Outstanding Audits Feb 2020
Dickinson pledges to fix’ audit backlog
The Minister of Finance has pledged to “fix” the problem of publicly funded organisations failing to keep up to date with their annual audits.
Curtis Dickinson told a post-Budget meeting of business leaders: “I’m not happy about it. We have had challenges with some of the financial statements.
“I’ll step out on a limb here and say: ‘we’re going to fix it’.”
Heather Thomas, the Auditor-General, said earlier this month it was “unacceptable” that 29 publicly funded bodies had amassed a backlog of more than 100 years of financial statements between them.
She has since revised the figure to 28 and given The Royal Gazette a list of the organisations with outstanding audits.
Ten are public fund audits, including the Confiscated Assets Fund, which is eight years behind.
The other delayed public fund audits are for the Bermuda Tourism Pension Plan (6 years), the Contributory Pension Fund (6 years), the Government Employee Health Insurance (6 years), the Public Service Superannuation Fund (6 years), the Legislature Pension Fund (5 years), the Government Borrowing Sinking Fund (4 years), the FutureCare Fund (2 years), the Health Insurance Fund (2 years) and the Mutual Reinsurance Fund (2 years).
A finance ministry spokeswoman said: “The Accountant-General/Ministry of Finance and the Auditor-General have met and agreed a plan to have all public funds under the responsibility of the Accountant-General delivered to the Auditor by the end of 2020.
“This is an ongoing and longstanding matter which has plagued successive governments and it will take time to resolve. However, the Government commits to taking the necessary steps to remedy this situation.”
A health ministry spokes-woman said: “The Health Insurance Department (HID) manages the Health Insurance Fund, the FutureCare Fund and the Mutual Reinsurance Fund and has been working closely with the Office of the Auditor-General to bring the outstanding audits up to date.
“The 2016-2017 audit is currently being finalised and is expected to be tabled before the summer. The HID and OAG teams will then move on to the 2017-2018 financial statements of the three funds with the timeline for completion subject to scheduling with the OAG.
“HID is collaborating closely with the Auditor-General’s Office to get up to date.”
She added: “The Minister of Health is regularly briefed on the financial position of the funds by the Health Insurance Committee and on progress towards completion of the outstanding audits.”
Ms Thomas said last week that the 28 audits were overdue because there were “some organisations struggling, sometimes because of limited capability or capacity to prepare financial statements that comply with financial reporting, in accordance with generally accepted accounting principles”.
Mr Dickinson told the Chamber of Commerce meeting: “The fix depends on a couple of things. The Office of the Auditor-General is resource constrained. That’s part of the problem, so we’ve provided some additional funding in the Budget this year to get that work done.
“I also need some pragmatism here. We need help to get these things done. Governments, like banks and other financial institutions, rely heavily on this concept of confidence.
“Insomuch as we have to produce our financial statements, we have to give people confidence that the Government is doing what governments are supposed to do.
“So we’re looking for some help. The position we’re in is untenable. It’s longstanding and needs to be addressed finally.”
The Ministry of Finance did not respond to a question on what specific help was needed.
The Auditor-General’s Office was allocated $4.2 million in the 2020-21 Budget, an increase of $123,000 or 3 per cent on last year.
The office has 29 employees, expected to increase to 30 in the next financial year.
Its salary bill is expected to rise by $149,000, or 4.7 per cent, to $3.3 million.
The office’s revenue from audit fees is estimated to go up by $78,000, or 7.3 per cent, to $1.1 million in 2020-21.
Ms Thomas said in her last annual report in 2018: “I believe that, for the present, the office is being resourced adequately.”
She added this week: “For the 2020-21 fiscal year, the office is resourced adequately to address the financial statements in arrears.”
The Auditor-General said she was “encouraged to hear publicly the government commitment to address the accounts in arrears”.
She added that the extra $123,000 in the budget would be used to hire one full-time staff member.
Ms Thomas said: “I am also encouraged to hear those organisations struggling to produce auditable accounts because of capability or capacity will get the support needed.”
She added that her office would continue to work with organisations in arrears as the Government continued “on the path of working towards improving their financial reporting and accountability to all stakeholders”.
Ms Thomas said: “You, the public, have the right to know how the public funds are used and financial objectives are met or not met.
“The need for Government and its organisations to produce audited financial statements timely is a cornerstone of public accountability and transparency.
“It is the final step in the accountability process and how the public knows what their money has been spent on and what the organisations have achieved financially.”
Ms Thomas added her office had three unfilled posts and she would give more details on the vacancies in her next annual report.
• For details on the Auditor-General’s ongoing audits, check the ‘work-in-progress’ tab at oagbermuda.bm
The Auditor-General says 28 organisations have outstanding audits.
Ten are public fund audits managed by the Ministry of Finance and the Ministry of Health (see main story).
