However, she said, concerns remain over timely tabling of annual reports and financial statements in the Legislative Assembly.

“Such delays in the tabling of annual reports significantly impairs the attainment of full accountability as key stakeholders and the wider public are not receiving information of entities operations in a timely manner, resulting in the reports having reduced relevance in decision making,” she said in her latest report on government financial reporting, which was released Monday.

Winspear said although there is some positivity in the increased number of reports tabled, “there is still concern” regarding the significant time it took for these reports to reach the Legislative Assembly, noting, “72 reports took over six months from audit completion to be tabled. There are 49 audited reports that have not been tabled as of this report, of which 41 are beyond six months of their audit completion dates.”

Improvements

Winspear said she was pleased with the positive strides that entities have made over the years when it comes to their reporting.

“I am delighted that of the 36 audited so far, I have not given a single audit qualification, which demonstrates the marked improvement in the quality of government financial reporting over the years. It also means that by the end of 2019, my office has virtually cleared the audit backlog leaving only four entities still with audits outstanding,” she said in her statement on the report.

Based on numbers in the report in the 2008-09 period, only 37% of entity audits were unqualified, 39% of them were qualified, and 24% were disclaimed, as compared to 100% unqualified to date for the 2018 audits.

A qualified opinion is issued when financial information provided has limited scope or has material issues, while an unqualified opinion means financial records were presented fairly and appropriately without any identified exceptions.

“Whilst the story is one of progress regarding financial reporting, specifically at the individual entity level, there is still more that can be done before achieving the level of accountability as expected by accounting standards and as envisioned in the Public Management and Finance Law,” Winspear said.

Outstanding audits flagged

Only four entities remain with outstanding audits – the Ministry of Health, Environment and Culture; the Cayman Islands Airports Authority; the Cayman Turtle Centre; and Cayman Airways Limited.

The Ministry of Health, Environment and Culture, and the Airports Authority, Winspear said, are outstanding for the prior period of 2016-17, as well.

Winspear told the Cayman Compass, in an email response to queries on these entities, that she expects her office to be signing off on Cayman Airways this week.

“They will be receiving an unqualified opinion so the entities outstanding will drop to three,” she said.

While the delayed reports are a concern, Winspear said she remained optimistic.

“Each entity is on its own improvement journey and I trust that the Ministry of Health, Environment and Culture and the Airports Authority will work with us to get their audits up to date later this year. The Ministry of Education made great strides during 2019 in clearing their audit backlog,” she added.

She said, in the case of the outstanding audits, there were various problems encountered and her office has been working with the entities to try to enable them to resolve matters rather than qualify their financial statements.

“For example, during the 2016-17 audit of the [Cayman] Turtle Centre, a cash theft was discovered, and then fraudulent expenditure was found. This held that audit up for a good while because we had to work through and quantify each matter as it was found. The 2016-17 audit is now complete, but consequently the 2018 audit for the Turtle Centre is behind,” she pointed out.

At this time, she said, her office will pause these backlogged jobs until the 2019 financial audit peak is over at the end of April, and then pick up the three entities again.

“We hope to clear their audits before the summer,” she added.

She also pointed out that the consolidated Entire Public Sector account, which includes the consolidation of the 40 public sector entities, along with the ‘executive’ expenditure and coercive revenues of the government, has not yet been audited for 2018.

The government’s EPS account received an adverse opinion for the 2016-17 financial period due to numerous issues, she said. The financial results reported by statutory authorities and government companies provide a “mixed picture”.

The Port Authority and the Water Authority both recorded surpluses in 2018 for the first time since 2014-15, but some 13 SAGCs recorded a deficit in 2018.

The University College of the Cayman Islands, the National Drug Council and the National Gallery went from a surplus in 2016-17 to a deficit position in 2018.

Report recommendations for government

Timely audit of the consolidated entire public sector accounts.
Timely laying of annual reports, including financial statements and audit opinions, in the Legislative Assembly.
Publication of reports on the entity and Legislative Assembly websites.
Enhance the framework for reporting service performance information.
Remove impediments to further improve timeliness, quality and usefulness of the financial statements.