Cash mismanagement rolls on
(CNS): The auditor general unveiled three new reports Tuesday, and while all three address different issues regarding the public purse, the common denominator is the continued mismanagement of resources. The first is a public interest report on air ambulance services, which reveals a catalogue of issues and risks, not just financially but with patient health. The second follows up on the financial reporting and performance of statutory authorities but also looks at the management of these government companies and reveals political interference, conflicts of interests and questionable decisions by boards and management. The last report is a departure for the AG’s office as it focuses on recommendations to restructure government so it can finally achieve fiscal transparency.
All three reports, which are now public documents, highlight the continuing issues the Cayman Islands government has, with its administrative arm unable to deliver financial transparency more than nine years after the implementation of the Public Management and Finance Law.
In these reports, Alastair Swarbrick and his team point to the failure of leadership in the Ministry of Finance, which should be responsible for the delivery of government accounts as required under the law, poor management and decisions by boards and other public sector staff and the continued political interference in many areas of the public sector, circumventing processes and placing public finances at risk and value for money in question.
Although Swarbrick points to improvements when it comes to some of the statutory authorities and government companies (SAGC) in fiscal reportingfor the last financial year and the submission of accounts, in some cases this is nothing more than a move from accounts that were completely unauditable to ones that the AG has issued long qualified opinions.
While some SAGCs, such as the stock exchange, CIMA and the marine authority, have from the beginning complied with the PMFL, many other government entities have persistently fallen woefully short of compliance and continue to do so. However, even SAGCs that have complied with the PMFL in terms of timeliness and quality of the reports have other management issues that have caused Swarbrick concern, which he has documented in the relevant report.
The auditor general said that the leadership provided by the previous and current deputy governor is behind much of the improvements that have been made but he makes it clear that after nine years the fundamental question about why there are still no consolidated accounts for government is down to the failure of senior public sector staff in the ministry of finance.
In a departure from the office’s usual type of report, "Restoring Financial Accountability: A time for change?" makes a host of recommendations for government to consider that could reduce costs and help government entities achieve the elusive goal of financial transparency. The suggestions aim to help government deliver to legislators and the public reports that they understand and that reveal exactly how much government spent on what projects on an annual basis in a timely manner.
Of the many recommendations Swarbrick makes, he said core government should consolidate its reporting and stop trying to achieve the clearly impossible objective of internationally compliant sets of accounts for every ministry, portfolio, authority or company. However, in a written response to the government auditor‘s suggestion of consolidation in the report, the deputy governor disagrees with Swarbrick, stating that he believes consolidation would not be as transparent.
At Tuesday’s press briefing, where Swarbrick unveiled the three latest reports, he pointed out that at present, given the poor standard of financial management, there is no accountability at all. A consolidated set of accounts setting out the spending of each ministry and portfolio which is clear and accessible for the man on the street as well as the politically elected arm of government, he said, would be far better than the current unsustainable situation.
Swarbrick said he hoped that he would be able to change the deputy governor’s mind about his recommendations, which he admitted strayed into the management of government. He pointed out that as his remit is to advise government on, and help it achieve, value for money, any examination of strategic financial management had to look at the overall functions of government.
Speaking about each of the reports in turn and the motivation for them, Swarbrick said that the office had opted to examine the air ambulance service because of the concerns his office found during last year’s examination of CINICO and overseas medical costs. The report highlights a number of concerns about the unlicensed operation of a ground handling service for air ambulances and the management failures over the service, which he believes could put patients at risk and which currently costs the public purse well over $800,000 per year.
“This service is critical to the healthcare of the people of the Cayman Islands and I hope my report will provide the impetus for the necessary improvements,” he said.
Discussing his examination of the statutory authorities and government companies, he said that while there has been progress, only eight of the 26 entities had managed to get their financial statements completed and audited by the deadline provided in the law and more needs to be done. He also details concerns regarding the internal controls and governance frameworks, including how Boards of Directorsare mismanaging the activities of these organizations.
