Tourism audits reveal total failure

    Auditors ‘disclaim’ financial statements

    Mr. Swarbrick

    The former Ministry of Tourism,
    Environment, Investment and Commerce’s reports on its financial activities
    between mid-2006 and mid-2008 were so inadequate in some areas, government
    auditors were forced to admit they couldn’t perform a review of those areas or
    vouch for their accuracy in any way.

    Last week, Auditor General Alastair
    Swarbrick’s review of the ministry’s financial statements was released in the
    Legislative Assembly with a disclaimer of opinion attached; audit-speak for: We
    can’t make heads or tails of it.

    For instance, one area not
    contained in the information provided to auditors by the ministry was the
    number of key management personnel employed there during the 2006/07 government
    budget year. Those figures also did not state how much those key management
    personnel were paid, auditors said. 

    “We don’t know how many, we don’t know
    how much they were paid, and it’s not our job to go find out,” said Audit
    Manager Martin Ruben when questioned about the report by the Caymanian Compass.
    “We don’t put together these financial statements for the ministries.”

    The Ministry of Tourism’s financial
    statements were two of more than a dozen where the auditor general was forced
    to issue a disclaimer of opinion between 2004 and 2009 for various government
    ministries and portfolios, as well as statutory authorities and
    government-owned companies.

    In response to the audits, the
    following statement were written for both the 2006/07 budget year and 2007/08
    year: “We were not a part of the ministry/portfolio during the fiscal year as
    chief officer and chief financial officer and as such we were not responsible
    for, and therefore could not ensure appropriate internal controls were
    established and maintained throughout the fiscal year.”

    The statement was signed by current
    ministry Chief Officer Carson Ebanks and Chief Financial Officer Wendy Mazanares.
    Both were brought into the ministry following the election of current minister,
    Premier McKeeva Bush.

    Since the 2009 elections, the
    ministry has also reorganised to become the Ministry of Finance, Tourism and
    Development, with responsibility for different areas.

    Former Tourism Minister Charles
    Clifford was contacted by the Compass about the state of accounts under his
    administration.

    “I was never given any indication
    that there was a record keeping issue that could potentially affect future
    audits,” Mr. Clifford said in a statement. “However, because these are
    administrative functions these questions ought to be directed to the senior
    civil servants in the Ministry.

    Mr. Clifford also pointed out there
    were some difficulties in the hand-over of the ministry office during 2009 that
    could have affected record-keeping.

    “I know that the current minister
    who is also the premier refused to move into his office until certain senior
    officers were removed from the Ministry, so I doubt that there was any
    opportunity for a proper hand-over or transition with senior civil servants,”
    Mr. Clifford said.

    Among the areas where auditors
    found shortcomings in the 2006/07 financial statements included:

    Revenues of $2.5 million for
    services provided were unverifiable, according to Mr. Swarbrick.

    A workers benefit expense account
    of $306,000 could not be audited because of “insufficient information”.

    A end year cash balance of more
    than $1 million could not be verified.  

    Employee entitlements also were not
    kept track of: “The financial statements did not include an accrual for comp
    time for the ministry. The schedule provided was not complete for accrued
    vacation leave and omitted the accrued vacation leave for a particular
    department.” 

    In 2007/08, issues with cash balances,
    personnel costs and employee entitlements continued.

    In addition, auditors did not
    receive supporting documents that would allow them to verify the ministry’s net
    worth for the year or the accuracy of the ministry’s cash flow statements.

    Mr. Ruben said the former Tourism
    Ministry’s audits for 2006/07 and 2007/08, as well as many others that have
    been reviewed by the auditor general’s office, called into question the value
    of having the government put together financial statements for years long past
    and for which information largely was impossible to obtain.

    Mr. Swarbrick has also raised this
    issue in a 2010 report that indicated government has spent close to $2 million
    trying to complete older financial reports; a move which he does not consider
    to be good value for money.

    Responding to that auditor’s report
    in 2010 the Ministry of Finance disagreed. “The government recognises the
    importance and value of having current and credible financial information and
    is not prepared to ignore the reporting of financial performance over the past
    six financial years,” the ministry statement read. “These reports still have
    tremendous value.”

    “On the basis of the opinions I
    have rendered so far that are currently being finalised up to 2007/08…the
    majority of the reports have such significant deficiencies that they cannot be
    relied upon,” Auditor General Swarbrick responded. “Their usefulness for decision
    making and holding government entities to account is practically non-existent.”

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    Mr. Swarbrick
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    3 COMMENTS

    1. It seems ironic that just a week ago, responding to the news that Cayman would be represented at LIDS, I posted – I think it is way overdue for the Auditor General to take a long hard look at how DoT is throwing away public money on overseas stunts when the root of the problem is based on their own doorstep.

      In fact the feedback I have from people who were at LIDS over the past weekend (trade and visitors) is that it was another waste of time – even allowing for the problems in London on Saturday the show is no longer attracting the kind of interest that justifies the cost of floor space there.

      It seems amusing that DoT can issue very complex statements about the financial or ecomonic state of tourism, phrased in travel industry jargon to the point to the point where most people find them meaningless, but are unable to do the sums when it comes to their own expenses.

      This seems to mirror their approach to attracting tourism to the Cayman Islands. The phrase cart before the horse often seems appropriate.

      When I first came to Grand Cayman nearly 20 years ago tourism, and in particular the dive industry, was thriving – but the one thing that allowed this, resonably priced hotel/motel/guest house accommodation, has now all but vanished.

      In those 20 years the tourism industry, particularly in the UK and Europe, has also changed with the market now being dominated by the one thing that Cayman cannot offer – cheap all-inclusive packages.

      It seems that right now DoT are trying to solve a problem that they do not fully understand and, in doing so, applying measures which probably have more to do with the public profile of the department than attracting tourists. Maybe that is why their book keeping is, at best, somewhat lacking – after all if there are no figures, no one can say whether the money is being spent wisely or not.

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    2. John

      An excellent analysis…

      Your journalist abilities shine through in this one, mate.

      What you have ony brushed on is where the real problem lies.

      The Auditor General is not referring to the effectiveness of Cayman’s DOT programs here and he makes that quite clear.

      What he is categorically stating is that the DOT’s financial statements are basically garbage…

      As an auditor, if he cannot verify the accuracy of the figures, which is his job to do, then he cannot offer any opinion on whether the CI Government is getting value for money expended.

      And the Premiere is stating that the CI Government has turned a budget deficit around or at least cut it down materially.

      If his own Ministry of Tourism are turning out garbage financial statements that his own auditor cannot sign off on, how can anyone have any faith in his statements regarding the country’s finances ?

      After all, he is no financial professional.

      Is this why he has put the ministries of finance and tourism under his own authority ?

      So that he can bully all and sundry into accepting anything he says ?

      History already shows us that this is and has always been McKeeva Bush’s modus operandi.

      By the time the next election rolls around, a true and proper audit will probably show that his financial postion will be absolutely no better that what he took over from the PPM.

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    3. ‘I know that the current minister who is also the premier refused to move into his office until certain senior officers were removed from the Ministry, so I doubt that there was any opportunity for a proper hand-over or transition with senior civil servants.’

      Once again the ‘professionalism’ and ‘maturity’ of the HONOURABLE Premiere is highlighted… (sigh)…

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