Slow progress on accounts

| 31/08/2011

(CNS): The auditor general said today that there has been some slow progress on thegovernment's accountability to the public, as he presented an updated report on financial reporting. On the deadline day for government entities to submit their accounts for the last financial year, Alistair Swarbrick said there was hope that the governmentmay finally manage to produce some form of timely consolidated report for the most recent financial year, but added that it would not be easy. Changes in the public finance law, the pragmatic approach, some lines in the sand from the audit office and leadership from the deputy governor had all helped to improve the situation, but he warned that there would still likely be issues with the quality of the reporting, which could go on for several more years.

“While there has been more progress since my last report, it has been slower that I had hoped," said Swarbrick. “I fully support government's more strategic approach to concentrate on the current financial results, however the delays clearing backlog will definitely impact on government's capacity to prepare the 2010/11 financial and my ability to audit them.”

The update by the office revealed a number of continuing problems in government's accountability  to the public on how it is spending their tax dollars. Aside from the fact that the Ministry of Finance, formerly the portfolio of finance, will never have any audited accounts for the years between 2004 and 2008, all accounts for government ministries and portfolios after 2004 up to 2009 are of such poor quality that there will never be any meaningful consolidated accounts for those years. This means leaving the Cayman public in the dark about how public money was spent.

The report also reveals that that there are still some 55 reports that are ready to enter the public domain that have not been tabled in the Legislative Assembly, and as a result remain under-wraps.

Swarbrick said that despite the numerous issues, progress was being made and only 14 statutory authority or government company backlog reports remained outstanding and 12 for ministries and portfolios, which was an improvement, though things were slow. “It's not as fast as I had hoped but we are getting there," he added.

However, the goal now is for all government entities to submit their 2010/11 accounts before 5pm Wednesday in order for government to have a real chance of getting back on track and produce full consolidated accounts for the most recent financial year.

Swarbrick said the change to the law, which has removed government's obligation to produce audited financial accounts for the years up to 2008/09, and the more pragmatic approach by government to focus on the more recent accounts may bear fruit.

The auditor pointed out that in the end the financial statements are about accountability to the people as without them elected officials cannot review how the money they authorized through thebudget process was spent.

“The wider public cannot see what has happened to their tax dollars and they cannot be sure they were used appropriately,” swarbrick said as he emphasized the importance of addressing the ongoing failure of government to be accountable. “The accounts represent what happens to public money and holding the people who are responsible for spending it accountable as officials should be seen to be spending money responsibly.”

Although there are a number of ways that governments can be accountable to their people for what they spend, the Cayman government  has only ever produced annual reports, and as a result of not doing that for more than seven years, the people have no idea what has happened to public cash.

In order to try and address that issue and get some form of genuine accountability, the auditor general said his office would be undertaking compliance audits on the missing years in an effort to get some answers.

“As a result of the large number of disclaimers of opinion on the financial statements of ministries and portfolios and some financial statements for the period 2004/05 to 2007/08 not being subject to audit as a result of the PMFL amendments, I will be undertaking a series of compliance audits that will review significant high risk areas of expenditure to ensure that they have been incurred for the purposes they were intended and in compliance with the relevant statutory provisions,” Swarbrick wrote in his latest report.

He explained that areas where money is awarded based on subjective criteria is what was generally consider high risk, such as scholarships or bursary payments, as well as specific projects. He said that the changes to the PMFL which removed the need for audited financials up to 2008 required the compliance audits as a way of addressing gaps in the accountability of how public money has been spent.

The auditor admitted, however, that the reality of the situation, as a result of the failure of government to put proper processes in place regarding financial accountability, the public will never truly know what happened to its money between 2004 and 2009.

Swarbrick added that the historical failure of government to keep track of public money may well have contributed to the recent  years of deficit because, he said, while officials may know at a given time how much money government does or doesn't have, it has had difficulties predicting budgets and understanding its financial requirements as elected officials have not been able to see where or how money is actually spent and therefore unable to make informed decisions about cuts.

See Financial and Performance reporting update here

Category: Local News

Comments (13)

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  1. Anonymous says:

    Grand Cayman.  The only place where employing Caymanians is more important than getting any work done.

  2. Andrew Reid says:

    "The auditor admitted, however, that the reality of the situation, as a result of the failure of government to put proper processes in place regarding financial accountability, the public will never truly know what happened to its money between 2004 and 2009."

    The fact that the Ministry of Finance is the chief offender and "will never have any audited accounts for the years between 2004 and 2008" is literally beyond belief.

    This is a truly woeful state of affairs and one that should never have been allowed to develop over such a long period. If it is really the case that the public will never know what happened to the money between 2004 and 2009, we should at least be told who is/was responsible for this mess.

    The politicians will understandably duck for cover, but who in the glass house failed to carry out their statutory duties and who in the legislative house turned a blind eye while this was going on?

