The $2.6 billion which erroneously wasn’t stated in T&T’s 2023 revenues—and subsequently caused a problem between Government and the Auditor General recently—was due to a new automated system across the financial sector which is operated by the Central Bank, Finance Minister Colm Imbert confirmed last Friday.
Imbert did so in Parliament as Government successfully piloted a motion to extend the time for submission of information on Trinidad and Tobago’s 2023 accounts to the Auditor General. The motion, passed by Government votes alone, will be debated in the Senate today.
Imbert said this country’s 2023 accounts were submitted on January 31, 2024 deadline to the Auditor General Jaiwantee Ramdass. But because of challenges following the introduction of the new automated system, actual revenue was initially under-reported by $2.6 billion, he added.
Imbert said the bulk of this—$2.2B—occurred with one erroneous transaction posted by CBTT on February 9, 2023. Once the $2.6 billion error was discovered by Finance officials, staff reached out to the Auditor General to correct the records to ensure an accurate record of Government’s accounts for 2023. She declined to accept it, but after continued outreach—including a pre-action protocol letter—agreed to it on April 16. However, the Auditor General’s 2023 report on T&T’s accounts which was sent to Parliament, didn’t have the corrected information.
Imbert refused to present the report to Parliament. Instead, presenting the motion he said Government felt it necessary to extend all of the reporting periods to the Auditor General by four months to ensure the correct figures for 2023 are placed before Parliament and the public.
Imbert said the $2.6B error was discovered by public servants in early February. He was told of the situation on March 25 since he said public servants were trying to solve it themselves. He sought legal advice.
Imbert gave information that he said he was told by the public servants.
Detailing Inland Revenue (IR) processes for tax refunds involving cheques, Imbert said, “Prior to February 2023 to facilitate the reconciliation process Central Bank submitted to Inland Revenue on a periodic basis the actual physical encashed cheques plus a report on a compact disc for uploading to IR’s Gentax (electronic system). However, on February 6, 2023, the Central Bank implemented a new electronic cheque clearing system which changed the manner in which cheques are cleared.”
Under this new system, physical cheques are no longer required to be transported from commercial banks to CBTT and then back to IR for reconciliation. Instead, cheques are scanned and images are uploaded to the electronic clearing system, then transmitted to CBTT, shortening the time for clearing cheques.
Imbert added from February 6, 2023 when the new electronic clearing system at CBTT went “live” the IR no longer received the physical cheques as expected.
“The IR began receiving the electronic images. However owing to the secrecy that exists under the Income Tax act, neither the Treasury Ddivision or Finance Ministry has any access to the Gentax system so it cannot participate in the reconciliation process – the burden then shifts to the IR division.”
Commercial banks’ difficulties, CBTT mistakes
Imbert added, “I’m told that difficulties arose with the implementation of the new electronic clearing system for clearing cheques - the data in the CBTT’s digital platform couldn’t be easily read by IR’s Gentax system without errors.
“The errors were related to the commercial banks experiencing difficulty with the magnetic ink character recognition line (used to verify cheque legitimacy) required to read the cheque numbers.
“IR officers said it was difficult to easily access the new electronic cheque-clearing platform. Further, files on the platform contained multiple tax types instead of being batched into various tax types as previously,” he explained.
Imbert said the new electronic system doesn’t batch the tax types and instead sends all in one file to IR, “This created difficulties. There were also mistakes made in the data processing at CBTT.”
Despite the setback, IR prepared and submitted its certified statement of receipts/disbursements to the Treasury. These were subsequently incorporated into Treasury statements which formed part of the public accounts submitted to the Auditor General in January.
Imbert added, “However the week of February 6, 2024 the Budget division informed Treasury Division of what they’d seen as an apparent material understatement in the reported revenue statement for 2023.
“The Budget division discovered the revenue for 2023 that was reported by the Treasury to the Auditor General was actually lower than it should have been – there was higher revenue,” he said.
When the Budget division received the statement of revenue they compared it to their records and observed variances under several items, “Particularly under individuals, Business Levy and VAT.”