Auditor flags areas of risk

| 05/04/2011

(CNS): With so little information backing up the accounts being submitted by government to his office, the auditor general says it is very difficult to say how well or even how honestly public money has been spent. Given the alarming number of disclaimers, adverse and qualified opinions he has had to give on core government accounts and some public authorities, it is considerably more challenging for his team to alert the authorities to irregularities that might indicate financial crime, he has revealed. However, Alastair Swarbrick said that during the audits of government accounts the office has identified areas of riskwhere there are concerns and his office will be issuing compliance orders to take a closer look.

Speaking at a press briefing on Tuesday afternoon where he released the latest report on the progress government has made in dealing with its financial reporting, the auditor general said that he would be taking a look at some specific areas of risk. He said the office would be seeking to find supporting information for some of these riskier areas of spending that occurred between 2005 and 2008, he said.

The auditor said the office is still struggling to get information from the relevant government entities to support the financial statements, which not only continues to delay the goal of getting the accounts up to date, but also means that when the reports are completed and made public with qualified and adverse opinions or disclaimers, the reports are of little use and government is unaccountable for its spending.

“We simply can’t say if public money has been spent appropriately. It might have been but the government entities can’t provide the evidence to say it has,” said Swarbrick. “So government is not accountable to the people about how it spent public funds.”

He also noted that to manage any business, public as well as private, you need good financials to make proper decisions. You can’t be expected to run the business, in this case the business of government, without them.

With a growing number of reports now audited, the office has revealed that of the 46 ministry and portfolio reports from 2004 to present that have been tabled in the LA, only seven are unqualified. The information in the other 39 reports cannot be considered credible, reliable or useful, Swarbrick said in the report. While the statutory authorities have done better, with 62 unqualified reports, 44 qualified and 4 disclaimed.

With several more reports audited but still waiting to be tabled in the Legislative Assembly and made public, many more of those will have adverse opinions and disclaimers as well as qualified opinions. Swarbrick said that in his twenty years as a public auditor he had never issued anything worse than a qualified opinion as a result of a technical problem — until now.

And he said the office was still struggling to get the necessary information from the relevant government entities to support the ongoing financial statements — a problem which continues to undermine the government’s goal to clear the backlog. When it came to making progress, he said that although there was evidence that things were going to move forward, government had failed in its goal to clear the majority of the backlog by the end of February 2011.

“While some progress has been made, the government did not achieve its objective,” Swarbrick said. “I am concerned that any further delays, such as those we have been encountering in receiving submissions from individual entities, could impact the government’s ability to become compliant with the reporting requirements of the Public Management and Finance Law in a reasonable time period."

He said the whole point of the exercise was for government to provide more accurate information on time but the pace of progress would stop that from happening. He said the delays were impacting the next financial year and were now being compounded by the switch in focus from preparing the 2010/11 accounts to preparing the 2011/122 budget.

The full details on the progress of each ministry, portfolio, statutory authority and government company are set out in the full report which is now a public document.

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  1. Anonymous says:

    So alarming!! It seems as though we will have no choice but to write off 6 years of government spending. So assuming a $300M/yr budget we are talking about $1.8B unaccounted for with no consequence or accountability from anyone. Really???

    A line has to be drawn and excuses curtailed. So from Jul 1 2010 a reconciliation for all dept accounts should be reconciled to date, all payments should have to be verified with the necessary supporting documentation. Absolutely no cheques should be signed from tomorrow onward without the proper authorization supporting documentation and approvals. This directive has to come from the Governor. The Financial Secretary(FS) should be fired. Someone from Financial Services should be tasked with centralizing the process and held accountable for consolidating all accounts in the interim until a new FS is hired.

    There needs to be a greater outcry from the public.

    C’mon voters this is such an important issue thats affects us ALL!!!

  2. Anonymous says:

    Auditor flags areas of risk…the Cayman Islands Government.

  3. FED UP says:

    The competence of our country is at stake by the ruling Party not dealing with the accounts of our country.
    Elio’s insult to our intelligence saying he has other more important things to do then the job we elected him to do.
    His pay and all other committee member’s pay should stop. The governor should be on this front and center with $69 million not being accounted for. This is what happened in the Turks Ciacos when the Governor took his eye off the immature politicians activities. The Foreign Affaires Committee will hear about the incompetence of the all these do nothing leaders.

  4. The spin Cycle says:

    Where else could you get access to that much money to spend freely without accounting for a dime of it? Nowhere else but in government. The problem lies not just with the CFOs incompetent as they are but with an entire political system that sees public service not as a responsibility, but as an opportunity. That is why the The Opposition is strangely silent on this one which leads you to believe both parties and their cronies see the CIG as a piggy bank. Oink.

