PMFL too tough, says OAG

| 04/07/2013

myaccountant (274x300).jpg(CNS): While the auditor general has pointed to a number of reasons preventing government from meeting its requirement to report properly on public finances, Alastair Swarbrick said the main problem is the Public Management and Finance Law. Adding his voice to long-time calls for a complete review of what he believes is a very complex piece of legislation, the country’s public auditor said government was never going to meet the law’s demands and, as a result, both legislators and the public would remain in the dark about what government has done with tax payers' money. In a report entitled "Restoring Financial Accountability: A time for change?", he answered his own question with an emphatic 'yes'.

“Whilst poor implementation, leadership and management have been contributors to the absence of accountability over the last nine years, it is my view that the PMFL is too complex for the Cayman Islands government to deliver effective accountability and transparency for the use of resources,” Swarbrick wrote in the Office of the Auditor General (OAG) report, adding his opinion that, nine years after its implementation, the government would never meet the requirements of the PMFL .

Swarbrick pointed to the many damning failures in the administrative arm of government and the end result — a resounding failure of officials to explain how they have spent the people’s money and whether the spending has helped to meet the policy objectives of the successive governments since the law was passed in 2004.

With little or no attempt to report on outcomes (the information which would demonstrate whether or not government initiatives have been a success) and a sizeable increase in staff costs with no tangible benefits, the public purse is at serious risk, Swarbrick said.

Aside from the risk of fraud, abuse and mismanagement of resources, and no way to see if money has been spent wisely, Swarbrick pointed out that for almost a decade, the public has not been given any credible, understandable and timely reports that explain where their money has gone.

Regarding the main function of a financial reporting framework where the people are concerned, he noted, “The framework should enable the Legislature and other stakeholders to effectively scrutinize the plans of government and subsequently hold them accountable for the resources authorised and used to deliver those plans.”

Among the many problems caused by the failure of government to report on spending and the complexity of the current law, the separation between executive and entity has not only led to the need for two sets of accounts but it has blurred the boundaries between what the Cabinet spends and what the administrative arm spends.

“Whilst chief officers are clearly accountable for ensuring adequate controls are in place over entity expenses, in practice executive expenses are not always subject to the same controls,” he said. However, the most pressing problem is that executive transactions are only reported via the Entire Public sector (ESP) financial statements and, as no ESP report has been published since the financial year 2003-04, government has not provided any audited information to the LA or the public on spending by Cabinet for more than eight years.

As the goal is for the legislature and the people to hold government accountable for the money it spends, Swarbrick has recommended a major overhaul to simplify the way government reports, including consolidating the ministries and portfolios into one set of accounts.

Although some of his recommendations have been well received by the deputy governor, who has now taken leadership on government financially accountability, he has rejected some of Swarbrick’s proposals on the grounds that they would be a step away from the goal of complete transparency.

However, Swarbrick argued that this was not the case and, given that government officials have completely failed to meet the requirements of the current system, right now there is no accountability at all. Swarbrick is hoping to persuade the head of the civil service that his ideas will help him and the public sector achieve significant transparency for the first time in years, even if it is in a more consolidated format.

Swarbrick said that producing one good set of consolidated core government accounts that are “credible, timely and understandable” would be a massive improvement on the current situation. “Right now there is no transparency at all,” he said last week at a press briefing about the report.

See full report here.

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  1. Anonymous says:

    As a former CFO who came into the role in 2006 I can say that I can agree with the auditor general to some extent. I found that we had internal non-financial measurements which were meaningless. When I challenged the staff responsible for preparing them they were at a loss since they were only following instructions. Secondly we had unresolved issues regarding what were considered executive and Ministry assets. In order to avoid depreciation and capital charge expenses some Ministries treated their major assets as executive expenses even though they were for the production of outputs. Thirdly the Ministry and not the executive was responsible for the control and budget for the executive assets and expenditures. If this was a true concern then they would have been assigned to the cabinet office for control and not in the line Ministry.  I can say that we followed the public tender rules at all times. There are however some very good provisions within the law especially regarding the targets that the government should meet in terms of debt ratios and cash availability. These can somewhat tie a leaders hand when the economy gets tough as it did from Ivan through to 2008 financial crisis and beyond. There were no clear rules on transferring assets, liabilities and budgets when departments were shifted between Ministries. The final crazy thing they did was to try and bring all minor fixed assets onto the books rather than deal with the land, buildings, road and vehilces. They could have recognized the minor fixed assets going forward, the effort was not worth the agony of not being able to produce financial statements. The other unresolved issue was if the land assets were executive assets, the Mininistry or just District Administration. The consultants got paid and left the day the system was switched on.

  2. Anonymous says:

    If we follow Mr Swarbrick's suggestions it would certainly reduce his and his office's workload very considerably. He could then reduce his staff, save funds for government and still spend more time than he is able to do at present examining the shenanigans going on in some (many?) of the statutory authorities/government owned companies such as the CIAA.

