Tonight the Government Development Bank of Puerto Rico announced via EMMA that a $1.14 billion figure shown on the Commonwealth’s unaudited financials dated 11-6-2015 as a negative was actually a positive.
The change resulted in an $2.3 billion correction.
A one paragraph statement that was released with the new numbers, the core content of which was:
This Errata Notice corrects an inadvertent error in the “Total Expenditures” line item for fiscal year 2014 under the columns of “Other Governmental” and “Total Governmental”. The parentheses in the number $1,140,433 under the “Other Governmental” column are eliminated resulting in “Total Expenditures” of 21,620,133 under the “Total Governmental” column, instead of $19,339,267. The “Excess (Deficiency) of Revenues over Expenditures” for fiscal year 2014 appearing on that table remains ($4,309,879).
An error of this size and importance highlights the need for the Puerto Rico government to release audited financial statements. Puerto Rico’s auditor KPMG has not signed off on the financials of four government units, one of which is the Government Development Bank. In the absence of audited financials the PR government has hired restructuring firm Conway MacKenzie to prepare unaudited financials.
The Puerto Rico government has been using Conway’s unaudited financials to represent its liquidity and solvency. It would benefit Puerto Rican citizens, the U.S. Congress and bondholders if the Puerto Rican government came to an agreement with KPMG and published audited data for fiscal year 2014.
A reporting error of this magnitude will likely receive U.S. Congressional scrutiny at the U.S. Senate hearing next Tuesday.