The prime minister of Bahamas has announced plans to fully switch to accrual-based accounting, claiming that the current accounting system is “woefully lacking” when it comes to providing an overview of the country’s financial position.
Addressing the Bahamas Institute of Chartered Accountants’ (BICA) Accountant Week last month, prime minister Hubert Minnis reportedly said the government would switch by the end of June 2022, while the accounting system would be implemented by the wider public sector by 2023.
He described the move as “no small feat”, but said the current cash-based system was lacking in providing a complete and accurate view of the financial position, activities and performance, according to one of the country’s leading daily newspapers, the Bahamas Tribune.
“As policymakers we value the importance of financial reporting that meets international standards. It is essential that we are in a position to utilise high-quality information to make informed and sound spending decisions, while properly managing our assets and our liabilities,” he said.
He added that the move would ensure greater transparency and accountability in public sector finances and allow the government to better monitor its debt and liabilities.
He said: “Transitioning public financial reporting to accrual based accounting is no small feat. We have targeted a date of end of June 2022 for full central government transition to accrual accounting and 2023 for the public sector at large.”
The IMF urged the government to move forward with accrual accounting and producing “general government fiscal accounts”, at the conclusion of a visit to the Bahamas in September.
In the statement, the IMF also said the government’s fiscal deficit was estimated at 5.7% of GDP in financial year 2017, up from 3.5% the year before.
This was largely due to increases in the wage bill, post-hurricane recovery, temporary tax reliefs, and disruptions in revenue collection.
Simone Rensch
Reporter on Public Finance International
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