The Auditor General has just published her annual general report on the state of financial reporting in the Cayman Islands to the end of 2023, and her words echo the same sentiments as from previous years: while many public bodies received clean audit opinions for 2023, there were still continuing concerns about the quality of financial statements from some and also non-compliance with legislation.
Auditor General, Sue Winspear, said her report showed a “mixed picture” for the 2023 financial results of public bodies.
“The Public Authorities Act requires that Statutory Authorities and Government Companies at least break-even,” she advised. “However, of the 21 SAGCs with completed audits for 2023, 12 made surpluses, two broke even and seven reported deficits. Within this, some SAGCs made significant surpluses and some made significant losses.”
Notably, the Cayman Islands Monetary Authority ended the year with a $21.7 million surplus and the Health Services Authority ended with a $82.8 million deficit.
“I also noted that the post-retirement healthcare obligations of ten SAGCs have increased significantly between 2018 and 2023, which is affecting the financial results of some SAGCs,” she stated.
She also noted that despite Ministries, Portfolios and Offices typically budgeting to break-even, their financial performance differed from that.
“For the 18 completed audits, around five broke-even, 12 made a surplus and one made a loss.” Ms. Winspear said. “Some core government entities have significant current assets, some of which relates to them holding high levels of cash. I noted that several core government entities had not repaid their surpluses to the Ministry of Finance despite this being a legal requirement.”
The report states that 39 public bodies received unqualified (clean) audit opinions on their 2023 financial statements. It also highlights some of the key matters identified during the audits of the 2023 financial statements. These include concerns about the quality of financial statements submitted for audit and non-compliance with Acts and regulations.
“So far, I have issued 39 unqualified audit opinions on public bodies’ 2023 financial statements,” Ms Winspear confirmed. “This is good but I continue to be concerned about the quality of some of the financial statements that are submitted for audit.”
She also noted a large number of adjustments with a significant value were made to the 2023 financial statements during the audits, which affected the final financial performance and position of many bodies.
“Public bodies need to do more to ensure that the financial statements submitted for audit are fully compliant with accounting standards and contain adequate disclosures. I urge public bodies to further improve their financial reporting to improve transparency and better inform decision-making,” she said.
As with previous years, Ms Winspear said she continued to be concerned about the extent of non-compliance with Acts and regulations.
“This is despite the Acts being in force for many years and reporting similar issues in previous General Reports. I noted again several instances of non-compliance with the Procurement Act and Regulations in 2018. 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 or without approved business cases,” she said.
She urged these issues be addressed to ensure that public bodies got value for money when procuring goods and services using public funds, noting that four years after Section 47 of the Public Authorities Act came into force, three SAGCs had yet to align staff remuneration and terms and conditions with the civil service.
The report states that, as at 30 September 2024, 18 audits, including the consolidated Entire Public Sector (EPS) account were outstanding. This includes seven public bodies and the consolidated financial statements of the EPS for the 2023 financial year.
“The Government needs to continue to implement corrective measures to improve the quality of the consolidated financial statements of the entire public sector. The Ministry of Finance needs to focus on this account and take corrective action to resolve all the qualification issues,” she said.
More information about the report can be obtained by contacting Sue Winspear at (345) 938-3201 or Winston Sobers, Deputy Auditor General (Financial Audit), at (345) 244-3207.
The report can be found at www.auditorgeneral.gov.ky .
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