The Tribune

By NEIL HARTNELL

Tribune Business Editor

nhartnell@tribunemedia.net

A BISX-listed firm last pledged it has "resolved" technology woes that forced it to seek more time to publish its 2022 financial statements and prevent a 'qualified' audit opinion for a second consecutive year.

Julian Brown, Benchmark (Bahamas) president and chief executive, in brief messaged replies to Tribune Business questions said the issues that forced the investment manager to request an extension from the Bahamas International Securities Exchange (BISX) have been addressed and the audited financials will soon be disclosed to shareholders and the capital markets.

"Technology upgrades created the issue, which we have resolved. Our accounts will be released shortly," Mr Brown, who said he was off-island travelling, messaged. No further details or explanations were provided after it was disclosed earlier this week that Benchmark (Bahamas) was effectively trying to prevent lightning from striking twice and avoid external auditors qualifying its accounts for the second successive year.

"Benchmark (Bahamas) wishes to advise the investing public we have requested, and received, from The Bahamas International Securities Exchange (BISX) an extension for filing our 2022 audited annual financial statements to allow further research into a difference in the 'due to clients' account in the statement of financial position," the company revealed.

"We are working to eliminate this difference by providing sufficient support to determine the adjustment and avoid a qualified opinion. The statements will be filed on or before May 31, 2023." Mr Brown's messaged rely to Tribune Business seemed to indicate that the technology woes behind the 'due to clients' difference have been resolved, and that Benchmark (Bahamas) will avoid a qualified audit opinion on its 2022 results, although it was not entirely clear.

For the same problems were at the root of the qualified audit opinion that Benchmark (Bahamas) received on its 2021 audited financial statements last year. Mr Brown, in a September 22, 2022, interview promised that the issue would be “cleared up” in time to avoid a repeat with the 2022 audited financials, which has seemingly either not happened or is taking until the last minute to be addressed.

Back then, he blamed the switch to a new reporting platform for PKF Bahamas’ revealing there was an “unreconcilable” $337,369 discrepancy in the $18.439m sum owed to the financial services provider’s clients.

The accounting firm and its lead audit partner, Renee Lockhart, in the opinion attached to Benchmark’s full-year financial statements that were signed-off by its directors on July 31, 2022, declined to provide a clean bill of health due to the absence of sufficient supporting records on that matter.

“The group is carrying a balance due to its customers’ account amounting to $18.44m in the consolidated statement of financial position at December 31, 2021,” PKF informed all Benchmark shareholders and other interested parties. “We were unable obtain sufficient appropriate audit evidence to reconcile this amount to the underlying accounting records, specifically the subsidiary ledger.

“The unreconciled difference between the consolidated statement of financial position and the subsidiary ledger amounted to $337,369. Consequently, we were unable to determine the adjustment that is necessary to be posted to the said account.” BISX-listed companies are supposed to publish their annual financials within 120 days of year-end, and end-May would be past that timeline.

A “qualified” report is issued whenever auditors find discrepancies or anomalies with particular aspects of a company’s financial reporting and accounts that warrant attention and questions being raised. The 2021 financial statements gave no further explanation for the anomaly, and PKF said its inspection of Benchmark (Bahamas) financial statements proved satisfactory in all other respects.

Capital markets sources, speaking on condition of anonymity, yesterday said a repeat of the same issues with the 2022 audited financial statements, together with the potential for another qualified audit, "doesn't bode well for a broker/dealer". Benchmark (Bahamas) is one of BISX's five authorised broker/dealer members.

"There's obviously more than a little smoke around that issue," one contact said. "I'm sure there's some validity to the issue." Another suggested that the Securities Commission, the capital markets regulator, should take a look at the situation. "The regulator should have been on top of that," they added. "If they had a qualified last year, they should be following that up to make sure that's addressed."

The audit issues, and extension, have arisen just as Benchmark (Bahamas) has been mulling the creation of an investment fund that it says will enable Bahamians to participate in the ownership of major foreign direct investment (FDI) projects in this nation.

"Benchmark wants Bahamians to gain a bigger participation in future investment opportunities made by the FDIs in our GNP (gross national product)," it said in recent promotional literature. "We believe it’s what the Bahamian people deserve. After all, it is our land.

"Benchmark is creating a Benchmark Bahamas Real Estate Investment Trust (BBREIT) to allow Bahamians the opportunity to invest small sums of money consistently in the growth and expansion of our real estate properties by FDIs in our GNP. The BBREIT can be offered to small, medium, and large size Bahamian investors, which will allow Bahamians the opportunity to mobilise capital of significant value to participate with or without an FDI in our GNP.

"The BBREIT will have the opportunity to participate in exponential returns while, at the same time, generating consistent income for its investors. The BBREIT will be a new opportunity for Bahamians to begin to once again build wealth for themselves and for future generations, the same as it is presently doing for the FDIs."

Mr Brown yesterday said the plan was still very much at the concept stage, telling Tribune Business: "We are doing our analysis on a Bahamian real estate investment trust concept. Once done we will determine the direction."