Source document: https://docs-lawep.s3.us-east-2.amazonaws.com/1698831132157.pdf (Saint Kitts and Nevis)
On the Accounts of The Nevis Island Administration For the years ended December 31, 2007, 2008, 2009, 2010, 2011.

NATIONAL AUDIT OFFICE ST. KITTS AND NEVIS ii ST. KITTS AND NEVIS NATIONAL AUDIT OFFICE P. O.

Box 19, Basseterre, St. Kitts.


TEL: (869) 467-1051 FAX: (869) 466-8510 E-MAIL: Auditoffskn@sisterisles.kn Honourable Vance Amory Premier and Minister of Finance Administration Building Charlestown Nevis Sir, Pursuant to section 76 (4) of the Saint Christopher and Nevis Constitution Order 1983, I have the honour of submitting my report on the Accounts of the Administration for tabling in the Nevis Island Assembly.
This Audit Report is on the Accounts for the fiscal years ending December 31, 2007; 2008; 2009; 2010; and 2011.

Respectfully submitted, Wesley Galloway Director of Audit November 09, 2015. iii TABLE OF CONTENTS 1.

EXECUTIVE SUMMARY 1.1 Reporting Mandate 1.2 Audit Mandate 1.3 Report Highlights 2.

THE AUDIT OFFICE 2.1 Budget 3.

OVERVIEW OF THE PUBLIC ACCOUNTS 3.1 Submission of Accounts 3.2 Accounting Policies 3.3 Performance Summary 4.
ANALYSIS OF THE PUBLIC ACCOUNTS 4.1 Annual Abstract 4.2 Statement of Revenue 4.3 Statement of Expenditure 4.4 Capital Account 4.5 Statement of Assets and Liabilities 4.6 Statement of Advances and Deposits 4.7 Statement of Public Debt 5.1 Acknowledgments APPENDICES Outstanding Expenditure Authorities Page 1 1 2 4 6 6 8 11 18 26 37 40 41 43 43 45 1 1.
EXECUTIVE SUMMARY 1.1 REPORTING MANDATE: This Audit Report, on the accounts of the Nevis Island Administration, is submitted to the Minister of Finance to be laid before the Nevis Island Assembly as required by sections 76 (4) and 108 (2) of the Saint Christopher and Nevis Constitution Order 1983, and section 8 of the Audit Act No.

8 of 1990.

The legislation requires the Director of Audit to submit his report within a period of nine months after the close of each financial year.
This report is in respect of audit work on the Accounts of the Administration covering the five-year period 2007 to 2011.

1.2 AUDIT MANDATE: This Audit Report on the accounts of the Nevis Island Administration for each of the years ending December 31, 2007, 2008.

2009, 2010 and 2011 has been prepared pursuant to the obligation imposed by section 76 (2) of the Constitution Order and section 7 of the Audit Act, 1990.
Under section 76 (2) of the Constitution, as amended by section 108 (2) I am required to: (a) satisfy myself that all moneys that have been appropriated by the Legislature and disbursed, have been applied to the purposes to which they were so appropriated and that the expenditure conforms to the authority that governs it; and (b) at least once each year audit and report on the public accounts of the Administration, the accounts of all officers and authorities of the Administration and the accounts of the Clerk of the Assembly.
Additionally, in accordance with generally accepted public auditing standards, I must also satisfy myself that: - all moneys other than those which have been appropriated, have been spent in accordance with proper authority and the guidelines stipulated.

- all reasonable precautions have been taken to safeguard the collection and custody of revenue and other monetary instruments, and that the laws and directions relating to them have been duly observed.
- all assets and liabilities disclosed in the financial statements exist and that they properly belong to the Administration and are stated at proper value.

The Constitution also facilitates the performance of these duties under section 76 (3) which mandates: "The Director of Audit and any officer authorized by him shall have access to all books, records, returns, reports and other documents that in his opinion relate to any of the accounts referred to in subsection (2)".
2 The professional independence of the Director of Audit is also guaranteed by subsection (7) which states: " ... the Director of Audit shall not be subject to the direction or control of any other person or authority."

1.3 REPORT HIGHLIGHTS: This section provides a brief overview of the contents of this report.

The section reference at the end of each highlight is to facilitate easy access to the detailed comments on the topic: Chapter 2 : The Audit Office - Budget.
(2.1) Chapter 3 : Overview of the Public Accounts - - - - Accounts of the NIA will soon be current.

(3.1) Accounting definitions used.

(3.2) The largest overall deficit recorded $29.56 million.

(3.3) The largest recurrent deficit is wiped out by capital surplus.

(3.3) Chapter 4 : Analysis of the Public Accounts - Revenue collections exceed $100 million for the first time in 2007 (4.1) - The twelfth consecutive overall deficit from 1998 broken in 2010.
(4.1) - Expenditure generally kept tight and within budgeted levels.

(4.1) - Cash & bank balances decrease in addition to increase in overdraft.

(4.1) - Cash & bank balances show net decrease of over $16.3 million.

(4.1) - Only 2 Revenue centres surpass targets.

(4.2) - Hotel Room tax continues decline to almost nothing.

(4.2) - Financial Services revenue performs well, but just short of budget.

- Five Program Heads incur excess and unauthorized spending - Debt servicing shows slight reduction.
(4.3) - Debt Servicing consumes over 39.9% of recurrent revenues.

(4.3) 3 -Budgeted figures for Office of the Opposition Leader removed in 2011 - Response rate to Audit observations still a concern.

(4.3) - Surplus trend for current 5 year period broken.

(4.3) - Capital account deficit of $17.2 million causes largest overall deficit.

(4.4) - Accumulated Deficit approaches $200 million.

(4.5) - Bank Overdraft reaches a high of over $83.5 million in 2009.
(4.5) - Outstanding Advances to Public Officers still cause for concern.

(4.6) - Outstanding Public Debt now over $399 million in 2011.

(4.7) 2.

THE AUDIT OFFICE 4 As this Audit Report is the first to the Nevis Island Assembly since 2008, I am obliged to bring to the fore, matters of significance that transpired during the reporting period.
In this regard and starting on still a sad note, despite it is several years later, I must place on record the gratitude at the National Audit level, for the sterling contribution rendered to the Civil Service and in particular the Nevis Audit Office, by Senior Audit Manager, Ms. Veronica Parris.

Indeed it would be recalled that Ms. Veronica Parris succumbed on August 12, 2009, after a brief period of illness.
For her thirty-six (36) years of public service (18 of those years spent in the Nevis Audit Office), she was considered a model civil servant.

She was a meticulous lady of strong character, dependable and trustworthy.

Her dedication to her work was unmatched and envied by many.

She was a person who was always willing to give sound positive advice, and for that reason, I am grateful to have known her and worked with her for the many years she served in the Nevis Audit Office.
In fact, her last work before retiring, due to the illness, was on drafting the Report on the 2007 Accounts.

That report was finalised since September 2008, but was never produced for tabling in the Assembly due to other complications.

Ms. Eunalette Roberts also served the Office in the capacity of Secretary, from 1998 until she left to pursue studies in 2002.

Having completed the Bachelor and Master degrees by 2008, Ms. Roberts requested further leave to do a second Masters.
However, before a decision was made, she submitted a letter of resignation to take effect in January 2009.

The PSC advised her services were terminated on the grounds of insufficient notice.

Nevertheless we thank Ms. Roberts for her work and dedication to the Audit effort during her years spent here.

Our gratitude is also expressed to Mr. Rene Smithen for his stint of service at the Audit Office during the period January 2004 to January 2007.
Mr. Smithen served as one of the Audit Managers during that time.

Finally, Ms. Terrel Claxton joined the staff in May 2009 as the Audit Assistant/ Secretary and still continues in that capacity.

2.1 BUDGET: The Nevis Audit Office had an approved Budget of $340,401 for the fiscal year 2011.

This budgeted allocation was an increase of just $5,211 or 1.5% over the 2010 allocation.

The Office has two Programs with related Activities for funding.
These Programs received allocations as follows: 1) Administration $161,220 and 2) Audits $179,181.

Actual total expenditure incurred during 2011 was $280,988 thereby realizing savings of $59,413 for the year.

5 In fact, for the entire five year period under review, the Nevis Audit Office contained its expenditure to well within the budgeted allocations.
The Office had approved Budgets of $340,401; $335,190; $462,878; $327,070; and $324,182; for the years 2011, 2010, 2009, 2008 and 2007 respectively, and as can be noted from the table below, the Actuals were within the parameters set.

The unusual jump shown in the 2009 budgeted figure resulted from an increased allocation for Personal Emoluments in the Audits Program.

This was in keeping with the decision to increase the staffing arrangements at the Office.
However, those posts were never filled and the budget was reduced to the regular level in subsequent years.
The following schedule provides comparative data of the actual expenditure during the period under review: Administration: Personal Emoluments Other Charges Audits: Personal Emoluments Other Charges Actual 2011 $ 137,950 85,092 Actual 2010 $ Actual 2009 $ 91,983 100,028 129,874 89,206 56,404 55,670 Actual 2008 $ Actual 2007 $ 108,603 71,351 52,858 36,313 43,624 40,668 37,252 143,038 140,501 147,161 123,224 103,262 144,730 121,035 101,059 75,993 72,607 2,537 2,431 2,189 2,203 3,386 Total Expenditure 280,988 239,143 223,252 233,135 184,596 3.
OVERVIEW OF THE PUBLIC ACCOUNTS 3.1 SUBMISSION OF ACCOUNTS: 6 The Accounts of the Nevis Island Administration for the year ended December 31, 2006 along with the Audit Report thereon, were forwarded to the Honourable Premier on April 28, 2008.

Those Accounts and the Audit Report were tabled in the Assembly on December 09, 2008.

Since submitting that 2006 Report to the Premier, the Audit Office has received from the Treasurer, the accounts for the years 2007; 2008; 2009; 2010; and 2011.
The following statements in respect of each of these years (2007 – 2011) were submitted for Audit examination: 1.

Annual Abstract 2.

Detailed Statement of Revenue 3.

Detailed Statement of Expenditure 4.

Statement of Assets and Liabilities 5.

Statement of Advances 6.

Statement of Deposits 7.

Statement of Public Debt The Audit Office is also aware that the Accounts of the years 2012 and 2013 are complete and ready for submission to the Audit Office.
The Office awaits these documents and anticipates those for 2014 and 2015 will follow shortly in the new- year.

3.2 ACCOUNTING POLICIES USED: The accounting policies and practices employed in the preparation of the Public Accounts are not documented in any procedural or policy manuals, and in most cases, are applied on a conventional basis.

