Governor: audit excuses over

Governor Stuart Jack has weighed in on the late government accounts fiasco, declaring the time for excuses is over.

In a statement to the Caymanian Compass Tuesday, the Governor’s office said: ‘The Governor agrees with the Auditor General that audited financial statements are important for the accountability of government and hence for good governance.

‘While there may have been reasons in the past, the present delays in finalising those statements cannot be allowed to continue.’

The statement said Mr. Jack has carefully considered the issues raised in the report and has discussed them with Financial Secretary Kenneth Jefferson.

‘The Governor welcomes the efforts now underway to resolve this issue,’ the statement continued. ‘He expects chief officers and chief financial officers of all government entities to give the highest priority to quick progress towards meeting the requirements of the law and of financial accountability to the Legislative Assembly and the public.’

Mr. Jack’s first public statement on the situation came after Leader of the Opposition McKeeva Bush called on the Governor to intervene to resolve the crisis – described by Auditor General Dan Duguay as a threat to the very foundation of good governance in the Cayman Islands.

The Government also responded to the report with a terse four-sentence statement from Mr. Jefferson late Monday afternoon.

‘The Portfolio of Finance and Economics, on behalf of Government, assures the public that it is addressing concerns raised by the recently issued Auditor General’s Special Report, The State of Financial Accountability Reporting,’ the statement said.

‘The Portfolio continues to consult with all stakeholders in respect of the matters raised in the report. At present, this is all that the Portfolio wishes to add to its press release of 18 July.’

It said members of the public with questions on the matter can email Mr. Jefferson’s office on [email protected].

In his 18 July release, Mr. Jefferson lashed out at Mr. Duguay for discussing the contents of the report with the media prior to its release and said delays in submitting reports does not mean government is not accounting for money used.

But that assessment was contradicted by Mr. Duguay’s report, which stated: ‘Legislators are being constantly asked to provide new funding for various [government entities] without any significant accountability reports for them as to what they did with previous funds allocated to them in previous years.’

The report went on to state that the delays mean there had been no serious scrutiny of governmental expenditure by the Legislative Assembly since July 2004, when the Public Management and Finance Law was enacted.

Mr. Jefferson was silent on why his office had missed numerous self-volunteered deadlines for providing feedback on a draft of the report, ultimately delaying its publication (see Compass 1 August).

He did not address why his 18 July release had stated ‘it is incorrect to say that government is yet to account for $1.5 billion in budgetary expenses since the 2004/05 year’, as was claimed in a 17 July Cayman Net News article – a figure that was later backed by Mr. Duguay’s report.

The Net News article had put the figure at ‘nearly $1.5 billion’ but the Auditor General’s report went further, saying that as of April 2008, there was at least $1.5 billion of operating expenditure that should have been accounted for that has not yet been reported to the Legislative Assembly.

The report

Released last week, Mr. Duguay’s 32-page report said government entities are years behind in providing financial statements for auditing, to the extent that he believes legislators have lost control of the public purse.

It detailed wide-spread non-compliance with the Public Management and Finance Law, to the extent that as of April, only four of the 13 government ministries and portfolios have audited financial statements for the 2004/05 financial year: the Office of the Complaints Commissioner; the Office of the Auditor General; the Portfolio of Legal Affairs; and Judicial Administration.

Describing the situation as ‘totally unacceptable’, Mr. Duguay said ‘We are now nearly two and a half years late in the preparations of these financial statements and even today we cannot estimate with accuracy when the final consolidated accounts for 2004/05 will be complete.’

The situation is not much better among Cayman’s 25 statutory authorities and government companies, the report notes. It said nine of those entities are providing financial statements in a timely manner, but adds that none are in total compliance with the law’s requirements for making annual reports public by way of producing them to the Legislative Assembly.

Mr. Duguay laid most of the blame for the situation on high-paid chief officers and chief financial officers, saying it appears ministry and portfolio CFOs are failing to fulfil a major component of their jobs.

In the wake of the report, the Public Accounts Committee has announced it will hold a week of hearings on the situation in September in which COs and CFOs, as well as Mr. Jefferson and Chief Secretary George McCarthy, will be asked to explain publicly why the delays have become so severe.