Auditor says financial statements need work

A report due to be released later Thursday by the Cayman Islands auditor general’s office is expected to show that some government entities have made good progress in addressing a backlog of overdue financial statements.

That report is also expected to reveal a number of significant deficiencies in financial reporting within the government service.

The problem of overdue or incomplete government financial statements was first revealed in 2008 – when former Auditor General Dan Duguay stated that some $1.5 billion in government spending over a period of several years remained unaudited.

Current Auditor General Alastair Swarbrick noted, in information his office sent to the Caymanian Compass earlier this week, that statutory authorities and government-owned companies have made significant progress in improving the reliability of their annual financial statements and producing reasonable numbers and information on those statements.

The auditor’s office indicated that statements from government ministries and portfolios that make up central government were nearly complete up to the government’s 2007/08 fiscal year, and that officials hoped to have the most recent year – 2009/10 – by the end of February.

However, the audit office noted in the information provided that the ministry and portfolio financial statements up through the 2007/08 budget year was fundamentally unreliable.

For the more recent budget years, 2008/09 and 2009/10, the auditor’s office indicated it could not give a clear view on reliability of the statements, but that, in all likelihood, those would have some significant issues as well.

The auditor’s report on government financial statements is also expected to address output 
statements used by the government. Output statements typically contain information regarding what government entities expect to achieve for the year and whether they met those goals.

In almost all cases, the auditor general’s information indicated that the numbers in the output statements could not be relied upon and did not clearly indicate what a ministry or portfolio had actually achieved.

The auditor’s report is also expected to address the consolidated government accounts statements for the entire public service.

The information from the auditor’s office indicated that those accounts for the 2004/05 budget year were received in October, but nothing was received for any of the subsequent years.

The auditor’s information indicated that the value of the statements up to the 2007/08 fiscal year was limited due to lateness of the reports and the likelihood that the audit office would have to disclaim any opinions because of the underlying financial statements.

Earlier this year, the auditor general provided an update on the state of government accounts that noted that more than half of the entities reviewed had not submitted financial statements by the statutorily mandated deadline.

According to Mr. Swarbrick, six of 12 government ministries and portfolios did not submit their financial statements for the 2009/10 fiscal year on 31 August, as required.

Only 10 of 25 statutory authorities and government-owned companies had submitted their financial statements by the deadline.

The budget year for government ends on 30 June. Government departments, statutory authorities and government-owned companies are supposed to submit financial statements by 31 August so that auditors can review them by 31 October.

Mr. Swarbrick said that did not happen this year, and the delay would affect his office’s ability to complete annual reports.

“For me to do my job properly, I expect all entities to submit their draft financial statements to me by the due date,” Mr. Swarbrick said in October.

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1 COMMENT

  1. If you will recall, shortly after Mr. Duguay reported 1.5 B in unaudited spending he got run off. Well, it is still unaccounted for. Maybe the bank accounts and spending habits of certain government officials need to be audited. Those that are clean, would welcome the audit as a show of good faith to the public. The others, you can run but you cannot hide.

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