Public finance law changed

| 04/08/2011

(CNS): Legislation to amend the Public Management Finance Law, which government said was too cumbersome and complex to follow, was passed through the Legislative Assembly on Wednesday with support from both sides of the House. The amendment to the law which governs the management of public accounting has reduced the amount of reporting government entities have to do and has essentially removed the legal requirement to have audited accounts before 2008 in order to help all public authorities and ministries catch up. It will also allow government to produce an up to date set of consolidated audited accounts for the first time in over seven years.

Withdrawing the previous bill because of the language used in that first draft, which included reference to non-compliance with “generally accepted accounting practice”, the premier explained the changes government now intended to make to assist with addressing the disarray in government’s management of public accounts.

Bush said that government had undertaken the mammoth task of identifying what the problems were in government agencies with their failure to produce accounts on time and address them by fixing the systems and the law itself. Having hired a consultant from the UK and taken advice from the auditor general, thenew legislation would address some of the complex and cumbersome problems that have prevented government from producing accounts within the requirements of the existing PMFL, he said.

Keith Luck, the consultant, issued his final report in April 2011 and one of the areas that he identified was the reporting requirements, and as a result government has now changed the law to suspend quarterly reporting. It has also dropped the requirement for the audit of output reports and reduced the volume of reporting by statutory authorities and government companies.

The premier revealed that Auditor General Alastair Swarbrick had said that the output statements includedin government accounts were of limited value and didn’t  provide effective accountability of the performance of government and the requirement should be removed.

It was also the AG who recommended that government give up on trying to produce consolidated financial statements for the years up to 2007/8 and probably 2008/9 because they are too late to be of value, so the law has been changed to remove the need to produce those out of date accounts. Bush said that, as recommended, government would concentrate on ensuring that statements for 2009/10 are as good as they can be.

The premier said that the previous reference in the first proposed amendment was much misunderstood by the public. The premier said that the reason why so many qualified, adverse and disclaimer opinions had been issued was because of the failure to meet certain definitions of accounting practices, but this did not mean it was neglecting accepted standards.

“To the general public, it would have appeared as though the government was suspending all accounting rules, procedures and conventions,” he said. “But this was not the case nor was it the intention of the government. The government since met with the auditor general and the legal drafting department to ensure that the government’s intention was accurately re-worded in this present version of the bill now before the House,” he added during his presentation on Wednesday.

He said that everyone had now agreed that instead of amending the law to suspend compliance with 'generally accepted accounting principles’ (GAAP), a better alternative would be to disclose in the notes of the financial statements the particular sections of IPSAS where there will be non-compliance — and such departures would be applicable only to the earlier years of 2004/5 to 2007/8.

See revised amendment to the PMFL here.

Category: Politics

Comments (23)

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  1. 4th CLASS CITIZEN says:

    Cut civil servant's pay and give it to the churches. What kind of politicians would do such a thing? Stupid petty ones I say. Change the finance law to coverup incompetence by the same stupid petty politicians. What a country?

  2. Anonymous says:

    Maybe now is a good time to bring back the old system where government accounts were centralised.  Now just too many accountants and no results. This is what you call too many Chiefs and no Indians. 

  3. Anonymous says:

    So all that money paid last year to one of the big accounting firms to bring government's accounts upto date just went down the drain…cns please ask for an FOI request into how much was paid to the accounting firm

  4. truth says:

    In other words our accountants are just not as smart as the ones hired in any other country but we still pay them more because they are from here.  Right?  And if we get rid of all ex-pat skill then we will finally be the smart ones around here.  Right?  Then we won't need any laws, rules, or anything to get in the way of our own stupidity.  Right?

    Because this would only make sense if your really stupid and in charge in Cayman this is the only way to do things.

  5. Anonymous says:

    This is an example of the true Cayman culture.

    • Post X Pat says:

      Unfortunately you're dead right. A perfect example, Sweep it under the carpet so "we can make a fresh start". If a law is inconvenient we'll just ignore it and then later on, wriggle out of any responsibility. Oh, and where money is involved we'll close ranks and destroy the evidence, just like we always do, safe in the knowledge that the system of law enforcement and the judiciary lacks the funding and the inclination to do anything anyway . That pretty much sums up the Caymanian way 🙁

  6. Wet Paper Caymanian says:

    Nah ! I would not hold my breath at this time, more excuses will come forward unless they are ready to start first thing Monday morning and keep them honest and on target.. FS doing anything lately ? Could be the watchdog for what you're getting paid I still don't know what you are suppose to be doing. And people respond better to diplomacy and communication IF you want to help OUR Government..       

