More public sector financial statements have been turned in recently, but the Cayman Islands auditor general’s latest report paints a rather bleak picture nonetheless.
A process first started by former Auditor General Dan Duguay – that of updating and finalizing financial statements for 40-plus government entities that in some cases were more than five years behind – has largely been completed by the current AG’s office.
Auditor General Alastair Swarbrick says the financial records being presented to his office, in some cases, still leave much to be desired.
However, Swarbrick believes the message of accountability has finally gotten through to many civil service entities.
“I’ve got over my ‘surely not’ moments. The first year and half, I suppose – it was different than I’m used to,” he says. “Ultimately, my role here is to support the LA and to provide accountability to the citizens of the Cayman Islands in terms of how their money is being used.”
Like every government department over the past three years, the auditor general’s office has sustained round after round of budget cuts and Swarbrick says they are still missing “one or two” positions. He admits he hasn’t done quite as many “value for money” audits as he would have liked, largely due to the demands of getting government caught up on its annual financial statements. His office has also raised ongoing concerns about the expertise and leadership regarding financial matters within the Civil Service. Those concerns remain today.
“Poor implementation, leadership and management have been contributors to the absence of accountability over the last nine years,” he says.
But not all the blame lies with the personnel. Swarbrick says, to a certain extent, the financial reporting system used by the government has failed the Cayman Islands. “The Public Management and Finance Law is too complex for the Cayman Islands Government to deliver effective accountability and transparency for the use of resources.”
Swarbrick’s comments come as part of a 34-page report recommending an entire restructuring of the government’s financial management system, which include scrapping many of the requirements of the country’s Public Management and Finance Law.
“The audited consolidated position for the whole government has never been publicly reported in over eight years, leaving legislators and citizens with no reliable information on how government has generated and used significant public resources,” Swarbrick notes in his report.
Because of this, the overarching objectives of the Public Management and Finance Law – essentially credible records of government stating what it does with the public’s money – were never achieved “in any meaningful way”. “At present it is my view that there is a significant risk that the government will ever complete this journey,” Swarbrick says.
One of the most significant gaps contained in government financial reporting was identified in the ‘executive transactions’ area. Those transactions, which are direct expenditures by Cabinet, are only reported through consolidated financial statements for the government’s entire public sector. However, those entire public sector reports have never been done since the advent of the Public Management and Finance Law in 2004.
“Therefore, there has never been any accountability for these transactions and balances since the introduction of the [law],” Swarbrick says. “For over eight years, government has not provided any audited information to the Legislature or the public relating to the actions taken and spending of public funds by [Cabinet].”
Executive transactions include a diverse collection of programmes including government scholarships, poor relief payments and nation building fund payments, among others.
The Scottish-born auditor, who has now been in the position for three years, says he’s still surprised to a certain extent at how politicised the process of issuing audit reports through the Legislative Assembly’s Public Accounts Committee can become in the Cayman Islands.
“It’s a Westminster-style democracy. The nature of it is fairly rough-and-tumble,” he says. “It’s slightly more politicised here, which makes it a challenge.”
Although, Swarbrick agrees, the nature of audit work doesn’t necessarily lend itself to everyone liking you all the time.
“We report what we find, without fear nor favour, but it’s about trying to move things forward and improve things at the end of the day,” he says. “It’s very easy to blame people and use [that] as a stick to beat people with. It’s easier to blame than to solve. And if you criticise, people are going to react negatively to that. It’s how they react negatively sometimes that is a bit surprising, in terms of inappropriate reactions.”
Swarbrick did take some criticism from a round of public reports recently released when members of the Legislative Assembly said he didn’t present them to house members prior to holding a press conference.
He denies it and says he handed all three reports over to the assembly speaker and clerk on 14 June, more than a week before the press conference was held.
Among other things, allegations of elected ministers and board members fiddling with the appointment of employees and the award of bank loans were reported by Swarbrick’s office.
As part of a larger review of perceived problems within public sector statutory authorities and government-owned companies, Swarbrick identified a number of instances where politically-appointed boards of directors overstepped their bounds or government ministers engaged in questionable activities.
“We found examples where the boards are getting involved in the day-to-day operations of the entities, rather than letting the executive management run the business for which they are remunerated,” Swarbrick states in the report. “I also have significant concerns about how boards are appointed and members are chosen for various roles that they are required to perform.”
Swarbrick says he has tried to “strike a balance” when it comes to communicating his office’s sometimes negative messages about the public sector to Cayman’s media.
“I would never say that we’re media darlings,” he says. “We engage with the media in an appropriate and effective manner. We have to get our message out….to hold government to account ultimately. One of the most effective ways to do that is to communicate through the media.”
Although it is an important part of his job, Swarbrick says sitting under the bright lights of press conferences isn’t his favourite thing to do. Part of the problem seems to be that the media, seemingly, has a mind of its own.
“I don’t particularly enjoy it that much,” he says. “You can create a story from a report in a number of different ways, so you try to manage what you think the message should be and it’s not always going to happen as you would expect it to happen.”
Also, Cayman’s close-knit society leads to the auditor general’s public reports being given a bit more scrutiny, he says.
“There’s just more interest…in what the reports of this office do. I’m not saying there isn’t interest in Scotland, but it’s not usually front page of the news. The profile here is higher, I think it is a function of the smaller society…it is a bit of the fishbowl, that brings additional pressures.”