Financial and Performance Reporting – Status Update

The Auditor General, Alastair Swarbrick, made public today a report on the status of financial accountability reporting in the Cayman Islands Government as at 30 September 2013. The report is an update on previous reports issued by the Office of the Auditor General on this subject, and reports the progress on the financial statement audits up to and including the fiscal year ending 30 June 2012.

In this latest update, the Auditor General has confirmed that there continues to be progress and that the Government is moving towards more timely reporting.  The report states that all government entities submitted their 30 June 2012 financial statements to his Office by the 31 August 2012 deadline. By 30

September 2013 (fifteen months later) the audits of the financial statements for 29 (71%) out of the 41 entities have been completed. The Auditor General also reported that there are only 9 audits from 2005 through 2011 that remain to be completed by his Office, effectively reducing the backlog of audits to a point where it should not impact the ability of the Government to become current.

The Auditor General intends to report more comprehensively on the outcomes from his audits of the financial statements for the year ending 30 June 2012 in the near future.

“There continues to be progress in the timeliness of financial reporting, with increasing numbers being completed within the statutory timescales or significantly earlier than had previously been the case. However there continues to be a number of entities where challenges still exist to moving forward the timeliness of financial reporting” said Mr. Swarbrick. “My Office will continue to work with Government to address the challenges, and move forward the quality and timeliness of financial reporting to ultimately enable accountability and transparency in Government finances to be restored.”

The report is available on the Office of the Auditor General website at: www.auditorgeneral.gov.ky. More information regarding this report can be obtained by contacting Alastair Swarbrick at the Office of the Auditor General at (345) 244-3201.

The following is the word document from the Report as stated above

INTRODUCTION

1.         Timely, accurate and reliable financial information is a fundamental component in ensuring the effective governance and accountability of government and public entities. Without this information, the decision making of the Legislative Assembly, the Government and public bodies is compromised as legislators and officials cannot make effective and robust decisions regarding the allocation of resources and effectively manage the resources at their disposal. Furthermore, the Government and public bodies cannot be held accountable for how they have used public money.

2.         The purpose of this report is to provide a status update on the completion of the financial statements audits up to the fiscal year 2011/12. In the following sections I have provided separate updates on ministries and statutory authorities and government companies. It does not report on the status of the Government’s requirement to report on the Entire Public Sector (EPS).

3.         For the fiscal year ending 30 June 2012 the financial statements of 26 (63%} entities (2010/ 1:22 (52%) entities) we recompleted and signed off within 12 months of the year end i.e. by 30 June 2013. Exhibit 1shows the progress that has been made since the introduction of the PMFL in 2004/05 in the completion of audits within 12 months of the respective fiscal year ends.

4.         This exhibit demonstrates that there has been continuous improvement in the timeliness of financial reporting across the public sector and that it is continuing on a positive path.

5.         In July and August 2013,a further three sets of financial statements for 2011/12 were issued. Therefore, 29 (71%) of the 41entity financial statements for the year ending 30 June 2012 were completed as at 30 August 2013.

6.         The Public Management and Finance law requires the audits of all government entities to be completed by 31 October of each year. With respect to the completion of the audits on the financial statements for the year ending 30 June 2012 by statutory deadline of 31October 2012,18 (47%) entities (2010/11: 10 entities) out of 41managed to achieve this goal. Therefore whilst compliance with the statutory deadlines continues to improve, it remains challenging for entities to provide the information necessary to ensure their audits are completed on a timely basis.

7.         Finally for the backlog of financial statements up to and including 30 June 2011, there are now only nine audits outstanding. Seven relate to small entities, five of which pertain to the Sister Islands Affordable Housing Development Corporation.

8.         This will be my final report to the Legislative Assembly on the status of financial reporting which I have been providing to keep the Members up to date on the backlog.

9.         It is my intention to report less frequently and more comprehensively in the future on the progress in financial reporting across the individual entities, addressing the issue of quality, along with the key matters arising from the individual audits of the entities that I believe should be brought to the attention of the legislative Assembly.

10.       I would like to take this opportunity to urge all Government entities to make the completed financial reports along with my opinions public as soon as possible and to make them available on the various Government websites.

Alastair Swarbrick MA(Hons), CPFA           11 October 2013

MINISTRIES AND PORTFOLIOS

OUTSTANDING FINANCIAL STATEMENTS UP TO THE YEAR ENDING 30 JUNE 2011

11.       Two ministry and portfolio financial statements remain outstanding for the fiscal years up to and including the year ending 30 June 2011. In both instances the audits are now substantially complete and it is expected that they will be issued shortly after the date of this report. They are:

•          Portfolio of Internal and External Affairs – Year ending 30 June 2011

•          Ministry of Finance, Public Finance – Year ending 30 June 2011

STATUS OF THE AUDITS FOR THE YEAR ENDING 30 JUNE 2012

12.       Exhibit 2 provides details of the dates that the audits of each individual ministry and portfolio were completed, the opinion that was placed on the financial statements and the date the statements were tabled in the Legislative Assembly if that has occurred. In cases where the audit it is not completed the status of the audit is provided. Definitions of the audit opinions and audit status are included in Appendix A.

Exhibit 2 & 2A: Ministry and portfolios audit status for the year ending 30 June 2012 – see attached

STATUTORY AUTHORITIES AND GOVERNMENT COMPANIES

OUTSTANDING FINANCIAL STATEMENTS UP TO THE YEAR ENDING 30 JUNE  2011

13.       The following SAGC financial statements remain outstanding for the fiscal years up to and including the year ending 30 June 2011:

•          Cayman National Cultural Foundation – Year ending 30 June 2011

•          Children & Youth Services Foundation – Year ending 30 June 2011

•          Sister Islands Affordable Housing Development Corporation- Years ending 30 June 2007,30 June

2008, 30 June 2009, 30 June 2010 and 30 June 2011

STATUS OF THE SAG C AUDITS FOR THE YEAR ENDING 30  JUNE  2012

14.       Exhibit 3 provides details of the dates that the audits of each individual SAGC were completed, the opinion that was placed on the financial statements and the date the statements were tabled in the Legislative Assembly if that has occurred. In cases where the audit it is not completed the status of the audit is provided. Definitions of the audit opinions and audit status are included in Appendix A.

Exhibit 3 & 3A: SAGCs audit status for the year ending 30 June 2012 – see attachments

APPENDIX A-DEFINITIONS

The opinions that I can render on an entity’s financial statements and their definitions are as follows:

•          Unqualified- The information contained within the financial statements can be relied upon;

•          Qualified- A qualified opinion means that a portion of the financial statements cannot be relied upon,but that the rest of the statements can be relied upon by the reader;

•          Adverse- There are such significant deficiencies with the information in the financial statements they should be considered unreliable for the user and the information contained therein is not trustworthy; and

•          Disclaimer- I was not provided with sufficient information to conduct an audit.

The definitions of the audit status are as follows:

•          Finalized – Financial statements completed/draft opinion provided (awaiting approval by entity)

•          Substantially complete – Financial statements submitted/audit fieldwork complete

•          In progress – Financial statements submitted/audit in progress

•          Not commenced – Financial statements submitted/audit not started due to clearance of backlog