Report: Confusion over government travel policy

Credit card ‘late payments’ still happening

The Cayman Islands government has significantly reduced the amount of mismanaged expenditures incurred during official travel since 2012, an internal audit has revealed.

However, some instances of unsubstantiated official travel spending are still occurring, and auditors have noted that is at least partly due to confusion over what is required by the civil service travel policy. Deputy Governor Franz Manderson’s office last year agreed to revise the policy, which was created in 2013.

The government’s Internal Audit Unit found that during the 2013/14 financial year, after the travel policy was created, dozens of expenditures were incurred for official travel for which either approval forms for the travel had not been completed or proper receipts for expenditures during the trips were not kept.

“The lack of documentation for audit review … is not in accordance with good governance practices and potentially exposes the government to unsubstantiated/unjustified travel expenses,” the audit unit reported.

However, the amounts spent on travel for which receipts could not be found totaled less than $8,000 in the government agencies reviewed by internal auditors, far below the misspent sums identified in the 2012 audit. This was an area in which the government administration had improved, internal auditors noted.

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In 37 instances reviewed, travel permission forms were completed but appeared to have little relevance to the expenses attached, auditors said. In some of those cases, employees on official travel submitted only per diem [daily expense] costs rather than all expenses related to the official travel.

Internal auditors identified some of the difficulties as occurring at the highest levels of government, including with the Cabinet, two government ministries, the Portfolio of Legal Affairs and the Office of the Complaints Commissioner. All of the agencies provided a “management response” to the review, stating that they would accept the audit’s recommendations to better track travel expenses and permissions.

Internal auditors, following up on the 2012 review, noted that during the period audited, about 45 travel expenditures by various departments and agencies were not properly approved. Twelve of those travel requests required direct approval by the governor and another six needed Mr. Manderson’s approval.

In 14 other cases, government employees’ travel costs were incurred without anyone approving the expenses.

“While … some entities were not in compliance with the [civil service] travel policy, it is apparent … that the expectation of the governor and the deputy governor signing off on official travel forms … may not be the most effective way to obtain approvals,” the report noted, explaining that routine administrative work need not be handled by the heads of the civil service.

Another issue that led to confusion regarding official travel was the requirement that a business case be submitted to “justify” the official travel expenses. In 49 instances reviewed by internal auditors, this requirement was ignored or did not properly explain why travel was requested.

“The [travel] policy does not define what a business case should be,” auditors noted, adding that some civil servants simply jotted a phrase down on the travel application form to explain the travel, believing that would be sufficient. “The policy, as written, is not clear and entities are uncertain … in regards to the need for a business case.”

Despite some of the growing pains identified by auditors, the review concluded that the deputy governor’s official travel policy did serve to bring a consistent approach across government for the approval of spending on official travel. The changes eventually “should result in increased effectiveness in managing official travel within the Cayman Islands government,” auditors opined.

Late fees

In a separate review of government expenses, the Internal Audit Unit revealed that at least three of the agencies it looked at were not paying credit card bills on time.

“As a result of the late fees and interest charges, the government is incurring unnecessary, avoidable expenditures,” the review noted.

The amount accumulated in late payments – just under US$600 – was not material to the budgets of the three agencies, identified in the audit as the Cabinet Office, the Portfolio of Legal Affairs and the Office of the Complaints Commissioner.

However, auditors noted that the delays in payments were often due to simple issues such as forwarding credit card statements from the government Treasury Department to the agencies that owed the money. The credit card statements are available online, but there were some instances where the credit card bills were not paid until the hard copy of the bank statement was received by the government agency, the report noted.

The government’s internal auditors first identified the problems with late credit card payments in 2009/10. The issue also arose during 2014, when the Cayman Compass revealed that a number of credit cards issued to elected officials had accumulated a few thousand dollars in overdue charges. According to records, the total late payment fees and interest fees totaled just more than US$5,000 over a period of several years.

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