Reporting deadline mostly missed again

Dozens of government financial reports not done

Although some progress has been made, the majority of Cayman Islands government ministries and portfolios failed again to meet legally mandated financial reporting deadlines for the 2009/10 budget year, and a number of financial reports from previous years have still not been made public in the Legislative Assembly.

The status report on Cayman’s progress with public accountability reporting was released Tuesday by Auditor General Alastair Swarbrick’s office.

“The government had intended to clear the majority of the [financial reporting] backlog by the end of February 2011,” Mr. Swarbrick wrote in his report. “The government did not achieve its objective.”

“Entities continue to delay providing my office with supporting schedules and information necessary to complete my work,” the report continued, echoing previous statements often made about government financial reporting by former Auditor General Dan Duguay. “There has also been no further progress [on] the entire public sector financial statements.”

Mr. Swarbrick said further delays would begin affecting government’s ability to report its finances for the current budget year, since it would still have to deal with any backlog of reports from the 2009/10 fiscal year as well as previous financial statements that remain unfinished.

“These delays in clearing the backlog could impact my office’s time lines for the audits of financial statements for the year ended 30 June, 2011 and meeting the reporting deadlines…[in] the Public Management and Finance Law,” the report stated.

As of 31 March, Mr. Swarbrick said only one financial report from a government ministry or portfolio had been finalised and made public in the Legislative Assembly for the 2009/10 year. The other eleven reports from government ministries and portfolios for that year either had not been submitted yet or had been submitted, but were not signed off on by the auditor’s office.

Statutory authorities and government-owned companies were doing better, with eight reports ‘issued’ – meaning completed and made ready for public release in the Legislative Assembly – another three reports had been finalised and 10 submitted for the 2009/10 budget year. Just four entities’ financial statements had not been completed and submitted.

Although both central government and government authorities are slowly catching up in submitting their financial statements, the quality of the work in many of those reports is extremely poor.

For instance, the Health Services Authority – which runs the Cayman Islands hospital and local health clinics – had all of its financial statements between 2004 and 2009 “disclaimed”. That means the information was so inadequate the AG’s office couldn’t properly perform an audit on the figures presented.

Also, the former Ministry of Tourism, Ministry of Education, Ministry of District Administration, Ministry of Health and Ministry of Communications had all their financial reports disclaimed or had an “adverse” opinion issued on them. An adverse opinion means that an audit could be performed, but information was seriously lacking in some areas.

Adverse and disclaimers of opinion indicate “that the information in the financial statements cannot by considered reliable or useful”, according to Mr. Swarbrick.

The Portfolio of Internal and External Affairs, which has responsibility for local law enforcement agencies, were given “adverse” opinions on financial statements submitted for the years 2004/05 and 2005/06. All other years’ statements had not been finalised, although the auditor’s report indicated progress was being made on those.

Cayman Airways hasn’t had any financial statements issued since 2004/05, although it indicated it had finalised those records for the 2009/10 budget year.

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1 COMMENT

  1. The completion of the audits post Ivan is a daunting exercise for the CFO’s in the various Ministries. There is a lot that can be said for the effort the group has made in reconstruction information after this event. However one needs to understand that the process to convert to accrual base accounting started on July 1, 2004 2 months prior to Ivan. Post Ivan, the focus was on working on the damage estimates.

    Hence you change your system of accounting, the consultants leave on implementation and are not around for the post implementation process and a major disaster occurs. Decisions on the treatment of fixed assets and the transition process that was required to meet the financial reporting targets.

    You have the ultimate accountants bad dream. Couple that with inadequate resources and a planning cycle that lasts from October to June each year. There is not a lot of time to play catch up.

    The Cayman Government needs to brig resources in to provide the relief so that the back log can be worked on so that the CFOs and Chief Officers can focus on the future.

    While audits are important tools, it is also one aspect of the total financial process that has to be looked after.

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