Additionally, the financial statements do not disclose these policies in Notes to the financial statements.
Full disclosure in the Notes to the Financial Statements is to enable the user to better understand and analyse the statements in their appropriate context.

Unfortunately, there are no Notes found at the end of the Statement of Assets and Liabilities and as such the statements do not provide adequate information for the proper interpretation of the accounts.
The following are some of the more significant accounting policies Audit assumes are adopted by the Treasury in the preparation of the Public Accounts.

(a) Reporting Entity The accounts presented relate to the operation of the Nevis Island Administration only.

The accounts of statutory bodies operating on the island of Nevis are not included in these public accounts.

(b) Cash Basis of Accounting The public accounts are prepared using the cash basis of accounting.
Therefore, only those transactions that involve an exchange of cash are recognized in the accounts.

7 Consequently, revenues are not recorded until they are received and expenditures are only charged to the account when payment has been made.

(c) Classification of Financial Transactions All revenue received that is not payable by law into a specific fund, must be paid into the Consolidated Fund.
The Legislature provides the authority to make expenditures out of the Consolidated Fund by the passing of an Appropriation Act.

These revenues and expenditures are reflected as budgetary or "above-the-line" transactions in the Annual Abstract.

All other transactions generally fall into the category of borrowing, lending or investing activities and result in financial claims on others or future obligations payable from the Consolidated Fund.
With the exception of loan proceeds, most of these transactions are recorded as "below-the-line" or non-budgetary transactions in the Annual Abstract and are disclosed on a net basis on the Statement of Assets and Liabilities.

Any funds realized through loans and other forms of credit are recorded as revenue when the related expenditure is made.

The obligation for the future repayment of the loan is not recognized as a liability.
(d) Assets The fixed assets of the Administration such as land, buildings, roads, vehicles and equipment are charged as budgetary expenditures at the time of acquisition or construction.

Accordingly, while these are not reflected as assets on the Statement of Assets and Liabilities, this does not negate the fact that the Administration has substantial holdings of such physical assets.

(e) Liabilities Liabilities represent financial obligations of the Administration to other parties.
As a result of the Administration's accounting policies, certain financial obligations are not recorded as liabilities.

For instance, most moneys raised through loans are usually recorded as revenue and consequently, the obligation to repay the loan is not recorded as a liability.

However, the financial obligations of loan receipts are recorded in memorandum records and are disclosed in the Statement of Public Debt.

(f) Foreign Currency Transactions in Eastern Caribbean (EC $) dollars.
The public accounts are expressed Transactions occurring in a foreign currency are translated to EC dollars at the prevailing exchange rate at the time of the transaction.

However, sterling balances and sterling transactions executed by Crown Agents on behalf of the Administration are translated at a rate pre-established by the Treasury.
(g) Pensions and Gratuities Pensions, Gratuities and other terminal benefits of Government employees are treated as expenditure and charged against the Consolidated Fund in the period in which payments are made.

Estimated pension liabilities are not actuarially determined for disclosure in the public accounts.

3.3 PERFORMANCE SUMMARY: 8 It should be stated at the onset that as this Report covers a five year period, focus would be primarily on the most current year, 2011.
The results of the remaining years will be provided and quoted for comparative purposes and to highlight trends.

The Accounts for each of the financial years ended December 31 disclose for the most part, overall deficit results with the exception of one year.

From 2007 to 2009, overall deficits in the amounts of $17.25m; $19.27m; and $29.56m respectively, were recorded.

In 2010, a small surplus of $1.04m was realized and then in 2011 the deficit was $20.06m.
These results give an accumulated deficit for the five-year period of $85.10 million.

In the previous Audit Report for 2006, it was noted that the result then ($19.57m) was the largest overall deficit on record, since 1983.

This has now dropped to third place as the results for 2009 ($29.56m) and for 2011 ($20.06m) have taken over.

The overall results comprise the out-turns on both the Recurrent and Capital accounts.
During the period under review, these results showed some very wide swings and at times seem to alternate the extent of the swings.

It would be noted in the Abstracts (shown on pages 12 -16) the Recurrent results in 2007 and 2008 were relatively small deficits of $1.63m and $3.94m; whereas the Capital results were deficits of $15.62m and $15.33m respectively.

In 2009 the recurrent deficit escalated to $27.26m and the capital deficit was only $2.30m.
For 2010, the results were an amazing and by far the largest recurrent account deficit and capital account surplus ever on record (since 1983).

The recurrent deficit was a significant $49.86 million.

However, this was completely wiped out with the equally impressive capital surplus of $50.90 million; thereby resulting in the modest surplus of $1.04 million for the year.
The Annual Abstract Account, as prepared by the Treasurer, discloses Recurrent Revenue for 2011 at only $119,585,846 and Recurrent Expenditure at $136,052,429 In fact, recurrent expenditure decreased by $7.80 million (5.4%); whereas recurrent revenue increased by $25.6 million (27.24%) over the 2010 levels.

The actual recurrent revenue of $119.59 million fell short of the budgeted level by $16.93 million.
However, the actual recurrent expenditure of $136.05 million exceeded its budgeted level by just $2.15 million.

There were as many as five (5) Program Heads that recorded expenditure in excess of their budgeted allocations on the 2011 recurrent account.
These were the Premier’s Ministry which recorded $271,831 in excess of its $4.5m budget; the Ministry of Finance, Statistics & Economic Planning which led the way with $4.66m over its $ 63.2m budget; the Ministry of Tourism recorded $593,124 in excess of its $2.27m allocation; the Ministry of Social Development, Youth, Sports etc.
reached $899,258 over its budgeted amount of $4.88m; and finally the Ministry of Trade, Industry & Consumer Affairs found that it needed $1.46m more than the $7.15m that it was provided for the year.

Hence the gross over spending was $7.89 million 9 The other nine (9) Program Heads provided sufficient savings on their budgets to effectively reduce the impact of the excess spending by the others.
Their savings amounted to $5.73million, thereby reducing the level of over spending to the net amount stated ($2.16 million).

On the revenue side, the Ministry of Finance and its Departments led the performance with their pool of revenue totalling $103.44 million, although this was some $15.76 million short of the projected revenue.

In fact, only two Ministries passed their revenue targets in 2011.
The Ministry of Health collected $1.52 million which was slightly more than its $1.48m target; and the Ministry of Trade, Industry & Consumer Affairs etc.

had revenues of $7.16m versus a budget of $6.3 million.
The following graphs present the recurrent account results and the overall (recurrent + capital) annual results covering the period 2002 to 2011: East West East West North North 1st Qtr 2nd Qtr 3rd Qtr 4th Qtr 1st Qtr 2nd Qtr 3rd Qtr 4th Qtr RECURRENT A/C SURPLUS & DEFICITS 2002 - 2011 7.15 (2.99) (4.68) (8.18) (2.38) (1.63) (3.94) (16.47) (27.26) 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 YEARS (49.86) 100 100 80 80 60 60 40 40 20 20 0 0 $ M I L L I O N S 15 10 5 0 (5) (10) (15) (20) (25) (30) (35) (40) (45) (50) (55) It is noteworthy that in each graph there is only one surplus recorded among nine deficits during the period.
There is a recurrent account surplus in 2005 in the amount of $7.15 million and then there is an overall surplus in 2010 of $1.04 million.

10 Also of interest during the ten-year period, is that the Recurrent account results for the first five years (2002 -2006) only total a deficit of $11.08 million; whereas for the second five year period, the one under review, (2007 -2011) the deficits total $99.16 million.
The Overall results for the same periods are deficits of $53.84 m and $85.10 million, respectively.

In fact, looking back at the results from Independence (1983) to 2006, the Recurrent account has a net deficit of just $17.28 million, then the last five years add a further $99.16 million.

The Overall results show an accumulated deficit of $110.08 million up to 2006 and by 2011, it totals $195.18 million after a lengthy string of deficits dating back to 1998.
The overall annual results of a surplus and deficits (recurrent and capital accounts) during the period 2002 to 2011 are shown in the following graph: Annual Surplus/ Deficits 2002 - 2011 1.04 (3.69) (6.97) (7.76) (15.85) (17.25) (19.27) (19.57) (20.06) 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 YEARS (29.56) $ M I L L I O N S 5 0 (5) (10) (15) (20) (25) (30) (35) 11 4.
ANALYSIS OF THE FINANCIAL STATEMENTS 4.1 THE ANNUAL ABSTRACT The 2011 Budget anticipated a surplus would be realized on the recurrent account in the amount of $2.61 million.

This was based on Revenues of $136.52m and an expenditure level of just $133.90 million.

The actual Recurrent Revenue realized in 2011 was $119,585,846 resulting in a shortfall from projections of $16,931,154.

It would be noted that the budgeted revenue was increased by $35.07 million or 34.6% over the previous year.
However the actual revenue reflects an increase of only $25.6 million or 27.2% over the 2010 level of performance.

On the expenditure side, actual recurrent expenditure amounted to $136,052,429 and reflected a reduction of $7.8 million or 5.4% from the amount spent in 2010.
Even though the level of spending was reduced from the previous year, it was still sufficient to exceed the budgeted amount by $2.15 million On the Capital account, revenue from all sources was estimated at $23.8 million comprising Loans $21.88 million and Development Aid $1.92 million.

Capital expenditure however was set at $44.37 million.

Hence a budgeted deficit on the capital account of $20.57 million.
The actual capital revenue of $34.72 was recorded as Loans revenue in the amount of $34.66 million and Development Aid of $55,961.

The total capital expenditure amounted to $38,314,391 or 86.3% of the budgeted level.

