Accounts system under fire

| 14/08/2009

(CNS): Chair of the Public Accounts Committee (PAC) and independent MLA for North Side, Ezzard Miller, says that it is time for government to dump the Public Management and Finance Law (PMFL) as it has failed to deliver the necessary information on government spending. Even though the introduction of PMFL was once supported on both sides of the Legislative Assembly, the lack of a full set of government accounts since its introduction has lead to growing support for a return to the old method of accounting.

Under the PMFL government departments are required  to file with the auditor general not only annual accounts but also output statements, which detail the delivery of goods and services giving what is meant to be a more accurate and accountable representation of how public money is being spent. Under the system departments are also using an accrual method of accounting, which measures the performance and position of a department by recognizing economic events regardless of when cash transactions occur.

Auditor General Dan Duguay said it gives a more accurate reflection of the true state of finances of a government entity. With the growing backlash against the demands of PMFL, which has been criticised for being too expensive, not designed for a small jurisdiction, too cumbersome to meet, and above all pointless as so few departments have managed to meet its demands, Duguay warned against throwing the baby out with the bath water.

“If we stopped using the accrual accounting method that would be a backward step, but I think there is room to adapt the PMFL to work better for us,” he said. “We can perhaps reduce some of the demands and irritants required, suchas quarterly reports which are not necessary, but overall we need to give it a chance to work.”

Duguay explained that because so many government departments are failing to complete their full annual reports with the output statements, the public and the politicians have yet to enjoy the benefits of the PMFL.  “The problem we have is that it has not worked yet,” he added explaining that if the output reports were coming in people would have a far greater understanding of how public money is being spent. “We need it to work for people to understand its benefits. The reason why this law was introduced was because the politicians asked for more information on revenue streams so they could make better decisions and more effective expenditure.”

Duguay acknowledged the criticism that it is more expensive to create this type of annual report. “But then good information always costs more,” he added, saying that the problem here was not so much with the principles of PMF but with the fact that not all government departments are  doing what is required of them. “The thing is many of them are managing it so I don’t accept that it is too difficult.”

However, Miller says that it is the PMFL which has prevented government from getting any accounts information for more than five years. “We have no idea what our assets or liabilities really are, because we haven’t had the accounts, and no matter how good the principle might be it’s not working. So what is the point if we can’t get the information we need?” Miller asked. “We can’t produce accounts under it so we have to get rid of it.”

He said that PMFL had created unnecessary government bureaucracy with added expenses and the country was not deriving any of the benefits promised because the accounting information simply has not been provided to the Legislative Assembly.

He noted how cumbersome it had made the Civil Service, indicating that government employees were once paid salaries and then they performed the duties of their department. Miller said that today if we need Lands and Survey to do something for another government department, for example, not only do we pay the staff salaries, the department requesting the work also has to pay a fee for that work, which he said was absurd.

Above all, however, Miller was concerned that what should have produced more accounting information had in fact produced a lot less. “I see a lot of wings flapping, but there ain’t no birds flying,” he noted, adding that it was time for birds to start flying, in other words, for accounts to be produced. Miller said if that meant returning to the old system then that’s what should happen.

“If this law worked then the accounts would be done,” he lamented. “What is the law doing? We cannot get away from the fact that since we introduced this we have not had a full set of government accounts in five years.”

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  1. anon1 says:

    Thank you Mr. Miller

    I have read this article several times and listened to Mr. Miller this morning on the Rooster call in radio show. At no time and no where in this article do I see Mr. miller stating that we should move away from an acrual accounting system and revert back to a cash based accounting system.

    To the contrary, Mr. Miller repeatedly said that the PMF Law itself is the proplem, not the accounting system. This law everyone agrees, creates duplication upon duplication in costs, personell, accounting departments, personell departments, excessive paperwork and a general waste of public funds. Mr. Miller points out that this waste is not a means to an end as the desired effect of having accounts on a timely basis has been a complete failure.

    The accrual accounting system can stay in place, however the requirements of the PMF Law itself MUST be revised …. just as New Zealand was forced to do…. not because of the accrual system of accounting, but because the objective the law was intended to achieve has not materlised.

    The argument but forward by Joey this morning on Rooster that it is the fault of the Civil Servants for not complying with the Law and the sitting and past elected Governments that no accounts have been produced for the past 5 years just does not make sense.

    Let me give him a common sense case to study ……. If the will of the people was that everyone had the ability to swim across the length of a swimming pool. For years everyone had taught themselves how to achieve this, some by dog paddleing, some by back stroke some by breast stroke and some by their own system that did not even resemble swimming, but everyone got across the water in the pool. The objective of swimming across the pool was met.

    Then suddenly there came a Swimmers Law that said that everyone swimming across the pool had to do so, not only by breast stroke, but had to carry 4 big rocks on their backs as well. Oh yes and there would be no proper training on the breast stroke orthe rock carrying technique. What do you think would happen to 75% of the public …. they would drown. Whereas if the criterion was that everyone had to swim breast stroke and everyone was taught breast stroke then no one would have drowned.

    This is what the PMF Law has achieved. If the objective was to provide the Country with accrual accounting, this was what the law should have done. All this other foolishness that was wrapped into the PMF Law is what is causing the different departments to be behind in their reporting, not the accrual system.

    I say Mr. Miller is dead right, throw out the parts of the PMF Law that are not workable and start over. Train the departments or better yet, recentralise the accounting process with departments having to report to the central accounting department and get rid of some of the redundant accountants in every department.

    The centralise accounting department can then implement the accrual accounting system for all departments and we can have a system that works for us all. A good place to start in recruiting the people to man the centralised accounting department would be the departments that actually produce accounts now.

    Mr. Miller, I applaud you for having the balls to identify the problem and call for it to be fixed. Ignore the naysayers and the accountants that want to protect their high paying jobs. If they were doing their jobs like you are doing yours as the head of the PAC we would not be in this mess that we are in right now where there have been no accounts for 5 years.

    Oh yes, as a Northe Sider, let me say that you will continue to have my support as long as you make your common sense giude you and not political correctness that everyone else pulls you down for.

    Post here if you want me to come and connect that pipe to the Hurricane Shelter that it has taken you 17 emails to get done that is not done yet. I will do it for you.

    • Anonymous says:

      ANON 1 Are you for real! I listen to the show this morning as well. Joey said the failure to produce audited accounts was as a result of the failures of elected parliament, his PPM party included. Ezzard said if we return to Cash base accounting our problems would be resolved. Dan Duquay called and agreed with Joey fully on every single point. Let’s face it…we have a Chairman of the PAC who does not have a clue but is great at the blame and dodge game…now he is afraid of Mac and is blaming the system!