  3. Anonymous says:

    This is a failed project. Let's simplify and move on…

    • Anonymous says:

      Agreed, 9:37 and let the same people who have not been able to cope with this project redesign and implement a new one maintaining the sound principles in the PMFL (especially accruals, transparency and fiscal responsibility) Mr Swarbrick mentions. But will they be able to do that? 

  4. Anonymous says:

    Finally the AG has said something worth while– the Ministers/COs and people in the Ministries have had to much control of how the monies are spent esp: on projects that are more politically motived exp:110 million $ schools– look at the Prep school addition — check the cost –value for money not monuments to someone or political party-nobody in the last 9 years has done it right-

  5. UH UH UH says:

    AND I QUOTE:            

    Although some of his recommendations have been well received by the Deputy Governor, "Who Has Now Taken Leadership on Government Financial Accountability", HE [The Deputy Governor] HAS REJECTED SOME OF SWARBRICKS PROPOSALS on the grounds that they would be a step away from "THE GOAL of COMPLETE TRANSPARENCY"  

    WOW!  Why did he "Governor Manderson" not simply say GOOD IDEAS but we like the status quo. Because that is "in my opinion" exactly how most of those in the upper echelons of government would prefer it to continue. Why you may ask? Because ladies & gents it maintains the "modus operandi" of these people under whose responsibility these things fall, thus they will always have someone or something else to blame thus avoiding any direct responsibility for the fiasco they will have created! 

    What we need is legislation that demands responsibility of all those who handle the people's money, and if they are found wanting we replace them with competent persons who can do the job. We'll save a lot of money!

    • Anonymous says:

      Deputy Governor! What does he know about leading government finances? He should be sitting next to the governor, having nothing to do with cabinet and policies. He doesn’t even have a vote in cabinet yet he chairs cabinet on occasions. Cabinet should be chaired by our Premier as it was intended in our constitution.

      I should add that the PSML also needs to be overhauled as it gives Deputy Governor and Chief Offices too much power. We need to reappoint a public service commission to interview for jobs and make recommendations to the Deputy Governor for Chief Officer position only. Recommendations should be made to Chief Officers for HOD’s etc. This will bring about equality that is currently absent in the system.

      As it currently stands, the Portfolio of the Civil Service and the Deputy Governor are lawless and unaccountable for their decisions. it must stop and the only way to do this is to reappoint an independent body to deal with these matters.

    • Anonymous says:

      Deputy Governor takes the lead on CIG financial accountability. Huh?

      • Anonymous says:

        This man seems to be all over the place doing nothing and saying little that makes sense. Check his ever dwingling minutes.  The Auditor General is absolutely right and I wish those with good sense will take over and implement his suggestions for the sake of these islands and not the stroking of civil service egos.

  6. Anonymous says:

    Whatever happened to the Luck Report on the PMFL commissioned a year or two back with a lot of fanfare? Some civil servants i know tellme he was concerned at the poor level of Finance staff but was his report ever published and was anything ever done with it?

  7. Maynard Friedmann says:

    Mr Swarbrick calls for a review of the PMFL in order to move ahead. Another one, Mr Swarbrick? What happened to the Luck Report? Is it on the shelf with all the other reviews of government departments in the last 25 years? Who is going to implement all the changes you call for? Not these senior sad asses in Finance – not even CPAs some of them- on huge salaries that you are too soft on in your report. They are ok for doing the church treasurer tasks in their private lives but do not have the intellectual capacity or the endurance (ie hard work) for real work like this. Nor will the lower level finance people, some who are CPAs but who didn't make it in the private sector so of course had to be found a job in governmnt, the employer of last resort for Caymanians. There are many lower level finance people who are good civil servants and can do the finance work assigned to them but they will tell you their bosses are utterly clueless or ill or doing church work or off on "refresher courses."

    • Anonymous says:

      Mr or Ms Friedmann ( I suspect that is a pseudonym) is obviously very knowledgeable indeed about the civil service finance people. I used to work there and this comment is very accurate. Pity it doesn't mention the name of the person who grabs a huge government salary for doing church work. People have complained about it for donkey years.

  8. Anonymous says:

    The CIG and OAG takes a very accomodating stance on this 9 year abuse of public funds.  The Donald Trump approach would be to dismiss the project manager in each of those 16 non-reporting departments.  Someone needs to get called back to the boardroom and someone needs to get fired.  I don't think you'd have any trouble expecting transparent announting reports after that.  The nation cannot afford to continue the embarressment of playing Mr Nice Guy and coddling those that aren't doing what's required.  Let them go and promote someone that will get the necessary job done.  

    • Anonymous says:

      This just does not…we copied it from New Zealand and even they abandoned it….you can fire as many project managers as you want it will not work and it only added over 800 staff to the civil service…crazy, crazy…get rid of it now quickly…I am sure Roy McTaggart can show them a workable solution…use him now.