Hence the result on the capital account was a deficit of $3.59 million.
The following tables provide the summary of the budgetary transactions as extracted from the Annual Abstract of the Accounts for the five year period: 12 THE ABSTRACT (SUMMARY) 2011 RECURRENT ACCOUNT: Revenue Expenditure Surplus / (Deficit) ESTIMATED ACTUAL VARIANCE $ $ $ 136,517,000 133,902,791 2,614,209 119,585,846 136,052,429 (16,466,583) (16,931,154) (2,149,638) (19,080,792) CAPITAL ACCOUNT: Loans: - Revenue Expenditure Surplus Development Aid: - Revenue Expenditure Surplus Capital Revenue: - Revenue Expenditure Deficit 21,877,311 21,877,311 0 34,663,222 20,961,489 13,701,733 12,785,911 915,822 13,701,733 1,919,600 1,919,600 0 55,961 0 55,961 (1,863,639) 1,919,600 55,961 0 20,568,544 (20,568,544) 0 17,352,902 (17,352,902) 0 3,215,642 3,215,642 Capital a/c (Deficit) (20,568,544) (3,595,208) 16,973,336 Total (Deficit) (17,954,335) (20,061,791) (2,107,456) Deficit brought forward Deficit for the year (2011) Accumulated Deficit c/fwd.
(175,116,105) (20,061,791) (195,177,896 13 THE ABSTRACT (SUMMARY) 2010 RECURRENT ACCOUNT: Revenue Expenditure Surplus / (Deficit) ESTIMATED ACTUAL VARIANCE $ $ $ 101,448,000 127,345,177 (25,897,177) 93,988,428 143,847,104 (49,858,676) (7,459,573) (16,501,928) (23,961,501) CAPITAL ACCOUNT: Loans: - Revenue Expenditure Surplus Development Aid: - Revenue Expenditure Surplus Capital Revenue: - Revenue Expenditure Deficit 17,574,544 17,574,544 0 73,688,121 3,777,145 69,910,976 56,113,577 13,797,399 69,910,976 1,817,272 1,817,272 0 787,426 651,331 136,094 (1,029,847) 1,165,941 136,094 0 18,325,473 (18,325,473) 0 19,147,748 (19,147,748) 0 (822,275) (822,275) Capital a/c (Deficit) (18,325,473) 50,899,322 69,224,795 Total (Deficit) /Surplus (44,222,650) 1,040,646 45,263,293 Deficit brought forward Surplus for the year (2010) Accumulated Deficit c/fwd.
(176,156,751) 1,040,646 (175,116,105) 14 THE ABSTRACT (SUMMARY) 2009 RECURRENT ACCOUNT: Revenue Expenditure Surplus / (Deficit) CAPITAL ACCOUNT: Loans: - Revenue Expenditure Surplus Development Aid: - Revenue Expenditure (Deficit) Capital Revenue: - Revenue Expenditure (Deficit) ESTIMATED ACTUAL VARIANCE $ $ $ 121,273,000 117,686,954 3,586,046 90,065,869 117,327,499 (27,261,630) (31,207,131) 359,455 (30,847,676) 19,000,000 19,000,000 0 17,984,418 7,955,274 10,029,144 (1,015,582) 11,044,726 10,029,144 1,446,059 1,446,059 0 465,683 484,577 (18,894) (980,376) 961,482 (18,894) 0 15,250,000 (15,250,000) 0 12,304,385 (12,304,385) 0 2,945,615 2,945,615 Capital a/c (Deficit) (15,250,000) (2,294,135) 12,955,865 Total (Deficit) (11,663,954) (29,555,765) (17,891,811) Deficit brought forward Deficit for the year (2009) Accumulated Deficit c/fwd.
($146,600,986) ( 29,555,765) (176,156,751) 15 THE ABSTRACT (SUMMARY) 2008 RECURRENT ACCOUNT: Revenue Expenditure Surplus / (Deficit) ESTIMATED ACTUAL VARIANCE $ $ $ 115,350,000 105,982,622 9,367,378 112,073,984 (3,276,016) 116,012,184 (3,938,200) (10,029,562) (13,305,578) CAPITAL ACCOUNT: Loans: - Revenue Expenditure Deficit Development Aid: - Revenue Expenditure Surplus Capital Revenue: - Revenue Expenditure Deficit 36,433,800 36,433,800 0 6,608,460 (29,825,340) 12,040,153 24,393,647 (5,431,693) (5,431,693) 1,347,200 1,347,200 0 206,477 0 206,477 1,140,723 1,347,200 206,477 0 22,405,000 (22,405,000) 0 10,106,017 (10,106,017) 0 12,298,983 12,298,983 Capital a/c (Deficit) (22,405,000) (15,331,233) 7,073,767 Total (Deficit) (13,037,622) (19,269,433) (6,231,811) Deficit brought forward Deficit for the year (2008) Accumulated Deficit c/fwd.
($127,331,553) ( 19,269,433) ($146,600,986) 16 THE ABSTRACT (SUMMARY) 2007 RECURRENT ACCOUNT: Revenue Expenditure Surplus / (Deficit) ESTIMATED ACTUAL VARIANCE $ $ $ 104,507,860 95,284,547 9,223,313 417,973 104,925,833 (11,275,991) 106,560,538 (1,634,705) (10,858,018) CAPITAL ACCOUNT: Loans: - Revenue Expenditure Surplus /(Deficit) Development Aid: - Revenue Expenditure Surplus/ (Deficit) Capital Revenue: - Revenue Expenditure Deficit 48,433,800 48,433,800 0 26,143,540 (22,290,260) 28,799,890 19,633,910 (2,656,350) (2,656,350) 1,531,835 1,531,835 0 0 19,358,046 (19,358,046) 0 21 (21) 0 1,531,835 (1,531,814) (21) 0 12,958,938 6,399,108 6,399,108 (12,958,938) Capital a/c (Deficit) (19,358,046) (15,615,310) 3,742,736 Total (Deficit) (10,134,733) (17,250,015) (7,115,282) Deficit brought forward Deficit for the year(2007) Accumulated Deficit c/fwd.
($110,081,539) (17,250,014) ($127,331,553) 17 The surplus or deficit for each year is transferred to the Consolidated Revenue Fund.

The balance in this account shows an accumulated deficit of $195.17 million as at the end of 2011: Deficit brought forward Deficit for the year (2011) Accumulated Deficit c/fwd.

(175,116,105) (20,061,791) (195,177,896) The changes in the Accumulated Fund result only from the budgetary transactions of revenue and expenditure on both the recurrent and capital accounts.
However, there are many non-budgetary transactions that involve cash flows and yet do not affect the annual deficit or surplus as recorded.

The effects of such transactions are reflected in the movement of the cash and bank balances.

Despite the deficit of over $20.06 million, there was further reduction in the Cash and Bank balances during the year of 2011.
The cash position worsened by $16.35 million, as shown in the following table: 2011: Bank Overdraft Cash Balances Net Decrease in Balances 2011 2010 68,056,386 1,366,972 51,447,362 1,110,313 Increase <Decrease> (16,609,024) 256,659 ($16,352,365) The non-budgetary transactions that gave rise to the net decrease in the cash position are summarized in the next schedule of cash flows for 2011: 2011: Cash Inflows: Increase in Trust Funds Increase in Deposits:- Social Services Levy Social Security Other Severance Payments Decrease in Deposits-Other Total Cash Inflows $ 1,485,616 $ 823,741 1,145,816 1,894,780 68,688 (1,303,980) 4,114,661 Cash Outflows: Deficit for the year Increase in Advances: - Public Officers Decrease in Deposits:- Total Cash Outflows Net Cash Outflows 18 20,061,791 405,235 (20,467,026) ($16,352,365) 4.2 STATEMENT OF REVENUE Revenue collections on both the recurrent and capital accounts have not been up to the anticipated levels.
The total budgeted revenue for 2011 of $160.3 million resulted in a shortfall of $6.0 million due to the fact that only $154.3 million was collected.

The revenue sources on the Recurrent account generated $119.6 million; and on the capital account it was $34.7 million.

Amongst the seven (7) major revenue heads for which estimates are prepared, only two sources recorded revenue as being “over the estimate” during the 2011 fiscal year.
These were the Ministry of Health and the Ministry of Trade, Industry etc.

A summary of the 2011 performance by the major Ministries is given in the following table: Estimate $ Actual $ Variance $ % Legal Services Premier’s Ministry Ministry of Finance Ministry of Public Utilities Ministry of Agriculture, Lands Ministry of Health Min.

of Trade, Industry, etc.
185,000 1,560,000 (49,702) 26.9 (146,546) 9.4 119,023,000 103,437,391 (15,585,609) 13.1 135,298 1,413,454 7,031,000 699,000 5,729,550 188,417 (1,301,450) 18.5 (510,583) 73.0 1,481,000 6,300,000 1,522,055 7,155,077 41,055 2.7 855,077 13.6 The following chart shows the proportion of contributions to the recurrent revenue by some of the major sources during 2011: 19 Major Revenue Programs, 2011 Inland Revenue 44% Customs 33% Financial Services 9% Dep't of Trade 6% Other 2% Premier's Min.
1% Min of CWPU 5% LEGAL SERVICES The Legal Services has two programs where it was estimated that the Legal Department would generate $145,000 and the Company Registry $40,000.

The actual collections totalled $135,298 and were generated from: Registration of Companies $21,750 and Unclassified revenue of $113,298.

It is noted that revenue from the Registration of Companies has decreased from the previous year moving from $26,550 to $21,750.
The overall performance of the Legal Services showed a 29.6% or $49,701 shortfall from estimated figures.

PREMIER’S MINISTRY This Ministry has two major programs for revenue collections and as noted was one that did not meet its target, by $146,546 or 9.4%.

The Administration program, which is responsible for Passports, Permits etc.

and Work Permit ID fees, had a target of $1.16 million and generated only $1.07 million.

This amount is to the credit of Passports, Permits etc.

which realized $1,058,226.


Work Permit ID fees were $17,875 and Sale of Forms $885.

20 The Magistrate & Registrar’s Program had a target of $290,000 and its actual was $253,102 recording a shortfall of $27,898.

Fines and Forfeitures for this year accounted for the majority of this program’s revenue with $252,532.

The Government Press and Public Relations program collected $83,025 or 5.87% of total revenues for the Ministry.
MINISTRY OF FINANCE There are five Programs for revenue collection under this Ministry.

For the most recent year in the period under review over 87% of the budgeted revenue is allocated to the Departments within the Ministry of Finance.

The actual collections of $103.4 million represent over 86% of the recurrent revenue collected for the year.

The Value Added Tax (VAT) was introduced and implemented in St. Kitts and Nevis as of November 2010.
This new tax was intended to replace primarily the Consumption tax and a number of other minor tax sources, previously referred to as “nuisance taxes”.

The general VAT rates were also intended to be close to revenue neutral.

That is, no extra ordinary increase in revenue collections was anticipated from its introduction.