      Your analogy is just too unintelligent to comment on! If the Civil Servants can produce a budget they can account for the spending. Failure to do so must result in termination of the persons responsible…The bottom line here is that if we cannot create a more efficient Civil Service we will all be burden with unnecessary tax. I say we rid ourselves of the non-performers and let’s get the high performing Civil Servants to lead.

      Ezzard if you need someone to blame so desperately I suggest George McCarthy…he was the FS at the implementation of the PMFL and the CS during the time the training and implementation was to occur. If you must!

      • Anonymous says:

        To be fair to McCarthy, there was a massive amount of training. Very few of the most senior civil servants (including PSs)  went to it and no one called them to account for their non participation (McCarthy can be blamed for that). That is the problem with the Civil Service. No one is ever held responsible for their actions or non-actions. Just try that in the private sector.

      • anon1 says:

        I agree with you regarding whatyou claim Joey said and the fact that the AG agreed with him. I do not agree with your claim that "Ezzard said if we return to Cash base accounting our problems would be resolved." I too listened to the program and he said no such thing.

        I also think that Ezzard put the blame in the right place when he blamed the accountants who came here and sold the whole PMFL to the PPM Government in order to greate high paying jobs for themselves.

        The question is not what kind of accounting system is used, I personally think that the accrual system is the way to go for Government as it is no more difficult to implement and administerthat a cash based system. The problem in in the details ofthe PMFL which mandated duplication and decentralisation of so many functions that in a small country such as the Cayman Islands is just simply not practical.

        Since you were too intellegent to understand my good old Caymanian common sense analogy, I have a lot of land on a canel that I want you to swim across ………. and I have a few big rocks as well. Just let me know when you are available.

        • Anonymous says:

          LOL! You are funny yet unintelligent! I suggest that rather than associating your analogy with the “Old Cayman Way” you work on saving Ezzard! He is obviously in over his head!

          Ezzard did say we should return to cash base accounting. The PPM and the UDP were responsible for the PMFL. W cannot blame the “system” we have to identify the person/s responsible and then follow the labor law with respect to discipline and replace them if necessary. As Joey has said repeatedly, the elected members of Parliament who vote and approve budgets in Finance Committee must be held accountable by the people for failing to ensure audited accounts are produce.

          For your information great accountant its “create” not “greate”. Attempt to read your little response now and find the misspelled word! Go on…you can do it!

          • Anonymous says:

            Anon at 19:29

            Nothing will ever happen in Cayman. No matter what system is in place, Caymanians in the civil service are never held to account. That’s why so many of them want to go back to the cash based system-the good old days- when anything went and no permanent secretary had to say to anyone  "I spent this $ money on this to achieve that outcome".

            Mr Miller has formed his own opinions but he would do well to call some of the people who HAVE coped with the PMFL and also call those PSs who have been there for the last ten years and whose ministries have not complied and ask them why THEIR ministries have not coped with it. He should also (radio broadcast of course) ask Duguay to question them on their understanding of their responsibilities under the PMFL and shut them off as soon as they huff and puff about its difficulty etc etc.

            Th results with at least two Chief Officers would be embarrassing to the country and so it will never happen.

        • Anonymous says:

          OK I will come to do the swim on Saturday at 10:30 AM if that is convenient to you.

          Now please explain what I have to swim across. 

          What is a "canel"?

          What is the address that I have to come to do the swim.

          Thanks

          • Anonymous says:

            Sad, isn’t it Anon at 16:54?

            Supposedly the world’s fifth (or whatever) most successful/sophisticated offshore centre. Hard to believe.

    • Anonymous says:

      Anon 1 at Tuesday at 12:48:

      It’s so worrying to have to point out to you-because your level of comprehension is so slight and limited obviously- that Mr Miller says in the original article: "Mr Miller said that if that meant returing to the old system, then that’s what should be done".

      You say " I have read this article several times………………………At no time and no where in this article do I see Mr Miller stating that we should move away from an accrual accounting system and revert back to a cash based accounting system."

      Sir/Madam: The ‘old system" (quote; E Miller) was a cash based system.

      And we wonder why we are in such problems in our beloved Cayman Islands.

      • anon1 says:

        You have done a good job of contridcting yourself and making my point by your bold quote from the article, although I don’t need your help in making my point ever.

        As you quote "Mr Miller said that IF that meant returing to the old system, then that’s what should be done". Funny thing that little word "IF". He did not say that the accrual system of accounting was indeed the problem.

        I recall him also saying that he was not an expert in accounting so he was not commenting on what system was best, simply that the desired results anticipated from the enactment of Public Management Finance Law had not materialised and whatever needed to be done to get the system to begin to produce accounts that were more recent than 5 years old should be done.

        Reading between the lines I presumed that he in fact, wanted the accural accounting system. Then it  would be compulsory to list the value of Governments real estate assets as that was the nexus of the whole discussion, simply because no one could testify before Finance Committee as to what the value of these were to Government.

        As for people like myself that understand both the accural accounting from producing them for 29 years as a manager and the cash accounting systems from using this in 3 successfull buisnesses that I owned and sold, it is obvious that the accural system is NOT being implemented by Government, for whatever reason. If it was being used there would be NO question of what Government’s real estate assets were as it is a requirement of the accrual system, that that ALL assets be quantified, and costs associated with the acquisition be armortised over a fixed period of time.

        Your time to put your foot on your mouth again and tell me where I am wrong, by in fact using some other resource of yours to prove that I am right.

        Again I say …. Keep on doing what you are doing Mr. Miller. If the system is not working, someone had to stand up and say so. If the emporer has on no clothes then say he is naked.

        • Anonymous says:

          Anon1 at 13:34.

          No, I’m not going to put my foot in my mouth, tell you where you are wrong and prove you right. Your loyal defense of Mr Miller (credit to him for raising the image of the PAC by the way) says it all.

  2. Anonymous says:

    Keep going Ezzard!!

    It’s a rough road but you can get to the end.  This MUST be sorted out properly and put back on track.  No accounting system is too hard to make go.  If training is needed, then have the government order it to happen.

  3. Anonymous says:

    So what this comes to is simply an admission that the governments past and present  were and remain incapable of maintaining a set of accounts for the operations of the government.  This is remarkable on an island where there’s an accountant under every tree and a financial services attorney in every second hammock. 

    Clearly the government prefers to not have books of account, which means they can take the Treasury and do with it what they will.  As an expat (about to flee the rampant crime here) I am really not that concerned about how the government makes off with your Treasury, but I do feel bad for the Caymanians who are being taken for a ride in all of this.  Those tax dollars could employ a lot of Caymanians if used correctly.

  4. Ezzard Miller says:

    I see I have managed to stir some interesting debate on the PMFL, but I am left to wonder if those anonymous persons, particularly the professional accounts who speak so loudly about the benifits of accrual accounting has in fact read the current law.

