Still no sanctions for breaking finance law

Ministry of Finance may end up as ‘enforcer’

For about a decade, the Cayman Islands Government failed to file consolidated financial statements on time, or in any sort of auditable form, as required by the territory’s Public Management and Finance Law. 

However, because there are no specific sanctions for not following the legislation, no one was ever punished for what amounted to law-breaking. 

As of Friday, that situation had not changed, despite recommendations in a government report dating back to the beginning of this year. 

The one exception to the ongoing non-compliance was the government’s 2013/14 budget year, for which entire public sector audits were recently completed. Those statements received an “adverse” – meaning generally poor quality – opinion from the auditor general’s office, but they were completed in a form that auditors could at least meaningfully review. 

A number of other areas where requirements of the public finance law have not been followed in past years include the public release of financial statements within a specific time and the use of proper accounting systems in the government’s budgeting process. The auditor general’s office has cited dozens of examples where the law was not followed dating back to at least 2006. 

A special government committee report recommended in February that the ability to sanction individuals or entities for not following the law be enacted. However, those particular recommendations were not added in the recently amended version of the law – although a number of other recommendations surrounding the government budgeting process were approved in October. Those changes included switching to a two-year budgeting process and changing the government budget year to run from January to December. 

The committee, led by George Town MLA Roy McTaggart, recommended strengthening the powers of the Ministry of Finance to “hold [government] chief officers accountable for providing high quality information within a specific time frame.” 

“The Ministry of Finance should be able to prescribe certain sanctions for non-compliance,” the report recommended, without stating what those “sanctions” should entail. 

Once specific civil service employee roles in the budgeting process are clearly defined, the recommendation is that “the deputy governor should discipline or reward chief officers for their performance in relation to their responsibilities under [the law].” 

During the last meeting of the Cayman Islands Legislative Assembly in October, North Side MLA Ezzard Miller questioned why comprehensive reform of the Public Management and Finance Law had not occurred. 

“We are amending selective sections of this law to fit our agenda,” Mr. Miller said. 

During the October debate, Mr. McTaggart pointed out that Mr. Miller was correct in stating only a few of the many changes recommended in his committee report had been implemented immediately. He said this was because those were “the most time critical and sensitive” recommendations. 

Finance Minister Marco Archer also pointed out that some 35 changes recommended by Mr. McTaggart’s committee would take more time to implement “given the nature of those changes.”