CIG ignoring serious liabilities
Acting Auditor General Garnet Harrison
(CNS): The Cayman Islands Government has failed to include some $1.3 billion of liabilities for post-retirement healthcare benefits and pension liabilities for civil servants in its recently completed consolidated accounts. Among the many problems identified the auditor general in the first ever Entire Public Sector (EPS) financial statements, the problem of unaccounted liabilities contributed to the adverse opinion.
In a report reviewing the first auditable set of government accounts in ten years, the Office of the Auditor General (OAG) found that government has failed to account for liabilities, including $1.18 billion in healthcare obligations and $213 million for pensions.
“In addition to not recognizing the liabilities, the complete relevant expenses for post-retirement healthcare and pensions obligations have not been recognized within the financial statements for 2013-14,” the former auditor general, Alastair Swarbrick, wrote in his report before he left. “As a result Personnel Costs have been understated. It is not practical to quantify the understatement of these expenses due to the co-mingling of pension expenses attributed to the defined benefit and defined contribution participants’ accounts for pensions and the co-mingling of current year healthcare premiums and premium payments for current beneficiaries.”
But the audit team found that the total expenses reported for the year ended 30 June 2014 by the government’s actuary were $116 million for post-retirement healthcare and $24 million for post-retirement pensions. This means that the EPS statements are “materially misstated”.
Speaking at a press conference on Wednesday, Acting Auditor General Garnet Harrison explained that the liabilities need to be managed and should be included in the accounts because not only are they required under the Public Management and Finance Law, but government cannot afford to ignore such a major liability coming down the line. He said that CIG would need to prepare to fund the liability so it must be part of its financial statements.
Category: Government Finance, Government oversight, Politics
Not everything man builds grows and prospers. Some things are not meant to survive themselves. The Caymanian way of governing will soon be gone for all the right reasons. When it goes it will take a lot of the people that depend on it with it but everyone else will be fine.
Minister Marco Archer’s halo isn’t shining so bright after this report. He and the ministry of finance made the decision to ignore these liabilities which was a really bad move.
Time to admit Mr. Archer there is no surplus!
Sorry to bust your bubble but it has always been this- all through McKeeva’s reign. Marco did not invent this method. I don’t know whether they should or shouldn’t but this is nothing new
The FCO will never approve spending for the port unless a lump sum to the tune of 300M cash falls out of the sky. Should FCO by some miracle do approve then they are simply paying out the rope with which the CIG will hang from in the not to distant future.
3;37
What is your aim in trying to mislead the public in the financing of this port? All the report i have read states that the cruise companies will fund this Port. e all know by now that we cant borrow any money for this, so stop being a smart ass. Do you really think you are smarter than the average person?
Smarter than you perhaps. Where are these reports that state the cruise lines are financing the piers?
I have a deep suspicion that Mr. Swarbick had to leave before this was published to avoid being taken to Pedro St James to be hung, drawn and quartered for treason. What Mr. Swarbick in my opinion continually fails to understand is that if you turn your head to one side and squint at the sun as hard as you can then everything looks rosy and no need to worry about a thing. Why complicate life with all this accountability stuff?
this was all in the miller shaw and e&y reports on the civil service…
the only solution is a complete overhaul of the civil service including staff/benefit reductions….
but no government has got that guts to do it….especially not the spinless ppm……
don’t worry we can always add more indirect taxes and increase work permit fees…….zzzzzzzzzzzzzzzzz
All rubbish posts no government in the world put these costs in their financial statements. Let me see if I get this right .. we are expecting everyone entitled to a pension to retire tomorrow ? Are we expecting everyone who is entitled to health care payment to get sick tomorrow for the rest of their life ?
One or the main reasons why the EPS was given an adverse opinion is because government has not valued our roads. Wow Zzzzzzzzzzzzzzzzzzzzzzz. AG your deadline for auditing the financial statements submitted on time by CIG is up on the 31 Oct. Let’s see how many will be returned audited.
This is as clear as mud. Mr. Harrison clearly states that, quote ” government cannot afford to ignore such a major liability “coming down the line”. This at the very least suggests that it is not in fact a current liability and leaves one to wonder how far into the future it goes and perhaps what if any PORTION of it if any should be included in financial statements covering a past period..
Are you familiar with the expression – ” CONTINGENT LIABILITY “
Are you familiar with the ecpression “current liability”?
Has the word ” INSOLVENT ” crossed anybody else’s mind – at least on a liquidity test basis. And CIG cannot sell off it’s Fixed Assets to raise cash to cover the deficit. It is a bleak outlook for Civil Servants reaching retirement age in the future.
No but the term “FUBAR” has. LOL!
VERY GOOD
Stop boring me with these annoying details.
Details???? Hmmmm, the is where the devil lives.
Unless, 6.20, you don’t check what you are posting?
The US and UK governments don’t include health and pension liabilities in their financial accounting so I do not think we should be beating ourselves up over our not doing it here in Cayman.
Could this be that the USA and UK provide these services through a Government tax deducted from one’s salary and held in a pot until needed? ( not private financiers) that make a great difference!
