Audit uncovers electric utility morass
Santo Domingo.- The accounting firm KPMG revealed that it “wasn’t able to obtain sufficient and appropriate audit evidence” on the financial statements in 2010 from Dominican Republic’s State-owned Electric Utility (CDEEE), and therefore couldn’t state an opinion.
According to outlet diariolibre.com, the firm began its report with a list of accounting weaknesses, omissions and absence of records of CDEEE financial transactions, leading it to conclude that “an uncertainty of relative importance can project a significant doubt about the company’s ability to continue as a business, without financial support from the Central Government of the Dominican Republic.”
KPMG was hired by the Accounts Chamber to audit the CDEEE’s financial statements to December 31, 2010, date in which tycoon Celso Marranzini took over as CEO, holding the post until August 16, 2009. His predecessor, Radhames Segura, was CEO since August 2004.
In one of the bases to “abstain from making an opinion,” KPMG reveals that the CDEEE had yet to update the values of the technical facilities of the subsidiary EdeSur, revaluated in 2004 at RD$7.8 billion. It also notes that it couldn’t reasonably verify the property, technical facilities, furniture construction in progress and equipment of around RD$11.1 billion.
Marranzini however notes that they found “a company that had no bookkeeping since 2000.” He read a report in which the CDEEE’s current Comptroller notes the report by KPMG, which says that EdeSur didn’t have auxiliary books that register its assets, but that “since the SAP (a modern accounting program) in 2011, the assets acquired by EdeSur are properly registered.”
“There’s indication of the change that we made in just one year,” said the business leader, who was removed as head of the CDEEE in August 2012.
KPMG notes that the CDEEE’s accumulated losses to 31 December 2010 were of RD$47.0 billion, and its working capital is negative at RD$30.8 billion.
But the report slams the Utility’s bookkeeping problems on sensitive issues as decades-old, “for example, the confirmation of the accounts receivable balance from clients for RD$759.5 million to December 31, 2010.
The audit also reveals a lack of documents on amounts receivable maintained by EdeEste for RD$592.1 billion and EdeNorte’s lack of reclassification to accounts receivable on RD$20.6 million in advances to its suppliers.
It adds that the CDEEE had neither determined nor revealed the reasoning behind its value of the deposits and long-term debt in the books for RD$2.2 billion and RD$524.5 million, “with cases like these forming a long list.”
Category: DR News |