Dear Sir,

It has been some time since I checked in with the people’s financial watchdog, Heather Thomas, who is our Auditor-General. Looking through the AG’s website, I clicked on the “Our Universe” section, showing completed financial statement audits. I was encouraged to see some improvement with regard to the number of outstanding financial statements of our government entities. Out of 55-plus government-controlled public entities, only 19 were past due by more than three years. While that may not sound like a positive statistic, believe me, it is progress from where we were five years ago.

I took a closer look at the main “offenders” and a few of those are detailed below, with some background on each entity.

Bermuda Housing Corporation — latest audited financials = 2022

The BHC is the government agency established to provide affordable housing and promote independent living for Bermudians. The BHC receives significant government funding, primarily through both an annual operating grant and large capital grants for housing development and repairs. For the 2026-27 fiscal year, BHC has been allocated $26.9 million. There are three prior years of BHC funding/spending which has not yet had the scrutiny of our Auditor-General.

Bermuda Gaming Commission — latest audited financials = 2021

This BGC commission body currently consists of six members, who are responsible for regulating the non-existent gaming industry in Bermuda. Taxpayers have funded at least $16 million towards this government organisation over the past decade. There are four years worth of BGC financial statements which have not been presented/audited.

Bermuda Economic Development Corporation — latest audited financials = 2019

The BEDC is a government funded agency dedicated to growing the island's local economy by supporting small and medium-sized businesses. There are ten board members of the BEDC. Their website reads: ”The Finance, Data & Administration Unit is responsible for managing the financial austerity of the Corporation, providing accurate and timely financial statements in accordance with the accounting standards generally accepted in Bermuda and Canada.” Well, clearly, they don’t. Six years of financial BEDC transactions (spending) have yet to cross our AG’s desk for scrutiny.

Board of Trustees of the Golf Courses — latest audited financials = 2020

The board has 11 members who have a responsibility to manage and prepare the financial statements for this government entity. The two public golf courses, while generating their own revenue, are also subsidised by the government, with $2 million each year and the combined wages and benefits for both golf courses is in excess of $4 million annually. Five years of their financial information/spending are unknown. That’s $10 million of taxpayer funding.

Trustees of the National Sports Centre — last audited financials = 2020

There are seven board members who are responsible for managing and providing updated financial information for this entity. While it generates user fee revenues, the NSC also receives an annual operating grant from the Government. In 2021, the Bermuda Government did not provide a direct, simple cash grant but rather authorised and guaranteed a controversial $3.2 million HSBC loan for the NSC Board of Trustees, to fund a major solar panel installation project. The status of that project is unknown. We are “missing” five years of financials from this entity.

Confiscated Assets Fund — last audited financials = 2010

This is a government fund established under the Proceeds of Crime Act 1997, that deposits cash and assets forfeited by criminals, specifically to combat money laundering and drug trafficking. It serves as a source for grants given to community organisations, charities, and sports clubs to support youth programs and infrastructure. The last published audited financial statements for this fund were for the fiscal year ending March 31, 2010. In September 2017, a moratorium was placed on grants from the fund, which was described by the National Security Minister as being "substantially depleted".

Though the fund itself hasn't published recent, direct audits, we know that a special grant of $76,322 was recorded as coming from this fund and paid to the Financial Intelligence Agency in 2023, an amount which was recorded in their own financial statements. The grant was specifically used by the agency to purchase cryptocurrency investigation software. The Accountant General of Bermuda prepares the financial statements for the Confiscated Assets Fund. There have been no published financial activity statements for the fund for 15 years.

Berkeley School Capitation account – last audited financials = 2015

The Berkeley Institute is a government-aided school and receives annual funding. The Berkeley Institute Capitation Grant Account is a public authority fund which is used to cover the school’s operational costs like maintenance, cleaning, and utilities. These finances are managed by the school’s governing body, currently consisting of 13 members. There are ten years of financial information which have not been presented to the AG’s office.

Our AG tells us that her audits have often been delayed by a lack of sufficient evidence to support financial transactions and balances, requiring extensive back-checking. She has repeatedly highlighted that many publicly funded entities provide incomplete information or fail to conduct sufficient internal reviews before submission which forces the AG’s office to spend additional time making corrections rather than just auditing the final figures. The AG has warned that because of the lack of proper documentation for historical transactions, many financial statements may receive qualified or disclaimed opinions once they are finally processed, which can further delay the finalisation of public reports.

Almost a decade ago, the Progressive Labour Party (then opposition) told us that upon becoming the government, they would improve efficiency, transparency and accountability in government financial administration. One of those promises was to strengthen the powers of the Auditor-General’s office, which never came to fruition. The PLP 2017 election platform clearly outlined a pledge to expand the authority of the AG, allowing the office to actually ‘follow the money’ to identify systemic financial weaknesses within our administration systems and bring them forward into the sunshine of scrutiny, where changes/improvements could then occur in a timely manner. Presently, the AG can only audit the information she is given and make recommendations for improvements. Her work stops there.

We do have a secondary financial oversight body, the bipartisan Public Accounts Committee, whose role is to follow up on the AG audited accounts, review spending and any financial irregularities and report back to the House of Assembly. Included in this committee’s role is meeting with public officers, permanent secretaries, and officials to justify departmental spending and project outcomes and recommend procedural Improvements. The PAC effectiveness is sporadic, and there has been limited progress on many financial issues as highlighted by the Auditor-General over the past 30 years.

The Office of the Auditor-General is the most critically important government oversight agency the public has. It provides us with the assurance that financial statements are presented fairly and accurately. It promotes improvement in financial administration by making recommendations that, when implemented, will strengthen the management and conduct of financial activities of the Government and its 55-plus related entities. These recommendations are expected to be implemented/resolved generally within a year. However, as the AG tells us, the benefit of the audit work is not in the recommendations made, but the effective implementation of those recommendations and therein lies the problem.

This statement by our AG clearly identifies that problem:

“It is the responsibility of the respective ministries, departments, or quasi-autonomous non-government organisations to decide what actions to take for closing the deficiency or gap identified by the audit and to follow through on their commitments, as public stewards.” That’s called self-monitoring and it does not work well for any government.

So what are the consequences for entities entrusted with public funds and resources, which continually have their financial statement audits in arrears? There are none and this must change. We must give the Auditor-General the authority and additional resources to finish what she and her office starts. Give her an additional, neutral body of financial ‘monitors’, who will go out into the ‘field’ of our public administration, armed with an AG file of audit questions, completion timelines and procedure solutions, who will also have the authority to place consequences on non compliance.

Nothing will change unless the system changes and having consequences for lacklustre performance will be a big step forward towards achieving that.

BEVERLEY CONNELL

Pembroke