No, that has nothing to do with what you put in your accounts for audit and public scrutiny. And there are no magic “pots” in either country to fund these costs. They are essentially Ponzi schemes-legal ones-whereby taxpayers just keep coughing up what it takes to cover the bills…just like here.
Nothing new here. The most powerful countries in the world are in a similar boat as us. (United States, UK, China, Japan, Germany etc….. are billions and trillions of dollars in deficit)
If the Cayman Islands were in the midst of such “gloom and doom” why are so many expats on island buying properties to get Cayman Islands permanent residency these days ?
Life has never been so good, despite living in so many countries before reaching our shores.
that’s bunk NO EXpats are buying anything I have been trying to sell my 2 homes for 1/2 appraised value for 2 years and zero nada zilchhas come along Yes condos on 7MB do sell and some fancy south sound homes but that’s it its so shitty in cayman the free government homes sit empty AND who wants Residency on the rock that’s financially and morally bankrupt
They prefer the cheap inland parcels with no road access, or an inexpensive small apartment? Immigration requirement? No major committment. Easy come, easy go. Perhaps when the ‘party’ is over now that Marine Patrol and the RCIPS are cracking down on undesireable packages washing ashore, Cayman can get its country back.
Whilst you are correct to a certain degree, there are just as many expats not pursuing PR and trying to sell property and leave.
A lot of forward thinkers already left for other countries such as Gibraltar, Malta, Cyprus and Canada, securing their pensions while they can.
Permanent Residency is not the be all and end all for everyone, it may suit some but not all.
4;25
This might be the case with many nationalities, but tell me how is it you cant see no more than a dozen Caymanians in the supermarkets, which 90% are Jamaicans? are you saying that these people are breaking down our doors to stay, no matter what?
Not sure if you are entirely correct. Most people who I know that reached the point of PR, just left and may come back in a year, maybe not.
Expats buying inland properties without road access. No taxes. No DUI check points. Endorphin releasers freely coming to the shores……Life is good! Hmmmmmmm……
4;15
You are so correct in your observations, and in doing so they are forcing the government to destroy the Caymanian way of life..the opportunities. This is done by fixing all our laws to accommodate them, and they still shit on us and call us anti-foreigners.
Too much ganja will make you paranoid.
Big difference – they have access to all sorts of Revenue – not least Direct Taxation. Do you want to see that sort of tax in Cayman, because one day soon a CIG may have no alternative.
Our kids graduate without being able to read, write and basic math skills. Our pensioners will starve and die from lack of healthcare funds. Middle age people can’t pay their bills and mortgages. Crime is rampant and the dump stinks.
No money to fix all that and we want a 300m dock, revitalize GT and build the airport.
Future is bright! Go PPM!
Do any of these politicos really care about this country of ours?
This was predicted over a year ago and coincided with the exodus of people leaving so that they could secure their pension and maybe return.
Who cares about those 1b+ liabilities. We have massive surpluses year on year and the cruise dock will make all of us filthy rich.
Survival of the fittest strategy! No need to worry about pensioners and the unhealthy. Let’s weed them out. They don’t produce anything anyway. Send them all to the Brac or deport them somewhere else. I hear Germany takes immigrants by the thousands these days. They wouldn’t mind taking our pensioners and the ill.
No need to worry guys.
Time for the UK take over! It is imminent as all we have are doofies in the legislative assembly.
Would you take over an entity with debts like this?
Why can´t civil servants contribute to their own pension and health insurance? Then they have to nerve to complain about HSA sh*tty service that they aren´t even paying for. smh Start making them pay!
Please understand this relates to those on the defined benefits plan, not the defined contribution plan, i.e. We the younger and not near retirement CS.
@1:38pm – As a civil servant I would gladly contribute to my health insurance, as long as I am free to seek medical advice outside of the HSA.
That has always been the crux of the problem. Remove the necessity for the 4000+ government workers plus their families from using the HSA and you eff the HSA, funded by CINICO/Government.
Zombie programs and sunk costs. The lifeblood of governments everywhere.
Ours reminds me of Waterworld (that under appreciated comedy) with everyone living on a derelict hulk and lunatic leadership cajoling them to keep rowing a little more in order to reach the promised land.
Well, well well, what a surprise! Dump the port project, shut the turtle farm, fire the “redundant” or non effective positions in the CS (the worlds largest social service scheme) and we might have half a chance…adding huge capital spending to this will take us under…direct taxation will be introduced at which point bye bye financial services, and most of your income gone too…Venezuela/Jamaica here we come…Unless some bright spark in CIG realizes that they are all their predecessors were crap and get one of the big four accounting firms to run finance for us, because there is no-one capable and has not been for some time.
Government doesn’t pay for the opernational cost of the Turtle Farm, so even if you shut down the Turtle Farm government still has to make the bond payment
Untrue. Beyond the $6M loan payment there is also over $3M in operating costs that government funds each year. – A former CTF employee who knows.
These pensioners should be grateful that they have a big concrete dock to look at while they starve to death.
Amazing how the votes go on comments like this on a thread that the Kirkbots haven’t visited.
So much for good governance, transparency and accountability within CIG