be paid into the The Government Borrowing Sinking Fund, the Government Auditor has reported.

The fund was set up under the Government Loans Amendment Act 1993, requiring a segregation of cash within the Consolidated Fund.

The Act requires an amount equal to two and one-half percent of the public debt to be paid into the fund out of the Consolidated Fund. It was determined to be $1.5 million at March 31, 1993, the year end for which the Act was first operative.

But Auditor Larry Dennis has reported, in his just-released report for 1997, that the money has not been disclosed as a restriction of cash in the 1993 financial statements of the Consolidated Fund. And he reported, "To date (April 1997), the $1,500,000 (nor amounts required to be paid during the fiscal years 1995, 1996 and 1997) has not been paid into the fund.

"This constitutes a lack of compliance with the law by Government.'' He has recommended that the cash or deposits applicable to the Government Borrowing Sinking Fund should be shown as restricted cash in the financial statements of the Consolidated Fund. And since Government intends to make the sinking fund a separate entity, the 1993 legislation that set it up should be amended to effect that result, while provisions should be made for an audit, and the preparation of the accounts and financial statements, together with appropriate deadlines.

A response from the Ministry of Finance in the same report concurs and adds that as a first step in the process, the 1995 and 1996 Consolidated Fund financial statements disclose the amounts to be segregated as assets of the Government Borrowing Sinking Fund by note. The Auditor also complained that the Transport Minister is required to take to Parliament a report on the exercise and performance of the Public Transportation Board (PTB).

He said, "I was not able to obtain confirmation of any reports being laid before the Legislature by the Minister of Transport. "This constitutes a lack of compliance of the law by the Government.'' The Government agreed with his recommendation that the Transport Minister should bring the report to Parliament, stating that discussions have been held and appropriate action will be taken. But the Finance Ministry only agreed to take under advisement a further recommendation from the Auditor which would require an audit and the preparation of the accounts and financial statements of the PTB, together with the appropriate deadlines.

Mr. Dennis observed that as a separate entity, it was inappropriate for the accounts of the PTB to be absorbed into the accounts of the Consolidated Fund.

He recommended their removal from the Consolidated Fund's accounts and reporting system, and said the PTB should prepare financial statements, which should be audited and form part of the PTB's legislated reporting responsibilities to the Legislature.

The Ministry of Finance agreed to take the recommendation under advisement.

But the Auditor saw the inconsistencies in legislation and compliance with respect to reporting requirements as more widespread. He said that whatever inconsistencies or omissions may exist in separate pieces of legislation, the Audit Act 1990 establishes a uniform requirement for Ministers to lay audited financial statements before the Legislature.

He commented: "Since no comprehensive listing is kept of what reports and financial statements must be laid before the Legislature and their status, and because the expected communication procedure to the Auditor on this matter has been unreliable, it is very difficult to determine whether legislated requirements to file reports and/or financial statements have been complied with. The lack of accountability to the Legislature could extend for a number of years. For instance, I have been informed that the audited financial statements of Bermuda College have not been laid before the Legislature by the Minister of Education for at least the last ten years.'' He recommended a listing of what is required from each department and a record be kept when compliance is fulfilled. He also recommended that civil servants be reminded of their responsibilities. The Finance Ministry agreed, noting all Government Ministries and departments had been advised of their duties.

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