Archive for November 19th, 2014

Auditor:Progress too slow

(CNS):The day before government patted itself on the back over what it claimed were advances in the production of public accounts last week, the auditor general pointed out that the Cayman government still had a long way to go to address its “dismal” past failures and that progress was too slow as government should have been much further ahead by now in addressing the fundamental problem. In a press briefing hosted by Premier Alden McLaughlin on 12 Nov he lauded the fact that things were improving. However, on 11 Nov Alastair Swarbrick, the government auditor, had said that while things were beginning to move in the right direction from a situation he had described as “scandalous”, there is still an awful lot to be done.

Since the press briefing on 12 November, when government said the deputy governor had received an email from the Office of the Auditor General congratulating him on the public finance submissions for this year, CNS has been asking for comment on the government’s position from the auditor. But the office confirmed Monday that until the audits are finished, Swarbrick will not be making further comment over and above those made on 11 November at government’s professional development week — the day before the press briefing.

In his speech to civil servants that day, Alastair Swarbrick spelled out the appalling state of government’s accounts. And while government was singing its own praises, Swarbrick warned about the dangers of losing momentum.

“I have found the pace of change frustratingly slow," he said. "If you had asked me four years ago what I would have hoped for by this time, it would be that we were quite a bit further on. In the four years I have seen some spurts of activity and progress, only to be followed by a loss of momentum.”

In an address that highlighted the still very poor state of affairs, Swarbrick said that much more still needed to be done.

“The momentum needs to build on the achievements so far. No doubt some changes to the PMFL (Public Management and Finance Law) will help but it should not be an excuse for not achieving accountability,” he said.

Reflecting on how bad things were, he said that when he arrived here in July 2010, if he had known the true extent of the problem, he wondered if he would have taken the job at all.

“Six years after the introduction of the PMFL the position was pretty bleak, and to all intents and purposes there was absolutely no accountability for the generation and use of public resources. Just as concerning, there didn’t seem to be a plan in place to rectify the situation,” he stated. “We can examine the reasons why this position was reached but at the end of the day, no matter how you look at it, I have to say that from my perspective it was pretty scandalous and it is clear that it is a causal factor in undermining public trust in government.”

Swarbrick said that what he found when he arrived in the Cayman Islands was diametrically opposed to anything he had seen in his 19 years of public sector auditing experience at that time. 

“In those 19 years I could probably count on my fingers and toes the number of public sector entities that I had audited which had any form of qualification,” he said. “I had personally never been involved in any audit that had issued an adverse opinion or a disclaimer of opinion. Also it was very rare that audited financials were not completed and tabled in line with statutory requirements,” Swarbrick explained.

He said he had come across problems with financial managementand reporting, issues of waste or misuse of public funds. However, he emphasised that the fundamental principle of accountability through the presentation of an annual report, including the financial statements, was a serious requirement.

“Where there were failures in financial management and reporting, there were consequences,” he added. But this is the issue that has raised so much concern in Cayman. Despite ten years of failure by government to report back to the public how it spent the tax payers’ money, no one has been held responsible or accountable and no heads have rolled.

Swarbrick said that things were improving, given how bad they were, but the idea that he had been praising government, as implied by the premier, in an email to the deputy governor, appeared to be at odds with what Swarbrick said.

“I am hopeful that year ending 30 June 2014 may be the first year that we don’t have any adverse opinions or disclaimers on entity financials, although I must attach a significant health warning to that statement as some significant work is still required to get the full picture,” he said. “We continue to find governance and internal control issues that impact significantly on the effective stewardship of public resources.”

He said that government was still a long way off from delivering a picture to the people who pay for the public services how revenues government has generated from them has been used.

“They have no choice in paying the fees, charges, duties, taxes which fund government and the public services, unlike investors in the private sector, so as public servants our professional, ethical and fiduciary duties to safeguard public resources and assets, and report how those resources have been generated and used is significant, and in my opinion greater than that for private sector entities,” Swarbrick stated.

“Public trust in government finances is still a way off, impacting on the credibility of government overall,” he warned.

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