CIG struggling with EPS reporting on $1.1B
(CNS): The Cayman Islands Government collected almost CI$1.14 billion in revenue in 2019 but is still struggling to properly report how it collected and spent the significant amount of taxpayer dollars. In her latest report, Auditor General Sue Winspear said that when it comes to the Entire Public Sector (EPS) consolidated financial statements, the CIG has not been able to get a clean audit opinion and is still working on both the 2018 and 2019 final reports. Winspear found that “much more needs to be done” to reach an unqualified audit opinion for the EPS financial statements.
These statements cover all central government entities as well as statuary authorities and government companies but the government has only in very recent years begun producing these critical reports after the switch in 2005 to international accrual accounting standards.
The report from the Office of the Auditor General, “Improving Financial Accountability and Transparency – Financial Management and Reporting“, shows all the executive transactions, such as coercive revenues, transfer payments and pensions, and many assets and debts, that are not reported in individual financial statements.
“The EPS financial statements are therefore fundamental for financial reporting of entire public spending against the appropriations authorized by the Parliament,” Winspear said in her report, adding that quality of the EPS statements have improved in recent years but they continue to get an adverse opinion. “Much more needs to be done to move the audit opinion to qualified and then unqualified as a significant number of deficiencies remain.”
She said many core government entities still have poor internal controls of their management of coercive revenue, which is the money collected from the public and companies paying fees.
In 2015 the audit office recommended that government develop and implement appropriate controls to ensure that all revenues owed to it are collected and that consultants were engaged to provide advice on how internal controls and accounting for revenues could be improved. As a result, guidelines were produced several years later in 2018. While Winspear said this was a “welcome development”, she said it was still “too early to tell what difference these new controls will make, as the new arrangements would not have been in place until financial year 2020”.
The EPS financial statements do not include the full liability for pensions and healthcare, which is a departure from international standards and requirements. “It is not clear how the government will be able to show a complete financial position while it continues to exclude these liabilities from its financial statements,” Winspear stated in her latest report.
Another problem for these consolidated accounts is that government budgeting and accounting for executive and entity transactions are required to be reported separately, which makes them unnecessarily complex and reduces transparency.
“It is important that there is clear and timely financial reporting of the actual amounts of executive revenues and expenditures, including comparisons against budget. It is also important that the financial information reported shows the full cost of administering and delivering public services, rather than reporting these separately in individual entity and EPS financial statements,” the auditor said, as she again called for amendments to the budgeting and financial reporting framework to remove this requirement.
While government has accepted this recommendation, the implementation of the change is not expected for another two years.
Winspear noted that it can take time for governments to fully prepare their statements in line with accounting standards and to a standard that satisfies their auditors, as she outlined the struggles the UK government itself has had with whole-of-government consolidated financial statements. She said that preparing high-quality financial statements for the entire public sector is an evolutionary process and it will take time for the government to achieve a ‘clean’ audit opinion on its EPS financials. But the problem for the CIG is that it does not have a plan to achieve a clean audit.
Winspear also found a number of other major issues that still plague the government’s accounts, such as a lack of transparency and a failure to reflect how government entities have performed in relation to the budget. Nevertheless, the government’s response to the report from both the political and administrative branches was full of praise for the finance ministry.
Chris Saunders, the new finance minister and former member of the Public Accounts Committee, and Deputy Governor Franz Manderson both focused on Winspear’s comments about the significant improvements that have been made, while glossing over the remaining issues found by the OAG in this report, the second of a series of three on the state of government’s accounts and how they are reported.
While admitting that only five of the OAG’s recommendations have been fully implemented, Saunders and Manderson highlighted the auditor general’s acknowledgment that over the last decade the quality of financial reporting has markedly improved, which has resulted in a reduction in the number of qualified audit opinions, from 16 in 2013/14 to none in 2019.
“Strong financial management and reporting are the established cornerstones of good governance, and the latest report from the OAG rounds out the true picture behind the government’s management and reporting efficacy,” Saunders said. However, he did accept that there is room for improvement, which government is taking seriously. “This includes tabling all annual reports in Parliament,” he added.
“Coming from a background of active involvement in the Public Accounts Committee scrutiny of the government’s financial management and reporting throughout my career in Parliament, I am acutely aware of the need to consistently improve and ensure that the principles of responsible financial management are enshrined in the work of the current PACT Government,” Saunders said in the government response to this report.
Deputy Governor Franz Manderson said the AOG report provided opportunities to “continue to improve as we progress on our World Class Civil Service journey”, as he welcomed the positive comments on the state of management and reporting within core civil service. He said this was “reflective of the success of our efforts to continually improve our processes in this area”.
See the full report in the CNS Library
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Category: Government Finance, Politics
No problems CIG – blame Covid!!
Do Manderson and Saunders take us all for idiots, focusing on the “significant improvements” and mentioning the reduction in qualified opinions from 16 in 2013/14 to nil in 2019. The nil figure only relates to the statements submitted in 2019, and does not include all those that were outstanding at that time.
That was during the PPM reign…i am mighty sure that the PACT will address these issues.
Is anyone still searching for the missing billion? Or it doesn’t matter any longer?
Ir would be difficult to find. Most of it is probably in foreign bank accounts.
Which one? The one in 2007 which was 1.5 billion missing government expenses or the latest one?