      • Anonymous says:

        It did not add over 800 staff to the civil service, Bobo, even though you "were given to understand" this was the case. Criticism of the PMFL or anything else is ok but but try to be grounded in fact. My bet is you could not produce any empirical evidence whatsoever for us on CNS to back up your claim that it is "copied from New Zealand and even they abandoned it". But you were of course, "given to understand". 

      • Anonymous says:

        I couldn’t agree more. It takes a real politician to say enough is enough; and take the bull by the horn and repeal the PMFL. While they are at it, they must also overhaul the PSML. We love to copy Bermuda method of governance in many respects. Let us follow them with respect to the civil service HR policy. They still have a public service commission in the interest of fairness to well deserving civil servants.

        • Anonymous says:

          Fri 00:24, could you define what you mean by "well deserving civil servants"?. What are the essential qualities that you think make up such people?  

          • Anonymous says:

            Competent, hard working, reliable, and professional just to name a few adjectives; and of course a non-expat. Wish I had control of hiring. Our problem starts with our chief officers who is guided by we know who. They feel threatened by other intelligent caymanians, so they hire expats who become their puppets. Many of those top ranking civil servants that are in positions today did not get there by their competence. They got there by being a very obedient man or woman, and who they knew. I am referring from the top down. It is true to say that some of those chief officers don’t have the experience and know-how to be above the level of a middle manager. I have been made to understand that there is a move to replace all the well experience long serving civil servants with the inexperience new comers. Just sit back and watch what is going to happen in the civil service shortly.

      • Anonymous says:

        The deptartment heads have the Oracle accounting software to keep track, they just aren't.  That's the problem.  Fire some or all of them and replace with people who know the job that needs to be done.  Too many dinosaur egos in the CIG that are very comfortable with the way things are and were done.  Their mindset is not compatible with the decades of debt service obligations ahead of us.  Either the cuts are done voluntarily now, or Helen will make them when she arrives. 

      • Anonymous says:

        The bohemoth of inefficiency that is the Canadian Governement uses an allocation approach of X dollars per department per year, based on past spending.  They must make the most of it, and use it or loose it by year end.  Consequently, it encourages waste and inefficiency as each department struggles independently to out-spend the previous year's budget and boost the subsequent year's allocation by blowing their allocation by year end.  For example, this is why there is always a road construction boom in the late fall and winter time as the budget allocation is feverishly consumed before year end.  Often it is the same "easy" roads that get torn up and repaved every year.  We don't want/need that culture here.  Pooling budgetary allotments as the OAG suggests will do just that.   

        • Rrp says:

          Yes but we’re a small nation compared to Canada. If we engage 30 financial and managent accountants CAs and CMAs we can get to the bottom of all the waste pretty quickly. Imagine if we had 30 of the likes of Alister Swarbick around to not only audit but to develop and implement proper processes and policies to reduce waste.

          How about we make each govt dept head’s bonus and salary dependent on how much they reduce costs within their dept without sacrificing service quality and also producing proper accounts which can be opined upon by the OAG?

          After all , shouldn’t these people’s compensation be linked to how efficiently they run their departments while producing transparent reporting for the people who pay their salaries, ie. us. If you don’t produce, you’re fired. If you do, you’ll be rewarded.

          In the real world compensation is linked to performance, why can’t we adopt such a system within govt.

          This would solve all the issues we have in my opinion.

  9. Anonymous says:

    FINALLY!!!!!…A voice of reason on the PMFL….and from the AG this time…hopefully someone will listen now.

  10. Anonymous says:

    There is nothing printed in the section titled "Response from the Deputy Governor" – is this an omission or did they just not respond in writing?

    • Anonymous says:

      Oh dear, it appears as if you may have rushed to comment BEFORE you had finished reading to the end of the Auditor General's Report, otherwise you would have seen the "Response from the Deputy Governor" consisting of a 4-page letter dated June 11, 2013 from Mr Manderson to Mr Swarbrick!      

  11. Sam Putt Putt says:

    I don't think government is capable of balancing a checkbook. But keep reaching for that unreachable star donkeyface. Your struggle is a noble one.

  12. Anonymous says:

    Rubbish, just ask George McCarthy and Peter Gough!

    • Anonymous says:


      Those two "geniuses"… and isnt one of them STILL in government as the chief missionary/consultant – even well past retirement age??

  13. Slowpoke says:

    I said much of this in a post a couple of years ago and got thoroughly "thumbed down". 

    Just came back to gloat.

    • Anonymous says:

      Enjoy your gloat. Thumbs up for ya

    • Anonymous says:

      Yes, I well remember that post. I actually gave you a 'thumbs up" and am very familiar with how it feels to be a lone voice crying in the wilderness. Thank goodness for CNS or I'd probably go (completely) bonkers!