    Here is what one section of the legislation reads in section 14 subsection 4 " Governor in Cabinet decisions may depart from the principles of responsible financial management for a limited period if the Governor in Cabinet specifies in a paper laid before the Legislative Asssembly for its information ( which may be included in a relevant document required by this law)  – (a) the reasons for the departure; (b) the approach that the Governor in Cabinet intends to take in order to return to those princilpes; and (c) the period of time that the Governor in Cabinet expects to return to these principles". the marginal note for section 14 is "Responsible Financial Management".

    One of the major selling points on this legislation was that politicians would not be able to lie about the financial position of Government for election purposes and we all know what happened in the most recent election.

    • Anonymous says:

      But, Mr Miller, surely the fault lies with those entrusted to abide by the PMFL (ie Cabinet/Government!) if, as you say, lies were told about the financial situation before the election? The wording of the Law seems very sound (presumably to allow for emergency spending like Ivan) but if laws are broken-as might be the case here- there should be consequences for those who break them (eg: losing an election and the FS being put on the spot!)

    • Anonymous says:

      "One of the major selling points on this legislation was that politicians would not be able to lie about the financial position of Government for election purposes and we all know what happened in the most recent election."

      Isn’t what happened simply because the various departments utterly failed to keep and provide accounts, and not because of the type of accounts they are obliged to keep? 

      This sounds a lot like me telling everyone that I don’t have a mortgage to pay, and when the bank shows up with a copy of my signed mortgage and a statement of arrears then me trying to still avoid responsibility by saying" Oh it’s just so horribly complicated that I just can’t understand it, so I am not going to pay you.  It’s your fault for sending me bills I don’t know how to read.  Shame on you." 

      Governments and businesses the world over operate on the accrual accounting system, and also maintain inter-department billing to see where the dollars (tax or revenue respectively) are actually being spent.  Does the current government want to go on record as saying that they are not smart enough to operate an accounting system that a combined restaurant/bar business would use?

    • Anonymous says:

      For years there have been numerous calls from all sectors in the Cayman Islands for Government overdue accounts to be brought up to date, including the Auditor General, MLA’s, the past Public Accounts Committee, the press, business community and many, many private citizens. 

      With due respect Mr. Miller, sir, you did not "stir some interest" on the subject of Governments accounts.  You are good but not that good, many agree with you.

      You should also work with and not against the Auditor General, after all his job it to turn over all of the rocks, determine why some back doors have been left open and look into dark cupboards that many would prefer remain unturned,  unlocked back doors and cupboard doors unopened.

      I appreciate your vigour joining the quest for Government to produce the accounts to the Auditor General, continue on! 

      Take time to discern who can become your friends and allies in the good fight for governanceaccountability.

      Would you convene a broadcast public hearing with the Government departments successfully complying with PMFL and submitted their accounts to the Auditor General to find out how they do it?   These departments are your allies.

      Some have done it, why not the others?

      The public can then hear how their success was achieved, after all success breeds success.

      The Governor, is the entity ultimately responsible for the Civil Service, would you summon the Governor to come to explain to the Public Accounts Committee and the general public why he has not been able to ensure the successful implementation of PMFL across all of Government and then to explain the plans to ensure effective implementation without further delay?

      If the Governor does not have or will not answer would you then contact the FCO directly?

      Your public statement in response to these questions will be very much appreciated.

       

  5. Cicero says:

     

    There is some excellent research here and someone has really taken some serious time to explain what and where the problem lies. Keep up the good work. It is paradoxical that the Monetary Authority has strict guidelines for the filing of financial statements. For banks it is three months, an exception having been Fist Cayman Bank, but lets not go there, and six months for other entities.What is good for the goose must be good for the gander.

    My personal view is that we have some serious problems and they are not going away. Moreover the man in charge is not the person to fix them.

    Let us hope that the Auditor General does not take off. No doubt some of his reports will continue to be supressed and until the PAC has persons willing to read and understand his reports we are surely doomed.

    Take a deep breath everyone.

    • Anonymous says:

      Cicero, give the man a chance, he isnt perfect, but at least he is trying, the last guy did absolutely nothing, so give credit where it is due.

  6. Anonymous says:

     

    World Wide Public Sector Accrual Accounting Standard

    A brief overview to begin research on the subject

    FACT: Government accounts are now over four years in audit arrears for most departments of Government.

    BUT, why did some departments “get with the program” while others dragged their heels?

    FACT: In the Cayman Islands our Government has not effectively implemented the transition from the cash based accounting system to the accrual based accounting standards. 

    BUT, is the problem with the accrual accounting system or with its implementation by some departments?

    FACT: The culture of Government has not made the changes for the new level of accountability and transparency necessary to effectively implement the accrual based accounting standard.

    BUT, is it that many in Government both civil servants and politicians do not yet understand that more and more the public is demanding accountability and measured performance and that accrual accounting will demand just that and they do not like that?

    We have heard from many within Government, politicians and civil society opining why the above have occurred. 

    There have been calls from some civil servants, politicians and others to revert back to the old easily manipulated, undisciplined, no real independent standard setting organization cash based accounting system. 

    Before that disastrous decision is taken there should be extensive research into the reasons why the Cayman Islands is having such great difficulty to move from cash based accounting system to accrual based accounting standards.  At least forty eight (48) countries around the world, including New Zealand, are successfully using or are in the process of moving to the accrual based accounting standards.  There are no countries that adopted the accrual based accounting systems that reverted back to cash based accounting systems or some other accounting system. 

    See the above at:

    http://en.wikipedia.org/wiki/International_Public_Sector_Accounting_Standards

    Why can the Cayman Islands not also be one of these successful countries?

    As an old timer once told me “A good idea, badly implemented, becomes a bad idea”.  Sad but true many good ideas end up in the dust bin because of poor and sabotaged implementation when people do not want it to work.

    The International Public Sector Accounting Standards Board (IPSASB) (http://www.ipsas.org) is the accrual based standard setting organization against which government accounting is now internationally measured. This is opposed to the free flowing “flexible”, really no standard government cash based accounting system used and manipulated by previous governments in the Cayman Islands.  Without this standard setting organization governments and politicians would deviate from good financial practices to repeat the sad story of the wealth countries being squandered for personal benefit by those in power

    For generations the Cayman Islands Government budgets have been fudged to hide the real deteriorating financial situation in our Cayman Islands.  It is now getting harder to call losses, gains and liabilities, assets.

    As an example of irresponsible financial governance look at the situation with the growing liability of the Government’s Civil Service, Judges and MLA’s unfunded pension plans. 