Customs: It was estimated that Customs would realize $39.9 million for the year 2011, where this estimate reflected an increase of $5.94 million over the 2010 estimate.
The actual collections of $39.6 million compares favourably against the $39.9 million budgeted since there was only a shortfall of $310,327.
The actual amounts in respect of Consumption tax, Import Duties, Customs Service Charge, Environmental Levy, Excise Duty and Value Added Tax are summarized as follows: 9,715,262 6,970,547 Consumption tax Import Duties Customs Service Charge Environmental Levy Excise Duty 5,087,639 Value Added Tax 16,889,350 496,241 2010 2011 320,196 13,439,067 15,598,383 18,731,273 17,841,892 9,686,841 7,609,223 6,373,683 5,645,356 9,319,283 6,795,377 8,040,175 6,558,744 2008 2009 2007 545,659 648,350 983,300 1,179,132 198,411 2,355,192 182,219 - 201,312 - 400,113 - 21 Over the five year period, Customs Service Charge has shown varying totals with an overall increase of $596,864 or 9.36%.
Actual collection for 2011 was $6,970,547 that surpassed its targeted amount of $6,579,000.

This level of collection was also the highest amount over the five year period.

Environmental levy has shown some unfavourable performances over the years as reflected in the decreases in its revenue every year since 2007.

It has moved from $1,174,132 in 2007 to just $496,241 in 2011 reflecting an overall decrease of $682,891 or 58.16%.
The newly introduced VAT is the major revenue collection for the Customs in 2011, amounting to $16,889,349.

This was over the estimate by $249,349.

For the last two months of the 2010 year when value added tax was implemented, it brought in $2,355,192.

As previously mentioned, the introduction of VAT replaced the Consumption tax, among others.
It would be noted in the table above that in 2010 the amounts collected from both sources ($15.78m) closely approximates the $15.59m collected as Consumption tax in 2009.

Then in 2011, as the first full year of operating with VAT, it would be noted that collections have recovered to the 2007 and 2008 Consumption tax levels.

However, it is too early to comment on the revenue neutrality of the VAT rate, given that it is a tax that is levied on a much wider base than those it replaced.
Import Duties amounted $9,715,262 for the year 2011.

Duties on Articles other than Alcoholic Liquors had a target of $8.9 million and managed to realize $9.6 million; Duties on Alcoholic Liquors amounted to $106,938 which was short of its $150,000 target.

Customs Officers Fees only amounted to $50,440 and not the $80,000 that was anticipated.

Inland Revenue: The Inland Revenue Department realized revenue amounting to $52,126,469.
This performance was unfavourable compared to the budgeted amount of $66,534,000; with the shortfall being $10.4 million.

Notable among the variations in performances against the budget were: 22 Estimate 2011 $ Actual 2011 $ Stamp Duty – Property Business & Occu.

Licenses Social Services Levy Wheel Tax Hotel Rooms & Rest.

Tax Licenses – Drivers, Temp.

Licenses – Drivers, Perm.


Income Tax House Tax Land Tax Value Added Tax 550,000 10,800,000 2,500,000 - 220,000 400,000 13,000,000 5,400,000 7,505,000 10,521,912 390,782 7,833,799 2,018,414 838 322,558 322,496 4,665,356 2,119,421 41,584 18,140,000 18,624,272 - Variance $ 3,016,912 -159,218 -2,966,201 -481,586 838 102,558 -77,504 -8,334,644 -3,280,579 41,584 484,272 Further recovery is noted in the Value Added Tax.
The budget was $18.14 million and surpassed it by $484,272 for an overall total of $18.62 million.

Similarly, Stamp Duty- Property collections continue to improve, where it exceeded its targeted amount of $7,505,000 to collect $10,521,912 resulting in an overage of $3,016,912.

It would be noted in the following table that this revenue source had a high point in 2008 when $9.6 million was realized.

However, in the following year, 2009, the revenue fell significantly to just $5.87 million.
Since then, a recovery has been noted over the past two years.

Income tax and House tax realized unfavourable variances as collections were less than 50% of their budgeted amounts.

Actual revenues were $4,665,356 for Income tax and $2,119,421 for House tax.

Again the trend line will show that there has been a consistent fall off Income tax revenues from 2008, moving from $5.5 million down to $4.6 million.
On the other hand, House tax fell in 2010, but seems to have recovered in 2011 even though it was short of its target.

It should be explained that revenues for House and Land Tax were combined in some years and separated in others.

In 2007, they had a combined estimate of $2.65m recorded as House Tax and as such no revenue was recorded for Land Tax in 2007 (as noted in the table following).
They were budgeted separately in 2008, but were again combined in 2009 and 2010 as Property Tax estimated at $4.29million and $3.05million respectively.

The $1,880 recorded as Land tax in 2009 and the $167,412 recorded in 2010, seems to have been a few instances that escaped the combined net, as there was no separate estimated revenue for Land tax in those years.

A major indicator (for the Tourism Sector) has shown a downward spiral to virtually nothing.
The Hotel Rooms & Restaurant Tax has fallen from a high in 2008 when it was $10.8 million to a mere $1.6 million in 2009, then in 2011 it is less than a thousand dollars.

Of course these results from the revenue source reflect and 23 highlight the impact on government’s revenue due to the prolonged closure of the Four Seasons.

Another interesting trend is noted in the Drivers Licenses for both the Temporary and Permanent drivers.
Not only are the revenues trending downward from 2007, but the revenues from the Temporary visitors exceed that from the local “Permanent” drivers.

In fact, the 2006 figures show the Temporary Licenses at $419,000 and only $290,000 for the Permanent.

The Audit Officers did not complete a full review of this area, but it certainly merits further review and comments.
7,571,336 2,101,491 838 1,564,185 1,631,514 9,933,729 10,810,088 The five year summary of some taxes collected by the Inland Revenue Department: 2007 8,121,675 412,912 2008 2010 2009 2011 434,070 390,782 453,749 7,833,799 6,226,233 7,758,178 9,301,731 2,018,414 2,108,476 2,196,187 2,273,416 Stamp Duty – Property 10,521,912 7,264,406 5,867,655 9,612,416 419,573 Business & Occu.

Licenses Social Services Levy Wheel Tax Hotel Rooms & Rest.

Tax Licenses – Drivers, Temp.

Licenses – Drivers, Perm.


Income Tax House Tax Land Tax Travel Tax Traders Tax Value Added Tax 4,665,356 4,698,654 5,008,729 5,549,430 2,119,421 1,628,165 1,960,668 1,725,857 71,748 460,989 419,419 - 41,584 352,994 486,331 18,624,272 167,412 437,836 294,626 720,102 1,880 329,032 405,068 - 420,462 328,459 317,284 317,765 360,401 290,156 322,496 322,558 432,905 301,276 3,473,207 1,772,853 - 415,030 416,001 - Financial Services: This area of revenue collections continues to perform well.
The actual collection of $11.42 million against a target of $12.30 million is fairly well when compared to previous year of $11.22 million in actual revenue.

Revenue from the Registration of Offshore Companies has fallen short of the $950,000 target as collections amounted to $908,726.

Annual Fees amounted to $7.09 million and was still short of the revised budget of $8 million.

Also falling short of budget, were Registration Fees – Mutual Funds with only $1,350 collected against its budgeted $50,000.
However, Captive Insurance Companies realised $604,206 versus its $250,000 target thereby recording an excess of $324,206.

Registration of Trust (Nevis) contributed $91,476 although there was no budgeted figure for the year.

24 MINISTRY OF COMMUNICATIONS, WORKS, PUBLIC UTILITIES This Ministry had an estimate of $7.031 million and its actual collections were $5,729,550 with a shortfall of $1,301,450.
This Ministry has five revenue programs with two major sources, namely the Water department and the Post Office.

Water Department: The targeted amount set for the Water program was $6,127,000 where Water Rates were to generate $6 million and Repairs and Connections the remaining $127,000.

These targets were not attained as only $5.07 million was realized.

Water rates amounted for $4,996,154, and Repairs and Connections amounted to just $81,209.
Total collections for the Water Department in 2010, 2009, 2008 and 2007 were $4,604,422; $5,236,634; $4,315,945; and $4,199,167 respectively.

The five year period under review showed consistent improvement in revenues up to 2009.

However, in 2010 there was a shortfall of $915,977 from the targeted figure of $5.2 million.

Post Office: Revenue collection from the Post Office was targeted at $442,000.

Comprising this total were: Rent on private P.O.


boxes $50,000; Sale of Postage Stamps $350,000; Express Mail Service $38,000; and Unclassified $4,000.

The actual revenue for 2011 amounted to $329,983, resulting in a shortfall of $112,017 from expectations.

Sale of Postage Stamps amounted to $247,747 and EMS $21,686.

Rent on Private P.O.

boxes realized $56,100 which is $6,100 more than estimated and perhaps explained by more individuals making use of this service.
MINISTRY OF HEALTH, GENDER AND SOCIAL AFFAIRS As noted earlier, this is one of the seven Ministries that surpassed its target for the year, 2011.

The targeted revenue was $1,481,000 and the Ministry generated actual revenue of $1,522,055 which was $41,055 or 2.8% over the budget.

This Ministry’s major collections come from the Medical University fees, Hospital fees and Unclassified.

Medical University fees were estimated for $0.72 million and collection was $744,295 for the year.
At, the Alexandra Hospital they attained $682,519 compared to the targeted figure of $650,000.

As a result, these Activities that met and surpassed their targets contributed to the overall increase in revenue for the Ministry.

25 Comparison of Years: Legal Services Premier’s Ministry Ministry of Finance Ministry of Public Utilities Ministry Agriculture, Lands Ministry of Health Min.
Industry.. Trade, of of 2011 $ 135,298 2010 $ 167,212 2007 2009 $ $ 260,055 178,489 1,413,454 1,417,522 1,872,821 1,641,122 1,527,490 103,437,391 79,245,371 74,440,264 98,813,303 93,196,063 5,729,550 5,320,983 5,958,941 5,357,747 4,918,538 2008 $ 115,904 118,417 371,370 279,851 300,999 205,705 1,522,055 1,424,178 1,400,386 1,494,268 1,548,857 7,155,077 5,994,008 5,789,501 4,202,262 3,128,095 Over the five year period being examined, the Ministry of Agriculture showed a major decrease in revenue for the year 2011.
This was a result of the renovation of the Charlestown Public Market that started in December, 2010 throughout the entire year of 2011.

During the renovation, there were hardly any rental fees being charged to vendors, resulting in the Ministry only collecting $5,000 and in so doing did not meet its target of $30,000 for the year.

Another revenue generating source is the production of cotton.
Cotton is exported on a large scale and for the year 2011, the production of cotton did not generate a sufficiently large enough amount to be exported and as a result no revenue was collected for the year.

However, the cotton was stored for shipment at a later date.

The Premier’s Ministry had its peak revenue in the year 2009 and generated $1,872,821 million.

The revenue from the sale of Passports, Permits etc.

provided the major increase compared to previous years.
The move to using the CARICOM Passport mandated that all previously held passports be changed before the end of 2009; and that resulted in the level of revenue collected.

