Finance Minister Paula Cox has claimed Government still has tabs on most of the $800 million which the Auditor General believes is unaccounted for.

She said reaction to Larry Dennis' recently released review of Bermuda's 2004-2005 accounts implied financial irregularities around unaudited accounts.

In that hard-hitting report Larry Dennis said Government had "effectively lost control of a significant portion of the public purse" which raised the spectre of fraud.

But Ms Cox told The House of Assembly yesterday: "There is the very insidious impression that the $800 million has gone missing."

While accepting that the absence of audited statements gave greater opportunity for theft she said it didn't mean the absence of any controls.

Mr. Dennis had given no details about the missing $800 million in his report, said Ms Cox, but she said working papers sent to her office with the report revealed unorthodox underlying assumptions.

She agreed with Mr. Dennis that the worst offender was Government's pension funds but assured the public that the money had reached Bermuda's seniors even if the audit was late.

Ms Cox admitted there was $65 million of expenditure from the Government Employees Health Insurance Scheme yet to be audited covering 2003-2005 while another $43 million related to Public Service Superannuation Fund payouts to retired public sector workers.

"Again, Government is aware of where the expenditure out of the fund has gone."

Other outstanding audits included estimates of $39 million for the Bermuda College, $24 million for the Hospital Insurance Fund and $23 million for the Mutual Re-insurance fund.

Mr. Dennis' report showed that of Government's 37 quangos and public funds, only ten issued audited financial statements within ten months of their fiscal year ending.

Based on the last audited accounts for those bodies that were in arrears, Mr. Dennis estimated that the total spending unaccounted for at March 2005 was over $800 million.

But Ms Cox said: "There is no reasonable basis to presume that the $800 million has disappeared without a trace."

Many of the outstanding funds go back years, said Ms Cox, who added auditing of the Contributory Pension Funds under the United Bermuda Party appeared to be consistently four years out of date.

"We have improved the turnaround for many of these funds and public entities but we do have a ways to go before we catch up.

"While it is no consolation, professional accountants in the private sector have intimated that if I saw some of the internal audit reports of some large private sector entities, they would show many of the same findings that have been highlighted in the Auditor General's report."

But she said the accounting deficiencies raised by the Auditor General were disquieting and must be addressed.

"They are being addressed in a planned and disciplined manner by Government."