Oct 02, 2022 News
…civil society body tells Auditor General “immediate steps” needed to address misstatements
Kaieteur News – President Irfaan Ali is yet to respond to a letter addressed to him by the Civil Society body ‘Article 13’ that requested particulars of the tax payments made by Guyana on behalf of the oil companies, be made available to the public.
That letter was sent to the Head of State on September 19, last – almost two weeks ago – but, to date, there has been no acknowledgement of the correspondence.
A member of the group explained that while the President is yet to state his position on the release of the tax payment particulars, ‘Article 13’ will not allow the matter to be swept under the proverbial rug.
To this end, it was explained that the group had decided to pen some concerns to the Auditor General, Deodat Sharma who it called out for issuing a “misleading report” on the oil account.
‘Article 13’ had carried out a review of the financial statements of the Natural Resource Fund (NRF) for the year ended December 31, 2021 and comparative information for 2020. Part of this exercise, carried out by Professional Accountants here and abroad, included a determination of whether the NRF’s financial statements, which were audited by the Audit Office of Guyana, complied with the law. However, ‘Article 13’ noted that the exercise found that the AG did not conduct his audit in this fashion.
It was explained that Guyana agreed via the 2016 Stabroek Block Production Sharing Agreement (PSA) to pay income taxes for Exxon and its partners. Those taxes are to be paid from revenues earned for the sale of Guyana’s share of profit oil. Those deposits are made into the NRF account. The group noted that these taxes which ought to be paid over were not, yet the Auditor General in his review, gave it a clean bill of health.
The civil society body said, “…It was inappropriate and incorrect for the Auditor General to issue a clean audit opinion on the financial statements of the Fund for either or both years (2020 and 2021).”
In its letter to the Auditor General, ‘Article 13’ explained, “We note that you issued an unqualified opinion on the 2021 financials and that there was no reference to any modified opinion in respect of 2020. The principal finding arising out of that review is that these financial statements do not reflect the transactions relating to the requirement of Article 15.4 of the 2016 Petroleum Agreement between the Government of Guyana and the three oil companies.”
They went on to point to specific sections of the oil contract where the Minister agreed to pay the taxes owed by the oil companies to the Commissioner General of the Guyana Revenue Authority (GRA). Not only that, but the civil group also pointed out to the AG that according to Section 15.4 (i) of the PSA, “the Contractor’s share of the income taxes imposed by the laws of Guyana, including, but not limited to, income tax imposed by the Income Tax Act and corporation tax imposed by the Corporation Tax Act and payable at the date hereof, or from time to time thereafter, and any other levy or charge on income or profits which may become payable from time to time under any laws, acts, statutes, regulations or orders by the Government…”
More importantly, ‘Article 13’ explained that Section 15.5 of the contract states the “Contractor shall provide the Minister with the Contractor’s income tax returns to be submitted by the Minister to the Commissioner General, Guyana Revenue Authority so the Minister can pay income tax on behalf of the Contractor as provided under Article 15.4 (a). On such returns, the Minister shall note that he is paying the income taxes on behalf of the Contractor, so that the Commissioner – General, Guyana Revenue Authority, can properly prepare the receipts required under this Article 15.5. Within one hundred and eighty (180) days following the end of each year of assessment, the Minister shall furnish to Contractor proper tax certificates in Contractor’s name from the Commissioner – General, Guyana Revenue Authority, evidencing the payment of the Contractor’s income tax under the Income Tax Act and corporation tax under the Corporation Tax Act. Such certificates shall state the amount of tax paid individually on behalf of Contractor or parties comprising the Contractor and other particulars customary for such certificates.”
To this end, the civil society body told the AG that it is advised that the 2021 financial statements and comparative figures for 2020 are “materially misstated”, adding that his opinion no longer “appears appropriate”. The group also noted that “Vital decisions of national importance are made on the balance in this Fund, including transfers to the Consolidated Fund, developmental and infrastructural expenditure, and inter-generational savings.”
As a consequence, the group explained that Guyana’s Companies Act at section 183 (2) provides that “Where the auditor or former auditor of a company is notified or becomes aware of an error or misstatements in a financial statement upon which he has reported to the company and, in his opinion, the error or misstatement is material, he shall inform each director of the company accordingly.”
Section 183 (3) goes on to state, “When under subsection 2 the auditor or former auditor of a company inform the directors of an error or misstatement in a financial statement of the company, the directors shall — (a) Prepare and issue revised financial statements; or (b) otherwise inform the shareholders of the error or misstatement.”
Further, ‘Article 13’ said guidance is also available from various pronouncements by the Institute of Chartered Accountants of India including ‘Guidance Note on Revision of the Audit Report’ and SA 560 Subsequent Events. In fact, the group said paragraph 2 of the Guidance Note on Revision of the Audit Report states “A revision of the audit report may be warranted in several instances involving reasons such as apparent mistakes, wrong information about facts, subsequent discovery of facts existing at the date of the audit report, etc. The nature and range of instances may vary from one enterprise to another depending upon facts and circumstances. As it encompasses (a) variety of conditions which might be encountered, these procedures are set out only in general terms for guidance of members and for having uniform approach in such cases. Members are advised to exercise professional judgment depending upon the actual facts and circumstances of the case.”
The group has asked the AG to take immediate steps to address the concerns raised in its missive.
Exxon has to put up a sign board across the Demerara Harbour Bridge to tell Guyanese what % of revenue we are getting from the Stabroek Block!
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