Although the majority of government finance records for the last budget year are still being reviewed, Cayman Islands leaders said Wednesday that public sector accountants appear to be getting their numbers “right the first time, and on time.”
According to financial statements reviewed by Auditor General Alastair Swarbrick, the government Portfolio of the Civil Service and the Ministry of Community Affairs received unqualified opinions during the 2013/14 fiscal year, meaning all their spending could be verified by auditors. These unqualified opinions have been a rarity in Cayman’s public sector finances, and mark the first time the community affairs ministry had received an unqualified – often referred to as a “clean” audit opinion – in 10 years.
The Ministry of District Administration, Tourism and Transport was given a qualified audit opinion for the 2013/14 budget year. Although that opinion from auditors indicates there were still problems with verifying the agency’s spending and assets, it is the best evaluation for both the tourism ministry and district administration ministry in the past 10 years.
“It’s something which deserves to be marked,” Mr. Swarbrick wrote in an email read by Premier Alden McLaughlin at a Wednesday afternoon press conference.
“This is a huge stride forward,” Mr. McLaughlin said.
The three government entities whose audit results were discussed represent less than 10 percent of the agencies that must be reviewed by auditors on an annual basis. However, Deputy Governor Franz Manderson said he was expecting to hear “the rest of the good news” shortly. Mr. Manderson predicted that all ministries, portfolios, statutory authorities and government-owned companies would receive at least qualified audit opinions.
Speaking at the Government Professional Development Week conference Tuesday, Mr. Swarbrick said it was premature to get the full picture of the latest financial statements, but noted it was clear that things have improved significantly.
Mr. Swarbrick said 2013/14 may be the first financial year without any adverse opinions or disclaimers qualifying the audit of government’s finances.
There are still control issues, and more needs to be done to restore the public’s trust in the accountability of government entities and their spending, he said. Some of these issues were not just the timely submission of financial records to the auditor general’s office by the annual Aug. 31 deadline, but also the responsiveness to follow-up questions.
“You should be beating down my door to get issues resolved,” he told civil servants. “Until we have a consolidated financial statements, accountability will not be restored.”
The Cayman Islands has never put together an auditable set of consolidated financial statements in a government annual report since the advent of the Public Management and Finance Law in 2004. Attempts to do so for the 2008/09, 2009/10 and 2010/11 fiscal years failed as entire public sector accounts were disclaimed.
Both Premier McLaughlin and Finance Minister Marco Archer acknowledged that the government would likely need a few more years to restore full financial accountability.
“The lack of proper accounts is something that has haunted three [government] administrations now,” Mr. McLaughlin said.
Four years ago, the auditor general’s office faced a backlog of several years’ worth of government financial statements that were not submitted by the statutory deadlines or were incomplete.
At the time, 85 of 220 sets of entity financial statements were outstanding for nearly 40 percent, and that was after 15 ministry financials had just been finalized with disclaimers of opinion, Mr. Swarbrick said.
Statutory authorities and government companies fared a little better, with 56 of 98 statements having unqualified opinions, while 38 were qualified and four disclaimed.
Since then, the situation has changed. For the last fiscal year ending June 30, 2014, all entities submitted their financials for audit by Aug. 31, and by Oct. 31, 23 entities had their audits completed and signed off, with another four being completed imminently – the best result so far.
There has also been progress in tabling the reports in the Legislative Assembly, he said, although there are still some delays.
“I don’t want to diminish what has been achieved in the past four years in terms of moving things forward, but citizens as users of and payers for public services have a fundamental right of knowing what revenues government has generated for them and how this money has been used,” Mr. Swarbrick said.