The Puerto Rico Treasury Department released Tuesday a draft of the Commonwealth’s unaudited Basic Financial Statements for the fiscal year ending June 30, 2014, more than a year after their required release.
The draft is still subject to completion and audit, but includes audited financial information for all public corporations and retirement systems other than the Government Development Bank for Puerto Rico, the Employees Retirement System of the Commonwealth and the Retirement System for the Judiciary of the Commonwealth, agency officials said.
Subject to the limitations described in the draft’s disclaimer, in the opinion of the responsible officers at Treasury, the unaudited financial information included “is a fair statement of the results for the periods reported.”
“The Commonwealth continues to work constructively with KPMG on a daily basis through an iterative auditing process to complete the fiscal year 2014 audit,” said Treasury Secretary Juan Zaragoza.
“The issuance of the audited Basic Financial Statements is expected to be completed in approximately eight to nine weeks from the delivery of the first draft of the financials to KPMG on Jan. 31, 2016,” he added. “However, there may be additional issues that arise during such period that require an adjustment to such timetable.”
The released the draft to provide the public with additional information that could be useful in evaluating Puerto Rico’s financial condition and new legislative measures to address the current fiscal crisis, government officials said.
The financial statements have been at the top of the list of documents required by Congressional lawmakers and Obama Administration officials looking to extend solutions to Puerto Rico’s fiscal problems. Senate Finance Committee Chair Orrin Hatch had given Gov. García-Padilla’s administration until March 1 to produce the document.
“The Commonwealth has reiterated the critical need for Congress to provide Puerto Rico with a broad restructuring framework to address its unsustainable debt burden,” García-Padilla said.
“The risk of Congress not providing such framework — which costs nothing to U.S. taxpayers — is condemning Puerto Rico to a legal morass that will jeopardize essential services for U.S. citizens living in Puerto Rico, further accelerate outmigration to the U.S. mainland and severely impair creditors’ ability to recover on their claims,” he said.
“Denying any congressional assistance to Puerto Rico on the basis that the Commonwealth has not issued audited financial statement is simply an excuse for inaction. The Commonwealth has provided an unprecedented amount of reliable and up-to-date financial information regarding the depth and imminent nature of Puerto Rico’s debt crisis,” the governor added.
The preliminary results for fiscal year 2014 in the draft show that the Commonwealth’s “primary government” reported an increase in its net deficit position of approximately $2.5 billion, from $46.7 billion as of June 30, 2013 to $49.2 billion as of June 30, 2014. The increase was attributed to higher operating expenses than operating revenues and an increase in the Commonwealth’s liabilities, such as bonds and notes, net pension obligations, legal claims among other.
The aggregate net position of the Commonwealth’s “Discretely Presented Component Units,” or agencies outside public corporations and larger entities, decreased by approximately $1.7 billion during the same period.
“As the Draft makes clear, the Commonwealth currently faces a severe fiscal and liquidity crisis, the culmination of many years of significant governmental deficits, a prolonged economic recession [which commenced in 2006], high unemployment, population decline and high levels of debt and pension obligations,” Zaragoza said.