Accounts review called ‘ineffective’

Auditor questions Accounting Task Force approach

An internal
review of government accounts aimed at bringing the public sector up to speed
with legally mandated financial reporting requirements may be focusing on the
wrong areas, according to Cayman Islands Auditor General Dan Duguay.

As reported in
Thursday’s Caymanian Compass, dozens of government agencies, statutory authorities
and government-owned companies have not completed financial statements going as
far back as 2004. (See ‘Gov’t accounts a national crisis’)

An Accounting
Task Force, which began work on 1 July, made up of representatives from the government
as well as private sector accountants, has spent the last several months
working on the backlog in financial statements. Mr. Duguay said the task force
had spent CI $952,000 through the end of January.

The initial
focus of the task force, Mr. Duguay said, was to address accounting
deficiencies from the government’s 2004/05 budget year. The task force told the
auditor general it had completed this work by February and is now looking to
clear up reporting backlogs between 2005 and 2008.

“The
information being worked on is now so old and the quality of the (government)
financial systems and practices so poor for those years, it is very questionable
how useful the information will be to provide accountability for government
operations in those years,” Mr. Duguay wrote in his most recent assessment
of public accounts in Cayman.

“We
assessed the work of the task force to be of limited value.”

At the date of
Mr. Duguay’s report, the task force had gone into seven of the 13 central
government portfolios and ministries to assist them in “cleaning up”
accounts so that those could be audited.

However, the
government noted that some task force members were being stymied in their
efforts by a number of issues, including difficulty in retrieving financial
data and “unavailability” of chief financial officers within those
ministries and portfolios.

Auditors in
Mr. Duguay’s office said they were confused by the unavailability problems,
since only those agencies that had requested assistance from the Accounting
Task Force received it.

Mr. Duguay
found it unlikely that all ministry and portfolio financial statements would
be completed and submitted for audit by the government’s stated timeline
of 30 April. 

However, not
all was bad news.

Mr. Duguay
noted that many government agencies – particularly statutory authorities – had
made strides in completing financial statements, among them; the Cayman Islands
Development Bank, the Civil Aviation Authority, the Electricity Regulatory
Authority, the Health Services Authority, the Maritime Authority, The National
Housing Development Trust, National Roads Authority, and the Public Service
Pensions Board.

In fact, the
Health Services Authority had decided that it simply could not prepare
financial statements for the government’s 2003/04 and 2004/05 budget years.

“We
cannot condone the practice of the HSA not preparing critical financial
accountability reports, we believe that the dire state of accounting records during
these years necessitated this extraordinary action,” Mr. Duguay wrote.

Other
statutory authorities and government companies did not do so well.

The University College
of the Cayman Islands, previously well up to
date with its financial statements in mid-2008, hasn’t completed a report since
that time. Meanwhile, Auditor General Duguay pointed out that Cayman Airways
managed to complete statements for one fiscal year in the past two years.

“More
than half of the statutory authorities and government companies did not improve
or are doing worse,” Mr. Duguay said.

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