The Auditor Generalís Department has found that the Urban Development (UDC) is facing serious financial problems and that the agency could soon have solvency issues.
In a report which was tabled in Parliament yesterday, the department said the UDC has a cash shortage problem as it is not generating adequate cash to meet its short-term obligations.
The report highlights that the UDCís cash generation from operational activities moved from a negative $409 million in March 2010 to negative $1 billion as at March 2012.
It was noted that the cash balance decreased from $718 million in March 2010 to $221 million in 2012.
The Auditor Generalís report further said that the UDCís current liabilities exceed its assets by $367.7 million moving from a positive of $898.7 million in 2011.
It also highlighted that the UDCís unaudited financial statements show that non-current liabilities increased from 751 million as at March 2011 to $945 million as at March 2012.
The report explained that this is due mainly to increases in bank borrowing and debt insurance.
And the report from the Auditor Generalís Department noted that the UDC has been using land deposits from customers to finance its operational activities.
The report has called for the Corporation to end the practice noting that the funds are not owned by the UDC.
It was also noted that the UDC has not been effective in collecting its debts, insuring its high risk properties and putting in place a disciplined risk management framework.
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