Education ministry audits lag four years behind

Audited financial statements for the Cayman Islands Ministry of Education have not been completed for public review since the government’s 2012/13 budget year, more than four years ago, according to Auditor General Sue Winspear and Financial Secretary Ken Jefferson.

Ms. Winspear told the Legislative Assembly’s Public Accounts Committee Wednesday that financial audits for the ministry, at the time led by Minister Tara Rivers and Chief Officer Christen Suckoo, had not been signed off for the years 2013/14, 2014/15 and 2015/16 – during the previous government administration’s term in office.

Ms. Winspear said the Education Ministry is the only ministry to have outstanding financial audits for the past three years and she indicated there had been some disagreements between auditors and ministry staff about the content of those reports.

“It’s almost certainly going to be a heavily qualified account,” Ms. Winspear told the legislative committee Wednesday, meaning there are a number of areas where financial data provided by the ministry could not be relied upon. However, Ms. Winspear indicated many of these financial reporting troubles started well before 2013.

“Historically, there have been a number of issues, not least the valuation of its assets which has been a problem,” she said.

The Education Ministry is responsible for many of the properties the Cayman Islands government manages [school buildings, athletic facilities, administrative offices], and not knowing the values of those properties affects financial reporting for the entire public sector, Mr. Jefferson said.

The Cayman Islands government as a whole has never received a “clean” or unqualified audit opinion since it moved away from cash accounting nearly 15 years ago.

Chief Officer Suckoo said the ministry has still come a long way from the days when its annual reports were routinely disclaimed by auditors, meaning none of the figures within them could be relied upon. Mr. Suckoo said he was “encouraged” that ministry financial audits continued to improve each year.

“We look forward to crossing the threshold to unqualified opinions very soon,” Mr. Suckoo said, referring to the highest possible opinion on financial statements given by auditors. “The ministry has recently received the 2013/14 [budget year] draft opinion and while there are some qualifications included, the ministry is currently taking steps with the Auditor General’s Office to finalize, including provision of additional evidence with view to removing some of those qualifications.

“We further understand that the Auditor General’s Office is working on the 14/15 and 15/16 audits, and look forward to receipt and confirmation of those opinions in due course.”

The Education Ministry is not the only public sector entity that is still facing delayed financial audits. Ms. Winspear said her office was still working through a backlog of audits before the 2016/17 financial year which should be completed by the end of 2018.

Public property

One of the major issues identified with Education Ministry properties concerned the valuation of Clifton Hunter High School, which opened in 2012. Three years later, during the period the delayed audits covered, the auditor general’s office noted government lost $41.6 million on the construction of the high school since its opening date.

Records released to the Cayman Compass under the Freedom of Information Law stated that the Clifton Hunter property was valued at $69.2 million in 2013 by surveyors who were reviewing all government properties at the time. The final construction costs for the school were estimated at $110.8 million by the Cayman Islands Auditor General’s Office.

Auditors noted in later reports that valuations for the school property had fluctuated between $20 million and $40 million below the initial construction costs.

The reason for the fluctuation was that Ministry of Education officials decided to undertake a second valuation, with another surveyor, in June 2015 – more than two years after the first valuation.

The Compass has learned via the open records request that the second report put the value of the school property at $83.2 million, still more than $27 million less than the original construction costs.