    Until the early 1990’s there was no fund established for the ever increasing pension liabilities payable to “Permanent and Pensionable” civil servants, the liability was valued by an actuary at that time for about CI$140 million deficit.   Government then established a pension fund with great statements about how they were going to regularly contribute to finance this ever increasing pension liability.  Time and again Government has failed to meet their annual contributions to fund the pension liability and now again there is talk of further reneging on the promise to make the required contributions to reduce the ever increasing pension liability. Pension liabilities do not go on “holiday”, they continue to grow.

    Government has however quietly omitted listing their ever growing pension liability in Government’s accounts with “off book” accounting trickery (just like Enron, Parmalat and a lot of other crooked defrauding companies).  The Cayman Islands Government can fool most Caymanians most of the time; but they do not fool the world all of the time. 

    between 1996 to 1997 Dominion Bond Rating warned that the Cayman Islands “…large past service unfunded pension liability not as yet recognized…” “…either tax increases or expenditure reduction” “…population grown is too fast for the infrastructure…” “…the debt build up is too quick…” “If debt levels are not brought under control, interest costs may escalate and the country will start a debt spiral, with interest costs chasing the debt.”  Those reports were done over twelve (12) years ago, imagine what they would say today!

    The report published by Asian Development Bank (ADB): Accrual Budgeting and Accounting in Government and its Relevance for Developing Member Countries” is available for download free of cost at:

    http://www.adb.org/documents/reports/accrual_budgeting_accounting/chap03.pdf

    This report examines the relevance of accrual budgeting and accounting in government for ADB’s Developing Member Countries (DMCs) and provides background and guidance on this issue. It presents practical suggestions on how DMCs might improve their government accounting arrangements in a gradual, systematic manner.  Maybe the Cayman Islands can learn how to better implement the public sector accrual accounting standards.

    The extracts from the document on the country implementation experience of New Zealand when they changed from the cash based accounting system to the accrual based system can be found at:

     http://www.adb.org/documents/reports/accrual_budgeting_accounting/chap05.pdf

    “…for the first time, it was possible to apply these accounting concepts and

    disciplines to the budget process and fiscal management. The Government’s

    determination to apply sustained fiscal discipline was hugely aided by the

    availability of such sophisticated and effective accounting tools. The Budget

    of 1991 yielded a huge fiscal dividend extracted from the application of these

    modern tools. The credibility of our fiscal policy frameworkwas further

    boosted by the requirement that all this accounting and budgeting had to

    be conducted in compliance with generally accepted accounting practice.

    Maintenance and enforcement of those accounting standards is entrusted

    to a private entity independent of the Government. In this way a government,

    were it to be so tempted, is denied the ability to engage in self-serving

    interpretations.”

     

    — Former NZ Finance Minister, Ruth Richardson65

     

    “5. Conclusion

     

    This part reviewed implementation experiences and identified several

    lessons. Most importantly, there is no first-best implementation

    approach.

     

    Rather, this will depend on country arrangements and circumstances.

    Perhaps the overriding lesson is that implementing accruals cannot be seen as a

    technical accounting exercise.

     

    It needs to involve a “culture change” in government and be linked with wider public management reforms.

     

    For accruals to be worthwhile and successful, the new information that accruals brings forth needs to be used to improve decision-making in government. This change will not necessarily happen automatically.

     

    It needs to be actively promoted, especially at the level of policy makers and senior officials.

     

    A recent IMF working paper considers this issue further (see below).

     

    Performance Budgeting: Is Accrual Accounting Necessary?

     

    A recent IMF working paper reviews the role of accounting from the perspective of performance

    budgeting reforms. The paper argues that, while many OECD countries have

    moved their accounting systems from a cash to an accrual basis, such a move is perhaps

    only worthwhile in the context of adopting much wider public sector management

    reforms. Moreover, while recognizing that accrual accounting does support public management

    best practices, it argues that many of the objectives of performance-oriented

    budgeting can be attained by less-than-full accrual accounting, and that unless certain

    preconditions are met, it is safer for countries to remain with and improve their cash based

    accounting systems.

     

    However, the following criticisms might be made of the arguments presented in

    the paper.

     

    First, it overstates the preconditions for moving to an accrual-based system.

    For instance, it incorrectly assumes that accrual accounting must be introduced together

    with decentralized accounting and management, thereby weakening basic compliance.

     

    Second, the paper disregards evidence regarding the inherent benefits of accrual-based

    reporting.

     

    Third, it strongly advocates supplementing cash-based information with

    accrual information.

     

    While valid as a transitional approach, practical developing and

    developed country experience reveals that non-integrated ledgers and registers, such as

    asset registers, quickly become out-of-step with core financial information.

    Nevertheless, the paper is consistent with this report in advocating a gradual stepby-

    step approach to the introduction of accrual accounting.

     

    Appendix 3.

     

    Cost-Benefit Analysis of the New Zealand Adoption of Accrual Accounting

     

    http://www.adb.org/documents/reports/accrual_budgeting_accounting/appendix.pdf

     

    This appendix presents a cost-benefit analysis of the New Zealand implementation

    of accrual budgeting and accounting. The analysis presented

    in the table next page was prepared on the following basis:

    An attempt is made to quantify the benefits of enhanced credibility,

    brought about by the introduction of accrual accounting, and its

    impact on borrowing costs. Although mention has been made of

    evidence from the United States (US) that “states that use accrual

    information borrow at better terms than those states that use solely

    cash information,”91 we were unable to locate the evidence.92 However,

    in the absence of the supporting empirical evidence, it is

    (arguably) assumed that (i) implicit savings on borrowing costs

    caused by the introduction of accrual accounting are 0.04%; and (ii)

    benefits begin to be realized in year 4.

    No attempt is made to estimate the following benefits as their effects

    cannot be accurately quantified:

    o better estimates of the macroeconomic impact of government

    fiscal policy;

    o better information on payment arrears;

    o more comprehensive information;

    o improved liquidity management;

    o improved management of non-financial assets;

    o consistency with other macroeconomic statistical systems;

    o enhanced simplicity and understandability;

    o reduced opportunities for manipulation;

    o enhanced comparability;

    o better information on the sustainability of fiscal policy settings;

    o better information on the macroeconomic Impacts of current

    and capital flows;

    o improved information to support fiscal strategy decisions;

    o improved measures of intergenerational equity;

    o improved accountability;

    o improved resource management;

    o better information on future commitments;

    o better information to support liquidity management;

    o better information to support pricing decisions; and

    o improved access to financial personnel and financial information

    systems.

    A static analysis has been prepared—debt levels are assumed to

    remain constant.

    The internal rate of return (IRR) calculation is based on a 20-year

    period.

    Implementation costs are estimated, based on an NZ Audit Office

    study that estimated the total cost of financial-management reform

    for the period 1987–92 was $99 million (NZ$160-180 million) or

    about 0.1% of government expenses during this period. This study

    included direct costs such as (i) financial management information

    system (FMIS) purchases and implementation; and (ii) consulting

    expenses. It also estimated indirect expenses, such as staff time.93

    Implementation costs are phased over a 5-year period, reflecting

    implementation activities.

