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Auditor-General highlights Government financial accountability failings

The Government’s failures in financial accountability should be of concern to all Bermudians, the Auditor-General said today.

Heather Thomas, in her 2019 annual report tabled in the House of Assembly, said she had issued qualified opinions or disclaimers of opinion in 10 out of 47 audits and also discovered that many organisations were behind in their filing obligations.

She said: “The number of qualified or disclaimed audit opinions, coupled with the fact that as at March 31, 2019 there were 39 organisations falling under my mandate that were at least one year behind with their financial statements – with a total of 139 sets of financial statements in arrears – is of great concern to me and, I suggest, should be to legislators and the people of Bermuda.”

Ms Thomas added: “The financial accountability process for Government continues to not function well.”

The primary job of the Auditor-General is to audit the annual financial statements of the Government and its associated organisations.

She said one qualified audit opinion was “unfortunately” for the financial statements of Government’s Consolidated Fund for the end of the 2017/18 financial year.

Ms Thomas added that she was able to provide an unqualified audit opinion on the Consolidated Fund financial statements for the financial year that ended in 2019 and that further details will be included in the next annual report.

Ms Thomas explained the significance of qualified opinions and disclaimers of opinion.

She said: “In a general sense, they mean that all is not well and that, typically, sufficient, appropriate documentary support for amounts recorded in the financial statements is not available.”

The report also highlighted several “matters of special importance”.

Ms Thomas said: “The matters, all of which have been discussed in my previous annual reports, show that Government is continuing to make decisions without knowing the combined financial position of all the organisations that make up the Government reporting entity.”

She added: “Further, there are no effective, comprehensive long-term plans for reducing the annual and accumulated deficits or the associated debt, the unfunded liabilities of its major pension plans or the size of taxpayer indebtedness, all of which continue to grow unsustainably.”

But Ms Thomas said she was pleased that Government has committed to deal with many of the problems raised in her report.

She added: “The commitments include bringing all outstanding financial statements up to date by the end of 2020 and producing summary financial statements for the whole of Government for the year ending March 31, 2021 – subject to the availability of audited financial statements for Government-controlled organisations.”

Ms Thomas said another “special matter” was the “need for Government to provide the House of Assembly and the public with supplementary analytical information that would help them understand Government’s Consolidated Fund financial statements and its financial condition”.

She added that the Government had promised to produce a financial statement discussion and analysis for the March 31, 2020 financial statements for the Consolidated Fund.

Ms Thomas said: “In the absence of Government providing such important supplementary information, my report analyses key sustainability and flexibility indicators of the financial condition of Government’s Consolidated Fund for the five years ended March 31, 2018.

“I concluded that, despite some relatively small improvements to some of the key measures, the indicators of financial condition continue to demonstrate a level of unsustainability and impaired flexibility.”

She added: “In my view, Government needs to be clear about how its goals and priorities will be affected by fewer resources and needs to ensure that the reduced resources are aligned in a way that maximises their effectiveness and has the least impact on the quality of its service delivery.

“Each year of inaction exacerbates the problems. The problems are serious. Government should make getting to grips with the debt and the deficit one of its highest priority”.

Ms Thomas said her office had carried out a “public interest review” of Government’s Covid-19 response and related programmes in conjunction with the audit of the Consolidated Fund financial statements for the 2019/20 financial year.

She said it was a “phased review” so that Government’s Covid-19 activities would not be disrupted.

Ms Thomas said the results of the review will be released over three reports.

She added that her office continued to ask for modernisation of the Audit Act 1990.

Ms Thomas said that proposal got support from a Parliamentary standing committee in 2016 and a Bill was drafted more than two years ago.

But she added there was “no will to advance”.

Serious concerns: Heather Thomas, the Auditor-General

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Published November 06, 2020 at 7:59 pm (Updated November 06, 2020 at 7:58 pm)

Auditor-General highlights Government financial accountability failings

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