Leadership remains weak point for CIG accounts

| 28/10/2015 | 17 Comments
Cayman News Service

Acting Auditor General Garnet Harrison

(CNS): The adverse opinion issued by the auditor general on the government’s full set of annual accounts for the year-ending June 2014 is mostly down to a lack of leadership in the financial function at the centre of public accounting in the economics and finance ministry. Falling short of describing government’s problem as a skills gap in senior financial officers, Acting Auditor General Garnet Harrison said he was very concerned about the shortcomings across the board shown in the first set of consolidated accounts that government has produced that could be audited.

“Government does not have the procedures and controls to consolidate the financial reports from across the public sector,” Harrison stated as he opened a press conference Wednesday on this latest report.

Talking about the report by the Office of the Auditor General on the state of the Entire Public Sector (EPS) consolidated financial statements, which were audited by outgoing Auditor General Alastair Swarbrick before he left the island, Harrison said that the leadership problems on this particular element of government’s financial reporting related to the technical functions. Without naming names, he made it clear that the financial secretary is the person responsible for getting this part right.

Several years ago Franz Manderson took responsibility for addressing the dire state of financial reporting from the various government agencies, but when it comes to the consolidated accounts, Harrison explained, the responsibility to produce those lies directly with the chief officer in the Ministry of Finance and Economic Development, a post held by Financial Secretary Kenneth Jefferson.

Although this is the first time that government has submitted financial statements with enough information to enable the office to actually conduct an audit, the accounts were given an adverse opinion.

At Wednesday’s press briefing Harrison indicated that there were many problems with the EPS accounts and said he was very concerned that after all this time and endless recommendations from the OAG about improving government’s accounting function, there were still so many serious issues.

Most of the problems exist because government does not have the controls and systems in place to produce accurate consolidated statements and therefore cannot really account for the public money it collects and spends or its assets and liabilities. Harrison described significant failings and shortcomings because the finance ministry has not implemented the necessary functions that his office has continually warned about.

“In my opinion it is unacceptable,” he said, adding that although the OAG has persistently warned government what it needs to do, “we are not seeing it.”

Harrison said the issue remained a fundamental structural problem throughout central government’s accounting process and reporting because people were not doing what they should do on a consistent basis to record the information that government needs.

“Someone needs to take charge and make this happen,” he said.

He added that his office would keep on identifying the problems and bringing them to the public’s attention in the hope that this will drive the necessary changes in government. Harrison said that the lack of leadership was a long-term problem that his office had persistently communicated, as he indicated that the right people needed to be in the right posts with individuals who can understand the proper financial functions required to do the work.

Another major problem identified by the audit office, especially in terms of accountability, was the inability of the auditors to give even an adverse opinion on the Government’s Schedule of Appropriations that provides accountability for the expenditure limits imposed by the Legislative Assembly.

“We had to issue a disclaimer of opinion,” Harrison said, explaining that the auditors found that government did not maintain sufficient records to prepare this statement, which is required by the Public Management and Finance Law.

As the office tried to carry out an audit of the accounting records to support the schedule of appropriations, the government stated, “We are not in a position to make any assertions on the fair reporting embodied in the schedule of appropriations due to significant inconsistencies in which individual subsidiaries are measuring the amount of actual usage of appropriations, i.e. certain outputs are being measured but only as a fixed fraction of the annual appropriation without due regard to actual measurable outputs based on the purchase agreements.”

Harrison described this as yet another “significant shortcoming for the government’s accountants” and the ministry’s failure to implement the systems and practices to provide accountability to the Legislative Assembly.

“The law requires this accountability and we believe that there are fundamental structural issues that continue to prevent government from meeting these reporting objectives,” he said. “We have not seen the kind of plans or activities that would lead to government achieving the requirements prescribed in the law.”

With a significant amount of work still needing to be done to provide the accountability envisioned in the law and the management of public cash, Harrison pressed home the message that government will not achieve the kind of financial reporting and accountability required without strong leadership.

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Category: Government Finance, Government oversight, Politics

Comments (17)

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  1. Anonymous says:

    More evidence of how little Franz has achieved.

    • Anonymous says:

      Harrison himself do not understand the government accounting system modeled after the New Zealand. To this very day New Zealand has not been able to implement a lot of what it calls for. Bottom line is that Cayman copied a flawed accounting system and no one is willing to change it. I admit that it has some good accounting principles but there are other aspects that it is impractical to measure. Therefore they will always have issues. I sugget that the government modify the law and come up with a hybrid system that works. It may well set the pace for other countries to follow. Time for us to revert to history and learn from people like the lates Jim Bodden, Vassel Johnson and others who made us a Island that so many has come to enjoy. Unfortunately our Senior Civil Servants believe that we have to rely on expats when the reason they are here is because our people developed a product that they didn’t have in their own country.

