Duguay hopeful for report

| 19/03/2010

(CNS): After several years of pushing the need for more accountability and transparency in government finances, Auditor General Dan Duguay said he was hopeful that the findings of the Miller report would deliver home that message. Duguay said that many of the criticisms of public financial accountability noted by the Miller Commission were ones his office had consistently raised in the past in the hope of making government understand the need for responsible financial management. Backing Miller’s findings, the auditor general said government needs to be not just more accountable for what it spends but more open about how and why it is spending public funds, which requires accurate and transparent accounts. 

“We have been making the call for a number of years about the need for financial transparency and accountability,” Duguay said. “We support a number of the findings in the report and we really hope it has an effect.”

Duguay explained that improving financial accountability did not have to cost government more money, and in the end it would help it save and improve the management of the public purse. The senior government auditor said he was pleased that Miller had acknowledged the importance of bringing the accounts up to date and making government spending more public. He also noted that his office was finalising the latest report on the state of government financial reporting and told CNS that it would be given to the LA some time next month.

“We have been looking at how much improvement there has been since the last report and it is fair to see we have seen some improvement with some government departments and companies, but there are still some questions,” the auditor general said.

In his report James Miller seemed shocked by the situation regarding government’s failure to complete its annual accounts and the comments made by the auditor general in "The State of Financial Accountability Reporting", issued in April 2008.

“In view of the importance of independent audit and the need for Cayman, as a leading international financial centre, to conduct its affairs to the highest standards, we were somewhat surprised by what we found,” Miller wrote. Noting what Duguay had said about the $1.5 billion of operating expenditures that should have been accounted for that has not yet been reported to the Legislative Assembly and its loss of control of the public purse, he said it was a very serious matter.

“We are concerned from these comments that some parts of government, some of its statutory authorities and state owned enterprises are being managed by people who do not have full knowledge and control of their business unit‘s operations and who thus are not acting in a responsible and accountable manner,” Miller observed. He said that prompt, timely accounting and reporting was an immutable part of maintaining discipline over business activities.

“Besides possible risks to public safety, unintentional error (mistake) or intentional error (fraud and corruption) can result from such control weaknesses,” Miller said.

He also pointed out that the findings of the AG had rightly been included in the recent bond document, which he said may have affected the interest rate Cayman was able to secure.

“The fact that such statements had to be included in the recent Offering Memorandum is unfortunate but obviously necessary and correct. It would be surprising if their inclusion had not resulted in the Government’s paying a higher rate of interest on the borrowing than might otherwise have been the case,” the report stated. “These statements are fully public and must be regarded as potentially beneficial to competitor financial centres. Weaknesses in financial controls also have the potential to cause problems with maintaining the Cayman Islands reputation as an honest place to do business.”

The report noted that maintaining control over government and business activities was fundamental and of basic importance. Miller tied the lack of financial accountability to the wider problems of the budget and he said the research conducted by the authors of the report found evidence that the relevant committees of the Legislative Assembly are not fully informed of the budgetary implications of their decision making.

“Moreover, we find a significant lack of responsibility and accountability for spending decisions taken by the various Ministries,” Miller wrote, adding that government’s budget process lacks transparency, accountability, and control. “The current system does not enable timely control over spending, especially if committed programs overrun, leading to spending above amounts initially budgeted,” the report noted.

Miller concluded that the Cayman Islands Government had to improve accountability and the budget process before it could hope to better manageits financial affairs.

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  1. Anonymous says:

    The Miller Report is full of examples of how to make their suggestions work.  Besides, their task was to determine what the implications would be if direct taxes were to be introduced to Cayman.  They have drawn out a road map detailing the negative impacts on direcct taxation, yet CNS bloggers are also expecting them to build all the roads, put up the signposts and the street lamps and build the cars that will travel the road.  There has to be an assumption on the reporters’ behalf that there is someone in Cayman with a scrap of intelligence who can translate the theories outlined into practicalities and put together the mechanisms to make this work.