     

    According to the analysis, the implementation would yield an internal

    rate of return of +7%. This is likely to be a very conservative analysis

    given the following considerations:

    • The analysis excludes almost all benefits becausethey cannot be

    accurately quantified (see above).

    • The interest-rate adjustment factor used applies in a low-interestrate

    environment (US municipal government).

     

     

     

    However, the interest-rate benefits are likely to be understated because prevailing New Zealand interest rates were higher.

    • The implementation costs are overstated because they include the

    entire estimated costs of New Zealand’s financial management

    reforms; including for instance, the costs associated with performance

    contracting and output specification.

    • Anonymous says:

      Thank you Saturday at 15:48 for adding some quality to the debate. Doubtful if it will affect Ezzard in any way because he knows best.

      Implementation of PMFL was always going to be difficult given the "dyed in the wool if it’s not broke don’t fix it" nature of several of the Permanent Secretaries at the time who refused to cooperate and did not attend briefing sessions and, worse, poisoned the minds of their Ministry staff against all reform. Reform meant them having to MANAGE their HUGE budgets rather than striding around the swamps in their cowboy boots giving instructions to workers who should have been led by the Head of department. In other words doing easy Mickey Mouse tasks while collecting Bill Gates salaries Some have retired (one involuntarily but with massive publicly funded benefits) but two are still there and still occupying a mental zone dreaming of the good old days governed by total centralised control which made the decisions (which they could then bitch about as not having been taken by them) but let them collect the salaries as "managers".

      One hears criticism of the idea that Ministries should be run as businesses-after all it’s government so anything goes! But we should not forget howbig these ministry budgets are-upward of $50million. Should not the tax payers have regular reporting from the Chief Officers on how they are spending all this? And if they can’t do it, shouldn’t we get rid of them and get someone who can?

      Ah, but that’s the problem because of course they are all sons and daughters of the soil and as such protected from consequences of non performance. Blame it on the PMFL. Not our fault. Damned foreigners again.

      • Gotcha says:

        My friend,

        The biggest non-performers have been FMI and its team of implementers.  Tell me what have they accomplished?  Well let me help you a bit:

        1. DEBT, DEBT and More DEBT
        2. Confusion
        3. Lack of Reporting
        4. High cost of implementation
        5. Legislation which is impractical and cannot work

        The content of your post hit the nail on the head…spot on.  It is precisely because of your arrogant, colonialist and racist attitude, why we are in the mess we are in today.  You all are the experts.  You all are the re-invention gurus.  You couldn’t take advice from anyone.  You had your team pulled together, and you CON-vinced the most powerful Caymanian in the Civil Service to be your puppet.

        Well when the history books are written, we’ll ensure you are all named as the ones who changed the culture of the CI Civil Service since it’s fame you all seem to be looking for.

        Financial Management in the public sector has never been this bad before in the history of the country and you know it. 

        Just admit you got in over your head with this reform thing, give the money back that you earned as a result of being a part of the special team of reform experts, and sign off on your  peformance appraisal which you get a big fat 0 for absolute failure.

        • Anonymous says:

          Gotcha:

          You’re right. Damn foreigner, arrogant, colonialist, racist stuff has brought all this about.

          You need to check with CNS, though. They must have left off the bits where you actually engage in a sensible constructive debate on the points raised in the various posts about the accounting system to prove what you say. For example, the bits where you say it caused "DEBT, DEBT and More DEBT". Does a system cause debt or the people in charge of spending money? Confusion? Why are some departments (check the Auditor General) handling it just fine (though you are confused) ?

          And "lack of reporting". Hmm! Is that the system or the persons hired to do the reporting?

          • Gotcha says:

            You guys are really slick but not as slick as you think:

            First, you create an unworkable system mixed in with some very admirable elements such as accrual accounting. 

            Then you ensure that the system depends on your invisible hand to operate.  You weasel your way through the ranks of the Civil Service, popping up as accountants one day, then HR experts the other, then auditors another day.  What are your qualifications anyway? 

            Why is that your team of implementation gurus cannot ever be retired out of the Civil Service?  They go from being accountants to HR experts overnight?  Is it because you aren’t sons of the soil and you were blessed with a special level of intelligence that no one else seems to have?

            Or are you bumbling around trying to cover up your mistakes.  You know your team remind me of those handy-men from a certain Caribbean Island who claim to be experts in all trades and all tools.  Then when you put them to work, you see the results..broken tools and messed up house and yard. 

            The easiest thing for you to do is to blame people who are working in the system rather than to find any fault with your system.

            You want sensible debate, how about asking your media darling Auditor General why HE is behind on the majority of audits for the accounts.  Quite a different story than he likes to paint on the radio shows.

            Many more ministries and portfolios have their accounts sitting with him right now waiting to be audited.  The Audit Office is in  wayover their heads, but they can play off the long delays by coming back and asking questions once every 6 or 7 months.  That then places the onus back on the Ministries to respond.  How about focused auditing rather than Attention Deficit Disorder Audits.  That is a major source of CONFUSION CONFUSION CONFUSION. 

            How about decentralization causing duplication of costs and services which each ministry and portfolio can now justify as mini-empires.  Don’t you think that if 3 different entities buy 1 tractor each which they don’t use 24/7 that creates unnecessary spnding and adds to the debt we have now?  But everyone operates with blinders on, because in the systems SLA’s are too expensive and it’s an every man for himself and God for us all corporate attitude vs a holistic approach to governance.

            You all know that Chief Officers don’t approve budgets, Ministers do.  It’s just that with decentralization once again, everyone is maxing out budgets with their Minister’s blessing.

            But you inventors want to play dumb and blame civil servants.  Maybe if your output unit costs were more realistic instead of convoluted formulas which only you all can justify we wouldn’t be racking up these exhorbitant bills internally and maxing out budgets prematurely. 

            We won’t even go into inter-agency charges, double auditing for Government companies (how much does that cost by the way?) and the inflation of middle management, acccountants and HR ranks who still with all their professional credentials can’t get a grip on this monster. 

            Take  a page out of the PPM’s book.  If you can’t hear you will feel. 

    • Anonymous says:

      Wow, 

      I wonder if this was the same presentation used back in 2000 to dupe the then Deputy Chief Secretary, Financial Secretary and LoGB  into buying into this system?  How could anyone say no to something so lovely?

      Fortunately, unlike those misled leaders,  we aren’t wowed by statistics but horrified by the results. 

      Anonymous 15:48, might I suggest some simpler research; look up the definition of INSANITY. 

