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Government’s financial reporting needs improving

Government 30 Oct, 2023 Follow News

Government’s financial reporting needs improving

Last week the Office of the Auditor General (OAG) published its annual general report on the state of financial reporting in the Cayman Islands: ‘Financial Reporting of the Cayman Islands Government: General Report 31 December 2022’. In the report, Auditor General Sue Winspear said only 19 annual reports for the financial year 2022 had been tabled in Parliament as at 30 September 2023, less than half of the 40 completed 2022 audits that were laid in Parliament to date. She also stated that Parliament was not sitting frequently enough to facilitate the tabling of these reports.

“I strongly urge all public bodies to lay their annual reports and financial statements in Parliament on time and publish these on their websites as soon as possible. I further urge Parliament to meet more frequently so that they may table these reports,” she said.

Ms Winspear urged MPs and the public to read those reports that were available to get a fuller and deeper understanding of government business.

Adjustments needed

The report noted that 40 public bodies had received unqualified (clean) audit opinions, and seven public bodies and the consolidated Entire Public Sector (EPS) account had their 2022 audits outstanding.

Ms Winspear said although financial reporting was good, many adjustments were made to financial statements during the audits, which affected the final financial performance and position of many bodies.

“Through our audits, we also improved the disclosures made by some bodies. Together, these changes have resulted in better financial reporting to improve transparency and better inform decision-making,” she advised.

The cost of non-compliance

She went on to say she was concerned about the extent of non-compliance with Acts and regulations.

“Section 47 of the Public Authorities Act, which came into force in June 2019, aims to align in Statutory Authorities and Government Companies (SAGCs) staff remuneration and terms and conditions with the civil service. However, some SAGCs have yet to complete this alignment three years later,” she pointed out.

Even more concerning was the fact that the government had yet to estimate the full cost of harmonising all staff terms and conditions before SAGCs implement that section of the Act.

“After quantifying the potential cost impact, the government will need to decide whether to amend the Act or provide SAGCs with sufficient funding in their future budgets to pay for this,” she worried.

In addition, the report found that despite implementing the Procurement Act and Procurement Regulations in 2018, and the Central Procurement Office providing guidance and advice, many public bodies were still non-compliant.

“Some public bodies have procured goods and services without approval from the public procurement committee, while others have directly awarded contracts for procuring goods and services without approved business cases,” she explained. “These issues must be addressed to ensure that public bodies get value for money when procuring goods and services using public funds”

In addition, the AG said the government needed to continue to implement corrective measures to improve the quality of the consolidated financial statements of the entire public sector. “The Ministry of Finance needed a roadmap for moving from an adverse opinion to a qualified audit opinion in the first instance and an unqualified one in the longer term”, she said.

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