The Tribune

By FAY SIMMONS

TRIBUNE Business Reporter

jsimmons@tribunemedia.net

A FORMER Free National Movement (FNM) MP is arguing that the Government's failure to adopt accrual-based accounting limits its ability to properly allocate public funds, stressing that officials must know The Bahamas’ true financial position first.

Reece Chipman, ex-Centreville MP, said the transition to accrual-based accounting, which would provide a more comprehensive picture of the Government's assets, liabilities and financial obligations by recording expenditure commitments when they are incurred, not when the money is spent, is vital to improving public financial management and ensuring The Bahamas can properly plan its finances.

He argued that the existing modified cash-based accounting system does not provide sufficient clarity on the Government's actual financial position, particularly when liabilities and outstanding obligations are not fully reflected in the information being used to guide fiscal decisions.

“If the Government was following IPSAS, which is a public sector accounting standard, which speaks to accrual-based accounting, whichever you'd like to call it, then we could give it some credence,” the former MP said.

Mr Chipman also questioned the credibility of the Government's $39.3m Budget surplus for the 2025-2026 fiscal year, arguing that the failure of state-owned enterprises (SOEs) to consistently submit financial information makes it difficult to establish whether the figures accurately reflect The Bahamas’ fiscal position.

He said that when agencies whose finances contribute to the Government's overall reporting are not providing the necessary information, there are legitimate reasons to question the figures being presented.

“If the organisations of which you put in that, which you are saying is a part of this surplus, are not reporting their financial information, you know, I definitely question whether or not the surplus is real,” Mr Chipman said.

He added that the adoption of accrual-based accounting will help the Government establish a clearer understanding of what it owns and what it owes, allowing officials to make better-informed decisions about the allocation of public resources.

Mr Chipman argued that the ability to earmark money for specific purposes depends on knowing what funds are available, and what financial obligations have to be met, rather than moving money between different areas as needs arise.

“I think… I hope at some point we are able to earmark money. If you notice, the Government does not earmark its money because if I needed to use it from this side to that side or to go here or there, then we just move the money around,” he said. “Earmark the money. The only way you can earmark money is if you know where it's coming from and where you think it's going.”

Mr Chipman said the issue had been discussed for years without the necessary progress, recalling that the transition to accrual-based accounting was already being discussed when he served as Bahamas Institute of Chartered Accountants (BICA) president around 15 years ago.

He said the move would help The Bahamas better understand its financial obligations and plan for the resources needed to meet them. “You can only earmark what you know you have, based on what you know you owe,” he said.

Michael Halkitis, minister of finance, responding to questions about central government's financial reporting, said the Government produces annual reports through its Budget and Treasury reporting processes.

However, he acknowledged that much of the accounting work remains manual, with reports taking considerable time to generate, reinforcing the need to modernise the country's financial management systems.