Government Auditor Larry Dennis has given Government's finances a cleaner bill of health than in past years, but said problems still remain with the collection of taxes and control of expenditure.

Mr. Dennis, who has been openly critical of past Government accounting practices, said in an interview yesterday that he was generally happy with improvements in the level of accounting and expenditure controls.

But Mr. Dennis, in his Audit for the year ended March 31, 2001 tabled in the House of Assembly yesterday, said Government was owed more than $25 million in tax and pension contributions.

And he again “named and shamed” the most delinquent businesses in Bermuda and called for more aggressive collection policies of the taxes. (See box, Page 2).

Mr. Dennis said in an interview that he was happier with the improved level of accounting controls but said there were continuing areas of concern.

These included:

Government had again failed to provide consolidated financial statements for the year 2002;

computer environment problems and risks; and

problems with environmental monitoring and enforcement within the understaffed Environment Ministry.

Mr. Dennis also highlighted problems within specific Government departments and organisations, including the Bermuda Hospitals Board, the Bermuda College, the Contributory Pension Fund and the Bermuda Housing Corporation.

Mr. Dennis' greatest concerns centred on the failure to collect payroll tax, land tax and pension contributions.

He said: “For the Contributory Pension Fund and the Government to be owed almost $25 million of pension contributions and taxes that are more than three months in arrears is, in my view, intolerable.”

Mr. Dennis said companies that failed to pay pension fund contributions were “cheating” their employees.

“When pension contributions and payroll tax arrears accumulate to significant amounts and the employers' businesses fail, the amounts are lost forever to the Pension Fund and the Government.

“Some businesses may even be tempted to declare bankruptcy and then start a new business to rid themselves of pension and payroll tax liabilities,” Mr. Dennis' report said.

“When for, whatever reason, employers fail to remit the pension contributions they have collected from their employees, they betray their employees' trust and cheat them of the pensions for which they have paid.

“Employers who are slow to remit their pension contributions are in effect borrowing at no cost. For some of the reasons listed above, this practice is reprehensible and probably criminal. It also gives unscrupulous employers an unfair competitive advantage over their competitors who lawfully remit their contributions and taxes on time.”

Mr. Dennis added: “...these are not the only tax arrears. For instance, two of Bermuda's betting houses are seriously in arrears with their betting-tax remittances.

“Each has accumulated amounts due of $400,000. To make matters worse, betting taxes are not a business tax. They are collected directly from the bettor by the betting houses,” he said.

“Deficient accounting systems, ineffective collection methods and, as I noted in my previous report, the lack of political will to address this issue, have allowed these arrears to accumulate. It is an embarrassment.”

Finance Minister Eugene Cox yesterday admitted in a press statement that the report recognised the need for continued improvement in a number of areas.

But he said the report also highlighted the significant accounting achievements that had been made by the Progressive Labour Party Government.

“It is worth noting that the Consolidated Fund Financial Statements for the fiscal year ending March 31, 2001 have received a clean opinion,” he said. “In addition, the financial statements represent the earliest ever sign-off date, August 15, 2001, for the Consolidated Fund financial statements.”

Mr. Cox said the Accountant General's Department had helped to coordinate Government financial direction by bringing together key accounting personnel from Government and Government Quangos, had increased training and had resolved problems raised by the Auditor General over many years.

Opposition Leader and Shadow Finance Minister Grant Gibbons was off the Island yesterday and could not be reached for comment.