Submissions don’t add up

The Public Service Pensions Board and Cayman Airways, among others, remain severely behind with their financial reporting, regardless of their protestation, the Auditor General said. Although many government companies and ministries have submitted some financial details to Dan Duguay’s office, their submissions remain woefully inadequate, he said. Speaking in response to denials over financial delinquency voiced by various departments, Duguay explained that submitting a few bits of financial information to his office did not mean those entities were compliant with the Public Management and Finance Law or that things added up.

Faith Ebanks, Chief Financial Officer and Director of Finance and Investments at the Public Service Pensions Board, flatly rejected the AG’s report and told Cayman Net News (4 August) the company had submitted statements on time every year. However, the Auditor General noted by way of illustration that while the Pensions Board had submitted some financial details for its 05/06 accounts on 15 September, 2006, Duguay had written to them immediately to say that there was insufficient information for him to conduct an audit. “The statements were missing numbers from the balance sheet, as well as details from the main income statement,” said Duguay. “Instead of figures they wrote TBA in the columns.”

Duguay explained that their information literally did not add up and the board did not provide any financial statement notes. “Surprisingly we didn’t consider this to be a full submission,” added Duguay. “We informed them in a very short time that too much was missing and told the FO exactly what it was that we needed, but we didn’t get another submission regarding the 2005/06 accounts, from them until July 2008, almost two years later.”

He explained that inadequate provision was a persistent problem common to numerous other companies. “It is just not the case that because a government company or a ministry has submitted something to this office that it becomes our problem,” said Duguay. He explained that the office issues a letter to all public sector entities detailing what his office needs in order to do an audit because if an insufficient amount of information is submitted, his office simply cannot do its job. In a bid to help, however, he says his staff is prepared to go into departments and search for the necessary information if need be.

“My officers literally go into offices and dig out these missing receipts, which we shouldn’t have to do,” he said, adding his concern that companies were submitting inadequate information to gain the system. “Just by putting something in they have not complied with the law and a submission doesn’t absolve them of their responsibility,” Duguay explained.  “One of our requirements is that we expect to see a complete set of numbers on a financial statement.”

He said that even though his office did not have the necessary details required to do an efficient audit for the Pensions Board, he was willing to go and do it anyway. “We are keen to work with them to get this sorted,” he said.

In the case of Cayman Airways, he said that it had not had any accounts signed off since 2003, but in April of this year the CEO Patrick Strasburger had emailed the Auditor General that he had seen his report about financial delinquency and agreed that the details regarding CAL’s accounts were accurate.  Duguay said he believed that when Angelyn Hernandez, Chair of the Cayman Airways Board,  described the CAL accounts as being in "good shape" she had been misinformed. He said that the airline was so far behind, some of its missing accounts didn’t even fall under the PMFL. But again his office was more concerned with helping CAL improve rather than pointing the finger. “CAL is a long way behind and has a lot of catching up to do,” Duguay added, “but I am glad they are working diligently to address the issue and I hope they will become more compliant.”

One ofDuguay’s most problem clients has been the HSA. However,  Duguay has been at pains to stress that, regardless of the dire circumstances, the team is making a real effort to address the substantial problem.

“I respect where the HSA is going,” Duguay said. “They are coming from a terrible place where we could not rely on the accounting and financial systems. It was a real problem but things are happening to improve the system and the Authority has made a commitment to getting the 08 accounts in on time. They are trying to work with us and that’s a good trend,” he said, explaining that while there never will be reports for 04/05 and 05/06, his office does have a package that is the best he can expect for 2006/7.

Duguay is facing numerous issues because his office must deal with with such extreme and widespread delays that he needs to do more than one audit at a time. He explained that it is very difficult for auditors to do more than one year’s financial statement simultaneously because the previous year’s figures are needed before the next ones can be finalised, but with such enormous delays with some companies he has no choice but to do parallel audits.

Ultimately, Duguay said he cannot force any public entity to submit their full and reasonable statements but he believes that the attempts to buck the system and undermine what he considers to be a good law won’t help anyone. Speaking about suggestions that the law is too difficult to meet and should therefore be changed, he noted that some nine very diverse government companies, from CIMA to the NRA, had come very, very close to compliance, and if they could do it everyone could.  “Output auditing is very sophisticated but we can do it if people make the effort,” said Duguay.