CIG grappling with $ 1.1 billion EPS report


Sue Winspear

(CNS): The Cayman Islands government collected nearly $ 1.14 billion in revenue in 2019, but still struggles to properly account for how it raised and spent the large amount of taxpayer dollars. In her latest report, Auditor General Sue Winspear said that with respect to the Consolidated Financial Statements of the Whole Public Sector (EPS), the IGC was unable to obtain an audit opinion. clear and still working on the 2018 and 2019 final reports. Winspear found that “there is still a long way to go” to reach an unqualified audit opinion on BPA’s financial statements.

These statements cover all central government entities as well as statutory authorities and state-owned enterprises, but the government has only started producing these critical reports in recent years after the 2005 transition to international accrual accounting standards.

The report of the Office of the Auditor General, “Improving Financial Accountability and Transparency – Financial Management and Reporting“, Shows all executive transactions, such as coercive income, transfer payments and pensions, and many assets and debts, which are not reported in the individual financial statements.

“BPA’s financial statements are therefore fundamental for the presentation of financial information of all public expenditure against the appropriations authorized by Parliament,” Winspear said in his report, adding that the quality of BPA’s statements s ‘had improved in recent years but they continued to receive an unfavorable opinion. . “Much remains to be done to get the audit opinion qualified and then unqualified, as a significant number of gaps remain.”

She said many grassroots government entities still have poor internal controls over their management of coercive revenue, which is money collected from the public and from companies paying fees.

In 2015, the audit office advised that the government develop and implement appropriate controls to ensure that all revenue owed to it is collected and that consultants have been engaged to provide advice on how to improve internal controls and revenue accounting . As a result, guidelines were developed several years later in 2018. While Winspear said it was a “welcome development,” she said it was still “too early to tell what a difference. these new controls would help, because the new provisions would not have been in place until the 2020 financial year ”.

BPA’s financial statements do not include full liability for pensions and health care, which deviates from international standards and requirements. “It is not clear how the government will be able to show full financial position while continuing to exclude these liabilities from its financial statements,” Ms. Winspear said in her latest report.

Another problem with these consolidated accounts is that government budgeting and accounting for manager and entity transactions must be reported separately, making them unnecessarily complex and reducing transparency.

“It is important to have clear and timely financial reports on the actual amounts of executive income and expenditure, including comparisons with the budget. It is also important that the reported financial information show the total cost of administering and delivering the public services, rather than reporting them separately in the financial statements of the individual entity and the BPA, ”the auditor said. , as she again called for changes in budgeting and financial reporting. framework to remove this requirement.

Although the government has accepted this recommendation, it is not expected that the change will be implemented for two years.

Winspear noted that governments may take time to fully prepare their statements in accordance with accounting standards and a standard that satisfies their auditors, as she highlighted the difficulties 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 that it will take time for the government to get a “clear” audit opinion on its financial statements from the BPA. But the problem for the CIG is that it doesn’t have a plan to do its own audit.

Winspear also discovered a number of other major issues that still weigh on government accounts, such as lack of transparency and the inability to reflect the performance of government entities against budget. Nonetheless, the government’s response to the report from the political and administrative branches was full of praise for the Ministry of Finance.

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 ignoring the remaining issues identified by the OAG in this report, the second in a series of three on the state of government accounts and how they are presented.

While admitting that only five of the OAG’s recommendations have been fully implemented, Saunders and Manderson noted the Auditor General’s recognition that, over the past decade, the quality of financial reporting has significantly improved, resulting 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 cornerstones of good governance, and the latest OAG report completes the real picture of effective government management and reporting,” said Mr. Saunders. However, he admitted there was room for improvement, which the government takes seriously. “This includes the tabling of all annual reports to Parliament,” he added.

“With my active participation in the Public Accounts Committee’s review of government financial management and its reports throughout my career in Parliament, I am keenly aware of the need for constant improvement and improvement. ensure that the principles of responsible financial management are embedded in the work of the current PACT government, ”Saunders said in the government’s response to this report.

Deputy Governor Franz Manderson said the AOG report offered opportunities to “continue to improve as we move forward on our journey into world-class public service,” while welcoming the comments. positive on the state of management and reporting within the core civil service. He said this “reflects 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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