  5. Anonymous says:

    What’s really disgraceful is that the Portfolio of Finance and Economics last submitted report was as June 30 2005!!! and that took them 3 yrs to produce……………. Absolute height of slackness. I strongly believe this calls for drastic measures the Governor needs to shut down spending until this situation is under control. This process has to be centralized. You should not be able to purchase a pen without a signed authorized and approved requisition form!!! There will be no change if they are allowed to continue spending without any accountability whatsover. CUT OFF THE PURSE STRINGS NOW before there is nothing left!!!!

  6. Anonymous says:

    Do these figures include the 1.5 Billion that was announced as missing government expenses in 2008?

  7. Anonymous says:

    #1 who really cares??? .. we know caymanians will do nothing about this except re-elect the same muppetts next time around….zzzz
    however for the rest of the community here is the real question:
    what is the response from the governor who is meant to be ensuring good governance??????

  8. Anonymous says:

    Well the simple solution to all of our accounting problems is simply to get rid of the position of Auditor..and bingo! all our problems are solved! – I am sure Mac would agree…..

  9. Anonymous says:

    This is such an embarrassment and so alarming that I cannot understand how we havent been shut down as a country as yet.

    Registered voters we need to stand united and send a petition to the Governor that he has to step in to promote good governance. This issue has to be addressed NOW. This is a major problem that will not be fixed overnight but the problem will never be fixed if we dont address the issue.

    I shudder at the thought of the absolute waste and theft of public funds that has been allowed to carry on for YEARS. This has to stop.

    We have a Premier who is hellbent on selling the country to the LOWEST bidder, a Minster of Finance claiming he has no responsibility for the Finances of this country, we have Ministers flying all around the world on luxury trips, we have “accountants” producing useless financial statements year after year, we have a PMFL being blamed as the cause of all our problems, we have a Financial Secretary who is just useless IMHO, we have no PAC chair thus no meetings are being held. It is just a complete free for all with the public purse. There is absolutely NO accountability and consequence for the vicious raping of the public purse that we have endured all too silently over the years.

    Lets make some noise NO means NO, get a petition going we DEMAND good governance NOW!

  10. Anonymous says:

    Ahhhh……… now it is coming to light. So like I said last week – why did the media focus on the former tourism minister, Charles Clifford’s, Ministry last week when they knew from the reports that have been made public that every Ministry is in the same position ? The Caymanian Compass even started off their editorial on the subject by saying that some might think they are unfairly targeting the former tourism ministry – yes Compass we would say you were in fact unfairly targeting that ministry !

    So the question is why single out the former ministry of tourism to highlight ? Could it be the political money behind the UDP and PPM which is currently focused on shutting down the challenge to the JLP/PNP system of party politics that we have ushered into Cayman.

    I say to Mr. Clifford do not buckle to the pressure from the “big money” behind the two parties…..stand firm and fight for Cayman’s future like we know you can.

  11. Anonymous says:

    So I guess it won’t be long before Mr Swarbrick is moved on then, just like Mr Dugay before him….

    You  just can’t go around highlighting stuff like this without some form of reprisal surely ……..


  12. Anonymous says:

    So how much was the claimed surplus again ?

    • Anonymous says:

      Man that PMFL is really and expensive failure. No one is accountable for that either.

      • Anonymous says:

        If they modified or even changed the PMFL, the result would be the same; the accounts staff are duff and the Chief Officers and other managers are not held accountable for their incompetence and inaction. After all, we have a Financial Secretary who is overall responsible for all this and he’s still in place! What happened to the review of the PFML by the consultant from the FCO, by the way?

        • Anonymous says:

          Originally I blamed the financial officers within the ministries however unless we see some changes in these positions the public can only conclude that the majority of ministers do not wish the public transparency that would result from reliable financial reporting combined with FOI. 

    • Anonymous says:

      As much as Mac wants it to be!

  13. Anonymous says:

    What is going here?  How does this actually happen?  Aren’t there controls in place?  We can’t go on year after year merely saying "lets not worry about historical information".  

    Why aren’t the ministers firing the financial officers who are responsible?

  14. Real World says:

    When the AG says  ". . .it is very difficult to say . . .how honestly public money has been spent" we all know what he’s implying: people are on the take. The evidence becomes clearer by the day: Cayman is being managed like a third-world, disorganised, corrupt, banana republic; and run by kleptocrats.  

  15. Scrooge McDuck says:

    I don’t care what the Auditor General says just because they can’t find it right now doesn’t mean it isn’t there somewhere.  As part of his Minister of Finance duties in the past year the Premier has been to Dubai, London, New York, Hong Kong, India, Vancouver And Venice. Maybe some other places. What do you think he was doing? Looking for the lost money!!! Even the Deputy Premier got involved!! She went to Barcelona to try and find it with a bodyguard in case there was a lot of it. Good luck to the Premier and the Deputy Premier. God speed. We know you’ll find it.

