Gov’t financial statements improving but 51 annual reports tabled late

Government has made great strides in improving the quality of its financial statements, but 51 government entity annual reports have not yet been tabled in Parliament, the Public Accounts Committee heard on Friday.

Of the 51 annual reports, 48 have missed the statutory deadline, which is six months after the completion of the corresponding audit, Auditor General Sue Winspear said at the hearing on her office’s report on government’s 2019 financial reporting.

There is a significant discrepancy between the timely completion of financial statements and the publication of the annual reports they are a part of.

The 2019 audits of 36 out of 41 entities that make up the Cayman Islands public services have been completed and none has received an audit qualification.

The five 2019 audits that have not been completed in time are for the Ministry of Health, the Cayman Islands Airports Authority, the National Housing Development Trust, utility regulator OfReg, and Cayman Airways.

The Ministry of Health and the Airports Authority do not yet have audited financial statements for the years 2016-17 and 2018, either.

Three government entities missed the filing deadline for financial statements on 28 February 2019, “which is a step backward compared to 2018” when only one entity did not submit in time, the auditor general’s report said.

Compliance with the Public Management Finance Act was even worse in relation to annual reports in 2019 as only 14 of the 41 government bodies submitted their report by the deadline.

Annual reports and financial statements are important documents for Parliament and residents to hold the government and individual public bodies accountable for their use of public money.

PAC chairman Ezzard Miller said it “is troubling” that there are 51 annual reports outstanding, in some cases for several years.

“The audited accounts are only a part of the report. It is very important for the public to get an overall view of what the ministries and other entities are trying to do, and to make judgments on how they are functioning. The absence of those reports makes that difficult,” he said.

The committee heard that some ministries and statutory authorities struggled to produce the financial reporting documents in a timely way because of staffing problems in combination with a year-long backlog.

Nellie Pouchie, chief officer in the Ministry of Health, said the responsible resource issues have been resolved and there is an agreed plan to rectify the matter by June of this year.

Albert Anderson, CEO of the Airports Authority, said his organisation had grappled with staffing problems and a “revolving door” in the finance department. However, the authority has the board approval and financial resources to fill vacant positions and is in the process of hiring, with a focus on audit and reporting.

Citing the auditor general’s report, Financial Secretary Kenneth Jefferson noted that government had done “extremely well” in improving the quality of financial statements compared to a decade ago.

In 2009-10, all core government entities had received either a qualified audit opinion, meaning that parts of the financial statement could not be relied upon, or a disclaimed audit opinion, indicating there was insufficient information to carry out an audit.

In 2019, the audits of all core government bodies and statutory authorities have so far been unqualified, with five audits yet to be completed.

“It is possible to end up in a situation where for 2019, we have 100% of the entities with clean opinions on their financial statements,” Jefferson said. However, he agreed that the late production and publication of annual reports was an issue.

The auditor general noted that it would support the timely tabling of annual reports in Parliament, if there were more routine and regular meetings of the House.

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