CIG still struggling to fully account for public cash

| 14/12/2021 | 46 Comments

(CNS): The audits of the consolidated accounts for the Entire Public Sector (EPS) for both 2019 and 2020 are ongoing as a result of a catalogue of issues that still prevent government’s financial officers from properly accounting for the public cash it collects. In her review of the 2020 accounts and the general state of government’s books, Auditor General Sue Winspear said there had been significant improvements in almost all aspects of public finance reporting.

But she said public sector management needs to focus on addressing the problems surrounding the EPS to give the public a meaningful and timely account of what has happened to their money and to help shape better public policy.

“While the story is one of progress regarding financial reporting, specifically at the individual public body level, the focus now needs to be given to the EPS account,” Winspear said in her latest year-end report, Financial Reporting of the Cayman Islands Government: General Report 31 December 2020. “I recommend that focus is now given to getting these audits up to date and addressing the issues that have led to the adverse audit opinion being given.”

The EPS account is the consolidation of the all ministries, portfolios and offices plus the 42 statutory authorities and government companies. It is also the only place where the executive transactions and transfer payments, coercive revenues, executive assets, as well as governments liabilities are documented all in one place for the public to see.

But for both the 2018 financial year and the 2016-17 financial period, the EPS account of the government received an adverse opinion due to numerous issues, and the 2019 and 2020 accounts have still not been finished, even as the 2021 year draws to a close.

There are around eleven different issues identified by the Office of the Auditor General in the report, ranging from poor controls and insufficient audit evidence for coercive revenue to the understatement of personnel costs relating to post-retirement healthcare and pension liabilities.

“The Government needs to focus on addressing these issues that are resulting in the adverse audit opinion on the EPS account. The 2019 and 2020 EPS audits are in progress but there are many issues needing resolution to move to a qualified and then unqualified audit opinion. This is possible but it will take time and concerted effort,” Winspear added.

While she stressed several times that individual reports from public authorities have improved massively, Winspear pointed out that government is still failing to get these reports out into the public domain on time and that the tardiness of reports undermines their purpose.

“In addition to having good quality financial information, it must be accessible to key stakeholders and the general public in a timely manner,” Winspear said. “The availability of financial information is crucial as it should be able to be used for accountability and decision-making purposes. The usefulness of financial statements is impaired if the information is not made available to users within a reasonable time.”

However, very few reports wind up in the public domain on time. More than half of the reports that should be published by government entities each year have still not been tabled in Parliament for last year and ten are still outstanding from 2019.

“There continue to be delays in tabling the financial statements and the associated annual reports in the House of Parliament, which is the pivotal step that completes the accountability chain,” the auditor general added.

In her review of what government needs to do to make strides to properly fix the public accounts she makes some very specific recommendations, such as the need to bring the Sister Islands Affordable Housing Development Corporation (SIHADC) under another entity, since it did not build or sell any houses in 2019 or 2020.

“I question whether maintaining this operation as a separate entity is value for money,” she said. But she also noted more broad and fundamental improvements that still need to be made, such as performance information.

“Greater focus must be placed on the volume and quality of service performance information,” Winspear said. “At present, due to the suspended requirement of the Public Management and Finance Act for output reporting from core government, there is no robust assessment of service performance and whether, on a global basis, resources have been used effectively and efficiently, or if expected outcomes have been achieved.”

Nonetheless, the improvements are leading to more information getting into the public domain. In some cases this has revealed the many problems faced by certain public companies and authorities and a “considerable proportion of them continue to show signs of being under financial strain”, Winspear noted.

The auditor general warns that entities like the Cayman Islands Development Bank and the Cayman Turtle Centre (CTC) are entirely dependent on government cash injections and many entities are consistently recording year on year deficits, now exacerbated by the COVID pandemic.

“HSA, PACI, and the National Housing Development Trust all consistently recorded year-on-year deficits,” she said, noting that “this will likely continue to be the case in most instances without any changes in operations, business restructuring, or ongoing and further government support or changes in government policy”.

In 2019 she had warned that the CTC was heavily dependent upon the continued financial support of central government and the pandemic has increased that dependency. Although the audit for 2020 is still ongoing, the situation raises the question about its ability to continue as a going concern.

However, during Finance Committee last week, the government committed to financing the failing tourism attraction, not least because of the jobs it provides, its cultural role in breeding meat and its conservation work.

Meanwhile, although the development bank general manager also reported to Finance Committee that there were significant improvements this year, last year’s books show it relies heavily on support from central government and in 2019 the bank could not meet its obligations without public cash.