In fact, Passports and travel Permits realized $1.49 million of the total $1.87 million collected by the Ministry.

Under the Ministry of Trade, the Supply Office collected $1.16 million in 2011 which was greater than in previous years.
This success was aided by the improvement in the department’s inventory system, where increased stocks were made more readily available to the public and the department welcomed new buyers from the sister island, St. Kitts.

The introduction of the Value Added Tax has generated a fair amount of revenue for the Ministry of Finance, resulting in that significant increase from 2010 to 2011.

However, 2009 was the year when revenue collections were down across almost all areas of activity.
26 4.3 STATEMENT OF EXPENDITURE The Nevis Island Assembly passed the 2006 Appropriation Act, which authorized Recurrent Expenditure of $133,902,791 on fourteen (14) Program Heads and Capital Expenditure of $44,365,455 for ten (10) of the usual fourteen Programs.

Generally, expenditure by the majority of Heads during the year was kept well within the budgeted amounts, particularly on the recurrent account.
The gross over- expenditure on five (5) Program Heads amounted to $7,882,872 and this was reduced as a result of savings of $5,733,233 on the other nine (9) Heads.

The following tables show the savings and excesses in both dollar amount and as a percentage of the budget allocation.

PROGRAM Legislature Ministry of Communications, Works, etc.

Ministry of Agriculture, Lands, Housing, etc.


Ministry of Health Ministry of Education & Library Services Human Resources Savings $ Actual $ 196,447 482,251 8,615,251 1,091,018 613,069 4,335,660 12,690,820 2,210,169 577,757 16,604,515 740,372 2,150,945 % 28.9 11.2 12.4 14.8 3.4 25.6 PROGRAM Ministry of Finance, Stats., & Econ.

Planning Premier’s Ministry Ministry of Tourism Ministry of Social Dev’ment, Youth, Sports & Community Dev’ment Ministry of Trade, Industry & Consumer Affrs.
Actual $ 67,847,646 4,766,920 2,860,116 5,780,639 Excess $ % 4,661,022 7.38 271,831 6.04 593,124 26.1 899,258 18.4 8,607,223 1,457,637 20.4 As noted from the chart on page 11, the results in the past three years (2009 – 2011) have been amongst the highest recurrent account deficits.

However in the earlier years the expenditure did not out-strip the revenue to such a large extent.

The deficits were much smaller.


This perhaps suggests as well that there was more fiscal discipline in the implementation and monitoring of the budget during the year.

In reviewing the historical data on the recurrent account, it was noted that during the period 1983 to 1990 all deficits were incurred with the largest amount of $3.7 million in 1984.

Then, during the period 1991 to 1999 there were all surpluses with the largest amount of $5.71 million in 1997.
The five-year period 2000 to 2004 had all deficits and the largest was in 2000 in the amount of $9.74 million.

27 In the 2006 Report the following comment was made: The recurrent account surplus in 2005, of $7.15 million is in fact the largest surplus on record since 1983.

The result this year (2006) of a small deficit has broken the trend of what should have been surpluses for the period 2005 to 2009.

Of course it would be of interest to note what results the next three years produce.
Indeed we now know that the recurrent deficit trend continued right through to 2011, with the increase in expenditure out pacing that for revenue.

The following graph highlights this trend.

Actual Recurrent Revenue & Expenditure I S N O L L M I 116.01 3 9 .

4 0 1 73.72 7 0 .

2 1 1 143.85 136.05 9 5 .

9 1 1 7 0 .

0 9 9 9 .


3 9 $160 $140 $120 106.56 $100 $80 $60 $40 $20 $0 Expenditure Revenue 2007 2008 2009 YEARS 2010 2011 DEPUTY GOVERNOR GENERAL The Allocation to the Office of the Deputy Governor General for 2011 was $351,802.

A total of $302,889 was spent, thereby realizing a saving of $48,912.

There was over expenditure on just one item, – Operating and Maintenance cost was over its budget in the amount of $200.
Spending in the other areas was well within budgeted amounts and resulted in savings as stated for the full allocation.

LEGISLATURE 28 The budget set for this program was $678,698 and Actual Expenditure amounted to $482,251 thereby recording significant savings of $196,447.

There were over- expenditure on two object codes, Office and General Expenses in the amount of $1,626 and Grants and Contributions $21,542.

However, savings in the other areas resulted in the net savings stated.
The observation must be made that there was a second Program that was budgeted under Legislature in the name of “Office of the Opposition Leader”.

The following budgeted allocations were made during the period: YEAR 2007 2008 2009 2010 2011 BUDGET $ 56,500 57,000 54,000 31,050 Removed EXPENDITURE $ - - - - The last time any money was spent from this Program, was in 2006 when a paltry $600 was incurred from the budget of $56,500.

The $600 was charged to Office and General Expenses.
Absolutely no spending has taken place during the period 2007 to 2010, despite the provisions to do so.

Perhaps the removal in 2011 is justified.

LEGAL A Total of $922,642 was allocated between the Two Expenditure Programs for the Legal Department namely Administration and Company Registry which received $842,642 and $80,000 respectively.

A total of $726,566 was spent resulting in a savings of $196,076.
There was over- expenditure on two object codes; Wages in the amount $11,361 and Supplies & Materials with just $26.

All other areas of spending recorded savings on their budgeted allocations.

Similarly, spending in the previous years was well constrained, with $648,843 being incurred against a budget of $871,000 in 2010 and a total of $637,003 against a budget of $809,000 in 2009.

29 PREMIER Administration This Activity exceeded its budget of $2,138,411 by $402,885 or 18.84%.
The major areas of over expenditure were: Personal Emoluments, Allowances, Professional and Consultancy Services and Production & Marketing Expenses.

The allocation for Personal Emoluments was $892,000 the amount incurred was $1,028,941.

The Allowances budget was $87,000 yet a total of $131,509 was expended.

Professional and Consultancy Services cost $268,054 whereas the allotment was $159,000.
An Appropriation Warrant in the amount of $136,800 was utilized to cover some of the excesses incurred by the Administration program, but it was totally insufficient.

In fact, the Appropriation Warrant plus the savings from the other five programs in the Ministry did not cover the excesses.

As a result, the net over expenditure by the entire Ministry was $271,831.
As the Warrant was for only $136,860 it means the difference of $134,971 is recorded as Unestimated expenditure and as such is without legal authority.

I can state at this point that there are four (4) other instances of Unestimated expenditure in the 2011 Accounts.

These will be summarized at the end of the Report for necessary action.

Registrar A Total of $695,046 was allocated for this Program and the expenditure amounted to $666,165 thereby realizing a savings of $28,881.
Spending was also within the budgeted total in 2010 with $663,952 incurred against a budget of $688,000 and in 2009 there was $641,149 against a budget of $722,000.

Magistrate The Budget set for this program was $179,287 and Actual Expenditure amounted to $174,341 resulting in a small saving of $4,946.

There was over-spending on two object codes.

The Allocation to Wages was $17,000 and spending was $56,838.

Operating and Maintenance had a budget of $2,000 whereas actual expenditure recorded was $3,905.
Labour This Program was allocated $342,544 and spending amounted to $299,235.

This expenditure was well within the budget allocated and hence provided a (net) saving of $43,309.

There was no over- spending on any of the object codes for Labour.

Disaster Management 30 The sum of $298,711 was budgeted for this activity and the expenditure amounted to $257,217 resulting in a saving of $41,494.
There was over expenditure on Personal Emoluments, where the budget allocation was $168,000 but spending amounted to $190,974.

However, there were enough savings in other areas to result in the net saving as stated.

Department of Information The Department of Information received an allocation of $841,090 and the expenditure amounted to $828,664 resulting in a saving of $12,426.

Spending in 2010 was $752,077 against a budget of $772,000 and 2009 spending was $728,222 against a budget of $911,000.
Overall, the Ministry and Departments of the Premier had a budget of $4,495,089 and incurred expenditure of $4,766,920; resulting in net excess spending of $271,831.

This excess was partly covered by an Appropriation Warrant in the sum of $136,860 hence the difference of $134,971 is unauthorized.

MINISTRY OF FINANCE STATISTICS & ECONOMIC PLANNING The allocation to this Ministry was increased by $3.215 million to $63,186,624.
The actual expenditure incurred was $67.848 million resulting in a net over expenditure of $4.661 million.

There was a significant reduction ($12.332 million) in spending from the level incurred in 2010.

As the Ministry of Finance did not approve any Appropriation Warrants for itself, the excess expenditure is recorded as Unestimated and hence not authorized.
Administration: The Ministry of Finance is the centre of all financial activity and excesses can be expected as priorities are altered during the year.

The Administration Program had actual expenditure was $8,285,943.

This was significantly down from the $11.7 million spent in 2010.

In fact, based on the budgeted level of $12.99 million, there was a net saving on this Program of $4.71 million.
Some of the main items of expenditure were: Telephone costs of $466,667; Internet Services of $176,146; Subvention to Statutory Bodies $2133,315; Repairs and Servicing of Equipment $200,000; Local Hosting and Entertainment amounted to $254,057; Professional and Consultancy Services $601,323; Medical Insurance $774,111; Claims against Government amounted to $312,263; and Electricity bills total $3.39 million.

31 Treasury: The allocation to the Treasury in 2011 was $45.08 million.
Actual expenditure was $54.42 million.

This level of spending was $9.43 million less than the $63.85 million incurred in 2010.

Hence there was a net level of overspending of $9.35 million.

The key areas of spending included Retiring Benefits, which amounted to $6,128,704; the amount for retiring benefits shows a reduction of $1.4m from the amount paid out in 2010.

The other significant area of expenditure was in respect of Debt Servicing, which cost $47.69 million.
The cost of debt servicing was $8.08 million less than in 2010.

This year the amount of $40.39 million was in respect of the Domestic Debt, and only $7.31 million was on the Foreign Debt portion.

MINISTRY OF COMMUNICATIONS, WORKS & PUBLIC UTILITIES This Ministry was allocated $9.706 million, which represented a very slight increase of just $9,603 from what it received in 2010.

Actual expenditure this year was $8.615 million, compared to the $8.076 million spent in 2010.
All of the five Programs in this Ministry realized net savings on their budget allocations, to provide the $1.09 million savings recorded.

Public Works: The Public Works Program was allocated a reduced budget of $3.727 million to cover the Activities of Minor Works to Roads & Bridges; Building Maintenance; Vehicle Repairs and the Asphalt Plant.

