Audit reveals ‘immediate threat’ to Cabinet member

An ‘immediate threat’ to an unidentified Cayman Islands Cabinet member required the expenditure of more than $50,000 for security services, according to a July report made public recently by the government’s Internal Audit Service.

The nature of the threat was not revealed, but the payment was flagged up during a review of expenses for the 2015/16 budget year, which was the period covered by the audit.

The report detailed a standard expenses review done on the Portfolio of Legal Affairs which noted a purchase of ‘security services’ being made that was not put out for public tender as required.

“As a result, section 37(1) of the financial regulations (2013 revision) was not complied with,” the report noted.

The Portfolio of Legal Affairs, in its response to the audit, agreed that the financial regulations should be complied with and that contracts worth over $50,000 should be put out for bid.

“However, it should be noted the [audit] sample taken was for the procurement of security services which was handled by Internal and External Affairs at the time due to the immediate threat to a Cabinet member,” the portfolio replied.

The Cayman Compass contacted several current and former Cabinet members from the 2013-2017 Progressives-led coalition government about the security expense, but none could recall the circumstances surrounding the issue.

The audit was done to determine whether proper spending controls were in place at the portfolio. Auditors found that in four of the areas reviewed, those controls did exist, but in eight of the areas reviewed there were “one or more deficiencies which threaten the chances of operational success.”

Other areas of concern identified in the legal affairs audit included purchases of goods or services from local or foreign vendors not supported by purchase orders entered into the government computer system.

“Purchasing without approved purchase orders may result in the portfolio paying for unauthorized transactions,” the audit stated.

The Portfolio of Legal Affairs responded to this concern by stating that it was transitioning to “system generated purchase orders” and that where applicable, government computer system-generated purchase orders would be issued.

Another finding by auditors noted that review of actual spending against the portfolio’s budget “was not consistently done on a monthly basis.”

“Consequently, expenses may be incurred in excess of the Cabinet-approved budget,” the report stated.

The portfolio’s response indicated budget spending reviews do occur monthly in most cases. “The portfolio monitors and reviews budget to actual expenses on a regular basis [usually monthly]. The only exception is at year-end. Due to year-end demands and limited staff resources, priority is given to the accuracy and completeness of the annual accounts.”

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