Audits of government bodies outstanding for several years Loop Cayman Islands

The content originally appeared on: News Americas Now

Black Immigrant Daily News

The content originally appeared on: Cayman Compass

According to the Standing Public Accounts Committee public hearing on November 24, 2022, the audit of seven public bodies were outstanding or backlogged as of October 2022, the date of the Auditor General’s report (entitled “Financial Reporting of the Cayman Islands Government – General Report 31 December 2021”).

Among the entities that should have had their audits completed under the previous administration was the Ministry of Health and Wellness, which Roy McTaggart noted: “has been backlogged since 2016-2017.”

For members of the public to understand the significance of this backlog, McTaggart asked the Financial Secretary, Kenneth Jefferson, to explain the associated risks.

Responding to the question, the Financial Secretary said:

The backlog of seven, I think, has become five.

The fact that, you know, there are entities within the entire public sector like the Ministry of Health, like the Airports Authority, like the Turtle Centre, etcetera, who will have significant expenses, will have significant assets, will have significant liabilities… if the audits for those are incomplete, then, you know, the Audit office is left with a question mark as to whether when you put all of the entities together, whether there is a misstatement, an understatement of expenses… differences with assets… So, it casts doubt.

The risk, to answer your question…. Is that it casts doubt about the entire public sector and the fairness of the financial statements for the entire public sector.

Those are the implications of audits being outstanding for quite some period of time.

Expanding on these risks, the Financial Secretary continued: “Another obvious one is well is that, you know, there’s the increased risk of fraud as well if, you know, many years elapsed that the audits are not complete.”

Reacting to how the public might view this scenario, the Financial Secretary said:

Obviously, the public has an interest in, or should have an interest in, what’s happening with how their dollars is spent, etc.

So, the public doesn’t know what is going on in terms of the financial affairs of these entities that are listed here.

So, the public is left deficient as well.

With respect to how the current administration is aiming to reassure the public regarding the backlog and lack of audited information for the relevant public bodies, Matthew Tiibbetts, the Accountant General for the government, explained:

Something we’re doing in the Ministry of Finance is we’re getting a service level agreement with internal audit to look back at all payments and we’re going to expand it to payroll as well for any transactions that have transpired in the last five years and we want to particularly look at smaller amounts as well as large amounts, just to do an extra check, just to make sure that we can have a bit more confidence even though the audits haven’t been finalised. But we’ll be doing a bit extra checking particularly because these audits have not been fiinalised.

Tibbetts continued: “So, we want to have that extra level of confidence. We want the public to know that we’re actually doing things to ensure that we do have measures in place to try to mitigate any risk that’s associated with these.”

As to how the Auditor General is currently prioritizing the completion of the backlogged and outstanding audits, the Auditor General noted that there is “a plan to address the backlog,” emphasizing that, typically, when the Office of Auditor General gets into its busy season, it will “park the backlogged audits.”

Notwithstanding that backlogged audits would usually get parked, the Auditor General noted that her office has “made some changes within the office where” they “are going to put some focused resource on the backlog to try and clear that as quickly as possible.”

She also noted that “There is a trade-off between timeliness and audit opinion” and while her office could give disclaimed audit opinions on the Ministry of Health and get its audited financial statements up to date immediately, her office has “taken the view that it’s better to spend time and get the issues resolved and try and get to a clean or at least a qualified opinion.”

The outcome of all of the foregoing is that while audited accounts remain outstanding or backlogged for several public bodies, members of the public are likely to continue to cast some doubt about the financial information contained in the consolidated financial statements for the Entire Public Sector, which includes the consolidation of the ministries, portfolios, statutory authorities and government companies.