“Statutory authorities and government companies still have a long way to go before I will be satisfied that the Legislative Assembly is getting the accountability it needs for the public funds being spent by these entities,” Swarbrick said.
Still concerned that the information provided to the LA was poor, with only 15 of the 26 entities having tabled annual reports for the year ended 30 June 2011, he said that in most cases those reports still don’t measure up and are too late to be of use.
In his recommendation report asking the rhetorical question about the time for change, Swarbrick said he wanted to offer his thoughts on the steps government could take to rectify the now almost decade long problem of a complete breakdown in financial accountability. He added that senior managers could benefit from taking a fresh look at how they manage public finances.
With the government’s current review of its primary legislation for managing government’s finances,he makes suggestions to simplify systems to provide greater accountability. Given the complexities of the current laws, he adds that there are better ways for elected officials to hold the senior government administrators accountable.
“While it is not my role to recommend changes to the public finance laws, I have provided a number of suggestions that the government should consider when they look at amending the current laws and regulations,” said Swarbrick. After the Government has struggled to provide timely and credible financial statements and annual reports to the Legislative Assembly for the three years he has been on the job, Swarbrick said it was time to offer his position on how government can achieve greater accountability.
“I hope the government uses this opportunity to make the necessary changes to its financial laws and procedures to provide accountability for its activities and outcomes. The Government should recognize that the way it does business has not been working,” Swarbrick added.
All three reports are available in PDF format at www.auditorgeneral.gov.ky .
Check back to CNS throughout this week for more detailed stories on each of the reports.
Category: Politics
This comes as no surprise. The heads of these authorities have the classic 'sense of entitlement' attitude, making sure they are taking care of themselves first and using public funds as they see fit.
Outrageous cell phone bills, Hiring family members, awarding themselves higher per-diem rates, driving publicly funded ridiculous gas guzzling vehicles for their personal use (and to pay for the gas 'gasboy' is used of course), frequent travel to shows and useless or irrelevant conferences, are some of the things that need to be put right.
It is sickening how much they earn and have been doing so for a long time, and only showing up to their place of work for half the day.
It is about time these fraudster public servants came under the microscope and now is the time to disregard the masonic brotherhood foolishness and put things right for the sake of this country and its finances.
The boards of these authorities always seem to be made up of obsequious phlegmatic types, simply for the prestige of being a board member but in reality do nothing collectively. Board meetings should be regular and constructive, not just a time to get together and feast on food while garrulous accolades are performed.
Government incompetence is everywhere. The ESO is supposed to publish reliable government statistics on various industies in Excel format. Our Politicians and businesses rely on this info. Incredibly, their weblinks don't even direct properly to the relevant reports they are tasked with tracking and reporting. Since August last year, the "Financial Services Stats 2011" have directed to "Insurance industry Stats 2007-2011". I have to conclude that in almost a year, nobody with any seniority in government has bothered to review the Financial Services Stats from 2011. How comfortable do you feel about them going to London now?
What are the names of the 18 SAGC Department Heads that have refused to perform their duty of accountability for the last 9 years? Out of interest, how much salary, pension, and gov't perks have been wasted on these people since 2004? Who have they had to report to?
If, after nine years, there is still "no accountability at all" then it is clear that the government ministries are intentionally avoiding accountability, with all that implies.
People need to understand that Cayman's budget problems are due to one thing and one thing only: uncontrolled spending.
Unfortunately so many voters profit directly or indirectly from the misappropriation of public money that there has never been a political will to fix the problem. That needsto change before it is too late.
Perfect timing?
New Government, new and financially aware Governor, and a proven hard talker at Auditor General, andall with a something to prove?
There is one glaring problem though, and it is an endemic one, the fact that so many of the underperformers cannot be retired without strong action from Government, and whichever party is in, they will not fire people they probably know as friends or worse, family. The underperformers know that, and so have no incentive to get off their backside and do some work.