“As of 31 December 2020, CIDB’s impaired loans amounted to $7.4 million, representing 36% of its overall loan portfolio, excluding allowances for credit losses. In addition, CIDB received $4.5 million in contributed capital from the Cayman Islands Government during the year ended 31 December 2020,” the report states.

Winspear also turns her attention to the matter of ethics and recommended that the Standards in Public Life Act be amended from its 2014 version to make the annual reporting date 31 December.

“If the annual reporting date were 31 December, the final day of the financial year, rather than 30 June it would avoid unnecessary work to provide year end assurances,” she said.

See the full report in the CNS Library.


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Category: Government Finance, Government oversight, Politics

Comments (46)

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  1. Unhappy Caymanian says:

    No surprise

    It’s not first world

    The problem is that if you accept tardiness you potentially accept unaccountability, encourage dodging of responsibility and facilitate the potential for corruption and deceit.

    In 2021 it’s unacceptable.

    it’s why countries like the UK, Australia, New Zealand etc. have The National Audit Office (or equivalent), a body with teeth to which Govt. has to account by law.

    The problem here is that there are too many people with too much to hide and who don’t care about Cayman or Caymanians.

    Crabs in a barrel.

    We elected them over a number of years.

    • Anonymous says:

      Governments don’t follow the law, they omit themselves from the law.

      Cough cough US war crimes against humanity

  2. Anonymous says:

    Anonymous says:
    15/12/2021 at 9:51 am

    Please: the A.G. Is the Attorney General.

    I do hope this was not a MP.

  3. Say it like it is. says:

    If ever we want accountability in the Civil Service, Franz Manderson has to go, he alone carries responsibility for this disastrous state of affairs.

  4. Anonymous says:

    Why not promote the AG to Premier….

  5. Anon says:

    Incompetence and corruption at every level. World class my ass.

  6. Anonymous says:

    Waste, waste, more waste….and corruption! Many public service workers doesn’t even realize that something as simple as using company vehicles (gas) without proper authorization or justification is both waste & corruption!! That’s at the minor end of the scale! Times that abuse by 100 in the real public service!

    If Sue Winspear were to offer a course in PROPER public finances management, Franz Manderson, most of the Chief Officers and the majority of ranks thereon down would be like a deer in the headlights!! Duh???

  7. Anonymous says:

    The worse imaginable government

    • Truth says:

      Let’s put names to the blame people: PPM. Ona got it, like it or not it’s the PPM government who is responsible for these Audit whatever you want to call them. It now behooves PACT to clean the mes# up and swiftly. Include a big firing stick in the mix Mr. Saunders, enough of this BS.

    • Anonymous says:

      Oh, we’ve had worse…that’s how we got here.

  8. Anonymous says:

    Franz and the Fools 😂😂😂

  9. Anonymous says:

    Did you even read the article, or the AG’s report? While concerning, this has nothing to do with corruption.

    • Neverwannabeacivilservant says:

      4.01pm Don’t you wonder why Govt cannot account for how it spent all the public’s hundreds pf millions of dollars in revenue. This is almost certainly more than incompetence and surely involves some corruption as well.

  10. Anonymous says:

    Why have the CIDB at all when you just write-off the loans? Save yourself the cost of running the bank and just give out grants. Or is this just another CIG make work project?

  11. Anonymous says:

    I saw a couple new Mercedes being driven by Govt officials. That might help balance the books

  12. Anonymous says:

    The may seem like a minor point CNS, but to us accountants (and anyone interested in the accurate and transparent reporting of financial information) your headline is misleading.

    This issue is about presenting a full and fair view of the CIG’s financial position. It is NOT about cash. CIG has many assets and liabilities which (at the moment) are no where near being realized in cash.

    I think the AG’s report is fair, and your article accurately presents her finding. But your headline misses the mark.

    • Anonymous says:

      An accountant in the Cayman Islands preaching about openness and transparency.

      What a load of BS.

      • Anonymous says:

        Yes a very uneducated comment, you shouldn’t have wasted your breath.

      • Chris Johnson says:

        Mrs Winspear is the Auditor General a qualified accountant with an abundance of experience which is outlined in her CV. We are very lucky to have her working for us in Cayman. Above all she has the one ingredient that defines her role which is that of Professional Skepticism. Underestimate this lady at your peril!

        • Anonymous says:

          Please Mr. Johnson be careful how you praise the Auditor General openly! Some of the newly elected buffoons will get jealous and take a turn on her. Next thing she ends up like the UCCI President. Misplaced competition is alive and festering!!

          • Anonymous says:

            Don’t forget how Dr. Lee is being disrespected as well. This dear doctor is being mistreated just because he has been trying to help the public. During the pandemic. This looks like misplaced competition as well. I wonder if there is anyone locally to fill the position ? God bless you Dr. Lee- some of us appreciate all you did.