This is the world class civil service led by Franz Manderson it is there for all to see in multiple auditor general reports. The time to accept that being nice and polite is not enough. Mr. Manderson and his hand picked staff are a large part of the cover ups and issues. Why was Doreen Whittaker the only CO that was fired or retired for poor management in her ministry? What about all the others that have been appointed and supported by the DG despite the evidence of mismanagement? The biggest problem in Cayman is the civil service where no one at the top is held accountable but politicians get changed out every four years. Nothing really changes. Time for the Governor to step in and understand the system is broken and there must be changes at the top including Chiefs that are protected because of relationships with the DG not because of competence or performance. The corruption in this building is disgusting the only thing worse is the cover ups.
May I suggest that Govt. stop promoting unqualified employees to their level of incompitence.
Then Bobo, we would never have Caymanians promoted. Be careful what you wish for. BTW, you spelled incompetence wrongly; just saying.
#worldclass
The number of unanswered emails to the Registry… Or any number of government offices for that matter, is pathetic.
Just blatantly ignore you hoping you will finally go away.
I’ve been kindly trying to get a response for going on 2 years. Would an angry strong email work? Nah..
I guess their MO is working!
CIMA is the same. They just do not co-operate by answering emails but they are good on fines now they have been instructed to hand them out.
Try calling HSA 😵💫
Just terminate all of the senior executives within the entities that have not provided current and accurate financial statements.
This must be the world class civil service that the DG is talking about.
The fish rots from the head…
In years gone by we had people in government who knew the work without having any degree; nowadays, we are in danger of being overrun by “educated idiots” – people with a great amount of knowledge and degrees but no understanding of how to apply the knowledge. Many of these government departments and SAGCs are headed by such people. They are clueless as to what decisions they are supposed to be making, and their mistakes cost us money.
Yeah…that’s why we’re broke….oh wait, we’re the only country in the world that isn’t.
To 4:04pm: We are not broke because of the revenue that a handful of correctly-run SAGCs pay back into the coffers of core government! If it weren’t for that, we would be scrambling. Just add up the subsidies to NAU, Turtle Centre and Cayman Airways.
Are you sure? It seems that there are too many instances where the disposal and/or theft of the cash is never known. How can that happen year after year? I don’t remember seeing where anyone had been exposed for theft…….. other than “You Know Who” …… it seems there was some hanky-panky while “socializing” in another country. I believe it was swept under the official hiding rug for politicians, never to be seen again.
Agree. Many of these educated people came here with minimum qualifications then sat at their desks getting more certificates to claim promotions but no real experience so why don’t we review how and when all the Accountants, 3-4 Deputies got their qualifications and most importantly their experience.
Another area we could revamp and replace with British accountants to clear up mess and start recruiting generational Caymanians from private sector to RUN their own country.
In the light of recent political happenings including the fisticuffs I think you have it the wrong way round. Let expats be eligible to stand.
For your edification the British accounting qualification is far more respected than that of a CPA. Do not knock it please.
Fisticuffs…?who what when where why ..etc.
CIG is an employer of last resort for people with connections. Truly a travesty.
We were worried about a 2,000 person civil service being bloated years ago. Look what we have now and I don’t think much more is being done…
To 2:20pm – you ara partly right in that many people get a position through cronyism, but most do not. The hiring process is long, cumbersome and the pay for entry and management support roles is not competitive enough to attract the qualified, self-motivated people government needs. Also, one of the main tenets of successful businesses is discouraged- working on your own initiative. It seems almost a sin to have an employee that functions without direct supervision, which many times results in stifling the employee’s self-drive.
Gov-run offices are inefficient. The employees could not give a hoot about their jobs. They have no pride in their work and the majority are an embarrassment. You see this every time you have to visit a gov entity. The lack of customer service is disgraceful and the attitudes displayed by the employees are embarrassing to me as a Caymanian. Every one of them should have to attend and pass a customer service course every 3 months. I would gladly run it for them.
We-l-l-l, that ain’t a bad idea, but every 3 months is too often. Maybe just firing the goof-offs would help.
O.M.G !!! ALL of the goof-offs?? There would only be 3 0r 4 people left.
Two questions:
1 . Does PACT know about this ?
2. Will PACT do anything about it?
I think they are using consistent incompetence to mask systematic abuses.
😅😆😇😈😊😀😁😂😃😄😄😄😄😄
• From what I have observed, there is simply a lackadaisical attitude that permeates the entire civil service. We waste too much money—from leaving lights on when rooms are not being used to printing reams of paper instead of using Dropbox, Egnyte, etc. That attitude prevails from entry-level positions right up to the Ministers. Fire people who are not efficient! Inefficiency costs money and it brings down morale, not to mention that it places government at risk of lawsuits and creates more work in the long run. In that sense, government needs to take a page from the private sector: if they are not worth their salary, pay people what they are owed and send them home.
Please keep up the good work in bringing these critical shortfalls to light. Thanks to Ms. Winspear and her team!
The way this place is ran is a mystery. It’s made up of too many lazy people and those who lack forethought. Why am I submitting the same certificates to government every damn time instead of 1 system that speaks to all government agencies.
You are so right; I can understand they are all afraid of being hacked but really, a simple documents database would suffice to simplify matters.
they are not lazy people, they are ‘yes’ people. people who ask questions are not welcome…
10:32pm: You hit that nail right on. If anyone tries to do something efficiently (read differently), they are immediately “brought to heel by a supervisor” and as we know, nothing impedes innovation like institutionalization. Everyone must be just another brick in the wall. ♪