The Cayman Islands government does not know the total value of its own properties and assets, the Public Accounts Committee heard this week.
No full evaluation of the government’s assets has been carried out since 2000, raising concerns that in the event of a disaster or another devastating storm like 2004’s Hurricane Ivan, Cayman may not be properly insured.
The revelation was made in a committee hearing into an Auditor General’s report on the Hurricane Ivan insurance settlement.
Director of Lands and Survey Department Alan Jones said indecision over who should pay for valuations of properties meant that his department had not carried out a full evaluation since the 2000-2001 financial year. At the time, it took two evaluation officers one year to complete the exercise.
He said an asset valuation should be redone every five years. ‘That has not been done,’ he said. ‘We have been pushing for the past few years, since 2004 onwards to get the government to do an asset valuation so they can get proper figures on the balance sheet. That hasn’t happened.’
He said that Lands and Survey cannot undertake an evaluation unless it is instructed to do so by a ministry or Cabinet. In the 2000-2001 valuation, it evaluated some 600 government properties.
Mr. Jones said two options were available – to do a complete update on all properties in one exercise, which might take up to 18 months, or to carry out a rolling programme of evaluating 20 per cent of the properties each year, which would take five years.
Committee Chairman Ezzard Miller said the Public Accounts Committee was leaning toward recommending to government that an immediate valuation of government property be carried out as soon as possible.
He said Cayman would be better served if evaluations of government property were done on an automatic basis by Lands and Surveys. ‘I would suggest it might be a good idea for somebody to say to Lands and Survey, we need an update and do it every year. It becomes a much easier exercise than leaving it for eight years,’ he said.
Mr. Miller added that the committee had ‘no confidence’ that proper valuation of government properties was being done for either insurance or accounting purposes.
‘Our concern is nobody is willing to take this upon themselves and get it done,’ he said.
Auditor General Dan Duguay, in his report stated that, in 2006, the government obtained insurance for $400 million, based on input from the insurance broker. His report, completed in February 2007, recommended the government evaluate its properties regularly.
Senior Assistant Financial Secretary Michael Nixon, who is responsible for the government’s Risk Management Unit, said the delay in carrying out comprehensive valuations of government property and assets was mostly due to budget reasons.
‘There has been no comprehensive government valuation exercise conducted for a number of years. That said, we do on a regular basis every year conduct sampling exercise using services of our insurance broker… to ensure we are not over-insuring them or under-insuring them,’ Mr. Nixon said.
‘Ideally we would like to have a major re-evaluation exercise conducted,’ he said, adding that he was approached by Lands and Survey Department last week on this matter and intended to put a proposal to Cabinet for funding for a major evaluation exercise.
Mr. Nixon admitted: ‘There is no central consolidated process’.