Auditor General: $1 billion ‘unaccounted for’

Alastair-Swarbrick-v

Around $1 billion of spending in two government ministries remains unaccounted for, the Auditor General’s Office states in a new report which questions the competency of some officials responsible for managing public money. 

The two large ministries, highlighted as the worst offenders, have been unable to provide a reliable account of how they have spent the people’s money for the past eight years, the auditor states. 

The report – an analysis of financial and performance reporting in all government ministries and portfolios for 2010 to 2012 – points to a general improvement in the timeliness and accuracy of financial statements. 

But it warns this is relative to the previous “dire position” and says much work remains to be done to restore the financial credibility of government’s accounts. 

“There continues to be a lack of due regard by senior officials for ensuring that appropriate systems are in place, exposing public funds to risks of waste and misuse,” Auditor General Alastair Swarbrick states in the report. 

The Ministry of District Administration, Works, Land and Agriculture and the Ministry of Tourism and Development are singled out for specific criticism. Neither ministry has been able to present financial statements that the auditor deemed to be reliable or credible since the introduction of the Public Management and Finance Law in 2004. 

Highlighting a host of issues, including the capability of staff, poor control of travel and hospitality expenditure and disregard for procurement rules and procedures, Mr. Swarbrick writes that legislators and the public have no way of knowing that funding approved for either ministry was used for the purpose intended between 2004 and 2012. 

“Ultimately, there has been no accountability for around $1 billion of public funds in these two ministries and a significant increase in the risk of waste, misuse or abuse of public funds,” he said. 

Both ministries have undergone administrative and name changes over the years. Mr. Swarbrick highlights significant concerns about the financial reporting for Tourism and Development, for the period up to June 30, 2012. 

He writes that “Whilst there are a number of concerns, a common theme is the inability to effectively account for a broad variety of transactions on an accruals basis, raising significant concerns about the capability of the entity’s finance personnel and its ability to carry out this important role.” 

During a press conference Wednesday morning, Mr. Swarbrick said “poor controls and record keeping” in the two delinquent ministries had meant his staff was essentially unable to carry out the necessary audit work. 

“I have highlighted a litany of issues that underlined the need for more competent financial managers and for them to comply with the Public Management and Finance Law. The government has informed us that they have taken action to address these issues, the impact of which we will assess in future reports,” he said. 

Despite those concerns, Mr. Swarbrick said the overall position is improving, though more slowly than he would like. 

“In these reports, my clear overriding message is that I continue to see improvement in the timeliness and quality of information being presented for audit, but there is still much work that needs to be done,” he said.  

“Restoring financial accountability needs to be a priority for government. After reporting annually on progress for the last four years, I believe the government needs to do more to achieve that objective in a timely manner. 

“A greater and more concerted effort is also needed to address the underlying issues raised in my reports concerning weaknesses in governance and control frameworks.” The report states that the expectation is that all ministries and portfolios will submit annual reports and financial statements that receive an “unqualified opinion” from the auditor – meaning the information is deemed to be credible and reliable by auditors and accurately reflects the entities’ financial positions and how they used resources. Between 2008 and 2010, no government ministry or portfolio was given an unqualified opinion, the report states. 

A qualified audit opinion is issued when the statements are generally acceptable with one or two exceptions. 

A disclaimer or opinion or an adverse opinion is considered a fundamental failure to provide acceptable accounts for how resources were used. 

The two worst offending ministries – District Administration, Works, Land and Agriculture, and Tourism and Development – have received either disclaimers or adverse opinions every year since 2004. 

Pointing to general signs of improvement elsewhere, the auditor writes that for the financial year ending June 30, 2012, six entities received unqualified audit opinions, seven got qualified opinions, one was disclaimed and one received an adverse opinion. For the year ending June 30, 2011, the auditor issued two unqualified opinions, 10 qualified opinions, one adverse opinion and one audit was disclaimed. 

Alastair-Swarbrick-L

1 COMMENT

  1. This story is almost unbelievable.

    Many years ago we went from a more centralized form of government to a system were we have a number of statutory authorities and government companies. This move has proven to be unwise and only resulted in the creation of many high paid positions within these new entities that have been little more than a strain on government finances. The Cayman Islands is a relatively small country and we need to move back to a smaller and more centralized form of government and do away with all of these CEO, CFO, COO and CIO positions in these unaccountable and nonperforming statutory authorities and government companies. This would allow for tighter control of government expenditure and should represent many of the cuts that are necessary to the head count without having to dispose of significantly valuable government assets.

    The first year that the accounts were not submitted correctly the CEO and CFO of the related departments/companies should have been given a notice of intention to terminate their employment. If the situation was not corrected within six to eight months of the first notice their employment should have been terminated and they should have been replaced with competent individuals.