      While the country is picking up the tatters from the failed implementation of the seriously flawed system you helped to sell us, you are continuing to pretend that everything is ok, which is insane.

      If you all had enough moxy to stand up and admit you were wrong, apologize to the country and try to repair the system by taking an inclusive approach and involve the people who deal with the issues day in and day out, maybe you would have been a part of the solution.

      But you all should be ashamed, because you sold the country a beautiful apple with a razor blade in it and we swallowed it! 

      Accrual accounting can work, but not with your little FMI razor-blade hidden in its core.  It was a Trojan horse which assured that a special group of men were kept employed. 

      Fellow Caymanians don’t be fooled by accrual accounting shrouded in a system of confusion.  Separate the system from the players who are manipulating it even as it continues to fail, for their continued employment and you will see Civil Servants deliver. 

       

      • Anonymous says:

        "While the country is picking up the tatters from the failed implementation of the seriously flawed system you helped to sell us, you are continuing to pretend that everything is ok, which is insane."

        The accounting system is fine – a properly instructed school leaver could make it work.  The serious flaw is that the politicians and ministers were either simply too lazy to do it, or had their fingers too far into the cash register to not get caught if they actually started to report to the people. 

        Stop complaining about "failed implementation".  If the politicians and ministers couldn’t find an accountant to explain it to them ON THIS ISLAND, then I’m surprised they make it to the office in the morning.  This is simply intentional foolishness designed to mislead and hide the abuse of public funds.

  7. Anonymous says:

    The public sector’s use of accrual based accounting has repeatedly been refered to as a "New Zealand accounting system".  This is not factually correct, accrual accounting is centuries old and its use in the public sector can be researched starting at the International Public Sector Accounting Standards Board (IPSASB) (http://www.ipsas.org).

     

    It has been stated by many people that New Zealand abandoned the accrual accounting standard and reverted back to their old cash based accounting system.

     

    In investigating specifically the status of the public sector accrual accounting system in New Zealand contact was made with Mr. Ken Warren, Chief Accounting Advisor, The Treasury, New Zealand and he is also a member of the IPSASB his response is below:

     

    “August 13, 2009

     

    I can assure you that the New Zealand Government operates an accrual based system and there are no proposals to change from it.

     

    Critical to our successful operation of an accrual accounting system is our accrual budgeting system.  Not only does this ensure that we have a well-integrated single system, but it ensures that the accrual information is considered by decision makers.  Recent policy decisions where this has been evident have been in:

    ·         Recognising the loss on acquisition private sectors

    ·         Impairing investments that have lost value appropriately considering the impact of policy changes on the Government-run accident insurance scheme

    ·         Accounting for the Crown deposit guarantee scheme, introduced in the wake of the financial crisis.

     

    Trust this answers your concerns

     

    Sincerely

     

    Ken Warren

     

    —————————————————————————————————

    Ken Warren | Chief Accounting Advisor | The Treasury

    Phone +64 4 917 6128 | ken.warren@treasury.govt.nz 

     

    It is my suggestion that if anyone is in further doubt as to New Zealand abandoning the accrual based accounting standard and reverting back to their old cash based accounting system, then contact Mr. Warren directly.

    I hope this assists the discussion of Government’s accounts.

  8. Anonymous says:

    I would expect an elected representative to be able to construct a letter with much better grammar and spelling.  Hope the government does not stop any more education projects…looks like we better get back to reading and writing with a better effort.

    Is this what North Side has to offer its people?

    Keep up the good work.

    • Anonymous says:

      ….And if all you have to criticize is his spelling I hope you don’t offer yourself for any public service. 

      He has raised a very important debate and has sought to reply, rather hastily, to ensure that we remain on point, something which you clearly can’t do.

    • Anonymous says:

      As far as I am concerned Mr. Miller need not be able to spell or showcase his grammarian skills.  What I am interested in are his ideas.

      This forum is for exchange of ideas — and I really think that if all some people can contribute is a comment on spelling or grammar that we would be bettter off without their contribution. 

      I would also like to suggest that we stick to critiquing ideas and not people.  That is mostly unconstructive and can actually be destructive.

      Thank you, Mr. Miller, for putting your ideas out there and for being willing to state your name. 

       

    • Anonymous says:

      Further to friday at  12:38:

      I was also in the margins of the PMFL introduction but as a qualified accountant working in the private sector. I had a somewhat different perception from hers/his because I was very impressed with Government taking on board this cutting edge financial accounting system and to my knowledge all the stuff about New Zealand tossing it out was not true. Amendments-yes but that is natural with any law. I may be wrong and so any of these posters saying that the NZ system was thrown out-if you can give us web links to prove it, that would be good. For many years the NZ economy was very strong after their reforms-that’s why Kurt, George, Roy and Gilbert were attracted to its fiscal responsibility. Of course, like every other country in the world, they are struggling now.

      The two comments I made to the Financial Secretary at the time was that the civil servicedid not have the quality of accounting skills to deal with these reforms. The best brains were in the private sector-the two or three who left the private sector to join Government’s new accounting system did so because they were not really making it in the private sector. The second point was that the new system called for ACCOUNTABILITY (ouch) and no PS/Chief Officer/Minister would ever call for a Caymanian to be dismissed for incompetence or non performance. That is how it has always been and how it will always be.

    • Anonymous says:

      Well as for the spelling not all of us profess to be an english major, but this one thing I can tell you, Mr.Miller is no bodys fool and whether you like him or not he says what he beleives and stands by what he says. What a lot of you wont do.  North side should be proud that they have some one that will go to battle for them and at the same time battle for the rest of the country.

      We need a few more Ezzard Millers in the other district that will speak their minds be it popular or not, stand for whats right for our beloved islands,  and defend it.

       I bet you knew what he was talking about whether he spelled it right or not. We intelligent ones got his drift.

    • Anonymous says:

       As one of those North Side people with much to offer, I am rather delighted by our representation and his ability to think, compose and yes indeed, express in a collective fashion his point of view.

      Such expression,  theme with logical thought has always been a hallmark of the North Side cultural zeitgeist. 

      "I would expect" starts off with the wrong usage and "could"  have supported much more credibly the statement that followed if "should" has been used instead.

      *SNAP*

      • Anonymous says:

        "*SNAP*"

        What do you mean by "SNAP"?  Trap closing?  Vessel bursting?

    • Twyla M Vargas says:

      I WOULD EXPECT AN ELECTED REPRESENTATIVE,  Please remember it is human to err.  Oh how I  detest those dictionary fathead  idiots persons who think they are so educated that they never fail to cross a T or dot an I.

      Mr Miller is getting his point across, that what counts, and I think we need six 6  Ezzard Millers, one in each district.  Nuff said.

