Government’s audit advice often ignored

Less than one quarter of all recommendations made by the government’s internal auditors were followed during the past five years, according to a review by the audit agency.  

The Internal Audit Unit reported that just 24 percent of its recommended changes to government agencies were implemented between 2007 and 2012. More than half the recommendations remained “outstanding,” meaning, not acted upon.  

Sixteen percent of the recommendations were closed because too much time had passed between when the internal auditor’s reports were issued and when the government agency acted on them. 

The government conducts audits of itself continuously, apart from the work done by the independent Auditor General’s office.  

Several issues have been raised and highlighted by the Internal Audit Unit in recent years.  

After reviewing the five departments and statutory authorities that accounted for more than 73 percent of fuel purchases at the government’s North Sound Road gas station facility between January 2008 and March 2009, the audit unit concluded that a lack of internal controls by the management of the departments indicated the potential for significant fraud in fuel purchasing. This report led to a follow-up investigation by the Auditor General’s office that prompted a criminal investigation into fuel thefts.  

More than $190,000 worth of purchases made on credit cards issued to high-ranking members of the government could not be accounted for because no receipts had been submitted at the time the review was completed, according to a 2010 internal audit. 

The discovery that two underground petroleum pipelines that posed a potential safety hazard to residents of a George Town apartment complex had not been addressed for years, despite the problem having been identified in 2004. The fuel pipes, which originate at the Jackson Point fuel terminal in South Sound and then veer apart to terminate at the Caribbean Utilities Company plant and Owen Roberts International Airport, were operated by CUC and Chevron-Texaco. 

“Inadequate oversight” of the issuance of visitors’ arm bands at the Cayman Turtle Farm led to the “possibility of abuse and misappropriation” of funds collected from sales of those items. 

All reports submitted by the unit include recommendations to resolve the problems, which are then commented on by government department management.  

According to the evaluation by the Internal Audit Unit, between 2007 and 2012, only three government entities – Agriculture, Education Services and the Port Authority – had followed all audit recommendations.  

Dozens more departments had not implemented any of the audit recommendations, including: the Cabinet Office (15 recommendations), Computer Services (17 recommendations), the Health Services Authority (22 recommendations), four government ministries (a total of 32 recommendations), and the prisons administration (13 recommendations).  

“[Government] agencies have not demonstrated reasonable progress in implementing actions … to address Internal Audit Unit recommendations,” the unit stated in its report on the status of the 2007-2012 reports.  

“Agencies were requested to provide the reasons for non-implementation. However, this was not received for those recommendation that are outstanding.”  

A total of 166 audit recommendations remained outstanding as of the July 2013 date of the report.  

According to budget records for the current financial year, more than $950,000 has been set aside for auditing government human resource and financial policies. Typically, between 60 and 80 such reviews are completed by the government each year.  

Internal audit reports began being released to the public in 2009, following the advent of the Cayman Islands Freedom of Information Law and when the Caymanian Compass started seeking access to the records.