Government has fallen behind in its bookkeeping to the extent that nearly $890 million is not accounted for.

Former Auditor General Larry Dennis said it was time the Finance Ministry imposed penalties for department heads that fail to file statements on time.

His comments were made in his annual report, made public on Friday.

As of January 2009 only nine of Government's 37 entities had issued audited financial statements for the financial year ending March 2008.

"The other 28 entities together represent 67 years of accountability in arrears because many entities have not issued statements for several years," the former Auditor General said.

Among the worst offenders was the Pembroke Parish Council, which has not filed an audited report since 2003. The Contributory Pension Fund, Hospital Insurance Fund Bermuda College and Whitney Educational Trust have failed to file an audited report since 2005.

Mr. Dennis said $187 million of the unaccounted funds were attached to the Bermuda Hospitals Board. He said its audit was substantially complete but awaiting certain documentation and information to finalise the audit.

The former Auditor General said there was "no good reason" why Government entities cannot file annual financial statements, particularly as many of them are required to do so by law.

"Based on the last financial statements audited for entities that are in arrears with their financial reporting, the total expenditures for which the Government has not been accountable to the House for accounting years to March 2008 totals almost $890 million."

The figure was up from $485 million in March 2007.

"Despite considerable encouragement and resources provided by the Ministry of Finance over the years to address this problem, little improvement has been achieved," he said.

"This year, the situation worsened. In view of the serious consequences of late financial reporting, it is perhaps time for the Ministry of Finance to provide consequences for fund administrators, CEOs and financial managers who do not bring their financial reporting up-to-date, especially for those who end up with qualified statements and certainly for those who end up with denied statements.

"The Ministry should consider disciplinary actions including written warnings, penalties, and, in significant or continuing situations, dismissals of CEOs, chief financial officers, controllers and accounting officers whose entities receive qualifications or denials of opinions in auditors' reports on their financial statements due to the unavailability of evidential documentation supporting the disbursement of public funds."

Mr. Dennis said his recommendation may "seem extreme" but that the situations was becoming "increasingly serious".

Of the 30 audits he completed throughout the course of 2008 53 percent were qualified or denied.

On Friday, Finance Minister Paula Cox said: "The Audit Act requires his reports to focus mainly on observed problems and deficiencies. Accordingly his reports identify deficiencies in accounting and accountability systems."

She added that it was "sobering" the Auditor General's report also said: "Financial management, accounting systems and accountability reporting are, in many areas of Government, much better than they were a decade ago."

Bermuda Democratic Alliance MP Shawn Crockwell said the party supported the recommendations that heads of Government should be held accountable for failing to adhere to required financial protocols.

"Directors of Companies must comply with the rules contained in the Companies Act as it pertains to the filing of accounts so why not the heads of Government departments," Mr. Crockwell said. "It is a sad day that we have to resort to this but the reality is that there is a culture in Government to be negligent, if not intentionally improper, with the public purse and it must stop now."