliability of the financial information.
It is therefore that improvement of the supply of financial information has been stipulated as a priority for all public entities in the financial management improvement plans for 2012. For Bonaire and Sint Eustatius the improvement of the liabilities administration is one of the priorities for 2012, whereas for Saba and Sint Eustatius the month closing is one of the priorities.
Lack of capacity is an important factor for all public entities – the level differs for each entity - that determines the extent to which the improvements can be implemented. The necessary changes have to be executed by only a small number of persons, and after a period of (a little) progress, there now seems to be some kind of "change weariness".
In its half-year report Cft indicates that it is important that a new impulse be given to the change process. This is something that should be done by all parties that are involved in the Dutch Caribbean – the islands, the ministry of BZK, the Kingdom Representative and Cft.
In addition to the above mentioned Cft also requests explicitly attention for a number of issues regarding the transition, which are not finalized yet.
This regards amongst others the problem of the transfer of the pension funds from the Netherlands Antilles to the Dutch Caribbean and the possible settlement as a consequence of more, or less, use of the deficit series, which the public entities were allowed in the period of 2008 up to 2010.
It is of great importance that in these issues decisions be taken by the ones involved, so all parties know where they stand, and that they can be geared towards the future instead of investing a lot of energy in the past.
Certainly considering the limited capacity, this is necessary for the future, so the required improvements in the budget process and the financial management can be realized.