  2. What I would like to know is can the Auditor General come up with a fix it plan for the simmering milk that has been under all these fires for all these years.
    If not, then I would suggest it does not make sense to fan.

  3. Mack is right on with this, these types of thing do not happen in the private sector because people are held accountable for their performance and the CEO’s are help accountable for the companies performance. The slightest hint of financial irregularities would land them out the door.

  4. Oh Ms Vargas, I dont want to seem to be singling you out for comment, but maybe you have the most absurd viewpoints!
    There is a plan, the Auditor is pointing out that the operatives are not applying it, thats his job. Your comment seems to suggest he should ignore what he sees because it isnt getting fixed. Actually, the politicians are the ones who have to fix it, and the fact that they havnt is more evidence of their incompetence, and none carry more of the blame for that than your idol Bush! He did all he could to avoid the due diligence that is a pre requisit for applying the plan, and his lack of support for this and the last auditor was a pointer to what is happening on the ground. The civil servants that are failing know they can ignore the auditor if the senior politicians talk a different message, and for sure they know they wont be fired which is what many deserve.
    Are you seriously suggesting that multiple years of failure to account for public money is acceptable? If so, it explains why you can see no wrong in Mr Bush!

  5. If I am understanding this correctly, The Cayman Islands government could have used the most crooked administrators and would still have come out better of than now? Is this what this article is stating.

  6. Mr Arthur Rank, now pull up ya; let me tell ye something I can and have more than one time expressed why I support Mr. Bush. But my question why don’t you be an honest man and come out and tell the public on this media why you are so against him?. I bet you will not do that.
    Well as we say in Cayman Duppy know who frighten, and you can single me out as much as you want in your comments, but that will not stop me from talking. So once again come off mi back, mi tired a yuh.

  7. Mr Arthur Rank what I would like to ask you is did you see anywhere in my comments that I mentioned Mr Bush name? You just cannot stop bringing up his name. Tell the people of Cayman the truth why you so dislike McKeva Bush. I bet you will not do that.

  8. So the annual budget is around 2/3 of a billion,

    In 8 years (thru 2012) they are unable to account for the equivalent of 1 and a half years budgets.

    There is an inherent lack of respect for the way public money is spent.

    Several years ago there was a public fireworks display, for pirates week or some other event. It was a good display and the person in charge was interviewed. She was quoted as saying that the budget for had allowed 100,000 BUT it had actually cost 110,000 – …she felt that was OK as the tourists and people of Cayman were worth it!

    The real question was how should that money have been spent?
    A new engine for a garbage truck? Books for schoolchildren and so on – the extra 10,000 was carefully budgeted for, but ended up not being there because it literally went up in smoke over Georgetown!

    Mack has it right, downsize the Civil Service by firing those who cannot do their job – Surprised Ernst and Young missed that one!

    It’s not the guys on the front line that aren’t doing their jobs – the trash gets collected in a professional and timely manner (when the vehicles are running) – it’s the managers who expect wage parity with the private sector, PLUS extra benefits, together with an unrealistic level of job security.

    Swing the axe a few times, get rid of the worst offenders and you can bet the remaining guys WILL submit accurate and timely account info.

  9. I note the remarks that this article has enjoyed and the thumbs down. Ms Vargas I guess Mr Rank wins that argument. The buck stops at the top.

    So Ms Vargas every time you go and spend your well earned dollars look at your dollar bills. It will remind you for years to come that your money and mine was illspent in the previous regime. You may also look at your credit card when used to remind you of the misuse of credit cards by the previous regime.

    As I said the buck stops at the top and thank goodness we now have an individual who understands his obligations to the Cayman Public. Mr Archer may well make mistakes as he endures the learning curve but with the proper support of Government may he continue to be successful in his presentations to the public, which at least appear to be transparent, which is more than can be said of several previous governments.

    Finally let us respect the Auditor General. For the unitiated an auditor above all must employ the virtues of skeptism and independence. He is not there to be destructive but rather to examine and make recommendations to Government in his role. Cayman has been fortunate in having had several quality Auditor Generals for the past twenty years or more. It is unfortunate that more recently the last two have been taken to task by those whose misdoings have come to light.

  10. Ms Vargas, I have given many reasons why I dislike Bush in past posts, I can see no point in listing them again. As to bringing up his name in the context of the auditors comments, just read my last post again, the reason and context is obvious! Your problem is that you seem to be blind to what his shortcomings. I am sure that to his friends, and to his West Bay voters, he is a nice guy, but my comments refer to the way he has behaved in high office which in my opinion has done immense harm to the Islands, and in some instances has cost them dear. Pointless re stating the events, for me, I hope he never has the opportunity to repeat them, sad to say though, given the slanted way the voting system works, and myopic people such as his electorate, he may yet be back to do more damage.
    Just my opinion! And with that I exit this conversation!

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