Gov’t finances disclaimed for three years

The entire Cayman Islands public sector, including the central government, statutory authorities and government-owned companies, has had its finances disclaimed by the auditor general’s office for three years.

According to Auditor General Alastair Swarbrick’s quarterly report for July-September 2014, financial statements for the entire public sector received a “disclaimer of opinion” for government budget years 2008/09, 2009/10 and 2010/11 – the end of the former People’s Progressive Movement government and the start of the former United Democratic Party’s term. A disclaimer of opinion means there simply wasn’t enough information in the records presented for auditors to verify how government money was spent. It is the most serious level of failure auditors can professionally apply to financial statements they review.

However, Mr. Swarbrick’s office did sound a note of hope that entire public sector financial reporting in the Cayman Islands would not continue to remain of such poor quality. “For the first time, the Ministry [of Finance has] produced a plan for the way forward, and we will continue to work with them to achieve their ultimate objective,” he said.

Financial statements for the government’s 2010/11 budget year received a disclaimer of opinion last year, and the defunct reports were made public in the Legislative Assembly.

Finance Minister Marco Archer said the 2010/11 financial statements had been disclaimed for a number of reasons, including lack of sufficient and appropriate evidence of government assets, liabilities, revenues and expenses. “This should have been gazetted [made public] from the 14th December, 2011,” Mr. Archer said at the time.

Audits for the entire public sector for the years 2008-2010 were just completed in May and July of this year, and both again received a disclaimer of opinion. Neither report has been made public via the process of “tabling” it in the assembly. Public sector reports for 2011/12 and 2012/13 are still being audited.

Lack of accurate and timely public sector financial reporting has been a problem for Cayman since the government changed from a cash-based accounting system to accrual accounting. Dozens of financial statements turned in to auditors between 2005 and 2011 received disclaimers or “adverse” opinions.

Since 2012, government entities have been reporting financial statements more or less on time. However, Mr. Swarbrick has said that getting useful financial information to lawmakers and to the public has never been truly been achieved.

“The audited consolidated position for the whole government has never been publicly reported in over eight years, leaving legislators and citizens with no reliable information on how government has generated and used significant public resources,” Mr. Swarbrick said last year.

Entire public sector financial statements and reports can also be derailed by a few significant government ministries or authorities failing in their responsibilities and thereby leaving a large swath of public finances unaccounted for. Mr. Swarbrick gave an example of this earlier in the week when he released a report noting that about $1 billion in public spending from two government ministries was “unaccounted for.”

However, the overall financial accountability problems of the Cayman Islands government cannot be blamed on just a few entities, the auditor general said.

“Until we get the entire public sector [report] tabled in the House in a timely fashion, we will not have accountability restored,” he said.

1 COMMENT

  1. It is important to acknowledge that Finance Minister Marco Archer has produced a plan for the way forward and that we now appear to have the right leadership in place to eventually get this problem under control. That being said, the way forward must include a streamlined and more efficient process and must ensure that the right resources are in place to guarantee the timely and accurate reporting of all required information.

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