So there it is, a perfect time to prove they have the Islands' interests at heart!
Just dont hold your breath til it happens.
Folks, while I am in support of the theme of AGs report we must recognize one thing… It will be inevitable for us to put in DIRECT TAXATION to pay for these systems that we are being fed sugar-coated. The fact that we added over 1000 civil servants just to implement the silly New Zealand system that even New Zealand has abandoned is clear proof where we are going. We need to stand back and get rid of that accounting system immediately, keep accrual accounting, but move to a simpler system. We are simply going down the road to a HUGE civil service that continues to grow just to keep track of itself …..that just leads to direct taxation. Simply stated.
"….added over 1000 civil servants"…. etc ad nauseam. Over 1000 for just one project? Really? No, total BS. Anytime I see ridiculous exaggeration of this sort, I know to disregard the entire comment. If the civil service added a lot of posts over the last ten years, it was in a response to a demand to recruit more cops (for our crime increase), prison guards (for our ever expanding prison population), immigration officers (to implement rollover and other policies) teachers (for our rapidly expanding school age population), information officers (for FOI) and so on. Now, it may indeed be too large a civil service, that's a perfectly legitimate debating point, but let's identify real increases and not rely on the "I have been given to understand" rumours that certain people get their jollies from.
You really miss the point!
The whole tenor of the Auditors comments are, you cant control expenditure unless you keep proper and timely records. You cant run efficient government until you control expenditure, so efficiency follows control, manage that by making the managers manage, or save their considerable cost and appoint people that can manage. End result is a slimmer CS, not an increased one!
Looks like a lot of work for the new governor… She will be shocked when she comes here and sees the current mess. I hope she will be strong enough and have the courage to clean up the house.
wow…. its just like the miller shaw report…… zzzzzzzzzzzzzzzz
another glorious day for the civil service…… but according to alden…no cuts, no layoffs……. welcome to wonderland……
You people don’t understand the game of politics .. Alden says Austerity can’t work, no jobs to be lost etc, which gives him a good showing as a man of the people for the people. The truth is he already knew that all of his rhetoric would get him nowhere for the FCO who helped elect him told him straight and plain from the very beginning son, you got your work cut out for you either you do as we say or else. Now Alden will be forced to change his mind publicly with the caveat of see my hands are tied, there is nothing that I can really do other than impose a taxation system (UK) driven cut jobs, sell off assets( a UDP) proposal and try to win the next election by being patrimonial in the subtle way that his Colonial Masters are teaching him. Oh me mama oh me papa big confusion down ya PPm can’t have its way withUK. Heeeeeelp!
Keep up the pressure on these folks who dont seem to get the message.Its our money that is being washed down the drain and until the govt department heads get the message and clean up their act then I am sorry but if you were "working for a living"like the rest of us you would surely be out of a job.Time to clean up those in the civil service that dont work for their pay.This laziness has been going on far too long.Keep up the GOOD work Alastair we are all behind you on this.
The question now is, what is the PPM Administration going to do to get some type of leadership around the financial management of the Government. You can't ask for a more glaring diagnosis of the problem, unless someonestarts being responsible for financial leadership, I am afraid they are going to be in for a long 4 years.
17:38, they know who to sack or retire – everyone in the Government Building does – but will it be done? Unlikely. Not our way of dealing with incompetence.
CIG would do well to listen..the standards needed to ensure transparency are there for a reason…the new Government has a golden opportunity to show they are committed to cleaning up Cayman..
I worked with Cayman Airways many years ago. At the time the idea was to always protect Cayman Airways. While the airline was losing big money the Handling Agency side of the operation was very lucrative. So every US Air, United, British Airways and Canadian flight that came in meant money in the coffers. As a result the Governments starting with Mr Jim limited the Handling Agencies at the airport to the three.
I would suspect that is still the nature of the game. I wonder how much more we would have to supplement the national carrier were it not so.
