Public accounting attacked

| 31/03/2010

Cayman Islands News,Grand Cayman Islan headline News, Cayman finance(CNS): In the wake of persistent calls from the chair of the Public Accounts Committee to review the way government does its accounts, the premier has added his support to a review of the system. However, the country’s top auditor has warned that the Public Management and Finance Law was designed to improve the quality of accounting and offer politicians better information about where public money is going. Auditor General Dan Duguay pointed out that since the introduction of the law the government has not seen what the system can offer because the accounts have not been done, but it would be inappropriate to throw out the law before it has been given a chance to work.

In the Legislative Assembly last week Ezzard Miller, the independent member for North Side, filed a private member’s motion to have a select committee review the Public Management and Finance Law and change it. He also asked a parliamentary question regarding how much the law had cost to implement. Miller has long held the position that the government needs to return to the centralized accounting and reporting system while keeping the accrual method, as opposed to cash based accounting.

In response to his question Premier McKeeva Bush, who now has responsibility for financial matters, said 73 positions were created as a result of PMFL, costing government almost $17 million in salaries since its introduction in 2003. However, government did not offer a comparative list of the number and cost of financial staff in government before the law was implemented.

Duguay noted that information could be expensive, and had government received accounts as it was supposed to, the PMFL would offer very good information to politicians. He pointed out that the deficit and budget problems would not be so bad now if government had known exactly what was being spent on what at an earlier stage. He noted that out of date accounting information was no better than an absence of information when it came to the budget.

“Right now the Legislative Assembly knows that it gives around $500 million every year to government to spend but has no idea what it spends it on,” he said. “Information always costs money but it could be worth it. I think with better information government could make better judgements about cuts. Right now it is simply relying on anecdotal evidence about what it is getting for its money.”

While the AG acknowledges that the system is not working, he said rather than throw out the law it would be more beneficial for government to find a way to make the system work.

In response to Miller’s private members motion,, Bush said he had already written to the governor expressing his concerns about the “system” associated with PMFL and the desire to change it. The premier said he did not think the civil servants themselves were necessarily at fault but that the bureaucracy was the problem.

“A review of the PMFL in my opinion, would place the focus correctly on the systems that civil servants work within rather than on the civil servants themselves,” he told the LA on Thursday night (25 March). “The civil service consists of many systems and procedures in addition to the civil servants themselves, and when people point to the civil service as part of the problems we must bear in mind that this does not imply faults on the civil servant themselves as the issues often relate to the various systems within which they work.”

He added that he would like to see a review of all the civil service policies and procedures, because he did not think they were geared towards serving the needs of the economy. “If well intended systems and procedures result in failure to address inwards investment needs or the need for the government to execute its policies then it does beg the question as to what is the point of has having these systems and procedures in the first place,” he observed. “I also do recognize that such systems and procedures are there to assist in managing the government’s risk, controlling cost, etc, so clearly there needs to be a balance.”

Bush said he felt the balance was too much in the wrong direction and government must serve the people and the needs of the economy, particularly in crucial times such as these.

The premier added that it was unacceptable that there had been no audited accounts of core government’s revenue and expenditure since the enactment of this law. “Every effort must be made to correct this situation and we believe that part of the solution may come from amendments to the PMFL,” he said.

In his letter to the governor Bush has also raised the question of whether the government should consider switching back to a January to December fiscal year instead of the current fiscal year which runs from July to June.  Such a switch would avoid the sticky political question of moving the general election dates back to November and as a result cutting short the government’s term by six months.

“The Ministry of Finance is considering a number of reasons why we should revert back to the calendar year,” he wrote to the governor. He explained that the end of the current fiscal year ends too close to a general election and why it was moved, but that because of Hurricane Ivan the original rationale is no longer relevant.  The premier said that in due course the ministry would be submitting a position paper on the question of the calendar year change, but in the meantime he pressed the governor to consider a formal review of the PMFL.

“I believe that this review of the PMFL should be carried out as a matter of urgency and that we should aim to complete this exercise by the end of May 2010. It would benefit the performance of our upcoming fiscal year, for 2010/2011, if we were able to identify and implement possible adjustments to the PMFL and the related systems and procedures,” Bush told the governor.

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  1. Joe Mama says:

    The question should be "How can the system work when no person or persons can be held responsible for NOT doing their job?"

    The answers is painfully obvious.

  2. Anonymous says:

    LOL… that is axactly how the Legal Aid office look, just like the picure here. Disorganized! About time someone stopped the preferencial treatment that goes on there! Too comfortable in the job! But why all the hoopla??? Two years from now it will be the same, same person running it, same messy filling system, same messy office.. etc.. etc.. same preferencial treatment!

