CIG FINANCIAL REPORTING IMPROVING SAYS OAG

Government's financial reporting continues to improve and the focus now needs to switch to better budget preparation.

That’s the conclusion reached by the Office of the Auditor General (OAG) in two reports reviewing the government’s financial management across 2019.

The government concurs.

The reports are titled “Financial Reporting of the Cayman Islands Government: General Report 31 December 2019” and “Improving Financial Accountability and Transparency: Budgeting”.

The first credits the government for "sustained improvement in financial reporting".

The second report focuses on improving financial accountability and transparency in the budget and makes 17 recommendations.

Auditor General, Sue Winspear says “As the public sector is not profit-driven, the budgeting process is arguably more important than the year-end financial reporting."

She said, "While it is pleasing that the timeliness and quality of financial reporting continues to improve, focus now needs to be paid to bringing about improvements to the budgeting process.”

The current budgeting process was deemed to be “overly complex and time-consuming and does not focus on matching resources to the outcomes Government wants to achieve.”

“I believe that ‘less is more’, and producing 2,700 pages of budget documents actually reduces transparency and understanding,” the Auditor General concludes.

While the recommendations are aimed at Finance officials, Auditor General Winspear notes that two of the recommendations will need political buy-in, noting that “historically, supplementary budget approvals running to millions of dollars have often been approved by the Legislative Assembly after the budget year in question has ended.”

“I strongly urge officials and MPs to do this in a more timely way and improve accountability to the people as a consequence.”

The Auditor General said that “this will be helped if the Parliament shifted to more frequent and regular meetings as it establishes itself as a new, independent entity.”

For its part, the government said it welcomes the recommendations in both reports by the OAG.

In response to the conclusions reached by the Auditor General, Hon. Deputy Governor, Franz Manderson pledges to "continue to make improvements with regards to transparency and accountability in our use of public funds and, particularly, to make this information more accessible to the public while we continue to strive to improve the efficiency and effectiveness of our overall processes."

“In Government," he said, "we take our responsibilities as custodians of the public purse very seriously; where we have been tasked with making improvements in recent years, we have strived to deliver those efficiently and strategically.”

Mr Manderson said he was “pleased to see that the results of our efforts to improve our financial reporting have been recognized by the OAG.”

The government said it stands committed to working with the OAG on all matters, including improving its financial reporting, to promote accountability and transparency in its stewardship of public funds.

It points to a section of the OAG’s report which says the quality of financial reporting has improved significantly over recent years, culminating in all public bodies being issued with clean audit opinions so far.

Additionally, it also refers to another observation by the OAG noting “a marked increase in the number of entities preparing and tabling annual reports (as opposed to financial statements), which improves the standard of financial accountability and satisfies a key condition of the Public Management and Finance Law.”

The government says it “stands committed to continuing to make such improvements, including the recommendation to enhance the timely submission of these reports.”

Earlier this year, the Ministry of Finance and Economic Development laid out in its Strategic Plan for 2021 to 2025 the aim of strengthening Government’s “managing for results environment and culture,” including modernising the budget system for future budgets.

According to the government statement, “this demonstrates the Ministry’s commitment to tackle the further necessary modernisations outlined by the OAG and is already set out as specific actions in the Ministry’s Strategic Plan.”

It says these plans include the launching of the Budget and Reporting Working Group in January 2021. That was initially established in early 2018 but placed on hold awaiting the completion of OAG report “to allow for any recommendations to be incorporated.”