The former Ministry of Finance, Tourism and Development reported a healthy $21.8 million operating surplus and a net worth of nearly $7 million at the end of the 2011/12 budget year.
However, questions about the validity of some of those figures – particularly $6.9 million in “contributed capital” the ministry received from government – were raised in an evaluation by the Cayman Islands Auditor General’s office.
According to the ministry’s financial statements, nearly the entire net worth of the ministry was based on the “contributed capital” amount that could not be substantiated by auditors.
“We did not receive adequate support to substantiate the amount of $6,870,000 presented within the statement of financial position as contributed capital,” Auditor General Alastair Swarbrick wrote in his opinion on the ministry’s financial statements. “Therefore, I am unable to conclude that net worth [for the ministry] is fairly stated at June 30, 2012.”
Mr. Swarbrick’s evaluation indicated only that records did not exist to substantiate the amounts government said it contributed to the ministry. It did not conclude that the money wasn’t there.
In addition, Mr. Swarbrick noted other concerns about the net worth figures.
For instance, the amount of “accumulated surpluses” by the ministry – taken from the combined earnings of the ministry over a period of years – were questioned.
“The balance is deemed to be unreliable due to the fact that there are a number of accounting issues,” Mr. Swarbrick said.
A third issue relates to the fact that the buildings and properties the ministry owns have not been valued in the past five years. This has been a common problem across government since before Hurricane Ivan in 2004.
“As no re-evaluation was done, I am unable to conclude net worth was fairly stated,” the auditor general said.
The ministry acknowledges in statements attached to the auditor general’s evaluation that it “does not make any assertions” with regard to the value of the ministry properties.
The lack of valuations for all government buildings and properties was an area of concern in the auditor general’s report released in October 2012 on the state of Cayman’s public financial reporting.
“I couldn’t give you a view … whether [government assets are] undervalued or overvalued because they haven’t done a valuation since 2001 of their fixed assets,” the auditor general said. “A valuation impacts on your balance sheet and also on your depreciation. If there’s been a significant increase in valuation, the balance sheet could improve. These are important questions when you’re looking at the finances of government.”