Cayman Islands Auditor General Sue Winspear, has reviewed the three aviation bodies, Cayman Airways, Ltd., Cayman Islands Airport Authority and the Civil Aviation Authority of the Cayman Islands. She found a number of the issues identified in a December 2013 report remained, although some actions have now been taken.

“We therefore identified a number of recommendations for improvement. Some of these need to be taken by the organisations themselves and others need to be taken by Government,”Winspear said.

The following is the Summary from the Auditor Generals Report “Governance in aviation bodies – Summary of key findings”:

Cabinet needs to ensure proper rotation of board members – Each body is governed by separate legislation that sets out the requirement for boards of directors, how they should be appointed and governance arrangements that should be in place. None of the legislation makes specific reference to the need for rotation of board members. Proper and planned rotation of board members is important as it allows for fresh perspective and challenge. It needs to be planned well as changing too many members at the same time could result in a significant loss of expertise and corporate memory. To allow sufficient rotation to happen there needs to be a strong and wide pool of potential board members.
Boards need to provide a strategic focus – Boards should focus on the organisation’s purpose and outcomes for citizens and services users. Each body has a clear purpose, which is set out in legislation. However, board members did not have a consistent understanding of the purpose and, at the time of our audit, only one of the bodies had developed a strategic plan.
Boards need to discuss and approve important documents – SAGCs are required to have Ownership Agreements with the Government and prepare Annual Reports. These are key strategic documents for boards as they set out what the entities are expected to achieve and summarise their performance and achievements. We found that not all boards were discussing or approving these documents before they were submitted to government.
Board members need to be clear about their roles and responsibilities – To be effective, board members and staff need to be clear about their roles and responsibilities. We found that not all board members were clear about their roles and responsibilities. None of the bodies had a written description that clearly articulated what they expected from board members. Relevant legislation sets out the role of the Chief Executive Officers (CEOs). However, we identified instances where the same legislation also suggested that boards should be involved in determining the organisational structure and approving remuneration and terms and conditions for employees. These are operational matters that should be the responsibility for the CEO. There should be a clear distinction between the roles and responsibilities of boards and CEOs to ensure strong governance. It is difficult for a board to hold the CEO to account if they have been involved in operational decisions.

Governance in aviation bodies
KEY FINDINGS
Boards need to review CEO job descriptions – Each of the CEOs had job descriptions. These were generally clear and comprehensive but had not been regularly reviewed to ensure that they remained fit for purpose.
Bodies need to have clear processes for transparent decision making – Good governance expects that boards make informed and transparent decisions that are free from any conflicts of interest. None of the bodies had policies in place that set out the approvals process for decision making e.g. which decisions had been delegated to management or were reserved for the board. There is a risk that boards may focus on the wrong issues i.e. they are not making decisions on issues that they should be or are making operational decisions that should be responsibility of the CEO and senior management. We also found that supporting papers and reports for board decisions were not always retained. It is important that evidence is retained to demonstrate that informed and transparent decision making took place.
Cabinet needs to consider the skills and experience needed by bodies when appointing board members – The Cabinet is responsible for appointing board members for each of the bodies. We found that board members had been appointed without consulting with the board to discuss any specific skills that may be required.
Board members need better training – New board members were provided with orientation training and some had attended workshops. These are positive steps. However, training could be strengthened to ensure that it covers roles and responsibilities and is provided on a regular basis to ensure that skills and knowledge are current and cover specific subjects as necessary.
Bodies need to improve their engagement with stakeholders – Stakeholder engagement is essential for the success of any organisation. Bodies had clear and well established relationships with the Government but not all boards were actively or routinely engaging with other stakeholders.
Overall, we concluded that a number of the issues that we identified in our original report on governance of the SAGCs in December 2013 remained. As a result, we identified a number of recommendations for the SAGCs and Cayman Islands Government.
Since our audits were completed, all three bodies have taken actions and plan to take further action to improve their governance arrangements. We are pleased with the progress made and that further actions are planned during 2017.
In response to our original report, the Government drafted legislation to strengthen governance in the SAGCs in the form of the Public Authorities Law 2017. This legislation addresses some of the recommendations that we would have made to Government in this report relating to:

CONCLUSION
Governance in aviation bodies
• Ensuring adequate and proper rotation of board members to provide both consistency and challenge.
• Being clear about the roles and responsibilities of board members; and ensuring there is a clear distinction between the strategic role of the board versus the operational role of the Chief Executive Officer and senior management.
• Identifying the skills and experience that every board needs and considering these when making appointments. The Public Authorities Law 2017 specifically mentions corporate governance; strategic and financial management; and the scope of business, outputs and operations of the public authority.
• Ensuring that adequate induction training is provided to all new board members. The Legislative Assembly passed the Public Authorities Law 2017 in March 2017. At the time of preparing
this report, the Law has not been brought in to force by Cabinet.
Appendices 2 to 4 summarise the recommendations made to each entity and the actions taken and planned as at May 2017. We have not audited the effectiveness of the new arrangements that have been put in place.
In addition to the recommendations made to individual entities we identified a number of recommendations for government. As outlined above, some of these have been addressed through the Public Authorities Law 2017 that was passed by the Legislative Assembly in March 2017 but has not yet come in to force. In making these recommendations, we have assumed that the new Law will be brought in to force soon and all of its provisions enforced. In addition to the new Law, we have identified a number of additional recommendations for government that we believe would further strengthen governance in SAGCs.
The Cayman Islands Government should, in addition to enforcing the Public Authorities Law 2017:
RECOMMENDATIONS
• Develop plans to widen the pool of potential board members for now and the future, taking in to account: needs, including any specialist expertise that may be needed; a diverse range of views and backgrounds; and the population of Cayman Islands.
• In making appointments to boards, consult with the SAGC to establish whether any specific skills or expertise are required in the period ahead.
• Support SAGCs by providing induction training to new board members to ensure that consistent messages are provided on the roles and responsibilities of board members.
• Provide ongoing training on national and international developments and good practice that all board members should be aware of.
• Provide networking opportunities for board members from across public authorities to share their experiences and learn from each other.

Governance in aviation bodies

Ensure that Ministries and Portfolios lay all annual accounts and reports in the Legislative Assembly, including those of SAGCs, within the statutory timescales.

You can download a copy of the full reports at: www.auditorgeneral.gov.ky

Ezzard Miller, Chair of the Public Accounts Committee, commented:

“My committee members and I welcome the Auditor General’s findings. We are pleased that the introduction of the new Public Authorities Law 2017 goes some way to addressing the recommendations that the Auditor General would have repeated. However, the new legislation was only brought in to force recently and it is too early to say how well it will improve governance in Statutory Authority and Government Companies and the new Law doesn’t cover all the concerns raised.”
“As a Committee we are pleased that the SAGCs have taken action to implement some of the recommendations made by the Auditor General. However, we note that a number of actions remain outstanding and are planned for the remainder of 2017. We will be interested to hear on progress with implementing these recommendations in the future.”

What is interesting is the low profile Sue Winspear is keeping compared to her two predecessors. This does not mean she has not been doing her job as is clear from her latest report.

We will wait and see what she has to say next time around and if the same action is still required. Let us hope it will be a safe landing and not a bumpy one for the three aviation bodies.