    • Real World says:

      Tne simple fact is, the AG should be able to find it RIGHT NOW!

      • Anonymous says:

        The AG’s office cannot take over the accounting functions of all the ministries for the last 4 years.  

  16. petermilburn says:

    Mr.Premier on a scale of 1-10 how important is proper accounting and accountability to the running of this country?We all wait with bated breath for your reply.

    • Anonymous says:

      Peter, as Premier you know he has done more for saving the wetlands than anyone else in history. He has brought legislation so children could get scholarships. He has build ramps for the fishermen in each district to launch their boats. He has….. what was the question again?

  17. Lachlan MacTavish says:

    39 out of 46 reports cannot be considered credible, reliable or useful. To teh voters and population of Cayman. If you have unreliable accounting or banking what happens to you? Your credit is cut off.

    What happens to Mr. Bush and the UDP, you keep paying the tab. They are above common practice. They keep spendin you keep paying.

    I must point out when 80 or 90% of the CIG accounts cannot be balanced I have to assume that a large portion of your money went the wrong way. Until someone can show me different that is what I, we must believe.  

    This is ridiculous, you    cannot     run      a     country      like      this.

    • Anonymous says:

      and yet… it IS run like this. 

    • John Henry says:

       While we know where some people stand on politics (quite evident(and particularly those who continually harp on while not really doing anything else, the issue on these reports goes back to and transcends both the UDP and PMM, indeed it s a systemic problem caused by the lack of a clear understanding of the accounting system.  This has been discussed countless of times and some people keep on harping, well harp on.  Many people have taken time to hold discourse on what needs to be done and indeed its left up to the government to make a decision that will address this issue fully by accepting the qualifications  of the Audits as presented by the Auditor General,taking on board what recommendations are made by that body and moving forward.If the post at 18:19 and any others have workable solutions then bring them forth and not the wishy washi diatribe the post goes on with..  Remember poster the figures go back more than 2 years and indeed our credit was cut off or maybe its convenient to forget the resources and time spent on discussions with the obtain neccesary funding for the country allowing us to have credit again.  By the way ridiculous takes many forms.



      • Anonymous says:

        "It is a systemic problem caused by the lack of a clear understanding of the accounting system."

        Question:  how many accountants does the CI government have to hire before someone steps forward and claims to understand accounting?

        Accounting is NOT the problem.  ACCOUNTABILITY is!  And what still amazes me that when laws governing finance and accountability in government are blatantly BROKEN, no one steps forward to enforce them.

        This is what happens when you have the fox guard the hen house!!


        • JCaldwell says:

          If I had written this comment, I would have put my name to it.
          At least I can agree to it with my name.

          “ one steps forward to enforce them.”

          • Michel Lemay says:

            Absolutly correct JC. Coming out of the closet is what is needed. That is a big part of the problem. I find too many Anonimous as it’s similar to the same problem as lack of accountibility. I don’t believe they are all civil servants. Hope not !

            • Anonymous says:

              Michel,  I will not give you my name as that would jeopardize my employment in the Civil Service.

              If my ideas and comments are good, support them.  If they are not, criticize them.  But you do not need to know my identity to determine whether or not you like my ideas or comments.

              Curious choice of phrasing by the way, "coming out of the closet."


      • Anonymous says:

        It isn’t difficult to account for money spent in any work situation or accounting format. It isn’t a question of accounting systems or software, it is the fact that the underlying records don’t exist for some reason.

        JH how on earth can you possibly defend the many people involved? They are all guilty of (a) at best not doing their jobs anywhere near properly, or (b) at worst deliberately muddying the waters so no auditor will find out where the money went, or (c) somewhere in between.

        Your post doesn’t go anywhere near explaining or justifying the situation. Also I have seen before the urging to ” make a fresh start” – always by those who don’t want the old figures raked over any more, or want historic debts to “disappear”.

        But for workable soutions, you might try:
        1) sacking the heads of department involved in the worst cases and giving last warnings to others
        2) reminding all workers of their job descriptions and duties and making them sign a document to confirm they understand it.
        3) allowing more funding to the AG to allow for forensic auditing of the worst areas.

        I hope it doesn’t stop here. If money has been misappropriated let’s just for once follow through and have some criminal trials for God’s sake! Why does Cayman always have to be so lawless and its enforcers so toothless?

        • John Henry says:

          My submission is not in defense of anyone, I am simply stating that the Auditor Generals report is the document which we now have that should be taken on board and discussed in the Assembly(both sides)and measures taken to resolve the operational issues sorrounding the debacle in the finances, that is what Audit reports are for, excuse me. I add to this that while there have been insinuations of impropriety there has yet not been any hard and fast report made on this. As a people we thrive on rumour, inuendo and speculation. This lack of financials is critical andI know we all are concerned, but casting aspersions etc does not help the situation, affirmative action is what is needed at this critial point in our history