          • Anonymous says:

            2:42 pm: have no fear—Comparing the AG and the departed UCCI president is a false analogy. I know both and they behave quite differently. While the referenced UCCI president was well intentioned and worked hard—give her her due—she made many missteps.

            Among those, neglecting the faculty side and recruiting a large crew of persons to fill high-paying newly created and/or reconceptualised administrative posts. She forgot that the faculty is the heart of the university.

            Instead, she met needs for increased numbers on the faculty side by recruiting more adjuncts than ever in the history of the university. Why? Because they are paid a pittance: $45 per teaching hour, with no benefits. So if they teach a university course of 3 hours per week they are paid $135 per week—believe it or not. That does not nearly cover preparation, marking, office hours, emailing and telephoning students. (By the way, adjuncts used to be paid $50 per hour more than 10 years ago; that was reduced at that time as a cost-saving measure and has never even been returned to what it used to be.)

            Who suffers? Inevitably the students.

            Another cost-cutting measure was winnowing out heads of departments and appointing super heads—deans. What happened? The deans were stretched to the max and a few have simply crashed under the weight.

            Then there is the level of tension that was widely generated by the UCCI president. An objective measure of that has been the departure of large numbers of staff—estimated by informed sources at some 30 over her tenure. This included qualified and well experienced staff, such as the much admired Caymanian former registrar. And many (possibly all of the replacements?) were hired at increased salary-starting points).

            Much of this was detailed in the Marl Road article that appeared to be a synopsis of an HR audit commissioned by the new board.

            So please don’t put the two —the AG and the departed UCCI president—in the same class.

          • Chris Johnson says:

            I would rather put my name to an article rather than be anonymous. I have known the current auditor general, and many others for over 30 years and in fact my previous firm did work for them. As a former auditor I can tell you we have been fortunate in having their talent and the talent of the department as a whole.

    • Anonymous says:

      @1:01 pm: I agree. When I saw the headline I though that money was missing. Then I read down into the study and I see: “Winspear pointed out that government is still failing to get these reports out into the public domain on time and that the tardiness of reports undermines their purpose.”

      So I don’t think it is a small point at all. It is important to the work that Winspear does that the public fully understands what her findings were.

  13. Anonymous says:

    Any government entity that is unable or unwilling to produce accurate and timely financial statements should not be paying salaries to their executives and those executives should not be entitled to any benefits.

    The executives within the impacted entities should be given three month to get their act together after which their employment should be terminated.

    • Anonymous says:

      It is always the case with governments and civil service.
      It’s not their money.
      No one is accountable.
      No consequences .
      No one gives a damn and business as usual.
      Thank you res Winspear for trying, but don’t hold your breath.

    • Anonymous says:

      “terminated” or being fired doesnt exist in gov workers contracts, dont you know?

      They are more than happy to keep the incompetent bobos – after all, who else would hire them?

      • Anonymous says:

        14 @ 5:00pm – I’m ashamed for many of my people of the past two gens to be seen like that, but just as proud of the hardworking heritage of the previous generations. No question!

        Sadly, the only people who allowed the latter truth to become a myth and what you said, to become the present “truth”, are us Caymanians who voted the train off the track back in the ’70’s in favour of the real estate pirate selling the white gold beach and the “Boom” . Boom all right, we really blew up! For who?

        But you hit on something. “Government” and “governance”, over the past 40 years have, by-and-large, fostered (festered?) the reasons for and the incompetence itself, a sub-standard public education – sub-standard for Cayman’s growing needs since the late-1970s! The foundation of any society is its education system and well educated people can govern themselves properly. Simple!

        So I guess it falls on Government to employ a lot of elsewhere-unemployables until they get serious about delivering and instituting a suitable public education system in Cayman…..2 more gens before it’s visible!

        So I guess there’ll be no need to expect further improvements to the world-class CS anytime soon.

      • Anonymous says:

        14 @ 5:00pm – I should’ve said “make that truth become a memory”. It’s definitely not a myth!

      • Anonymous says:

        However full pay while on furlough or under inverse for a few years does.

  14. Anonymous says:

    The most sensible suggestion is the last one. Using 6/30 as the fiscal year end only serves to obscure the facts.

  15. Anonymous says:

    It would be shocking if it wasn’t totally expected.

  16. Anonymous says:

    How many times ought the public be expected to fully-fund (again) the completion of JGHS? We need tougher Standards in Public Life Law and enforcement resources to combat decades of ritualised institutional grift, kickbacks, and cronyism.

  17. Anonymous says:

    #worldclass
    #leggewasright

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