Financial statements given unqualified audit
Government’s financial statements for the 2012/13 fiscal year have been given an unqualified audit for the first time in six years.
The statements for the Consolidated Fund — Government’s general operating account — were tabled in the House of Assembly this morning by Finance Minister Bob Richards. The statements report the financial position, operations and changes in financial position resulting from the activities of Government.
Mr Richards said he was “pleased” that the Auditor General Heather Matthews had been able to endorse the figures, but noted that she had to include explanatory paragraphs on the increased level of Government’s net debt, increased levels of non-compliance with financial instructions and the preparation of summary financial statements.
“It is important to note that these explanatory paragraphs do not alter the Auditor General’s unqualified opinion, but are highlighted matters,” Mr Richards said.
“However the Government shares the Auditor’s concerns in these areas and has already started to tackle these matters.
“For instance the Ministry of Finance has already moved to a Medium Term Expenditure Framework, which is seeking to eliminate the deficit and ultimately reduce the debt.
“Liabilities related to pension and other employee future benefits are included in the net debt amount disclosed in the Financial Statements and the Government has already committed to review these benefits to ensure their sustainability.
“Whilst legislative changes are required to effect consolidated reporting, they are simply one aspect of a complex approach that would be required to achieve this accounting objective. Accordingly, progress is being made on this important initiative, but it should be emphasised that consideration must be given to resources, accounting systems, management roles and other factors that are critical in the accomplishment of this task.”
Mr Richards said the Accountant General had recently updated financial instructions and “revamped training”.
Mr. Speaker, with regard to the preparation of Summary Financial Statements for the Bermuda Government the Ministry agrees there are benefits to issuing consolidated financial statements and confirms that in the first instance, we will bring forward legislation to create the reporting entity under which the summary statements will be prepared.
According to the statements, $866.6 million was allocated to the Consolidated Fund in 2012/13 — a drop of $47.6 million or 5.2 percent on the year before.
Payroll Taxes, accounted for $328 million or 37.9 percent of funding, while Customs Duty brought in an additional $169.7 million or 19.6 percent.
Mr Richards pointed out that revenues fell $43 million short of Government estimates at the start of the financial year, while expenditures were $23.4 million higher.
“The all-inclusive results from government operations — both current and capital — for the year ending March 31, 2013, was a deficit of $408.0 million,” Mr Richards concluded.
There are many non-cash expenses included in this figure. If we strip those away, the modified cash all-inclusive results from government operations — on the same basis that is shown in the Budget Book was a deficit of $225.9 million. In 2012/13 $51.1 million of interest was paid from the Sinking Fund and the Government matching contribution to the Public Service Superannuation Fund was suspended. If we include these items the deficit would be $309.3 million.
“Whether on a cash basis or an accrual basis the level of deficits mentioned above are not only unsustainable but economically and fiscally imprudent.
“The statements of the Consolidated Fund provide valuable information on the financial position of the Government and I would encourage the public to examine these statements.
Shadow Finance Minister David Burt welcomed the unqualified statements, but pointed out that they demonstrated that concerns raised about the numbers by the One Bermuda Alliance when it was in Opposition were unfounded.
“The Auditor General states that she received an ‘independent professional valuation’ which affirmed that the valuations of Capital Assets, which caused her to issue qualifications in previous years, were in fact correct,” Mr Burt said.
“We are pleased that the Auditor General has seen fit to remove this qualification, but given that there were no adjustments required, it should put to rest the accusations made by the Minister of Finance when he was in opposition that ‘there remain serious questions about the integrity of the numbers’.
“Given today’s removal of the qualification and no adjustments being made to the value of the Capital Assets we can put this era of ‘these questions, these doubts and uncertainties about the handling of the people’s money’ behind us.
“In order for our country to succeed, we must have trust in the civil servants who work for the government without fear or favour. The aspersions cast upon these hard working citizens by Minister Richards were uncalled for at the time and we are pleased that the integrity of their work has been confirmed