Financial reporting not done properly
2008 audit only recently made public under Cayman’s Freedom of Information Law
exposes multiple instances where Cayman’s Judicial Administration did not
comply with the country’s financial regulations or the Public Service
Management Law when reporting its activities for the government’s budget
Judicial Administration, a government agency under the direction of the chief
justice, is headed by an administrator and was staffed at the time of the audit
by 53 employees.
to government auditors, who looked at the Judicial Administration’s operations
between 1 July, 2007, and 30 June, 2008, it was “very difficult” to determine
whether the administration had delivered certain work outputs for that
financial year. This was mainly due, auditors said, to a lack of adherence to
financial reporting requirements.
was observed that the (work) invoices submitted to the chief justice were not
supported with evidence of the outputs delivered,” the report from the Internal
Audit Unit stated. “It was therefore difficult to verify whether the outputs
were delivered as stated.”
instance, instead of listing the actual details of the work outputs to be provided
as the basis of billing the government for its services, Judicial Administration
billed Cabinet a fixed amount each month, which came to one-twelfth of its
yearly budget, auditors found.
the invoice with a fixed monthly amount might not reflect the agency’s true
productivity for the month,” auditors wrote. “This is the intent of the output
its response to the audit, the Judicial Administration stated that its JEMS
system (Judicial Enforcement Management System) is used to capture data on
cases filed by police, attorneys and the general public.
report can be generated at any time to provide statistical information,” the
audit response said, adding that supplementary budgets would be prepared by the
department during the year if additional cash was needed.
auditors later noted that the Judicial Administration did not put specific
costs by each output it expected to achieve during the government’s 2007/08
financial year. This is a required step for every government agency operating
under the accrual accounting system created by the financial regulations.
agency (referring to Judicial Administration) did not operate in compliance
with the financial regulations,” auditors wrote. “If…costs are not property
allocated, the output reports will be inaccurate.”
the government’s current budgeting system, statements of outputs are how
lawmakers, auditors and the public can measure the performance of any
government entity and whether it is achieving its stated goals.
government auditors said that performance agreements had not been entered into
with Judicial Administration employees during the 2007/08 financial year, as
required by the Public Service Management Law (2005).
agency did not operate in compliance with the Public Service Management Law as
the performance expected from the staff was not formally documented and agreed
to by…managers and staff,” the report noted.
response to both of these findings, the Judicial Administration noted that it
would properly allocate work outputs in its budget and that performance
agreements would be signed off during the next budget year.
auditors stated in conclusion that the administration’s reporting systems
needed some improvement to “provide reasonable assurance that the agency is
meeting its objectives”.
similar problem was identified in an audit by former Auditor General Dan Duguay
of Cayman’s legal aid system, which is managed by the courts.
report noted that at least $100,000 – and possibly much more – was owed to
legal aid attorneys as of last year. However, the exact amount was unknown
because of what Mr. Duguay said was a lack of record keeping and the fact that
the courts were using a different accounting system than central government.
said the cash-based accounting system used by the courts allowed the Judicial
Administration to “smooth out” legal aid costs – for example, hold some of them
over until the next financial year, even though those expenses were incurred
the year before.
any case, auditors said they found no coherent record-keeping system for legal
manager Martin Ruben described the system as a “free-for-all” during an
interview and added that there appeared to be no computerised records for legal
aid claims. Those claims are made after attorneys have completed work on a case
by way of a written invoice.
keeping within the Judicial Administration could not specifically determine how
much money was being spent on legal aid work for criminal cases and how much of
it went for civil cases, Mr. Duguay’s office found.