Latest Auditor General's Report Reveals Discrepancies in Barbados Revenue Authority Operations and Accounting Activities

“The Authority wrote to the Ministry of Finance on January 3, 2022, identifying the issues which have arisen and requesting that incorrectly applied penalties and interest be written off, with a view to correcting taxpayer accounts in the TAMIS System. The Authority is awaiting a response to that correspondence,” said the BRA.

“The penalties and interest function were turned on with an effective date of January 1, 2021, and applicable charges of penalties and interest are currently being applied to taxpayers’ accounts.”

However, Trotman also reported that prior to the introduction of TAMIS in 2018, the ETAX system was previously used for the administration of a number of taxes, including Personal Income, Corporation and Consolidation Taxes.

He said due to the discrepancies, reasonable assurance could not be provided that the overall receivable balance reported was fairly stated.

Trotman further reported that in excess of $17.9 million of wire transfers for tax payments for the financial year ended March 31, 2022, was not included in revenue.

“These transfers relate to taxes paid by the taxpayer for which insufficient or incorrect information was provided. While it was evident that the funds were deposited to the bank account, revenue was not updated and, hence, was understated. In addition, some of the taxpayers’ accounts were not updated and were therefore incorrect,” the Auditor General said.

The BRA said it reached out to the Barbados Bankers’ Association on this matter and efforts were ongoing to identify the taxpayers’ accounts to which those funds should be applied.

Adding that it had also reached out to individuals to submit required details, the BRA said taxpayers’ accounts were being updated when the necessary details were received.

Trotman also indicated that the submission of financial information for revenue collection was not in accordance with the law, adding that the BRA sought to portray its revenue collection activity as though it was a separate fund and this “created some confusion”. He urged the BRA to correct this.

Trotman said notwithstanding the response to the BRA on this matter, there were no statements provided to the Audit Office in respect of revenue, receipts and remittances.

In relation to tax refunds, the Government auditor reported that the tax refunds due to taxpayers were reported as $516.27 million as of March 31, 2022. However, he said that in verifying the amounts used to determine the tax refunds payable, a number of disparities were found including the lack of updates to taxpayers’ accounts and a high volume of cancelled/voided or returned refunds.

As of March 31st, 2022, in excess of 16 000 cheques totalling $47,405,337 were recorded as stale dated/voided and over 1 000 direct deposits totalling $1,053,302 were returned for such factors as invalid/closed accounts and the use of outdated taxpayer information.

Trotman called for greater efficiency in the management of the refund process.

However, the BRA suggested that banking and payment details were not always up to date, indicating that from April 1, 2023, all current refunds were only being facilitated via bank-to-bank transfer and this should reduce the need to cancel or reissue cheques in the future.

Trotman also pointed to “significant unresolved differences” in amounts between bank statements and ledger (cash/bank account), as he called for prompt action to resolve that matter.

“These longstanding differences reduce the effectiveness of the bank reconciliation process. As a result, the level of reliance that can be placed on the financial information produced by the Authority is reduced,” he said.

“The issues outlined in this report are significant and need to be urgently addressed as it would appear that the Authority has significant challenges in producing financial statements that are in accordance with its policies.”

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