By Poyi (Natalie) Leung
The report, which was released on Monday, revealed major mistakes amounting to over 100 billion patacas in the 2007 Consolidated Financial Statements.
The Commission of Audit (CA) gave a “reserved” comment to the financial statements, which Choi told lawmakers was mainly attributed to the “significant misrepresentation” in the category of “specific financial activities.”
However, the audit commissioner pointed out that the mistakes were a result of the change in the financial system beginning January 1, 2007, which required self-government departments, such as the Monetary Authority, Postal Savings Office and the Pensions Fund, to record their specific financial activities according to the public accounting system instead of the accrual system of accounting.
President of the Legislative Assembly, Susana Chou, and lawmaker Chui Sai Cheong, both deemed that the uncoordinated 2007 public accounts were caused by a “technical problem” in performing the new change of the financial system, rather than a “deliberate violation of the law.”
Hence, they said they were worried that the comment given by the CA to the financial statements would arouse misunderstanding and negative responses from society.
In contrast, Ng Kuok Cheong and Au Kam San supported the CA’s doing, and said that it could reflect the commission’s duties and functions.
Choi responded that the audit was conducted in line with international norms and audit ethics, which prohibited any industry practitioners from expressing “positive comments” when a financial report consisted of mistakes involving “massive amounts” that affected multiple accounting items.
According to the audit commissioner, the 2007 Consolidated Financial Statements prepared by the Financial Services Bureau did not follow the revised accounting rule.
The following annual audit report thus exposed that the capital income and capital expenditure were underestimated by respectively 803.3 billion patacas and 790.1 billion patacas.
Also, the surplus for operation budget was recorded by less 13.2 billion patacas, whilst “liabilities – the third-party debt” was reported more 62.7 billion patacas in the statements.
Net asset value was at the same time reported 61.5 billion patacas less.
Choi said as the specific financial activities of some self-government departments were “very frequent”, the use of the public accounting system would lead to “an enormous pseudo-increase” in the amounts of income and expenditure in a balance sheet.
“It clearly shows that the form of cash-based bookkeeping doesn’t benefit this kind of financial activities,” Choi said.
“To improve the unreasonable phenomena of the public financial system by appropriate legal procedures thus are necessary,” she added.
The audit commissioner also said that only by revising the system, “could the fact of an uncoordinated financial record be solved fundamentally”.
“Or otherwise it can be foreseen that the accounts reports in the future will still be affected by the current rule,” she told the legislature.
On the other hand, Secretary for Economy and Finance Francis Tam Pak Yuen introduced the performance report of the 2007 Fiscal Year Budget to the Legislative Assembly.
Tam said the SAR government had accumulated about 52.43 billion patacas of finance, excluding the land fund, as at the end of 2007.
In addition, the secretary said that the government had already completed the bill for a financial reserve system and it would be launched for public consultation as soon as possible.
Tam added that the related departments were also working on comprehensive plan to amend the entire public financial management system gradually within a period of three to five years.