PORT-AU-PRINCE- When last month’s earthquake flattened the tax office in Haiti, killing the director, many thought that it would take years to restore the country’s tax and accounting system. The headquarters of the Direction Générale de Impôts (DGI) was destroyed and its director general Jean Frantz Richard died. “The tax administration was decapitated,” said the International Monetary Fund’s (IMF) Haiti mission chief Corinne Deléchat later.
But amidst the physical and human damage that have set back the impoverished country for decades, Haiti’s government and private accounting and banking systems have not been obliterated. Deléchat said officials at the tax office “managed to salvage a server, but a lot of records were on paper in the building.” Digitisation has been the saviour here: partly because many financial records were backed up electronically by the government and financial institutions on computer systems outside the country. And within days of the disaster the government announced that thousands of civil servants would still receive their salaries, despite the devastation.
“It is up to every ministry to take the necessary steps so that their workers can withdraw their salaries,” said Serge Felix, information director at the ministry of economy and finance. “Public employees will be able to receive their checks this week.
Interviews by Accountancy Age in Port-au-Prince with government officials, accounting firm owners and bank executives have revealed that the country’s private accounting and auditing system has also withstood the shock. There were losses of course – many physical and human: many banks collapsed, losing hundreds of workers. Accounting firms were located in the downtown area, the hardest hit zone in the capital city.
According to preliminary information from Haiti’s accounting association – the Ordre des Comptables Professionnels Agréés d’Haïti – several small, local accounting firms suffered serious damage, with their offices partially destroyed. The country’s accounting sector includes several small firms and independent accountants, leaving them vulnerable to the multitude of personal tragedies that have flowed from the earthquake. For example, a controlling partner of a large local accounting firm has suffered personal loss of close relatives and is temporarily outside of Haiti. The practice plans to resume operations next week.
Only one ‘big four’ audit firm, KPMG, has an office in Haiti. It was established about 30 years ago in partnership with the Merove-Pierre Cabinet D’Experts-Comptables firm. The managing partner is Mireille Merove-Pierre, who told Accountancy Age said the he firm has 30 audit professionals.
Merove-Pierre said the firm was fortunate in the quake – it had not suffered any structural damage and computer records and archives were not at all affected. Its office has been fully operational since the following week of the earthquake, on January 18, and its auditors and accountants have been busy – continuing their usual work at the same time as assisting clients who may have suffered loss of records.
Meanwhile, because of the destruction, the tax office has decided to extend to three months the country’s tax filing requirements, whose deadlines largely were due at the end of January. Government officials had collected about US$8 million the day before the earthquake from taxes, and other fees, such as passports, license fees, were collected from satellite offices, said François Sérant a spokesman for the DGI. These have helped keep Haiti’s public administrations afloat.
Sérant stressed that archives and other documents had remained intact, despite the destruction. “The area where these records were kept, was not directly affected by the seismic force of January 12,” Sérant told Accountancy Age.
According to him, more than a dozen employees at the direction lost their lives. As well as the director, the chief of staff Jean-Baptiste Télémaque, operations director Murray Lustin Junior, and audit director Fénol Dureau.
The IMF has now stepped in to help, last week announcing immediate US$114 million financing to help the Haiti government get back on its feet, including buying new computer networks to start utilising financial data that was saved through digital back-ups. “It will also enable the authorities to maintain an adequate reserves cushion in the face of very large import needs linked to reconstruction,” an IMF statement said.
For Haiti’s economy was feeble before the quake, with more than 70% of the nine million people living in the Caribbean country eking out a living on less than one US dollar a day. But there had been significant signs that development was at last taking off in Haiti, after years of decline and stagnation. Last year, the economy grew an estimated 2.9%, one of the highest rates in the Americas during a year mired in recession. According to officials, higher public spending, debt forgiveness by developed country governments and a growing textile industry have been responsible for the growth.
In a recent report published by the IMF ‘Haiti: Financial System Stability Assessment’ and a related ‘Report on the Observance of Standards and Codes on Banking Supervision’, officials made several observations and recommendations.
These showed that Haiti was already woefully lacking in effective accounting and auditing services. It concluded: “Key concerns relate to the underlying reporting and auditing infrastructure; data processing in the BRH [the Banque de la République d’Haïti – its central bank]; and, the lack of clarity regarding which accounting standards are applied. Greater selectivity in banking sector data collection and upgraded IT infrastructure would free resources for a more risk oriented supervisory approach and the production of statistics that are currently unavailable,” the report stated, which was published in March 2008.