Analysis of CDAL Audited Financial Statements (2022-2024)

This forensic accounting analysis examines Caribbean Developments (Antigua) Limited's (CDAL) audited financial statements for 2022-2024, supplemented by the Reserve Study conducted in 2022 and related party lease arrangements. The analysis reveals critical concerns regarding CDAL's financial capacity to fulfill its covenant obligations to Jolly Harbour freeholders.

Key findings include material asset transfers out of CDAL, concerning changes in corporate structure, troubling accounting practices, complete neglect of reserve funding recommendations, and questionable related party lease arrangements that directly impact freeholders' financial obligations. Despite a documented USD $62.3 million infrastructure repair backlog over 30 years, with USD $12.3 million specifically required for 2023-2026, CDAL has transferred significant assets while failing to establish essential reserve funds, creating an urgent risk for freeholders.

• An artificial appearance of profitability through a USD $1.64 million (ECD $4.4 million) stockholder grant while actual operations showed a USD $336,078 (ECD $907,411) loss, raising questions about the going concern assertion given simultaneous asset transfers.
• Significant inconsistencies in capital expenditures compared to documented Reserve Study needs
• Modifications to financial statement disclosures following freeholder challenges to auditors
• Belated acknowledgment of the Reserve Study with incomplete and potentially misleading disclosures
• Continued related party dependencies and circular fund flows, complicated by shifting debtor/creditor statuses.
• A maintained pattern of asset outflows to related entities.
• Apparent violations of IAS 37 through non-recognition of infrastructure liabilities, which appear to contradict CDAL's own stated accounting policies.
• Concerns regarding auditor independence involving Gold Standard Accounting Solutions Inc. and its apparent relationship with CDAL's legal representatives, potentially creating multiple independence concerns (Self-interest, Self-review, Advocacy, Familiarity, Intimidation).
• Self-insurance practices that appear to create unrecognized contingent liabilities of over $300,000 USD annually and may potentially violate covenant requirements, alongside unexplained variations in reported insurance expenses. More significantly, this approach appears to expose CDAL and ultimately freeholders to potentially catastrophic uninsured losses in the event of a major incident, with no evidence of adequate reserves to cover such contingencies.
• Material violation of accounting standards (IAS 37) and Land Transfer Covenant through CDAL's apparent non-disclosure of litigation contingent liabilities, placing freeholders at risk of substantial financial losses from undisclosed legal actions despite explicit acknowledgment of multiple lawsuits in the financial statement notes.
• Questionable revenue recognition practices, including charges for infrastructure replacement, costs associated with water leaks, and recognition of income from payments reportedly made under protest.
• Continued reliance on outdated estimates (e.g., 2012 lighting costs) and apparent lack of implementation of previous accounting recommendations (KPMG 2001).
• Documentation from the 2020 Letter of Intent suggesting pre-acquisition awareness of infrastructure deficiencies by current ownership.
• Apparent absence of the specific "audited common expenses" documentation that appears to be required by the Land Transfer Covenant as the basis for community charges.
• Apparent concealment of the Reserve Study findings constitutes questionable financial disclosure.