Gov’t working to reconcile its accounts by year-end

The Government of St. Vincent and the Grenadines is closer to completing the reconciliation of its bank accounts, with Minister of Finance Camillo Gonsalves saying it is not true to say “$155 million is not reconciled”.

Gonsalves told Parliament that the government has made “considerable progress” on the reconciliation of the two main accounts operated by the Treasury Department.

“It is wholly erroneous, and we’ve said this in the past, to add up the annual differences between the bank statement and Treasury bank balance and say that $155 million is not reconciled,” Gonsalves said.

“The differences are not cumulative. The audit has never said that they are cumulative, and the slightest thought into the process would indicate that they could not be cumulative. So it is misleading to do that.”

The finance minister was responding in Parliament to a question from Opposition Leader Godwin Friday who pointed out that the Director of Audit, in her report on the 2021 public account, noted a difference of $4,381,753.08 between the statement of assets and liabilities prepared by the government and the certificate of balances issued by the Bank of St. Vincent and the Grenadines.

Friday quoted the Director of Audit conclusion: “In the absence of a bank reconciliation statement, it could not be determined what contributed to the difference.”

The opposition leader said the problem has been ongoing for many years, and between 2010 and 2021, it has amounted to a difference of over EC$155 million.

“The minister has indicated to the House that the problem was being addressed. The question is, will the minister please state what has been done to address the problem and to what effect?”

Gonsalves told lawmakers that in May 2022, the staff of the Treasury Department was strengthened with the addition of two Supportive Education and Training (SET) Programme interns to begin reconciling the development fund account and the current account of the accountant general.

He said the interns have undergraduate degrees in accounting and audit and accounting experience.

“These two SET interns are now part of the established staff of the department as senior accountant 1,” the finance minister said.

He said the two-person team was tasked with producing monthly reconciliation statements for both accounts, starting from Jan. 1, 2010.

Two additional staff members, each with a bachelor’s degree in accounting, were added in 2024 to expedite the reconciliation of those two accounts.

Gonsalves said the bank reconciliation process follows a logical five-step process, the first of which is to extract the bank transactions and the SmartStream transactions on the bank side and on the government side.

SmartStream is a financial transaction management software used by the government.

The second step is to match the transactions using an electronic database and then to investigate any discrepancies between the bank statements and the SmartStream statements.

The fourth step is to notify the Treasury of errors and adjustments that are necessary, with the final step being to prepare the bank reconciliation statements.

“The team focused its attention on reconciling the development fund account first, as this account has less daily activity and was assessed to be less difficult to reconcile,” Gonsalves said.

He told Parliament that the team has completed the reconciliation of this account from 2010 to the present.

“Monthly reconciliation statements are prepared and submitted to the accountant general. This account is now operating in good order, and all reconciliation statements are up to date.”

Gonsalves said the annual reconciliation statements for 2022 and 2023 were submitted to the director of audit along with the public accounts for these years in the annual statutory audit.

“The 2024 reconciliation statement has been completed and will be submitted with the 2024 financial statements to the Audit Department by the statutory deadline.”

As regards the second account —  the Accountant General’s current account — the four-member team had shifted focus to the current account and was sorting bank statements and SmartStream data for the years 2020 to 2024, having completed 2010 to 2019.

The minister said the first of the challenges so far was that sorting the transactions was very time-consuming, given the large volumes of transactions associated with this account.

“On the side of the bank statement, the volume of transactions ranges between 30 and 60,000 transactions annually, while on the SmartStream side, it ranges between 70 to 140,000 entries annually. So that’s six to 12,000 transactions per month,” the finance minister said.  

He said narratives and comments on many journal entries in SmartStream were not clear or not detailed enough and sometimes incorrect.

Additionally, the source documents, debit and credit advice from the bank sometimes contain insufficient narrative to ascertain the nature of the transaction.

“The department is working with the bank to address these challenges. We have to align not just the numbers, but the explanations for the numbers, and sometimes they’re less than fulsome in their descriptions, and we have to reconcile these things as part of the reconciliation process.”

Gonsalves said the data sorting process was expected to be completed by May 31, 2025.

“Once the sorting is finalised, the team will begin preparing detailed reconciliation statements for the period 2020 to 2024, and the full reconciliation process for the current account is expected to be completed by the end of this year, 31st of December.

“In short, the Treasury Department has made tremendous progress in resolving the long-standing and long outstanding matter, which has been a feature of treasury operations since the late 1990s. The accountant general and his staff should be commended for their work in regularising this aspect of the work of the Treasury Department.”