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Report by KPMG reveals history of errors at CDEEE

There is no list of the assets of the electricity companies

SANTO DOMINGO. The firm of KPMG revealed that "it was not possible to obtain evidence of a sufficient and proper audit" on the financial statements from 2010 from the Dominican Corporation of State-owned Electricity Enterprises (CDEEE), so that they were not able to issue an opinion.

The firm begins its report with a listing of omissions, accounting weaknesses, and the absence of bookkeeping of financial operations of the CDEEE, which led it to conclude that "a doubt of relative importance could project an important doubt regarding the ability of the CDEEE to continue as a business, without the economic support of the central government of the Dominican Republic."

KPMG was contracted by the Chamber of Accounts to audit the consolidated financial statements of the CDEEE to 31 December 2010. At that time, the executive vice-president of the CDEEE was businessman Celso Marranzini, who took on the position on 16 August 2009. His predecessor, Radhames Segura, had occupied the position since 2004.

As one of the basis "for the abstention of an opinion", KPMG revealed that the CDEEE has not updated the values of the technical installations of the Ede-Sur subsidiary for the amount of RD$7.8 billion that were revalued in 2004. In another paragraph, they explain that they could not verify the reasonableness of the property technical installations, furniture, construction equipment in process for approximately RD$11.1 billion.

But Marranzini explained: "We found a company that since 2000 had not balance sheets." He read a report in which the current controller of the CDEEE comments the notes of the KPMG report, that say that Ede Sur did not have the ledgers that registered their assets but that "starting with SAP-a modern accounting program-in 2011 the assets acquired by Ede Sur are properly registered."

The businessman, who in August 2012 left the position of executive vice president of the CDEEE, noted: "There you can see the change we made in barely a year."

KPMG noted that the accumulated losses of the CDEEE as of 31 December 2010, totaled RD$47 billion and that its working capital is a negative RD$30.8 billion. However it is the decades that its ledger problems have existed on issues as sensitive as, for example the confirmation of the balance of the accounts payable by its clients for RD$759,535,315 as of 31 December 2010.

Absence of entries

Other discoveries in the audit revealed the absence of evidence regarding amounts payable kept by EdeEste for RD$592 million; the lack of reclassification of accounts payable for advances to Ede Norte to its suppliers for RD$20.6 million. Likewise, they found that the CDEEE did not find out or reveal the reasonable value of the deposits and guarantees and the long term debt with values on the books for RD$2.2 billion and RD$524.5 billion. And cases like these just make the list longer.