The total incurred on all these Activities was $3.41million, which reflected an overall increase in the spending level of $158,000 from that in 2010.
Water Department: This Department had an allocation of $3.01 million and spent $2.62 million, thereby realizing net savings of $389,861.

The Administration and Billing Division incurred a total of $636,733; For the Production Activity, total costs amounted to $771,807; The Distribution Activity cost a total of $1.16 million; and Quality Control cost was $50,954.

MINISTRY OF AGRICULTURE, LANDS HOUSING & CO-OPERATIVES.

32 The Programs under this Ministry had a total allocation of $4,948,729.
The allocation was shared to: Administration $589,390; Agriculture Department $3,868,089; Cooperatives $228,250 and Fisheries $263,000.

The allocation represented an increase of $725,096 over that in 2010.

The major share of this increase went to the Agriculture department, which received an increase of just over $327,000 and there was one reduction of $24,700 to the Administration’s budget.

Total expenditure incurred by the Ministry was $4,335,660 resulting in net savings of $613,069.
Actual expenditure by the Agriculture Department amounted to $3,419,524.

The department therefore had net savings of $448,565.

The Department of Cooperatives had actual expenditure totalling $206,316, which was less than what was budgeted by $21,934; Also, the Fisheries Program incurred $211,667 of its $263,000 budget.

MINISTRY OF HEALTH The allocation to this Ministry was $14,900,989 and reflected an increase from the $13,309,610 provided in the 2010 budget.
Actual expenditure incurred was $12,690,820, which was some $831,011 more than the $11,859,809 spent in 2010.

Nevertheless, the spending by the respective programs under the Ministry was well within their budgeted amounts and hence provided overall savings of $2,210,169.

Public Health: The allocation to this Program was $3,266,820 and a total of $2,883,638 was spent.
There are six Activities under this Program with the major expenditure being incurred by the District (formerly Community Nurse Services) Activity where $1,021,745 was spent from a budgeted $1,058,000.

The key spending area within this Activity was on Supplies and Materials which totalled $92,928.

Another major Activity, Environmental Health Services, was allocated $1,043,000 from which it spent $974, 706.
Personal Emoluments and Wages were the main expenses for these Activities with $1,761,276 collectively being spent from a budget provision of $1,850,000.

Other Activities under this Program are Oral Health Services (Dental Unit) which incurred $330,235 from its budget of $419,000; and Patient Care Services spending an excess of $13,246 over its allocation of $90,000.

Also, the delivery of Psychiatric Services incurred $142,014 of its budgeted $271,000.
Alexandra Hospital: 33 The budgeted operating expenses for the Program Alexandra Hospital increased to $9,428,082 in 2011 from $8,109,860 in 2010.

The actual costs incurred amounted to $7,826,275, thereby generating savings of $1,601,806.

This program also comprises six activities with Patient Care consuming the most significant portion of $ 3,683,130.

Personal Emoluments, Wages and Allowances expenses of this Activity were $1,365,538 less than the budgeted amount of $4,645,000.
Another noteworthy expense is Supplies and Materials which incurred costs of $385,577 and was an overspending of the $263,000 that was budgeted for this item.

This increased spending occurred as a result of the Ministry’s intent of fulfilling its Mission of providing premium health care services, programs and leadership in order to promote, protect and preserve the health and welfare of the population of Nevis.
Additionally, the Administration and Maintenance Activity incurred spending totalling $1,336,847 which was slightly over its budgeted $1,333,000.

This was a result of the occurrence of combined costs from Personal Emoluments, Wages and Allowances of $1,082,804; Repairs and Maintenance $170,849; Local Travel and General, Supplies and Materials $81,058; together with Professional and Consultancy Services of $2,136.
It should also be noted that the Activity, Domestic and Nutrition Services accumulated expenses of $1,091,369 which was less than the budgeted $1,240,000.

Personal Emoluments and Wages within this Activity amounted to $903,532 while Supplies and Materials managed to be $182,036, less than the proposed spending level of $323,000.

The savings within this Activity was $148,631.

MINISTRY OF EDUCATION AND LIBRARY SERVICES The allocation to the Ministry of Education and Library Services was $17,182,272.
This was a fairly moderate increase of only $78,207 or 0.46% (less than half of one percent) when compared against the decrease of $554,878 or 3.1% from 2009 to 2010.

Actually, the budget for 2009 reflected an increase of $2.75 million or 18.4% from 2008.

So the Education budgets show significant variation I recent years.

Actual expenditure on the other hand, has shown more consistent increases over the years, even though most were well below the budgeted levels.
Actual spending in 2008 was $15.42m versus a budget of $14.91m; in 2009 the Actual was $15.61m vs a budget of $17.66m; then in 2010 it was $16.04m vs a budget of $17.1m; and in 2011 the actual expenditure was $16.6m vs the budget of $17.18m.

Hence, despite the small budgetary increase in 2011, a significantly higher level of spending ($464,000 more) was incurred, but yet managed to be within the limits of the year’s budget.
34 The Education Department Program, which includes Administration, Early Childhood, Special Education and the Teacher’s Resource Centre, incurred a total of $3.12 million from a budget of only $2.81 million.

Some of the costs were: Early Childhood cost of $772,333; Special Education cost $269,914; and the Teacher Research Centre incurred $98,476.

There were a few instances of overspending on some Activities of the various sub- programs.
Primary Education costs amounted to $5.81 million against a budget of $6.1 million.

Secondary Education costs were $6.26 million from an allocation of $6.43 million.

This included Charlestown Secondary with costs totalling $3.29 million; Gingerland Secondary $2.26 million and the Multi-Purpose Centre $0.72 million.

The Public Library had an allocation of $1.07 million and incurred costs of $675,636.
MINISTRY OF SOCIAL DEVELOPMENT, YOUTH AND COMMUNITY DEVELOPMENT The Ministry of Social Development, Youth and Community Development had actual expenditure of $5,780,639 whereas it was allocated only $4,881,381 in 2011.

This indicates there was overall excess spending of $899,258 by the Ministry.

The allocation received was an increase of $516,343 over the amount given in 2010.

The Ministry has three (3) Programs, where Administration incurred the majority of spending totalling $2,707,900.
This Activity is further divided into three (3) Sub- Activities with the majority of costs defrayed to the Sub-Head of Administration.

This category had combined costs for General Administration and Administrative Support of $1,452,555.

Included in this level of spending were payments to Statutory Bodies for $113,454 and Grants & Contributions to Local Institutions in the amount of $200,048.
The Basic Needs Trust Fund Unit incurred $233,822 for the alleviation of poverty through community based projects along with the Cultural Development Foundation of $1,021,524.

Expenses designated to the Cultural Development Foundation were Subvention to Statutory Bodies of $911,845 and Grants to Local Institutions of $109,679.
Incidentally, the Cultural Development Foundation overspent its budget of $575,000 by almost the same amount, in this case $446,524 in providing financial support to associations and organizations related to Social and Community Development.

Additionally, the Program Social Development had payments of $1,579,039 from its budget of $1,581,997.

There are Five (5) Activities that makes up this Program, the major one being Administrative Support which spent $793,155.
Other payments covered costs for Family Support Services of $306,106; the enhancement of the Social Well-Being of Senior Citizens of $252,903; the Promotion of Gender related Issues of $178,266 and Support and Development of Youths of $48,609.

35 The third Program of the Ministry is Sports and Community Development which had costs of $1,493,700.

This Program has into two Activities; Sports which incurred costs of $993,047 and Community Development which spent $500,653.
In summary, the three Programs of the Ministry had spending of $5,78 million versus a budget of only $4.88 million; with the result being a net excess of $899,258.

A number of Appropriation Warrants were approved, but only totalled $293,228 and failed to cover the excess spending.

Hence the difference of $606,030.09 is classified as Unestimated, or unauthorized expenditure.
MINISTRY OF TRADE, INDUSTRY, CONSUMER AFFAIRS The Ministry of Trade, Industry and Consumer Affairs had an actual expenditure of $8,607,223, compared with a budget of $7,149,586.

This resulted in an excess spend of $1,457,637.

No Appropriation Warrants were approved for the Ministry and consequently the excess is classified as Unestimated.

The Ministry has two (2) Programs, Administration together with Trade & Consumer Affairs.
The Administration Program had costs of $954,859 divided into sub- activities of Administration, as well as the Small Business and Craft House.

The other Program in this Ministry consists of the Trade and Consumer Affairs and the Supply Office.

Major spending occurred within the Program Trade and Consumer affairs amounting to $7,652,363.

The Supply Office incurred $7,217,752 for its operations and in so doing overspent its budget by $1,584,752.
Key costs within this Activity were charges to Supplies and Materials totalling $6,878,453.

This level of spending by the Supply Office resulted from an increase in the volume of sales, as the Ministry diversified the products offered.

These products are provided at concessionary prices, with the expressed intention of reducing the cost of living to the Nevisian consumers, as per the Mission statement of the Ministry.
Conclusion: In reviewing the Detailed Statements of Expenditure it is clear that there is improvement in the control of expenditure during the years under review.

However, the variances between the Budget and the Actual suggest that much work is required to close the gaps.

Now that the emphasis for control and monitoring of the budget is at the Program level, more attention is needed to track over expenditure on the various Activities.
It was noted that some of the incidents of Unestimated expenditure occurred because the Program totals were not adequately covered.

36 Although the Ministry of finance is responsible for its Departments, it failed to lead the way in ensuring the necessary Appropriations and or Reallocations were effected.

Perhaps the intention was to do one Supplementary Warrant to cover all instances, but the Accounts were finalized and the excesses remain not authorized.
As previously mentioned, the accounts for 2011 disclose five instances of over- expenditure at the high Program level.

These were the Ministry of Finance, Premier’s Ministry, Ministry of Tourism, Ministry of Social Development et al and the Ministry of Trade, Industry & Consumer Affairs.

Hence, on the recurrent account, all the other Programs recorded net savings on their budget allocations.
While it is acknowledged this is normal practice to temporarily exceed the budget allocation, it is still a breach of the Finance Administration Act.

The Appendix at the end of this Report details outstanding authorities dating back to 1988.

It is indeed a procedural matter, as the money has already been spent.

So while the excesses may total millions, it does not require actual funds to address them.

As one quotation states: “The job is not finished until the paper work is done”.
Finally, I would make a comment on the continued lack of responses to observations raised by the Audit Office.

In recent years the Office has been noting several instances of duplicate payments and these are happening across Ministries.

Most of the events take place at around the turn of the year, when there is a rush to clear invoices and payments are effected based on photocopies.

