Archive for June 11th, 2011

Finance law drops standards

Finance law drops standards

| 11/06/2011 | 85 Comments

(CNS): Planned changes to the law which regulates public finances will allow government to avoid meeting “generally accepted accounting standards” for its reports for the fiscal years 2004/5 to 2010/11 and the requirement to have government’s consolidated accounts audited for the years 2004/5 to 2007/8. Amendments to the Public Management and Finance Law (2010 Revision), which will be brought to the Legislative Assembly in the current budget meeting, will also relax the volume, frequency and formatting of reporting to enable government to tackle the myriad difficulties it has with its financial accountability.

Government has opted to drop the standards to enable it to meet them and produce some form of financial reporting for the missing seven years.

Despite spending significant time and financial resources, the efforts of the former Public Accounts Committee chair, bringing in a task force, the contracting of a consultant from the UK’s Foreign And Commonwealth Office and having the full attention of the Office of the Auditor General, the problem of managing public accounts has still not been resolved. As a result the government is changing the law to meet what it can do rather than trying to meet the requirements of the law.

This means that government will be offering unaudited – which means unverified – consolidated financial reports for its spending up to the end of 2008 and will also avoid other stringent standards for the remaining outstanding accounts right up to this financial year, which finishes and the end of June.

In future, chief financial officers in government ministries, portfolios, authorities and companies will no longer have to make quarterly or half yearly formal financial reports, which officials hope will enable the government’s bean counters to keep up with the annual accounts for future fiscal years.

Since the introduction of the PMFL, which required higher standards of financial accounting, government has failed to produce any audited financial accounts. The last time government presented accounts to the people was for the 2004 financial year. Since then the people of the Cayman Islands have gone through two general elections without knowing how government had been spending public funds or if it was getting value for money. There has been no documentation that can tell the people if government has been spending either wisely or even honestly when it comes to public cash.

The lack of proper published financial reports has not only presented problems for proper management of finances for government ministers but it has also left the public sector vulnerable to accusations of fraud because there has been no way to verify how money was spent, wiith a lack of supporting information for a significant amount of government spending, particularly in ministries and portfolios, for more than seven years.

The public will now have to wait until 2013, if government is able to meet the financial deadlines for this year, before it will be able to see a consolidated set of financial accounts that have been properly audited and verified, enabling them to make a real judgement about how government spent tax payers money and managed the public purse.

See proposed amendments to PMFL below.

Continue Reading

Budget promises CUC cut

Budget promises CUC cut

| 11/06/2011 | 80 Comments

(CNS): The premier has said that the introduction of a new fee for certain types of hedge funds, which will now be regulated by CIMA, will be converted into a subsidy to cut CUC duty charges on residential bills. Delivering his long awaited budget address late on Friday evening, McKeeva Bush spoke about the need for fiscal prudence and revealed a surplus budget for the 2011/12 year of $12 million. In a two and a half hour address he remained tight lipped on specific plans for the forthcoming year but said his government would be seeking to increase the country’s population and enter into more public-private partnerships to address Cayman’s infrastructure needs.

The long anticipated presentation was far more low key than expected,with the premier staying away from announcing any details on the various projects that his government is depending upon to boost the local economy. He did, however, talk about possible equity schemes for local people to gain a stake in some of these public-private partnerships and offered the George Town cruise port as an example that local people would be able to invest in the upland element of the project.

The premier spoke in particular about his intention to work with the Dart group to get things done and give Caymanians jobs. Although he mentioned the George Town cruise port, medical tourism, the special economic zone and the relocation of the dump, which he said would also be managed by Dart, he remained vague on the plans for all of these proposed developments.

Bush also gave little away on how his government had arrived at a budget surplus as he stressed how challenging it had been to deliver this year’s spending plan. Nevertheless, he did say that he was committed to no new borrowing during this and the next financial year. It appears the UK’s demands that government turn around what was an expected approximate $8 million deficit last week into a surplus was met as it is now predicting $12 million surplus for the 2011/12 year. This represents a change of some $20 milllion in a matter few weeks but government has not revealed what cuts have been made to public services.

With no budget documents available during his address because of the last minute changes, the premier told the opposition they would be delivered to them by Sunday.

Check back to CNS over the weekend for more on the premier’s budget address.  

Continue Reading