Haiti: after the devastation the rebuilding begins

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, despite the physical and human damage that have set back the
impoverished country for decades, Haiti’s government and private accounting and
banking systems still survive.

Still standing

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: especially as many financial records
were backed up electronically by the government and financial institutions on
computer systems outside the country. 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
cheques this week.

Interviews for 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: banks literally collapsed, losing
hundreds of workers. Accounting firms were located in the downtown area, the
hardest hit zone in the capital city.

And 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 his 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 18 January, 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
by three months the country’s tax filing requirements – the deadlines were
largely at the end of January. Government officials had collected about $8m
(£5m) 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 directory 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 rebuilding begins

The IMF has now stepped in to help, last week announcing immediate $114m
(£73m) financing to help the Haiti government get back on its feet, including
buying 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.

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, 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 report published in March 2008 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.

Garry Pierre-Pierre is the editor and publisher of The Haitian Times,
which he founded in 1999. He has worked for the Sun-Sentinel in Florida and the
New York Times, where he shared a Pulitzer Prize for coverage of the 1993 World
Trade Centre bombing.

IN OUR VIEW

Television images have painted a slanted view of events in Haiti. The
Haitians, the aid agencies and military representatives have been more organised
and composed than we might believe. But nothing demonstrates the resilience of
people facing adversity than the ability of professionals, from any discipline,
to begin rebuilding. It is such services that underpin civil society and aid the
rehabilitation.

Further reading:

haitiantimes.com