Public may finally know what structures are worth
For the first time in nearly 15 years, the Cayman Islands government has completed a full valuation of the buildings and properties it owns and is awaiting a review of those estimates to determine accuracy.
The government essentially has not known what its properties’ current values are since 2001. Successive reviews by the Cayman Islands Auditor General’s Office have revealed the issue is one of the key problems in annual public sector financial reports being disclaimed.
For instance, an audit evaluation for the government’s 2010/11 fiscal year received a disclaimer of opinion from Auditor General Alastair Swarbrick’s office – which means the financial statements for the entire public sector contained in government records could not be relied upon for accuracy – largely because government did not have “sufficient or appropriate evidence” of assets, liabilities, revenues and expenses.
Included among the government assets would be any property the Cayman Islands government maintains.
According to Mr. Swarbrick’s office, the government has not conducted a detailed appraisal of its properties since 2001. This makes it impossible for accountants to verify that the buildings and properties are worth what the government says they are worth.
That’s about to change.
Mr. Swarbrick’s office announced last week that it had engaged the services of consultants from the Royal Institution of Chartered Surveyors to review property valuations done by government for the 2013/14 budget year.
Audit manager Martin Ruben said Monday that since the audit office staff does not have specific expertise in the area of property valuation, the Royal Institution of Chartered Surveyors was brought in to review property value estimates done on behalf of government.
Finance Minister Marco Archer has sought to address the lack of updated property value numbers since last spring, when he announced that entire public sector finances in Cayman were disclaimed in the 2010/11 budget year. Disclaimers were issued in the 2009/10 and 2011/12 government fiscal years as well.
“A disclaimer of opinion is not a good audit opinion,” Mr. Archer said. “It indicates the government has significant work to do.”
The lack of up-to-date values of relevant government properties can also impact a number of other areas of public finance, including whether the government is paying enough, or paying too much, for annual insurance premiums. Former Auditor General Dan Duguay flagged this as a problem in 2007 and recommended that government seek to address the issue immediately. Mr. Duguay said the last valuation of government properties was done in 2000, and stated his concern that government assets might be significantly under-insured at the date of his report in early 2007.
At the time, Mr. Duguay noted that after the 2000 valuation on government assets, one had been scheduled for October 2004. However, that was interrupted after Hurricane Ivan in September 2004. When the government obtained new insurance in April 2006, it did so at a value of $400 million, based on what Mr. Duguay said were the year 2000 value estimates.