Immediate action needed after scathing fiscal review
Government should rush to take the “urgent remedial action” recommended in a recent report that paints the Treasury Department in a startlingly bad light.
Drafted by the firm PwC after an extensive review, the report describes a department where poor practices abound and accounting systems are haphazard at best.
To our thinking, two of the review’s many unfortunate findings stand out.
• A wide range of errors led the department to misstate the government’s true fiscal position to the tune of more than $100 million: As of 2011, PwC reported, the territory’s net fiscal position was about $75 million in the red — a far cry from the $34 million cushion that was originally reported.
• Cabinet repeatedly waived the tender process when awarding major contracts, often without documenting the rationale for doing so: Between 2008 and 2011, only 33 of 101 major contracts worth a total of $87.1 million were put to bid as recommended by the Public Finance Management Act.
Either of these findings would be disturbing in itself. Taken together, they suggest that decisions about major public expenditures were made recklessly without sufficient information about the territory’s fiscal position.
Worse, these findings were among many other disquieting discoveries about the Treasury Department’s processes: egregious reporting delays; inefficiency; inadequate controls and so on.
Since such systemic flaws must be brought to light before they can be rectified, we applaud the government for commissioning the review and making it public. Though the move smacked of a political manoeuvre — the review only covered the former Virgin Islands Party-led administration’s time in office — it was clearly needed.
Now, the government should quickly and transparently tackle the long list of reforms suggested in the PwC report. This task will not be easy: The recommendations, which seem sound, include extensive changes to policies and procedures, as well as various investigations.
Since coming to office in 2011, the current government has taken significant steps toward fiscal reform. Most important, perhaps, was the signing of the Protocols for Effective Financial Management in April 2012.
But leaders still have much to prove. Recently, a bidder claimed that the tendering process for the cruise pier project was categorically unfair, raising pertinent questions that government hasn’t answered. And in the case of the planned airport expansion, leaders have yet to produce a proper cost-benefit analysis as required by the Protocols.
In light of such omissions, it is fitting to note that agreements and promises don’t necessarily equate to reform.
Thus, while the PwC review is a preliminary step toward heading off a potential fiscal disaster, it is not sufficient in itself. Action must follow — and soon.
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