The Royal Gazette approached the other 18 publicly-funded bodies about their outstanding audit/s. The organisations which responded were:
Whitney Institute Middle School (7 years in arrears)
Terence Stovell, chairman of the school’s board of governors, said: “The Whitney Board is preparing to review, approve and sign the financial statements for the capitation grant accounts [for financial years] 2012, 2013 and 2014. Whitney Institute Middle School has received instructions from the Office of the Auditor-General and have agreed on a path forward to continue to reconcile the remaining outstanding audits.”
Pastor Stovell said the Whitney accounts department and board met with the Auditor-General’s office on Tuesday [Feb 25] to review its capitation grant accounts and that such meetings occurred each year.
He added: “Over the years, the settling of yearly audits has always been an ongoing process but the Whitney Institute has developed what I would consider to be a good working relationship with the Office of the Auditor-General. This has allowed us to steadily close the gap of our outstanding audits. We appreciate the OAG’s continual support in reconciling our audit matters.”
Bermuda Educators Council (6 years)
A council spokesman said: “The situation is in the process of being rectified.”
Bermuda Land Development Company (5 years)
A government spokesman said David Burch, the Minister of Public Works, would address the outstanding audit in today’s [Friday] sitting of the House of Assembly.
Sandys Secondary Middle School (5 years)
Dane Benjamin, treasurer of the school’s board of governors, said: “The Sandys Secondary Middle School board and management team continue to work closely with the Office of the Auditor-General to ensure that all accounts are brought up to date and are confident that any delinquent accounts will be made current in the immediate future.”
Berkeley Institute (5 years)
Craig Bridgewater, chairman of the school’s governing body, said: “The delays are a result of the logistics in organising and having the Auditor-General perform the audits.
“We have provided the Auditor-General with our financial information through to the 2018 fiscal year and are actively discussing having the outstanding audits completed as soon as practicable. In the meantime, financial information relating to the capitation account is made available to the Ministry of Education.”
Warwick Parish Council (5 years)
Chairman Anthony Santucci said: “The new council has been in position since January. We are aware that there are outstanding audits and we are in the process of addressing that.”
Pembroke Parish Council (4 years)
Chairwoman Patricka Ferguson said: “The Pembroke Parish Council has been actively working to be in compliance. The Auditor-General has documents for our outstanding years and is in the process of reviewing while we obtain additional documentation that they have requested.”
CedarBridge Academy (3 years)
Jason Wade, chairman of the school’s board of governors, said he and Kenneth Caesar took over the posts of chairman and acting principal, respectively, in 2018.
“Since that time we have managed to complete the 2016 audit and are currently working with the Auditor-General’s office on the 2017 audit,” he said. “We acknowledge that there is still work that needs to be done and we are committed to completing the rest of the outstanding audits in a timely manner.”
Mr Wade added: “If you have any questions as to why these previous audits were not completed those questions should be forwarded to the previous chairman Leonard Santucci.”
Dr Santucci said last night: “CedarBridge Academy is a very large entity that requires attention to details. I salute the principal and chief operations officer for the fine work they have done and do on a daily basis under the leadership of the board of governors to steer the ship.
“Over 100 people are employed within the school community with a multiplicity of relationships and accounts locally and internationally.
“During my tenure, the audits were in arrears by as many as four or five years. As chairman, with the support of the COO, we met with the Auditor General and her team as we worked to bring our records current.
“We addressed our arrears by setting up a separate office for the representative of the Auditor-General’s office to work from. With the assistance of our accounts office and financial consultant we were able to cover a lot of good ground in a short period of time.
“I believe the last audit that I signed off on was for the fiscal year 2015/16 after the opinion of the Auditor-General was shared with the board of governors.
“Audits are historical reviews of the handling of the finances of the institution against established policies and procedures. The opinions rendered enable the chairman and the board of governors to refine their operation as you learn from the decisions and actions of the past.
“The Minister of Education, historically, has always ensured that a certified professional accountant serves on the board to assist and direct us in our deliberations. This system has been very effective.
“I salute chairman Wade for the fine work that he and his colleagues on the board of governors are doing at present in providing valuable leadership for this fine institution.
“I have every expectation that they will do an outstanding job satisfying the requirements of the Auditor-General’s office regarding the matters at hand. I wish them well in the process and remain available to do whatever I can to assist them should they require my help.”
Bermuda Hospitals Board (2 years)
A spokeswoman said the board was following its mandated auditing process for the financial statements and would release them once completed.
She added that after completing audits for 2015 and 2016 “focus will now be on completing the auditing process for fiscal years 2017 to 2019”. The board’s full response appears in this article.
Bermuda Civil Aviation Authority (1 year)
Director general Thomas Dunstan said: “The BCAA’s 2017-18 audit is currently in progress and anticipated to be concluded in March 2020. The BCAA only commenced operations in 2016.