       

  9. Tired of this Foolishness says:

    Ok we can argue about what new system of accounting we should adopt but what can’t be argued is that the PMFL needs to go! New Zealand was the country first to use it and guess what they did with it…….. They got rid of it because they discovered it doesn’t work!

    What makes you people think that we are going to make it work?

    So before you all go blaming civil servants why don’t you give them a system that has a proven track record of actually working, then you can criticize them!

    • Anonymous says:

      It is terrifying the amount of money wasted within governments implementing and then reversing.

      This New Zealand system has cost hundreds of thousands to implement (if not more) — the training, the information systems, the manppower!  It is appaling.  The sad thing is that all the while that we were implementing the New Zealand system it was know that New Zealand had rejected it. 

      One of the benefits envisaged was that government would presumably be able to make decisions faster and pay bills in a more timely fashion.  While the last objective is now moot (since we may not be able to pay anything right now (:)), if the system is to be changed it will have to do it carefully so that we retain the benefits. 

       

  10. Plain Common Sense. says:

    Mr. Miller is correct…if it does not work, CHANGE IT….his suggestion on how to fix it is the only real debate here. They say the definition of Insanity is doing the same thing and expecting a different result. That is clearly the case here.

  11. A Concerned Caymanian says:

    I am not an accountant but one thing I know for sure !!! You can’t continue to spend and don’t check your balances!!! Unless you have Billions and Billions!!!  And even the Ritch people make sure all of their Money is accounted for !!!

    The Past Govt should have stopped voting Money for any Department that did not get their books up to date!!!!. This was a poor example of Mangement by the person in Charge of that Dept. They should have been fired!!!!

  12. Anonymous says:

    While the PMFL contained important improvements for the public accounting system, the application of an outdated and exuberantly expensive pholosophy of financial management – which at the time of its inception in Cayman had already been widely criticised and reversed in other countries including New Zealand where it originated – is a sad example of foreign consultants bringing their preconceived ideas to a small country that doesn’t know any better, and simply refuses to do its homework.

    I was marginally involved in the introduction of the PMFL and the New Zealand-based philosophy of applying private business rules to the public sector in Cayman. I had discussions with the people at the top and pointed out the fact that the consultant’s own articles, freely available online, demonstrated that his system was not applicable to Cayman (where, for instance, there is in most cases no private sector waiting to perform public functions more cost-effectively), but myself and my colleagues were laughed away because as non-accountants "we didn’t understand".  I would venture that we understood very well that this was a scandalous power-grab by the accountants (in New Zealand the system became known as the "coup d’etat of the accountants’), and while it may have clarified the financial position of government, it also complicated it when reporting became so cumbersome and IT systems were so poorly designed that reports were filed, as we all know, sometimes years too late.

    From the start the new system was cumbersome and purposefully decentralised, and it forced the hiring of at least a dozen highly paid Chief Financial Officers, as well as many more financial officers of lower rank. Decentralization in such a small pool as Cayman public service is only good for empire-building, but it does not do much good besides. The new system made life so difficult for many accounts officers who had to cope with a poorly thought-out system that many of them simply quit. The same is true of the CFOs themselves who – despite thir attractive salary – have had an amazing turnover since 2003. Non-financial staff, who should have been executing or improving their department’s core functions, were increasingly being drawn into playing the accountant, having to submit financial reports in such ridiculous detail (e.g. calculating how much of the cost of cleaning liquids used to clean offices is dedicated to each of the outputs that are being worked on in those offices, each month, quarter, year) using such a poorly designed and ill-functioning financial system, and wasting time calculating such the interagency charges Mr.Miller speaks of, that no one in the end knew what their budgetary position was anymore (so much for accrual accounting), and therefore had to run a "shadow" system of accounting. This lasted for years, and, for all I know, still goes on across government.

    As far as I am aware (and I did ask) no cost-benefit analysis was ever done to justify such a major and expensive change to government’s financial accounting systems, it was simply done on the word of a few well-placed, and undoubtedly well-meaning, individuals who happened to have the ear of the (then) Financial Secretary. 

    The suggestion that we should go back to the old system is not serious. But there are important lessons to be learned here, especially in these difficult economic times. One lesson is that proposals, especially if they are of the magnitude of the PMFL, need to be studied and the costs need to be justified and projected realistically. Plans should not be allowed to grow wild on the basis of an agreement in principle. Another lesson is that Cayman deserves better than to listen to those international consultants who do not bother to tailor their products to the local needs – especially if their product is well past its prime . Not all solutions are scalable to the small scale of Cayman, or are cost-effective on our smaller scale, and so not all "solutions" may apply here. No amount of financial dogma or nepotism will change that.

    • Anonymous says:

      It must be so frustrating for people like Anonymous of Friday, 12:38 pm, submission — to have been aware of the problem and not to have been listened to! 

      I am also aware that many people in government were aware of the failure of the New Zealand system and spoke openly and widely about that fact.

      The problem with us in Cayman is that we often fail to do an assessment as to fit to size.  Ok if New Zealand or Timbuktu wants to do something — but does it suit us in our small community with limited resources? 

      Secondly, why do we feel that because something is new, we should grab a hold of it?  The same thing was happening with education.  We were going pell mell down an expensive path of implementing a new system of classroom instruction which required huge changes in infrastructure.  We were all excited about taking on the ideas being promoted by some consultant at some education conference, and went widly ahead putting it into effect.  Then what did we hear? The UK schools that tried it then rejected it.

      WE HAVE TO STOP THIS GRABBING ON TO UNTRIED IDEAS THAT ARE BEING PROMOTED BY CONSULTANTS WHO ARE LOOKING FOR HUGE BONANZAS AND DO A SNOW JOB ON US.

      And in the final analysis, when it comes to education, the biggest factor for success is The teacher!!!! Just the teacher with a chalk and blackboard.  No fancy dancy new fangled ideas!!!!

      I hope that out of this recession we become more cautious about how we spend the people’s money!!!!!

      And we have to become more sophisticated in howwe assess new ideas — we simply cannot aoord this wastage any more!!!!!

       

  13. Anonymous says:

    With an electoral system that limits who votes and who can stand and allows someone to be elected to power with a mere couple of hundred votes (253 to be precise), you have to expect someone so fantastically unimpressive and out of their depth to come along very often.  Just maybe not quite so many all at once.

  14. Anonymous says:

    Well said Ezzard.

    It is understandable that the very numberous financial officers and others hired to implement the PMFL will be upset to see it go and I can understand their opposition but it is important for legislators to look beyond these narrow interests and return the country to a system that worked, even if it means that dozens of highly paid departmental finance and personnel officers which were not required under the cash accounting system will have to be found alternate productive activities. The PMFL which was introduced by the previous FS has proven to be an expensive disaster and I say congratulations to Mr. Miller for having the courage to call it like it is.  

  15. Anonymous says:

    dear anonymous, notice I will sign name i am not ashamed of what i write.