    Seriously, heads need to roll over this. At the very least, the Queen's medals should be returned.

    The Caymanian people deserve better and collectively we must demand better.

    Andrew Reid

    • noname says:

      In Cayman instead of risng to the bar its more like lower the bar so it can reach it.  Cayman is what it is and always has been. The only thing that can change it is change.The auditor and the Governor will have to fight a lot of ignorance and deceit.  Good luck to them.

  3. Anonymous says:

    Cayman Islands has come a long way from where it was 20 years back, most of it good. At this juncture, it is very important that attention be paid to ensure that going forward, all public sector/ Govt.entities have proper accounting systems put in place, accounts prepared by the management and audited, and placed before the public on a timely basis.

    Leadership and resources are definitely required here!! This is very important, we got to realize that if reliable Financial Statements are not prepared, the whole credibility (read gvernance) of any organization is in question.

    Audited Financial Statements are very important!



  4. Chris Johnson says:

    By coincidence today the Turks and Caicos announced the Goverment figures for the quarter ended June 30 2011. Yet our brilliant leaders have dispensed with quarterly accounts. Don’t stop the carnival.

    • Anonymous says:

      Dispensing with the quarterly accounts is the brainchild ( I use the term "brain" loosely) of the Financial Secretary, his Deputy and other senior civil servants who never liked the extra work the quarterly accounts put on their plates.

  5. Anonymous says:

    Reputed to be a a top financial centre, yet this country can't even account for its own money.   How do they expect overseas investors to have any confidence in investing money here, if Cayman Government can't keep track of its own books and provide accountability to its people on how their money was spent?  How do they know whether they really have a budget surplus or a deficit from year to year, if they don't have financial statements from previous years and from the current year?  Just goes to show that a country must have educated people at the helm running it, who know what they are doing.  Instead, we have the blind (aka career politicians), leading the blind.  Mr. AG and Mr. Governor, take a big broom and sweep them all out and start fresh with some educated people instead to lead this country.

    • Anonymous says:

      That's what amazes me as well.  Do people think that the financial services industry somehow functions ethically and on point when the rest of the island is completely screwed up?  The money people here are as deluded as the money people in the States were and the money people in Europe were and they're the ones that created the worldwide economic crisis.  Financial services is a GAME played by people with money to burn.  Add in the ignorant arrogance of someone who has an associates degree in finance from the Official College of The Tiny Island of Whatever and you've got one gigantic turd… the only thing keeping Grand Cayman afloat at this point.


      • Anonymous says:

        Cayman was as much involved in the financial collapse as any other place! When Bankswere concealing their bad debts they did it through Cayman SPV's, when Enron faked their figures they did the same. Thousands of these structures were sited here and local businesses got rich on it. The other points are fair ones, as a financial centre, not being able to produce proper financial records (or not wanting to!) is shameful either because you cant or worse because you wont! 

      • Anonymous says:

        I am with you, my bro (or sis).  But I don't think they even have as much as an associates degree in finance from the local college.  I hear one didn't even finish high school. 

    • Married to a Caymanian says:

      Yes, we need Audited Accounts, but more importantly we need Operational changes in every government office!  Accountability goes waaaaay beyond financial accounts.

      The way most Civil Service departments are run is simply the same shoddy way it has been handed down for the past twenty years and I'm not saying that this is the fault of the current CS employees, but if your "business" is run wrong, then speak up and DO something….  However, Govt. Departments are still doing most tasks by hand, no reporting, no continuity, minimal management, etc.

      I honestly believe you could & should cut 10% of all the staff (randomly, it really won't make a difference) and install an Operationals Manager in each goverment office.  (University degreed managers wil be trained in profit & loss, HR, Business Analysis, Operations, Projct Management)  PLEASE tell me if anyone has actually experienced a well run government department.  A well run department will know where every penny is going every day.  It will also maximize manhours, productivity, and output.  (What!?! output reports?  KPI's? Measure efficincies?…er, um, YES!)

      Ooooh, our civil servants won't like ME this morning, but accept the blame if you work for Govt and you have fueled this mess by not taking enough pride in your civil duties to make even simple changes.  (Like offering a smile with customer service or getting off your cell phone to  do your job)

      Take pride Cayman.  Every single person can make a difference so start by giving it your 100% today.



  6. Shock and Awe says:

    elected officials have not been able to see where or how money is actually spent and therefore unable to make informed decisions about cuts.

    They didn't provide ANY understandble accounts for 2004-2009??  What did they think the purpose of a CFO was?  What the hell were they hired for? Why were they paid?? Now the reasoning seems to be don't ask them – the CFO's- because they don't know.  Then WHAT the beejeesus were they doing going to the officeeach day??

    Cut their salaries and you can be damn sure they'll know where the money isn't.