    What do you think, could you hanled that from 2008. And practice what many of us have to do in the private sector : Produce or get out of the way !    

  7. Anonymous says:

    sssshush can't mention this too loud, this is the 5th largest financial center in the world, don't want anyone to find out about this…. oops I hear the FS Times and WSJ already got a hold of it.  Just hope that it's not true.

  8. Anonymous says:

    Perfect Solution

    Normally Cayman gets rid of the auditor when he asks the right question.

    This time, you get rid of the accounts!

    No accounts, no audit, no audit, no problem!

    Keeping accounts is fundamental to good management, auditing them is essential to transparency, you should get very worried about a government that prefers bad financial management.

    Surely your Governor has to react to this?

  9. Anonymous says:

    just another day in wonderland……zzzzzzzzzzzzzzz

  10. Scrooge McDuck says:

    If you can't keep accounts…….Fuggitaboutit. If you can't follow accepted rules……Change Them.

    Brilliant.

    And we pay those guys??

  11. Anonymous says:

    I'm a qualified accountant and cannot believe that we have been so stumped by an accounting program that we had to change the law (rather than the program).  That must be one really crummy accounting program!  Who was the clever person who made the decision to subject the entire government to such a piece of crap?……did someone say McCarthy?

    Ah of course….is that why we made him the chaiman of CIMA? …  I wonder what havoc he'll wreak there?…

  12. Anonymous says:

    What an international embarrasment!  Cayman, an internationally renowned financial service centre unable to update its accounts!

    Solution?? Change the law so you don't have to! 

    Yeah! way to set a great global example! 

     

  13. Its a... says:

    copout

  14. Anonymous says:

    OK, when I first read the head line I was like "SON OF A >>>>".  However, reading the whole thing OK…. this is OK.  I thought they were reducing the transparency and accoutability on a go forward basis.  However this seems to just be falling in line with the AGs previous gstatements.  The previous gov's accounting was so bad, that there was no way to do proper accounting of, so we need to more forward and at least get proper accounting going foward.  I rewrote that last sentence probably 10 times trying to make it sound less political but really couldn't find that still fits the AGs statement about previous accouting. 

     

    Anyway.  What is done is done.  Lets move forward with proper accoutning starting in 2009 and ensure proper oversight is in place.  This is actualy good thing.  They are now following the AG's advise.  Get proper accounting of current records at least as previous records simply aren't reliable enough for auditors to sign off on.  

     

    Upon reading the headline I really was afraid they were reducing thier own accounting requirements which would just scream bad things.

    • Anonymous says:

      It was not the previous government’s accounting, it was the civil servants’ accounting – and most of them are still there! Also, this predate’s 2005, it goes all the way back into the previous UDP admin… roundabouts 2002/3 The problem is really that the civil servants were not up to fully carrying out the functions of the PMFL. Which means that the fault really lies with the Governor, Deputy Governor (previously Chief Secretary), and the Financial Secretary (who had more responsibilties prior to the existance of the Finance Minister).

      • Anonymous says:

        Yeah, 2003 seems to be the last decent set of records.  2004/2005 I'm willing to give a pass on as those were some extraordinary cases dealing the Ivan.  2006/2007/2008 though I find unforgivable that they cannot produce proper records.

         

        I realize there is a view that the politicians job is just to tell them how to spend money and they aren't responsible for the accounting of it.  I just don't care for that view.  The politicians are the only ones we can truely hold thier feet to the fire by our votes.  So even if they aren't doing the record keeping themselves (which of course they aren't).  They need to apply all appropriate pressure to those who are (including ensuring staff are replaced if they cannot do the job). 

         

        So yes, civil servants do the actual accounting, but the public cannot fire them.  All we can do is pressure the politicians to ensure the civil servants are doing thier jobs and if not we can fire the politicians.  Perhaps not perfect, but I feel if those at the top are held accountable, they will ensure those beneath them will also be held accountable.  If we don't hold those at the top accountable…. well don't be suprised if nothing ever changes.

        • Anonymous says:

          Your comment has more validity now that there is an elected Minister of Finance.

        • Anonymous says:

          And what of the view that it is wrong and even corrupt for the politicians to bring undue influence to bear on the civil servants?

  15. Anonymous says:

    So I see that new Benson & Hedges College needs to add classes on fiduciary responsibility.

    Perhaps they can include that in the Mac-O-nomics class.

  16. Anonymous says:

    Just what we need less accountability.

  17. Anonymous says:

    So now will we finally be told the truth about the final position when the UDP took over instead of Mac's incessant waffle?