Then early in the new-year the same payment is made again.
While many of these are to local companies, some are in respect of overseas suppliers.

The difficulty Audit faces is the lack of responses to the queries for corrective actions.

Again, while some amounts are bordering on trivial, others are substantial.

Audit estimates there are about $200,000 in duplicate payments to be recovered, yet many Permanent Secretaries and Department Heads remain unresponsive.
These outstanding queries have gone through our internal processes of issuing three (3) official reminders to the original query to the PS of the Ministry concerned.

While some date back to transactions in 2009 and 2010, the original queries were issued in 2011 and 2013 and remain ignored.

In fact, all the outstanding matters were sent to the Ministry of Finance at some point for them to exercise their powers to secure government’s funds.

Still there is no success to report.


Consequently the Office will exercise its remaining option to detail in its next Report to the Nevis Island Assembly, those Ministries / Departments from which adequate and acceptable responses to queries are not received and the $ value at risk.

The work of the Audit Office would only be effective when there is an acceptable higher rate of response to the observations raised.
This would indicate that corrective actions were taken and hence the chances of recurrence minimized.

37 4.4 THE CAPITAL ACCOUNT Actual capital revenue realized in 2011 was $34,719,183.

This compares most favourably with the $23.8 million that was budgeted.

Capital Expenditure however, amounted to $38.31 million.

This performance on the capital account resulted in the deficit of $3.61 million.
The results of expenditure and revenue on the capital account have been summarized in section 4.1 in the Annual Abstract tables (pages 12-16) covering the period.

As noted, the revenue recorded on this account for 2011 resulted primarily from Loans raised in the amount of $34.66 million and a small amount of Development Aid funds of $55,961.

During the period under review, except for 2010, the Capital Revenues have been on the low side.
In 2010, one of the higher levels of capital revenue was recorded when $74.47 million was raised, albeit via loans of $73.69 million.

The amounts raised in revenues for the years 2009, 2008 and 2007 were; $18.45m, $6.6m; and $26.1m respectively.

The capital expenditure for 2011 was charged against capital Revenue in the amount of $17.35 million and against Loans, $20.96 million.

There were no Development Aid projects during the year.
The following are some of the projects by various Ministries: The Ministry of Communications, Works, Public Utilities and Posts accounted for $13.11 million or 34.2% of the total capital spending.

The Ministry of Social Development, Youth, Sports and Community & Gender Affairs incurred $17.56 million or 45.8% and the Ministry of Finance spent $2.49 million on capital projects.
The Ministry of Communications spent $1.32 million on the Purchase of an Asphalt Plant; it also spent $1.99 million on the Call Centre; Water Drilling used $2.19 million; Land Settlement accounted for $1.26 million and a further $250,000 was incurred in 2011 on the Police Barracks at Bell Vue.

Road Repairs and Improvement Project, including the Drainage System accounted for $890,870; and an upgrade to the Water Services totalled $833,910.
The Ministry of Social Development, Youth, Sports and Community Development spent $252,755 for the Maintenance of Community Centres; it also spent over $2.22 million on Improvement and Maintenance of Sporting facilities.

The major part of its spending in 2011 was $10.68 million on the Fine Arts Theatre.

Construction of the Community Centres for Camps, Fountain, Jessups and Cotton Ground amounted to $3.87 million and the Barnes Ghaut Community Centre incurred $262,292.
38 The Ministry of Finance incurred $441,842 for the Purchase of Vehicle; the Purchase of Tools, Equipment and Furniture amounted to $271,712; The Population and Housing Census accounted for $118,957; and $1.57 million was spent for the purchase of Lands.
The Ministry of Agriculture, Lands, Cooperatives and Fisheries spent $1.59 million on their capital projects, which included: $194,893 for Farm Machinery and Equipment; The Agro Processing Plant incurred $32,213; The Fisheries Bio-Diversity project $67,575; Sea Island Cotton Production cost $59,418; and the Upgrade to the Charlestown Public Market amounted to $1.08 million.

In the year 2010, the Capital revenue was budgeted at $19.39 million and the actual collection amounted to $74.475 million.
As mentioned earlier the Loans component was $73.688 million and Development Aid provided $787,426.

Despite this level of revenue, Capital expenditure was only $23.58 million.

The Ministry of Communications, Works, Public Utilities & Posts accounted for $10.5 million or 44.6% of the spending and the Ministry of Social Development, Youth, Sports and Community Development spent $6.03 million or 25.6% of the total.
The following outlines some of the projects undertaken during 2010: The Ministry of Communications, Works, Public Utilities & Posts: A total of $2.85 million was incurred on the Road Improvement Project and charged against Revenue, even though there was no budget allocation for this project.

The Water Drilling Project accounted for $2.52 million; Repairs to Roads and the Drainage System amounted to $1.11 million and again no funds were budgeted for this item.
Likewise, the Construction of the New Call Centre building incurred $296,425 in 2010 and was continued in 2011 and no budget allocation was made for this item.

The Police Barracks at Bell Vue incurred $201,186 and the Police Barracks in Charlestown accounted for $219,773 although this was not a budgeted item.

The Renovation and Expansion of Government Buildings amounted to $612,222 and Secondary Village Roads cost $562,796.
The Ministry of Social Development, Youth, Sports and Community Development: The Fine Arts Theatre accounted for $4,432,000 or 73.4% of the Ministry’s spending in 2010.

A further $602,340 was incurred for the Purchase of Saunders Land and the upgrade of Cotton Ground Playfield.

The Construction of Community Centres for Camps, Fountain, Jessups and Cotton Ground used $499,178; and the Improvement and Maintenance of Sporting Facilities cost $177,696.
The Premier’s Ministry: A total of $137,238 was incurred for the Upgrade of Police Services; A Commission of Inquiry cost $482,417; and the Purchase of Land and the Construction of Cotton Ground Police Station accounted for $1,041,963 out of the $1.79 million spent by the Ministry.

This Ministry had a budget of $2.83 million.


39 The amount spent by the Ministry of Health in 2010 was $1.55 million from their budget of $3.12 million and included: the Bulk Purchase of Drugs for $460,714; the Nevis Environmental Work Program cost $540,671; and the New Brown Hill Health Centre cost $371,107.

Ministry of Education & Library Services: This Ministry’s capital budget for 2010 was $2.3 million and the actual expenditure incurred was $1.53 million.
Among the projects done by the Ministry were: The Computerization of Schools project on which $407,743 was spent; Special Maintenance of Schools was $146,201; and the Upgrade of Primary Schools cost $702,580; the Expansion of Charlestown Secondary School amounted to $176,000; and the Schools Text Books Programme cost $14,553 in 2010.
Ministry of Finance: This Ministry had a budget of $1.25 million and actually spent $1.4 million on projects which included: the Purchase of Tools, Equipment and Furniture for $365,219; Purchase of Vehicles amounted to $730,506; and the Computerization of Government Services totalled $60,826.

Also, the Police Barracks at Butlers amounted to $225,000.

Capital expenditure in the remaining years 2009, 2008 and 2007 was $20.74 million; $22.15 million; and $41.76 million, respectively.
the Ministry of Communications, Works et al incurred $36.53 million or 87.5% of the total capital spending.
Its projects included: the Road Improvement Project $21.7 million; the Link Road project accounted for $6.3 million; Water Services Upgrade incurred $1.5 million; the Water Development Program had $499,126; and the Expansion of the Water Department Building incurred $110,725; also the Renovation of Government House cost $433,044 and the Renovation of the Historic Bath Hotel cost $173,022 for the 2007 capital expenditure.
In 2007 40 4.5 STATEMENT OF ASSETS AND LIABILITIES The statement of Assets and Liabilities as at December 31, for each of the years under review, is summarized as follows: 2011 2010 2009 2008 2007 $ $ 1,366,972 3,064,114 1,110,313 2,658,878 $ 1,345,0778 8,375,044 $ $ Assets Cash Balances Advances& Receivables Total Assets Less Liabilities Bank Overdraft Net Deposits Trust Funds Total Liabilities Accumulated Deficit Cash Balances 2011: The Treasurer’s Cash of $1,005,336 and the Joint Consolidated Fund (JCF) of $361,636 comprised the Cash Balances as at the end of December 2011.
The Bank Overdraft increased by $16.6 million or 32.3% for the year 2011.

The movement in the Bank Overdraft during the period under review can be noted in the above table.

Of significance, is the downward movement between 2009 and 2010 when it dropped by $32.13 million.

This was due in part to the $73.69 million in loans that were raised during that year, which included $64 million from the National Bank.

$83 million in 2009 The Trust Funds comprise the outstanding Treasury Bills as at year end.
The value of Treasury Bills as disclosed in the Public Debt statement at year end was $86.5 million ($86,498,263).
41 4.6 STATEMENT OF ADVANCES AND DEPOSITS The statement of Advances shows a negative balance of $3,224,987 as at December 31, 2011 and can be summarized with comparative data as follows: Advances: 2011 2010 2009 2008 2007 Other Gov’ts Public Officers Philatelic Bureau Post Master Other TOTAL $ 1,357 2,811,470 15,482 235,804 (6,289,101) (3,224,988) $ 1,357 $ 1,357 $ 1,357 $ 1,357 2,406,235 2,292,870 2,202,674 2,012,998 15,482 235,804 (7,593,081) 5,829,531 6,472,906 6,472,906 (4,934,203) 8,375,044 8,928,223 8,738,547 15,482 235,804 15,482 235,804 15,482 235,804 The negative balance occurred in 2010 when the Nevis Housing and Land Development Corporation paid $13.04 million into the Administration during the year.
This had the effect of reversing their Advance balance of $982,541.99 into a negative Advance balance or “Deposit” balance of $12,058,458.01.

As a result, the overall Advance balance turned negative as stated in the table above.

It must be stated this is not the only Advance account with a negative balance, however, the others are much smaller and have negligible impact on the overall balance.
Ideally, if the payment into the NIA was intended to wipe out the indebtedness of the NHLDC, then that amount should have been applied to the outstanding figure on the Advance account to bring it to a zero balance; and then the remaining $12m placed in a Deposit account.

Instead, the current situation gives the impression that the NIA has negative assets, or no net accounts receivable At December 31, 2011, outstanding Advances increased by over $1.7 million from the previous year.
This is accounted for by an increase in Advances to Public Officers (Subsistence and Personal) in the amount of $405,235 and an increase in Advances-Other of $1,303,981.

