Archer aims at ‘clean’ reports

| 14/04/2014

(CNS): The PPM administration is taking steps to eliminate some of the roadblocks to getting “clean” reports for its consolidated financial statements from the auditor general, Finance Minister Marco Archer told the LegislativeAssembly last week. In July 2013, a report on the valuation of the government’s fixed assets was completed, which had not been done since 2001, and will mean that government’s assets are now on the books at their current values. In addition, the valuation of post-retirement healthcare benefits is underway, and the government is improving its financial management systems to ensure accurate and timely financial information. These steps will eliminate  the disclaimers by the auditor in future audits, he said.

Getting through the backlog of financial statements that were not tabled by the previous UDP government, as required by law, Archer presented the statements for the financial year ended 30 June 2011, and said the consolidated financial statements for the financial years that ended 30 June 2009, 2010, 2012 and 2013 are currently with the auditor general and would be tabled as soon as the audits were finalized.

However, for the report tabled last week, he said that the auditor general was unable to obtain the audit evidence necessary on which to base an audit opinion, and he said government had “significant work to do to improve the quality of its financial information”.

The minister said that government had not carried out a revaluation of its lands, buildings, infrastructure and leasehold improvements since 2001.  As at 30 June 2011, the net book value of assets subject to revaluation amounted to approximately CI$625 million, which represented just 36% of the total assets reported. 

“As a result, the auditor general was unable to evaluate the reasonableness of the carrying amount of land and buildings, and any associated depreciation or impairment entries recorded within the financial statements as at 30 June 2011 as reasonable,” he said.

Under the Public Service Management Law, the government is obligated to provide post-retirement health benefits to qualified employees, spouses and dependent children , but the audit office was not provided with an evaluation of the extent of those obligations, Archer said, which is one of the issues now being rectified.

The total revenues recorded during this period amounted to CI$732 million with related receivables of CI$38 million, but, Archer told the House, the auditor general “was unable to obtain sufficient appropriate audit evidence to determine the reasonableness of the reported revenues. Evidence of expenses was similarly lacking, he said.

Acknowledging a number of systemic weaknesses in producing these financial statements, Archer said the Statement of Financial Position, as at 30 June 2011, showed that the entire public sector (EPS) ended the financial year with CI$1.739 billion in total assets, CI$1.241 billion in total non-current liabilities and CI$498.238 million in net assets.

The Statement of Financial Performance for the period shows that during the year the entire public sector earned CI$732.56 million in operating revenue and incurred CI$709.114 million in operating expenses, resulting in an operating surplus of CI$23.446 million.

The Statement of Cash Flows shows that the net cash flows received from operating and financing activities totalled CI$65.533 million and CI$131.076 million.  The net cash used for investing activities totalled CI$94.224 million. The cash and cash equivalents for the EPS totalled CI$259.098 million.

The Statement of Changes in Net Worth shows the total net worth of the government at CI$495.236 million.

While the government was in compliance with the surplus, net worth, cash reserves and financial risk ratios, it was not in compliance with the borrowing and net debt ratios as the debt servicing ratio was at 10.5% (which should not be more than 10%) and the net debt was at 98.1% of core government revenue (which should not be more than 80%).

The Statement of Public Debt shows that the net public debt for the EPS is CI$522.341 million.

The minister said government was “making great strides to improve the quality of its financial information and in turn improve the auditor general’s opinions on the government’s financial statements.”

In the Office of the Auditor General’s progress report, “Financial and Performance Reporting Status Update as at 30th September 2013”, he noted, 39% of the underlying government agencies’ financial statements, which were audited for the financial year ended 30 June 2012, received unqualified or “clean” audit opinions.

Thirty-one percent of the financial statements, which were audited for the year ended 30th June 2012, received qualified audit opinions. The audits of the remaining 30% of financial statements were not finalized and no audit opinions had been issued at the date of the audit report.

However, the financial statements represent the government’s financial position from two financial years ago, Archer noted.

"Government entities are focussing on improving their internal controls to ensure that revenue and expenses are properly recorded, supported and reported," he said. "In addition, the Treasury Department is currently in the process of procuring software that will improve the Government’s efficiency of producing and reporting accurate and timely financial information."

Laying the latest audited report in the House, he told members, “It is hoped that over the upcoming years, as further improvements are made, that the Government’s financial information will become more credible and reliable.” 

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Comments (11)

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  1. Anonymous says:

    Maybe the CFO's of various government departments need to be reminded of their job description.

  2. Anonymous says:

    Fake books made with Guesstimates at best

    Archer told the House, the auditor general “was unable to obtain sufficient appropriate audit evidence to determine the reasonableness of the reported revenues. Evidence of expenses was similarly lacking

    That said my beach front homes have gone down in value,

    Recently the realitor I used when I purchased 1 of my homes couldnt be bothered to list it because it just wont sell he told me. unless I wanted to sell if for much less than I had paid..

    The next realitor said almost the same thing.


  3. Anonymous says:

    Those reports ought to be squeaky clean. The spending they refer to has been through the laundromat so many times…

  4. Anonymous says:

    The only MInister worth his pay check – Well done Marco

  5. Anonymous says:

    The inability of the Auditor General to evaluate the reasonableness of the value of lands and buildings would only have affected the Statement of Financial Position(Balance Sheet)  and Stateemnt of Net Worth as changes in fair values of fixed assets should be treated as other comprehensive income not as a part of the surplus/deficit for the year.

  6. Anonymous says:

    I have heard of the new duty listings for various items brougt to Cayman and this list consists of 1200 pages and are a confusing mess.

    This is a bureaucratic nightmare.

  7. pmilburn says:

    Keep up the good work Marco.Stick to your guns and continue to do whats right and best for this country.

  8. Michel says:

    I am very pleased with the Minister of Finance Mr. Marco Archer. His ministry took over a mess with little accountability and laziness in preparation of reports. He expects reports on time and neat. Kudos Minister Archer and may you continue to show Our Masters (UK) that we are capable to manage Our Own Accounts as we have done in past years when we were the envy of everyone and ranked Top, #1. I would like to see that again one day for the sake of my Grandchildren ! God Bless. Michel Lemay.

  9. Anonymous says:

    Kudos to the Finance Minister.  He has a leviathan task ahead of him to clear up this mess, but I'm impressed with what I've seen so far.  Hopefully he is able to continue his work without undue political interference (from his own party or others).

    I'mvery proud to have Mr. Archer as my country's Finance Minister!

    • Anonymous says:

      Hear, hear!  We are so lucky to have him.  Minister Archer, we are so proud of you.  

  10. Anonymous says:

    No accountability for failures within the Civil Service and Finance Ministry on basic items that are over a decade late.

    Just another day in wonderland