Burch targeting wrong body on late financial reporting
Quite the political “finger wagging” has been going on as of late, with regard to who is responsible (to blame) for the tardiness of the Government’s financial reporting. Public works minister Lieutenant-Colonel David Burch recently gave the Auditor-General a pointed demerit for what he perceived to be her part in the persistent delays in auditing, which is the benchmark that keeps government agencies up to date on their financial standings.
This is interesting to me because as long as I have been following the Government’s financial reporting, including our auditor-general’s annual reports, Colonel Burch is the first minister that I can recall to fire a direct shot at our auditor-general, as being the cause of the delay in the production of annual audits for our public entities. Maybe he is on to something, but maybe it is not what it seems.
Let’s go back a decade and a half and look at the year 2007, a snapshot in time when the late (and another great) Larry Dennis was our auditor-general and had been in that post since 1978. I refer to his annual report, which included the standard section: “Matters of Special Importance”, which I have to say eventually became my “go to” chapter of every subsequent auditor-general’s report and I would read it before anything else. In that 2007 report, Mr Dennis continued to lament the ongoing problems with late financial reporting. Here are some of his statements, some 15 years ago:
“The reasons for late financial reporting vary from entity to entity, though there are recurring themes. Typically, accounting records are of poor quality and financial controls are absent or operated too late to be fully effective. Draft statements and schedules are not available for audit until long after year-ends and are often incomplete and inadequately supported. Too often, there is no commitment to maintaining up-to-date and complete accounting records or to issuing timely audited financial statements.”
“In my view these problems will persist until chief financial officers and heads of departments are held responsible for these deficiencies. This could mean levying financial penalties, demotion or even dismissal.”
“Late financial reporting is a serious matter. It weakens legislative control. It is contrary to legislated requirements. It precludes managerial and ministerial accountability. It frustrates effective management control. It prevents the preparation of consolidated financial statements. It creates an environment where fraud can thrive and remain undetected. In a well-run organisation, it would not be tolerated.”
Let's fast forward to our present auditor-general, Heather Thomas:
In her March 2020 Auditor-General’s Report: “I believe that the root cause of this fundamental lack of accountability [financial statements in arrears] can be attributed to ineffective leadership practices and mindsets. It is of concern to me that within the Public Service, those who have failed to carry out their basic responsibilities effectively have not been held to account through disciplinary or other measures.”
Office of the Auditor-General media release (October 3, 2022): “As reported previously, information provided to her office by many publicly funded entities is often incomplete or not reviewed in sufficient detail by management or those charged with governance resulting in multiple accounting adjustments, or the financial accounts not being submitted at all. It should be noted that even before the Covid-19 pandemic, the Government of Bermuda had significant challenges in properly preparing its financial accounts for audit as reported also by my predecessors. These challenges have only been exacerbated over the last two years by the Covid-19 pandemic.”
If you read the auditor-general’s annual reports of the past 15 years, they all say the same thing: late reporting is caused by a systemic failure in the accountability of the management of the Civil Service. I cannot for the life of me understand why this is not being shouted from the rooftops by the taxpayer because it is our dollar being (mis)managed. Is it apathy? Ignorance? Political allegiance? Pick any one because they all apply.
Colonel Burch, with all due respect, point your finger at the Public Service Commission, a body consisting of six appointed, unelected, members who discipline, manage and rate the performance of our entire Civil Service, and who report solely to the Governor. Members of the PSC are appointed by the Governor after consultation with the Premier, who also consults with the Leader of the Opposition.
Pick the bones out of that, voters. You should know that I have written letters to two previous governors about this very issue and I got the standard reply of “progress is being made”. I say that’s not good enough.
Some things change, but some things stay exactly the same. It is like listening to a broken record. (Yes, I’m old).