The Office of the Auditor General is revisiting the accounts of the Cayman Islands National Housing Development Trust following a police investigation into financial irregularities within the Trust.
The housing trust is one of several government entities causing “concern” for Auditor General Alastair Swarbrick for a variety of reasons, including the quality and timeliness of the financial information being provided to his office.
The auditor general released his latest report on the financial accountability of the government Tuesday, which showed that while progress has been made during the last 12 months, there were still audits or financial statements outstanding from 20 government entities.
Regarding the National Housing Development Trust, Mr. Swarbrick told reporters: “That audit was nearly complete but then because of the issues that blew up because of the police investigation, we are revisiting some of our work.”
He said his office was cooperating with police “in terms of sharing information about the Trust and they are providing us with information that is informing our audit”.
Police revealed they were investigating alleged misconduct within the Trust and arrested one man in connection with that. He has not been charged.
Quality in question
The Auditor General’s latest report, dated 2 December, 2011, shows that while the government has been better at providing the Legislative Assembly with more timely financial statements and audits from its 38 individual ministries, portfolios, departments, statutory authorities and government companies, there is an ongoing problem with the quality of information government bodies are submitting to the auditor general.
“Our real concern is the quality of the information in the statements and the information we are getting to audit,” Mr. Swarbrick said, adding that this related mostly to data being received from ministries and portfolios.
The auditor general provides opinions on annual financial statements produced by government entities, which indicates if he considered the information provided in those statements to be accurate and reliable. Of 60 annual financial statements on which the auditor general or his predecessor, Dan Duguay, issued opinions between the financial years 2004/05 and 2009/2010, 21 were ‘qualified”, meaning a portion of the information was unreliable; eight were “adverse”, audit-speak for untrustworthy information within the financial statement; and 23 were “disclaimed”, which means the auditor general was not provided with enough information to even conduct an audit.
Mr. Swarbrick said reliable information was necessary for the government to draw up its budget.
“I don’t audit the budget … [but] for budget setting, you need to have reliable financial information from the previous year to give you a clear view about where your budget is going and what resources you have to spend money on, so you can produce a budget every year,” he said.
Mr. Swarbrick said while government departments and bodies had management accounts to help them do budgets, “the question is, is that reliable if their financial statements cannot be relied upon at this stage? … There are question marks about the reliability of the information that they use to produce the budget from that perspective.”
The progress update report stated that all ministries and portfolios had submitted their 2010-2011 financial statements to the Office of the Auditor General on time, but eight audits were still outstanding due to a backlog – down from 12 at 31 July, 2011 – and 12 statutory authority and government company financial statements remained outstanding – down from 18 at 31 July, 2011.
Eight 2010-2011 financial statements that were considered “unauditable” came from Cayman Airways Limited, Cayman Islands National Museum, the National Drug Council, the National Gallery of the Cayman Islands, the Sister Islands Affordable Housing Development Corporation, the Tourism Attraction Board, the Turtle Farm and the University College of the Cayman Islands, the report stated.
As of 2 December, audits for 2010-2011 had been completed on three ministries and portfolios, four were substantially complete, and five others were in progress. Mr. Swarbrick said this was an improvement during the same time in December 2010 when only three audits had even commenced.
He said he had concerns about the time scales for completing audits of two ministries – Premier McKeeva Bush’s Ministry of Financial Services, Tourism and Development and Deputy Premier Juliana O’Connor-Connolly’s Ministry of District Administration, Works, Lands and Agriculture.
By 2 December, the audits of 11 statutory bodies and government companies had been completed, 13 were in progress and two had not begun – again an improvement on last year when only five audits had been completed, 12 were in progress and eight had not yet commenced, Mr. Swarbrick said.
One body that is causing some headaches for the auditor general in terms of having to audit a long backlog of accounts is the Sister Islands Affordable Housing Development Corporation, which submitted five years of accounts on 31 August.
“That will take time,” Mr. Swarbrick said.
A backlog of accounts from the National Drug Council and National Museum are also being scrutinised.
The auditor general’s next reports will focus on the government’s management of overseas medical expenses and the management of major capital projects, including the Government Administration Building and the new high schools.