Okay New Madam Governor & Govt. Finance Gurus, you NOW have your homework!!
Here is the GOOD news, it cannot be that complicated: We have 6,000 civil servants and 65,000 residents- a small town to most international finance situations so a simple accounting system should fix the problem. However, we DO need to move forward and to separate this from the past and failed past audits too. Start fresh and let the forensic folks come back with their historical reports (and more prosecutions for illegal use of govt funds I hope.)
More good news:
I used to work at a large USA firm thar rewarded employee innovation by 10%. Yes, if an employee found a way to save the company money and it was proven over a year's time that the reduction (or new profit) was sound and sustainable, the employee got a 10% of the reward savings! $$$
So, why not reward our Civil Servants the same way?
What a win-win…… find ways to either reduce costs or be more profitable while incresasing pride in your workplace at the same time. If your idea is successful, get an employee reward. It can be a little whistleblower or employee innovation, either way, make this a program to count the pennies please.
I will leave you with this, one employee (from our mailroom!) found a way for the company to save half a million dollars a year on postage and yes!, he got a big fat cheque for $50,000 in his annual bonus and we all remember his success story. There are good ideas on how to fix management so why not simply ASK and then REWARD the employees?
Here is a link where a state government took this idea and everybody wins…. let's try it?
http://www.reviewjournal.com/jane-ann-morrison/rewarding-workers-who-save-state-money-just-makes-sense
In the real world, accountability means, you do your job or you get canned in disgrace. With only 8 out of 26 SAGCs receiving passing grade in the 9 years since PMFL was introduced in 2004, that means 18 department heads should be rolling. Instead, the CIG continues to coddle these people, 9 chances and counting, and they continue to fail.
There are thousands of cost-effective integrated financial/CRM and inventory software systems that could have been deployed across all CIG departments to remedy the accounting shortcomings. The CIG needs to call an SAP software consultant (or equivalent) and start keeping track of our money!
The Cayman Islands Government already owns Oracle eBusiness Suite, a world class ERP system. It is in the same league as SAP.
The problem lies with the civil servants who do not use the tool properly either through incompetence, laziness, or corruption. By trhe way, they have received plenty of training for using Oracle eBusiness Suite.
This will always be the way when hireing family over skill. And you can't fire family. Grand Cayman still runs things the third world way. The tribal way. Only a big push for education and skill levels to match the competition can solve this. But first the third world leadership must be forced to change by the will of the educate side of the Caymanian people. To do that there must be more of them then the third world side. It will be a long wait. Settle in. Save your money. Pray the UK lowers its tolerance for incompetence.
To:Submitted by Truth (not verified) on Wed, 06/26/2013 – 07:30. The Cayman Is. have been under control of one or other European Government since their discovery, so if "Cayman still runs things the third world way" it has to be due to the incompetence of European (or "First World"as you will likely call it) leadership.Surely ,if we are incompetent, then or Mother country has to accept the responsibility for her failure to establish and implement more competent practices.Remember that Cayman is not an independent country,as so many are eager to remind us.
Thank you, Mr Swarbrick for saying what many of us have been saying for years, namely that most of the failure around financial accounting and reporting can be laid squarely at the door of the non leadership of the inadequately qualified and incompetent senior staff at the top of the Finance Portfolio, now Ministry of Finance.
Thank you 16:02 and Mr Swarbrick from a finance middle manager in the civil service who cannot believe how useless at least two people are at the top of Finance. Hopefully retirement will take care of one of them although that person wants to hang on until the last possible moment, doing nothing but earning huge money. Everyone has known it for years but no one would act to get rid of the person, of course. So sad. Our biggest problem in the civil service- doing nothing with non performing staff on permanent employment terms.
If you don't like working for a business that loses twice as much as it makes and takes 2 fools and one smart man to work then you should not be working in the CIG. Obviously there are many in line to take your job here.