Auditor General Larry Dennis’ annual salvo on Government’s financial management came out last week, and as Bermuda has come to expect, the annual report was full of criticisms.

The major point in the report, as it was last year, is that some $500 million of Government funds were not ready for audit and therefore could not be accounted for. This does not mean the money is missing, but as Mr. Dennis pointed out, delays in accounting and bookkeeping leave the Government open to fraud and misallocation of funds, either by public servants or by the general public, notably tax avoiders.

It would be nice to say that this is only a hypothetical suggestion, but the record over the last few years of civil servants stealing public money is all too well documented, and it is still no clearer that the proper controls are in place to prevent thefts of these kinds.

In her response to the Auditor, Finance Minister Paula Cox said: “This has been a long-standing problem that has now reached the tipping-point, and must be rectified without delay.

“Those organisations that do not respond in a timely manner will be at risk of having funding withheld until their financial records are current.”

The organisations Ms Cox is referring too are quangos and other associated Government bodies and she is right to bring out the “big stick” with regards to them. It remains to be seen whether she will use it; one would hope that the threat would be enough.

But it is shameful that the situation has had to reach a “tipping point” before the Finance Ministry gets really serious about it. One would have thought that action would have been taken long ago.

On the other side of the coin, the scale of tax arrears has fallen somewhat since 2006, but it is still unacceptably high. While some of the businesses that owe pension and payroll tax contributions are now in liquidation, others are still happily in business.

Credit for the cuts in arrears is largely due to the task force set up by former Attorney General Larry Mussenden and Ms Cox last year which has been aggressively pursuing tax dodgers. But the risk is that any reduction in effort will result in the level of arrears rising again.

Now, with a new Attorney General who is also Acting Minister of Health, there must be a concern that less attention will be given to this issue — and leadership from the top is needed.

It is reasonable to assume that at least some of the malefactors hold Government contracts. Ms Cox needs to wield the same big stick with them by either cancelling the contracts of those who refuse to pay their taxes and pensions, or to withhold sums from the contracts until the arrears are settled.

It should go without saying that employers who withhold pension contributions and Health Insurance Programme (HIP) premiums are stealing from their employees. This is not the company’s money but deductions from payroll that they are duty-bound to turn over as quickly as possible.

Last year, Ms Cox and then-Sen. Mussenden passed legislation that would enable the Government to hold directors and officers of companies personally liable for these unpaid deductions, but to date there has not been a single prosecution. What is Government waiting for?