Outstanding Advances to Public Officers, and in particular Personal Advances, continue to increase as more and more persons make use of the opportunities afforded to help address financial and oftentimes medical crises.
As such, these Advances are repayable over multiple financial years and their balances are not reduced as rapidly as with other types of Advances.

What may be required is a review of the policy guidelines to better administer the issuance of Personal Advances.

Personal - Advances increased by $37,359.

Repayments amounted to $28,949 and new issues totalled $66,308 for 2011.

The outstanding Personal Advances as at the end of 2011 is stated at $1.04 million ($1,041,691.14).
It should be stated that at the 42 end of 2006 the outstanding figure was a little less than a million dollars at ($996,811.71) Advances - Subsistence have increased from $896,123 at the end of 2006 to reach $1.77 million ($1,769,778.90) at the end of 2011.

Given that these Advances are to be cleared within two weeks of return from travel / assignment, the extent of un- cleared advances can hardly be acceptable.
During 2011, Subsistence Advances that were issued totalled $529,653; and repayments were only $161,777 resulting in a net increase of $367,876 for the year.

This is an “age old” lament from the Audit Office about the non-clearing of subsistence advances for travel purposes.

All that is required is a little more firmness from the Ministry of Finance in administering the policy.
Simply – if there is an outstanding advance, another would not be issued; and after a month, clearance is from the next salary payment.
The following is a summary of the Deposits Balances, ($40,522,222) as per the Statement with comparative data for 2010: Deposits: - Grants - Federal Government - Social Security - Social Services Levy - Severance Payment - Supply Office - Development Aid - Other 2011 $ 678,930 8,949,608 5,621,508 2,220,545 231,193 1,295,068 8,056 21,517,314 2010 $ 678,930 8,949,608 4,475,692 1,396,804 162,505 1,295,068 8,056 19,622,534 The Deposits - Federal Government account includes a loan of $1.7 million to the Administration from the Federal Government.
The difference, ($7.25 million) comprise transfers from revenue sharing exercises in earlier years, which were not directly recorded as revenues.

This account only needs the political will to be tidied.

The Deposit – Other account shows a net increase of $1.89million.

Included in this amount is an increase in the Stale Cheques account by $1.2 million.

This account needs regular tidying in order to reduce the risks of fraud and other manipulations.
There are a number of accounts that should be closed to revenue or expenditure as the case may be, and so reduce the risk of misappropriations.

4.7 STATEMENT OF PUBLIC DEBT 43 The Public Debt as disclosed on the Statement as at December 31, 2006 was $227,585,614 and by the end of December 2007 it was disclosed at $263,448,157 which reflects an increase of $35.86 million or 15.8%.

At that time the Domestic portfolio total was $155,463,508 and the Foreign portion was $107,984,649.
At the end of the period under review, December 31, 2011 the total Public Debt is disclosed as $399,076,742 reflecting an increase of $171,491,128 or 75.4% from 2006.

During this period the Domestic portion increased to $285,217,435 or by 154.8% and the foreign portion actually decreased to $113,859,308 or by just 1.56%.

The outstanding Treasury Bills as at the end of 2011 is disclosed as $86,498,263 and reflects a net increase of $36,098,135 or 71.6% over the five year period.
The domestic portion of the public debt includes Government Guarantees that amount to $15,265,150 at the end of 2011.

The statement does not disclose to which institution(s) the guarantees relate.

However it is important to note that the outstanding amount of the guarantees has been reduced from a high of $18.83 million in 2009 to now $15.26 million in 2011.

The guarantee in 2006 was only $1.82 million.


Audit notes that no provisions, by way of sinking funds, have been made for the retirement of any portion of the outstanding public debt.

The following statement provides comparative data: Domestic Foreign 2011 $ 2009 $ 285,217,435 255,015,184 214,483,823 181,063,126 111,925,525 113,859,308 133,362,261 152,157,784 147,619,316 113,839,766 2010 $ 2006 $ 2008 15,848,454 Guaranteed –.

*To be added to the Foreign Debt as at the end of 2006 to total $115,660,089.
16,538,601 17,864,977 15,265,150 1,820,323* 5.1 ACKNOWLEDGMENTS 44 In conclusion, I express my sincere appreciation to the staff of the Nevis Audit Office who worked on completing these audit assignments over the years.

Although the National Audit Office has overall responsibility for the Report on the accounts, it is the staff at the Nevis Audit Office who provides all the ground work, the vouching, inspections and analyses.
I thank them for their diverse opinions and commitment to the various audits that were undertaken on this five year reporting period.

I also express gratitude and recognise the input of the former Director of Audit, Mr. Albert Edwards, who has been engaged by the Nevis Island Administration and tasked with bringing the Audit of the Accounts and the Reports up to date.
Finally, my gratitude is expressed to the Treasurer and Staff at the Treasury Department, Nevis and the staff of other Ministries and Departments in Nevis, for their valuable and timely assistance.

Without such ready and willing cooperation, the Audit Office would not be able to fulfil its legislative mandate in an economic, efficient and effective manner.
Wesley D Galloway Director of Audit 45 APPENDIX 1 UNAUTHORIZED EXPENDITURE 1988 - 2011 HEAD SUBHEAD NAME UNESTIMATED $ 1988: Ministry of Finance Premier 27 52 2 Pension & Grants Increase to Civil Servants Travelling & Subsistence 11,899.18 21,883.88 422.52 Ministry of Communications, Works, & Public Utilities 3 8 30 Department of Education Department of Health Community Affairs & Libraries 22 13 10 38 15 12 Min.

C.W.

& P.U.

12(a) 18 21(g) 21(j) Upkeep of Office Equipment 75.30 M’tce of Terminal Bldg.
Rent of Water Rights 216.61 434.90 Staff Text & Supplies 395.45 Environmental Disease 744.72 School Health Programme 647.05 One 1500 V.A Transformer 200.00 Books & Materials Caretaker Services, Old Age Pension, Sev’nce Pay N.E.

Workers 200.00 94.72 Cades Bay to Camp via Mont Lily Bull Dozer Main street Charlestown Brick Kiln to Maddens 18,054.40 20,000.00 113,096.62 675.96 1989: Premier Finance 50223 Substitutes 251.25 60252 Civil Servants Increase 5,460.85 HEAD SUBHEAD NAME UNESTIMATED 46 1990: Min.

C.W.
C.W.

& P.U 529600 529910 Computer Room – Customs 568.87 Repairs to Cultural Complex 793.78 1991: Legal 40100 Personal Emoluments 1,071.20 Finance 60224 Loss of Exchange 3,593.08 Min.

C.W.

& P.U 529909 Purchase of 2 M.W Generating Set 249,380.67 1992: Finance 60217 Refunds Drawbacks & Re- payments from Revenue 1,249.28 Min.

C.W.

& P.U 520600 One Pick Up 374.48 Education, Health & Social Affairs 530200 Day Care Centre, St. Thomas 241.54 1996: Legal Premier Finance Min.
A.L.&T 40016 Operating & Maintenance 88.00 50509 Office & General Expenses 506.35 60101 60115 60509 70102 70110 70202 Personal Emoluments 56,137.22 49.80 Telephones, fax, Postage Office & General Expenses 20,283.02 Wages Supplies & Materials Wages 5,771.86 96.82 462.60 Dept.

of Agriculture 80101 Personal Emoluments 10,083.60 Min.

C. W. & P.U.
C. W. & P.U.

Public Works 100101 100214 120102 Personal Emoluments Operating & Maintenance Wages 26,172.76 4,336.43 214,340.78 47 PROGRAM ACTIVITY NAME UNESTIMATED 120116 Operating & Maintenance 22,866.93 Electricity Education Dept.

130110 130116 140102 140314 Supplies & Materials Operating & Maintenance 46,440.21 50,743.73 Wages 709.97 Tools, Instruments, Furniture 124.65 Health Dept.

150415 Telephone, Fax, Postage 55.60 Comm.


Affairs, Culture & Libraries 160102 1998: Personal Emoluments 35,302.18 Premier 0509054 Computer Lab 2,528.87 2000: Min.

of Finance Min.

of Education 2001: Min.

of Finance 1,214,215.98 239,630.06 06020119 Debt Servicing 2,309,015.09 Min.

of Health 09010101 Personal Emoluments 9,043.82 2002: Min.

of Finance 06020119 Debt Servicing 1,323,799.23 2003: Min.

of Finance 06020119 Debt Servicing 1,199,238.57 2005: Legislature 020101 Administration 21,687.06 Min.
of Finance 0602 Treasury 2,550,831.58 2006: Min.

of Finance 0602 Treasury 2,078,764.44 PROGRAM ACTIVITY NAME UNESTIMATED 48 2009: Min.

of Finance 0601 Administration 6,959,131.20 2010: Min.

of Finance 0601 Administration 20,208,156.48 Min.

of Soc Dev 1301 Administration 221,183.33 Min.

of Trade 1401 Administration 348,211.90 Min.

of Finance 0601 Capital Admin 286,284.79 2011: Premier’s Min.

0501 Administration 134,970.98 Min.

of Finance 0601 Administration 4,661,021.71 Min.


of Tourism 1001 Administration 593,124.18 Min.

of Soc Dev 1301 Administration 606,030.09 Min.

of Trade 1401 Administration 1,457,636.69 Total unauthorized expenditure was $7,452,783.65 incurred on five (5) Programs.

49 ADDENDUM: Domestic Foreign 2011 $ 2009 $ 285,217,435 255,015,184 214,483,823 181,063,126 111,925,525 113,859,308 133,362,261 152,157,784 147,619,316 113,839,766 2010 $ 2006 $ 2008 Guaranteed –.
15,848,454 *To be added to the Foreign Debt as at the end of 2006 to total $115,660,089.

16,538,601 17,864,977 15,265,150 1,820,323* ADDENDUM: Domestic Foreign 2011 $ 2009 $ 285,217,435 255,015,184 214,483,823 181,063,126 111,925,525 113,859,308 133,362,261 152,157,784 147,619,316 113,839,766 2010 $ 2006 $ 2008 15,848,454 Guaranteed –.

*To be added to the Foreign Debt as at the end of 2006 to total $115,660,089.
16,538,601 17,864,977 15,265,150 1,820,323* ADDENDUM: Domestic Foreign 2011 $ 2009 $ 285,217,435 255,015,184 214,483,823 181,063,126 111,925,525 113,859,308 133,362,261 152,157,784 147,619,316 113,839,766 2010 $ 2006 $ 2008 Guaranteed –.

15,848,454 *To be added to the Foreign Debt as at the end of 2006 to total $115,660,089.

16,538,601 17,864,977 15,265,150 1,820,323*