  2. Anonymous says:

    Ahhhhhhhhhhh the famous words, accountability and productivity soon come. Do anyone think this tardiness could exist this long anywhere else? Maybe it’s just by design! Who appraise the appraiser(s)?????? Ahhh soon come too. na anytime soon bobo.

  3. In 1998 – nearly twenty years ago, for goodness sake – several of us volunteers sat on a Vision-2008 Committee called “Open and Accountable Government”. At the end of the process we submitted a report that was composed on the basis of consensus. To the best of my knowledge, the report was buried and remains buried to this day. Mostly, our recommendations were ignored entirely.

    What a waste of time it all was! If – IF! – any of our politicians are serious about the concept of “open and accountable government”, they should dig up our report, and our Minutes (I acted as secretary, and drafted all the Minutes), and start again. The year 2008 is long gone, and 2018 is too soon, but would twenty years from now be time enough? Would the present government consider a Vision-2035 exercise, or is that asking too much?

    • Total Waste says:

      This and countless other reports actually form an entire sedimentary layer of our national mountain.

      In government it is usually better to do nothing. No matter the cost.

    • Anonymous says:

      Um 2008? Wasn’t that when McKeeva got in and it all went downhill? As we all know he is not into openness and accountability so its no surprise really that such a report was buried, or my choice of words for successive governments is “swept under the carpet” just like our concerns over the port, and most other things.

  4. Anonymous says:

    From the very beginning when McKeeva said he didn’t want foreigners appointed to the posts of Financial Officers, Government appointed Caymanians/Status holders (with one exception) who had failed in the private sector and had been let go but then had to be taken up by government, the employer of last resort. On top of that, we had a Deputy Chief Financial Secretary, formerly Accountant General, who had no CPA qualifications and was completely at sea with the intellectual demands of accrual accounting who constantly worked against civil service reform including the PMFL because she only understood simple bookkeeping. And to cap it off, we had a Financial Secretary, who was formerly an auditor in our audit office, who admired the non performing Deputy Chief Financial Secretary and hated the reforms because they did not fit with his or her simple cash based audit/ bookkeeping principles. Some of the duff financial officers have been replaced but it is still a long haul and we still have a Financial Secretary wondering which end is up.

    • Anonymous says:

      You and the Auditor General are both correct about the lack of leadership in Finance @7:12 but this goes back a long way and it all has to do with the fact that civil servants are not held accountable for non performance, in fact there is a tendency for them to be promoted.

    • Anonymous says:

      Unfortunately having CPA qualifications does not automatically make you competent. Neither the former Accountant General or her predecessor were CPA’s yet they both were able to produce auditable financial statements BEFORE PMFL came into being.

      After PMFL was introduced the Government was flooded with CPA’s and other qualified accountants yet since that not one auditable financial statement has been delivered until now…..but alas that one, again produced by supposedly qualified accountants is given an adverse opinion.
      There are many without accounting qualifications that can run circles around those who do.

      • Anonymous says:

        The “auditable financial statements” produced by “the former Accountant General or her predecessor” were predicated on a cash based system and were ultimately meaningless, a fact that politicians like Truman Bodden capitalized on because they made them look good. Many people still remember that at the end of the year no bills were paid and suppliers of services, both here and overseas, had to wait six months into the next year before, after constant complaints, they finally got paid. But the books showed that everything was fine and dandy.

  5. VP of Accountability & Operations says:

    Accountability is a disease within the Cayman Islands Government starting from the Governor, Deputy Governor down to the Chief Officers. They all fear it and cover for each other. Continuing to circle the wagons is not good enough. What more evidence is required for there to be real change?

    Helen Kilpatrick and Franz Manderson no for more pretty talk and justifying the indefensible. The buck stops with you and your management team.

    • Anonymous says:

      The Governor is not responsible for your account, CIG is. She is there to make sure that hopefully all is transparent and done according to the required levels…and that when your own politicians bankrupt it that the UK does not have to bail you out…

      • Anonymous says:

        It’s Franz Manderson’s responsibility (not the Governor’s) to hold civil servants to account and discipline them if the situation, after due process, demands it but there is no way he can carry out that responsibility in this day and age and fire Caymanians, especially in senior positions. It just does NOT happen. And who is he going to replace them with- a foreigner? Yeah right.

      • Anonymous says:

        I am sure I read somewhere that she is responsible for RCIPS. Enough said!

  6. Anonymous says:

    Government is seriously deficient in thought leadership across the whole of government period…..

  7. Anonymous says:

    The last four words of your headline are surplus to requirements Wendy!

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