  3. Wake me when it's over says:

    Three points:

    The premier said he did not think the civil servants themselves were necessarily at fault but that the bureaucracy was the problem.

    – Who populates a bureaucracy?  Bureaucrats.  Each and every bureaucrat in this bureaucracy is a civil servant.

    The premier added that it was unacceptable that there had been no audited accounts of core government’s revenue and expenditure since the enactment of this law.

    – Who is responsible for this lapse?  Individual bureaucrats ie. civil servants.

    He explained that the end of the current fiscal year ends too close to a general election

    – What are we supposed to do?  Guess?  It might be close enough for government work, but it isn’t good enough for people with the job of voting. What better time to end one fiscal year and begin another?  Than just prior to an election? 

    How else are we to know who to vote for and if fiscal policies over the previous four years have proceeded as stated?  Or how badly we’re in the hole?

    I don’t think and I hope it being proposed that financial problems can be corrected with changing the color of the stationary and $17 million dollars is a lot of salary for people who haven’t produced anything but a bureaucracy they don’t know how to use.



  4. Anonymous says:

    "However Government did not offer a comparative list of the number and cost of financial staff in government before the law was implemented".

    CNS: Congratulations on making this observation which is oh so conveniently ignored by those who want to say everything is the fault of this law.There has been considerable annoyance at the highest levels in some ministry/portfolio quarters that the figures given are not much much higher and of course some of the people in that figure were there before, as you probably suspected.

  5. Confucious says:

    I am missing something? Was  the PMFL not introduced by the UDP party in 2003 under the stewardship of the LOGB at the time; non other than Premier Bush? Now he wants to take another look at it!

  6. tim ridley says:

    The PMFL (whatever its failings and there are many) attempts to impose very necessary and much needed financial budgeting and reporting discipline on government departments and statutory authorities. However, it can only work if there is real leadership and drive by chief officers to get the job done and effective sanctions that are actually imposed for failure to comply and deliver. Typically that has not to-date happened. This has to change for there to be real improvement in performance. And this means demoting or terminating those who fail to perform.

    There are notable exceptions, one of which is the Monetary Authority. Under the direction of a strong board and executive management, the Authority has met its budgeting and financial reporting obligations, although that has not always been easy due to lack of timeliness from third parties in providing necessary information.

    We should also not think Cayman is alone in these problems. Neither the US Federal Government nor the EU Commission is able to produce audited accounts in a timely and unqualified manner.

  7. Anonymous says:

    Agreed and on target. There has been changes of personnel over the years, but who is responsible for ensuring ongoing training of Civil Servants since the personnel training unit was disbanded.

    A comparison of how the FOI and PMFL implementation would be a good start in regards to training.

    • Anonymous says:

      The poster at 15:41 is correct. There was a lot of training on hand. My spouse was trained in accruals accounting by a very good teacher from the private sector. The best mark in the class was gained by a sixty something year old lady from archives which suggests all our younger stars in the civil service should have had no difficulty and in fact they all passed. You don’t need a training unit to provide training. The last one in any case only did lower level stuff (though necessary) like better phone skills, better customer relations skills, improving your attitude, living within your means and so on. Chief officers get paid to manage their staffs training needs. The problem with the PMFL implementation is not lack of ability, it’s lack of effort and no penalties for those at the top or bottom who just don’t do what they’re supposed to do. That’s a very big problem in the civil service – the worst one of all – not just with the PMFL but with everything.

      • Anonymous says:

        I believe the question was " who is responsible for ensuring ongoing training of Civil Servants " for the FMI ?

  8. Anonymous says:

    What kind of training was undertaken when the law was instituted in 2003? Has there been training in the last seven years? Of these 73 officers how many are capable and trained for the challenge? 

    • Anonymous says:

      Anon 9:29: There was masses of training provided but guess what. Many chief officers of the time refused to participate and discouraged their staff from getting involved because "passing the law would never happen". What happened to these chief officers? Nothing. That’s the civil service way with its non overseas contracted staff. Some are still there and complaining loudest about the PMFL and encouraging Ezzard with his foolishness about it being responsible for 700 extra staff being recruited (remember?).

      Tim Ridley is right. It may have its faults. But any system here that requires accountability of these astronomically highly paid people is going to meet with very fierce criticism and resistance fromthem.

      • Anonymous says:


        The top Civil Servants by and large thwarted the introduction of the PMFL, they have and continue to block the system.

        Why, probably to cover up their tricks.

        Now Governor Taylor shift these Civil Servants blocking progress towards accountable government.