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DBAS gets unqualified opinion for 2007 audit
The CPA firm of Holsinger & Associates from Pittsburgh, Pennsylvania conducted a financial audit for year ending December 31, 2007 for the Development Bank of American Samoa, and the end result was DBAS earning a “clean or unqualified opinion.”
This has been DBAS’s grade, so to speak, for the third year in a row.
DBAS also got an unqualified opinion for the single audit, or the audit of federal programs.
According to DBAS President Utu Abe Malae, an unqualified opinion is the best one offered by CPA auditors when auditing the financial statements of a company. He said this means the auditors believe in the company’s financial reports.
DBAS could have gotten a “bad opinion,” which is a qualified audit that means the auditors take exception to an accounting method used by the company, or the lack of disclosure of an important item; or a “worse opinion” which is an adverse one where the auditors believe the deviations are so serious that the statements are misleading.
Utu reports that DBAS suffered an operating loss of $454,489; however, the bank was able to offset the loss by capital contributions of $857,887 which resulted in a net asset increase of $403,398.
As required by local statute, the financial audit report has already been submitted to the Fono and the Governor.
Utu said that the Bank’s financial statements and notes for 2007 reflect that DBAS is undercapitalized, meaning the bank can use a lot more money in order to make more loans for the niche market.
In addition to the huge allowance for bad loans, the accounting is more conservative than in was four years ago, meaning that income interest from delinquent loans of 90 days is no longer counted.
Utu said that the business loan portfolio performed poorly, even for a development bank where risks are high. And although the bank suffered an operating loss, this was more than offset by other contributions, hence the importance of grants.
Lastly, Utu said the bank had a few liabilities compared to assets, and audit fees can be reduced when the accounting and loan staff is prepared and competent.
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