Crucial reports held at government ministries

Annual reports submitted to a
number of Cayman Islands government ministries
and portfolios sat in those offices for years in some cases, keeping them from
being presented to the Legislative Assembly and therefore the wider public.

The annual report documents contain
financial information about each publicly-funded entity, as well as summaries
of their activities for the year. Often those records provide lawmakers key
information in making funding decisions for upcoming budgets.

At least half a dozen government
entities – statutory authorities and government-owned companies – testified
before the Public Accounts Committee that they had completed various financial
statements and annual reports and had submitted those reports to their ministries
for review.

“In a number of years, no such
annual report accounts have been laid before the Legislative Assembly,” said Cayman
Islands Stock Exchange Board Chairman Anthony Travers.

According to testimony before the
Public Accounts Committee, the Cayman Islands Airports Authority, the Cayman
Islands Development Bank, the Cayman Islands National Insurance Company, the
Electricity Regulatory Authority, and the Information, Communications and
Technology Authority all had submitted various annual reports that were still
being held somewhere within government.

Both committee Chairman Ezzard
Miller and Acting Auditor General Garnet Harrison said they were not aware of
what caused the delays in presenting those annual reports. Mr. Harrison said he
didn’t know if it was a case of ministries knowingly withholding documents or
simply forgetting about them.

The Public Accounts Committee spent
two full days reviewing a report compiled by ex-Auditor General Dan Duguay
which stated that most statutory authorities and government-owned companies, as
well as all central government entities, had not completed annual financial
statements needed to submit yearly reports to the LA.

The failure to do so constitutes a
violation of the Public Management and Finance Law, the statue under which the Cayman Islands civil service is governed.

Some government agencies have said
they turned in many of the financial reports sought, but that those had not
been signed off on by the auditor general’s office. Mr. Harrison said many of
those reports had not been signed simply because auditors couldn’t make heads
or tails of them.

“When the submissions are made,
those submissions are not very credible,” Mr. Harrison said. “We end up asking
‘okay, can we really audit these things?’”

Mr. Miller has set a deadline of 30
September for all backlogged reports, some of which date back to the 2004/05
budget year, to be turned in. The committee chairman said those reports should
be completed even if auditors had to issue adverse opinions or denials of
opinion on the data – essentially meaning the reports are worthless.

In addition, Mr. Miller said the
Public Accounts Committee would keep close watch on government departments, and
the auditor general’s office, when those entities turn in their financial
statements for the current 2009/10 year.

“We certainly are not going to be
tolerant of any statutory authority or other government department that doesn’t
comply with the (Public Management and Finance Law) in 2009/10,” he said. That
law requires all government entities to submit financial statements two month after
the end of the fiscal year, which is 30 June. Auditors then have an additional
two months to review them.

In order to meet the 30 September
timeline for the back-dated financial statements, some government agencies said
they would likely have to issue a combined statement for a number of years
simply because they were too far behind.

Mr. Harrison said that would be
against the law, which requires financial statements and an annual report from
each government ministry and portfolio, statutory authority and
government-owned company each year.

“We would never encourage breaking
the law,” he said.

Mr. Miller argued that, in
practice, everybody involved in the process of submitting financial statements
and annual reports is breaking that law; the government agencies for not
getting their reports finished, the audit office for not getting reports signed
off in time, and the Public Accounts Committee for not getting the situation
under control.

“I believe that we’ve got to get
past that,” Mr. Miller said. “Even if those records up until (the 2009/10
budget year) are not 1,000 per cent accurate.”

Committee member Ellio Solomon said
he took issue with that solution, seeing that the reason government accounts
became such an issue in the first place was because government ministries and
portfolios, in some cases, did not meet the requirements of the law.

“I’m disappointed to know this
committee is now going to perpetuate that,” Mr. Solomon said. “Two wrongs don’t
make a right.”

Mr. Solomon opined that if the
previous accounts were handled in this way, government could end with a situation
that was “not only locally a problem, but internationally a problem”.

Mr. Miller said the committee would
discuss the issue further in closed-door meetings this week.