    I am completely confused on another point – why is it that seemingly everyone who posts a blog seems to be begging for direct tax?  Is there something about keeping all the money you toil to earn to spend at your own leisure that is too  much for you?  Why do we want to support a grossly obese civil service who are the highest paid of any government officials IN THE WORLD instead of fighting against this foolish idea that no cuts need be made? 

    Oh,and by the way…. to the civil servants who are opposed to the pay cuts and want Government to look at taxation – do you not understand that the taxes will also apply to you?  You get the paycut anyway – either take it now for the betterment of everyone, or take it when the tax is implemented.  Either way, your cheque is going to be short at the end of the month, so do the right thing. That’s right – it is time to take one for the team.



    • Roadblogger says:

      12:34:  We don’t agree with direct taxation.  It’s evil and, given this government’s record of handling money it is not a good idea.  And in fact will create a bottomless pit…with us trying to fill it.

      But my understanding also is if direct taxation ISthe only remaining solution: the Civil Service will expect the the government to pay it FOR them.  In their mind this will… increase government revenues….from us.  And, at the same time create many, many, jobs. For them.  Collecting taxes.  From us.

      For them, it’s a Zen-like solution.

  2. Roadblogger says:

    Geez does someone have to actually tell this government things like: 

    Up to date accounting is necessary for budgeting.  What have they been using?  a Quidji Board? 

    And also that accountability is a good idea.  What has been offered when submitting requests by Department heads so far?… Trust me?

    This is just too bizarre.  They have hired.  At some expense.  After Mr. Duguay gave them pointers.    A new committee of experts.  To notify them:  How to save the country money and make an attempt at balancing the budget.

    And their learned conclusion is:

    First you have to keep track of it.

    "What???????"  That’s the same thing Duguay told us!!!

    So why has this come as a surprise?

    They even supplied graphs.  See this is how much you make…..

    And see this one??  This is how much you spend…..

    See the difference?

    Yeah. But what’s that mean?

    It’s a minus.

    Is that bad???


    "That’s the same thing Duguay told us!!!  Do you work for him???"

    I pity Mr. Duguay.  And his job.

    These are his choices:

    Either they don’t know what they’re doing.  And didn’t tell anyone.  Which is bad.  Or.. they do know what they’re doing.  And didn’t tell anyone.  Which is far worse.



  3. Anonymous says:

    It is interesting that no supporting information has been put forward for some of the suggestions and recommendations in the Miller report. I find that some of the research and methodology may have been flawed or severly lacking in substantive accurate information for the report to have drawn some of the conclusions that it has drawn. We have local expertise that would have done a better job. Its also disheartening that the FS had input to such a short sighted and one sided report. His accountability should also be questioned.

    • Anonymous says:

      Interesting.  Please give examples of these ‘flaws’ and lack of ‘substantive accurate information’ so that we can better understand.  When saying we have better local expertise, who would you suggest is better equipped to do the job?

      I am not saying you are wrong, I just feel that your statement should be expanded so we can better understand your point.  Why do you think it is short-sighted and one-sided?

      Having only partially read the report, I don’t feel in a position to comment yet (even though there are plenty commenters on here who clearly have not even read it at all, which says alot for their understanding of its issues!)

  4. Joe Bananas says:

    Give it up Duguay,  You are trying to save a ship that is headed for the reef at full speed ahead and the crew have installed the pumps backwards.   The captain is off ship shopping for tires and the ships radio only plays gansta rap.  You gave it your best and did too good according to the captain who recommended 50 lashes.  Good thing no one knows how to count.  Best thing anyone can do now is stay out of the way and invest in salvage tools.

  5. Thanks Dan! says:

    BANANA Crown Colony…

    The Queen shall be displeased with such horrid findings of gross mismanagement and plain negligence on the part of our government officials.

    I wouldn’t be surprised if Cayman is finallytaken over by its BOSS, as it just doesn’t seem able to cut it in terms of managing itself properly.

    This would probably be a good opportunity to impose direct taxation here, which has been on the FCO’s agenda for a good while, as a way to strip Cayman of its Tax Haven status and associated benefits…