Government ignores internal audits

The vast majority of recommendations made by the Cayman Islands government’s own auditors during a five-year period were not implemented, a report obtained through the Freedom of Information Law has revealed.  

Between May 2007 and July 2012, the government’s Internal Audit Unit produced 55 reports making a total of 327 recommendations to dozens of public agencies seeking various operational and governance-related improvements.  

According to the follow-up review performed by the unit, 78 recommendations – about 24 percent – were considered to have been “fully implemented.”  

A total of 166 recommendations from those reports – 51 percent – had no progress indicated.  

Of the remaining 83 recommendations made during the five-year period, 53 had been issued more than five years from the date of the follow-up report and were “automatically closed” by the unit. The other 30 recommendations were considered “no longer relevant.” 

“We are aware that many factors may have contributed to a delay in the implementation of these recommendations,” the audit unit follow-up review stated. “Nonetheless, we believe it is imperative that the internal control deficiencies, which prompted the recommendations, should be resolved as quickly as possible in order to minimize the risk of any further adverse consequences.”  

Reasons given for not implementing Internal Audit Unit recommendations included deferral of those due to “other departmental priorities,” resource “constraints,” and “the impact of new and changing initiatives.”  

Thirty-four of the 48 agencies to which recommendations had been made implemented fewer than half of them, the report noted.  

More than 60 percent of the outstanding audit recommendations at the time of the report were more than three years old.  

“We are not aware of any mitigating factors that would justify this long delay in implementation,” the report stated.  

The follow-up report was obtained as part of a Cayman Compass open records request for a number of reports completed over the past two years by the Internal Audit Unit. Of the 10 reports requested in January, only two had been released this month due to a government decision to start delaying the release of those reports until at least a year after they are completed.  

Officials with the Portfolio of the Civil Service, in their reasoning for delaying the release of the reports, stated that government agencies might not be willing to cooperate with internal auditors if the reports were “released prematurely.” This statement was released at the same time as the review that revealed less than one-quarter of the audit unit’s recommendations were being followed by government.  

“Internal audit is recognized as a critical element of good governance and, as such, prudent steps have to be taken so as not to undermine this process,” stated a memo sent to the Compass from portfolio Chief Officer Gloria McField-Nixon.  

“There is a strong public interest for disclosure of internal audit reports so as to provide transparency in the way in which the government operates and in the accountability of entities in the achievement of objectives and plans. On the other hand, there is also a public interest in maintaining an efficient and effective internal audit process.”