    To all the anonymous detractors have a good weekend, notice nowhere in my comments did i claim to be an accountant but mt bottom line is as an MLA for North Side I have no audited or unaudited information on Government finances over the last five years on which to make informed decisions. This law has not produced what it promiossed while the old cash accounting system has it faultsm it did give us some information. Howewver i have not suggested we go back to the old cash system so please anonymous contributors do not put words in my,or try to read my mind.

    However where were you objections to the laws failingsbefore I brough it to the forefront of the national debate, and what are your suggestions to improve it, be constructive and stop calling me names or applying labels to me.

    Explain why we paid someone from New Zealand $1,000.00 per day to train our civil servants on a system that their own government invented then rejected because it did not work.

    Here is part of what this law gives us, I have seventeen pages of e-mails over an eight week period trying to get potable water connected to the North side Civic Center(Hurricane shelter) and the District clinic and even though I got the water authority to bring the pipes from the main road to the civic center there is no pipe installed by either lands and survey or the HSA for them to connect their meter to. We are paying all these staff to work but under this law they still need to get an invoice from PWD and pay them for the work and usually more that the p[rivate sector would do it for ENOUGH SAID

    Ezzard Miller

    • Anonymous says:

      RE: Ezzard Miller’s" Explain why we paid someone from New Zealand $1,000.00 per day to train our civil servants on a system that their own government invented then rejected because it did not work.

      OH DEAR!!  Can you say how many days did we pay them for.  Was this put out to a competitetive bid and if so how much did the other bidders charge? Mr. Miller do us another favour, find out the true cost of this, and then also how it has benefited.  You are fearless and capable.

  16. Anonymous says:

    I agree entirely with Mr. Miller and it is high time that someone realised that the New Zealand system of accounting introduced without proper analysis by George McCarthy and Kurt Tibbetts is simply not working.

    It has created a beaucracy that is totally unmanageable and is costing the Country millions of dollars. Each Ministry/Department now has to have Finanical Controller who is a qualified CPA and a support staff of 3 or 4. In addition each Ministry/Department now has a Chief Human Resources Officer and support staff. How can a small Country like ours support such an unnecessary expense?

    In these times when the Civil Servoce is being eyed for cuts this is definitely the place to start. How many of these highly paid positions are filled by Caymanians? What benefit does the Country derive from it when it cannot even produce a basic set of accounts?

    Of couse Duguay may have a point, but the last i heard he was an Auditor and not a policy maker. Maybe it is not necessary to go back to a cash system, but certainly the present system needs to be changed. And the quicker the better. 

  17. Anonymous says:

    "I have worked in helping one department with their backlog and there are several reasons why this doesn’t work well "

    Can you name some of these reasons please?

    There is no way that we should be going back to the cash method of accounting. Give me a break!

  18. rob says:

    People who are not qualified to discuss these important issues, should leave it to trained professionals in your field.

     

    Mr. Miller, just get the people in North Side some jobs and off the streets.

    • Anonymous says:

      In response to rob’s post on 08/14/2009 10.54

      "People who are not qualified to discuss these important issues, should leave it to trained professionals in your field" – well said if you are referring to yourself and to your own post!

       

       

  19. Anonymous says:

    Sorry Mr Miller this is quite irresponsible of you. Cash accounting is for the dark ages..The accrual based method provides accurate information which then leads to more INFORMED decision making by our Ministers. Instead of dumping it you should review the departments that have not been adherring to law and find out why. Is it simply a matter of not understanding the requirements, people who are in charge are not qualified to do the job?/ What is the issue. Compare the groups that have been able to successfully produce the needed reports and accounts against those who haven’t and you will find your answers. From their fine tune and tweak what needs to be tweaked.

    As leaders it is important to understand our limitations.

    Lets not go backwards please!

  20. Anonymous says:

    We cannot go back to cash accounting. That is an ignorant suggestion. Now I agree that the PMFL needs significant amendments in order for the system to work. No question about that !

  21. Anonymous says:

    I dont think that it is the system that does not work but possibly the people behind the system. Civil servants need to step up to the plate and do a FULL days work for their pay. If the employees were doing their part I am sure it would be working much better than it is. As the previous poster said they have worked to help one department with their back log it proves that it can work – what we have to avoid is a back log and that means getting civil servants to work efficiently and effectively. Once again no accountablity from heads of departments – their heads should be rolling for not doing their job properly in monitoring staff.

    • Lite's Out!! says:

      Unfortunately, it is very convenient to blame the individuals who are working in the system for system failures.  Mind you now, they weren’t consulted on what kind of changes would help them do their job better.  There was a well paid CONSULTANT from New Zealand who called all the shots.

      Simple question:

      If they had been able to keep up to date with financial statements before (albeit on a cash accounting system) then BAM!  this great big change overnight to accrual/FMI and now no single Department or Ministry is fully up to date, is it simply because all Civil Servants are dumb and lazy?

      That’s not a very well thought out position my friend and hides the true problem here.  It clearly shows that the system was implemented too hastily, without proper training.  Accrual accounting works.  But when you do a Frankenstein job and add in onerous Service Level Agreements, Ridiculous interagency charging, reporting to the hilt, Time recording system that doesn’t add to anything, Output costing that no one can truly justify, and attempt to make every department "profitable" you end up with the complete mess that we have now.

      It has nothing to do with people not giving a full day’s work for a full day’s pay.

      What we have is a system created based on a good intentions, and supported by those unwilling to admit that maybe the idea wasn’t fully baked.  The system is actually preventing people from doing a good job. 

      XXXXX

  22. Anonymous says:

    Sounds like Mr. Miller is taking his cue from Mr. Bush.  He is not an accountant and Mr. Duguay is so I sure hope he listens to him.  I have worked in helping one department with their backlog and there are several reasons why this doesn’t work well but if he is suggesting to return to a cash basis of accounting he is showing his ignorance of accounting methods and controls.  Listen and learn from Mr. Duguay and lets not  make any hasty decisions because you may be doing more harm than good.

    • Anonymous says:

      Not having the slightest idea what he is talking about has never stopped Mr Miller in the past and it won’t stop him now.

      Many civil servants will love to return to the old accounting system-particularly our unimpressive Finance Portfolio- as it is simple bookeeping, fosters lack of accountability and does not give anything like a true picture of the country’s finances. That’s why Mr Truman Bodden was able at one time to memorably describe the deficit financial position  of Cayman at the time  as being a surplus (or "profit" he helpfully defined it for those who didn’t understand the word surplus). His many detractors labelled this approach as "Trumanomics".

      It would be truly sad-and an acknowledgement of our limited talents and capacity for hard work and staying the course-if we return to a cash based accounting system in this most sophisticated (supposedly) of financial centres.