Millions of dollars in previously owed government fees for trash collection were not accounted for in financial statements that were eventually disclaimed upon review by the auditor general’s office, a report from the former Ministry of District Administration indicates.
According to the report, which covers the 2012/13 government financial year, money due for the garbage fees was not included, resulting in an $8.2 million difference on the government’s books.
“A significant portion of the garbage fees receivable balance dates back to 2004/05,” the ministry statements noted. “The ministry continues to pursue these sums, albeit with minimal success.”
A disclaimer of opinion by auditors, as was given to the former Ministry of District Administration in 2013, indicates that the entity’s financial statements did not contain enough information for a proper audit to be conducted, essentially providing no outside assurance that the financial statements could be relied upon.
Revelations regarding the government’s unpaid trash fees, dating back a decade, were first revealed by the Cayman Compass in early 2013.
A report from February 2013 noted that more than two years after the Cayman Islands government stopped requiring the collection of garbage fees from local homeowners, the government admitted that some $1.76 million in unpaid garbage fees was still owed by various ratepayers.
The $1.76 million was owed in 689 “debts,” according to records obtained by a Compass reader under the Freedom of Information Law, 2007. The outstanding fees work out to an average of more than $2,500 per debt.
Garbage fees, as of 2010, are no longer collected for individual homes. However, previous charges owed are still payable to the government. Also, strata corporations that manage condominium and apartments owned by individuals are still required to pay for trash fees for dumpster maintenance. Commercial properties are also charged for their dumpsters.
In addition to the non-collection of household trash fees since 2010, it was revealed last year that hundreds of businesses and strata-governed condominium complexes did not pay government fees for trash collection in 2014, and may not have paid those fees dating back to 2010, according to an internal audit report.
“During the January-June 2014 billing period, 289 customers categorized as ‘business’ customer[s] were not billed,” the Internal Audit report, made public through a Freedom of Information request, stated.
The issue was noted during a follow-up audit by the unit last year, after revelations in 2010 that duplicate bills for trash fees were sent out and unauthorized fee waivers were granted to churches and schools.
In 2010, the government made changes to the system used to track garbage fees – known as EVMAS – to waive the fees on selected trash service routes. Department of Environmental Health managers said the changes made at the time were related to the government’s decision to stop billing residential homes for trash pickup. The waiver applied only to stand-alone properties, or was intended to do so at the time, internal auditors noted.
“However, upon our review, there were several service codes [in the EVMAS system] not related to residential units that were also assigned with zero fees,” the 2014 audit stated. “This includes hotels, offices, small businesses and rental containers.”
Trash fee collection
A private consultant review of the government, completed last year, recommended the outsourcing of waste collection and landfill services to the private sector. However, in order to do that, it was proposed that waste disposal fees be reinstated for all system users.
“Current waste collection fee arrangements in the Cayman Islands are ineffective with most residents and many commercial entities not paying for services,” the consultant’s report by accounting firm Ernst & Young stated.
To realize the estimated $2 million cost savings it identified, the EY consultant report makes it clear that the initiative would require the enforced collection of waste disposal fees. “In order to successfully outsource waste collection, it is a necessary preceding step to implement a collection fee structure and system.”
In addition to fees for waste collection, the report states, charges should be introduced for those bringing waste to the landfill site “for both private garbage collection companies and private citizens.”