“The 2016-17 audit was the first financial audit as a new authority and there were many complex transition issues that had to be resolved between the authority and the Government and it took a while to work through all of these issues.
“We naturally had to wait until the Office of the Auditor-General completed our first audit before they started the 2017-18 audit — there was a gap of about three to four months in between the audits.
“The BCAA has met all target dates for submission of financial information and all legislated requirements under the Bermuda Civil Aviation Act 2016.”
Chairwoman Kim Wilkerson added: “The board of directors and management of BCAA take its financial audits very seriously and all efforts have been made to assist the OAG to complete them as efficiently as possible.
“Given the complexities of our inaugural audit, the board has commended the OAG for carrying out a detailed and thorough audit process in accordance with their mandate.
“We are encouraged that the Minister of Finance has recently indicated that additional resources may be provided to the OAG to help ensure the timely completion of future audits.”
Bermuda College (1 year)
A college spokeswoman said: “Bermuda College’s 2018 and 2019 draft financial audits have already been prepared and are with the Office of the Auditor-General.
“The delay is as a result of several mitigating factors dating back to 2003.
“The Auditor-General at the time refused to continue any further audits at the college until an investigation into the 2003 lease between the college and the [neighbouring Coco Reef] hotel was completed and tabled in the House of Assembly.
“The 2004 audit was eventually completed in 2008. In 2009, the audits were stopped once more as a writ was filed against the Minister of Finance and Bermuda College by the then Auditor-General, questioning the legality of the 2009 addendum to the lease.
“The 2005 audit was finally completed in 2012. From 2012 to July 2019 (7 years), the college, through the Herculean efforts of its accounting staff and accounting consultants, managed to complete 12 audits for 2006 to 2017.
“We are pleased to note that as of February 2020 both the 2018 and 2019 audits are in the final stages of review and we expect that all audits will be current by the end of this fiscal year.
“It should also be noted that although the final statements have been outstanding, annual reports are produced on an annual basis outlining the operations of the college and are tabled in both Houses of the Legislature.
“We are fully satisfied that all due diligence has been exercised in getting our audits up-to-date, notwithstanding the inherent difficulties faced during this period.”
Bermuda Shipping and Maritime Authority (1 year)
CEO Francis Richardson said: “The Bermuda Shipping and Maritime Authority commenced operations on October 1, 2016.
“The first audit for the 18-month period from October 1, 2016 to March 31, 2018 commenced approximately June 2019 and is very near completion. The second audit for April 1, 2018 to March 31, 2019 is scheduled to commence immediately following the completion of the first audit.”
Tax Reform Commission (1 year)
Chairman Ronald Simmons said: “The audit of the financial statements of the TRC is substantially complete with the Auditor-General having issued a draft audit report thereon. There is one outstanding item to be resolved prior to finalisation.”
The Tax Reform Commission, a temporary body, will no longer be included in the Auditor’s portfolio once the 2018 financial statements are completed.
Bermuda Economic Development Corporation (1 year)
Executive director Erica Smith said: “BEDC’s audit for the 2017/18 fiscal year has been delayed. We started the process with the Office of the Auditor-General on these financials some time ago and provided them with our management accounts for 2017/18 fiscal year back in July 2018. ?“In October 2018 we started the actual work with the OAG with the audit prep meeting between both organisations. Since that time, we have been working collaboratively, cooperatively and diligently on this audit in partnership with the OAG but unfortunately changes in personnel and reduction in resource allocations from time to time have impacted the progress of both organisations resulting in some delays and this [is] taking longer than we expected.
“We did, however, receive the OAG final draft audit documents for 2017/18 fiscal year in December 2019. Unfortunately, BEDC’s board had held its last board meeting for the year before the final draft audit documents were received so we had to wait for our new board to be reconstituted for 2020 to gain the approval of the documents.
“BEDC’s 2020 Board was gazetted on February 11. Updated/revised documents were received from the OAG on February 14 and 17.
“We held BEDC’s board meeting last week on February 18 and the board approved the draft audited financials at that meeting. We are currently preparing those approved documents to be sent back to the OAG.
“BEDC is committed to financial responsibility and transparency of use of public funds.
“As such, we publish our statement of operations quarterly on our website; we provide an update of our end of year spending, programmes and new budget during the annual budget debate process; and we gazette contracts and accumulated vendor spend over $50k.
“Clearly, our desire is to wrap up this audit up as soon as possible and anticipate being able to provide the documents back to the OAG early next week. We believe we are an open book organisation always willing to provide information when requested.”
We were unable to get responses from the African Diaspora Heritage Trail Bermuda Foundation (9 years), the Trustees of the National Sports Centre (5 years), the Board of Trustees of the Golf Courses (3 years) and Sandys Parish Council (1 year).
• A shorter version of this sidebar appeared in today’s print edition of The Royal Gazette .
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