scratch, according to an audit report by business consultants KPMG.

Five specialists from the firm spent time in July reviewing Government's crusade to tackle the problem.

And after reviewing the report, Development and Opportunity Minister Terry Lister said the Government had made satisfactory progress.

"Bermuda has a very good reputation in the world community as a country which is serious about preparing itself for the Y2K problems that many fear may occur at year's end,'' he said.

Mr. Lister said Government had done a lot of work to be sure it was ready and protected from "unpleasant surprises on January 1, 2000''.

"I think it can be said that Bermuda is in reasonably good shape. And in the Government particularly, we can be comfortable that our services to the community should not be interrupted by Y2K problems,'' he said.

Of the Government's 28 mission-critical systems, 25 are compliant and the remaining three will be compliant by the end of this month. And of the 290 non-mission critical systems, 194 have been reviewed while the others will be completed by the end of October.

"The KPMG team said Government's Computer Systems and Services Department should be commended for the extent of the work they had been able to do with the resources at their disposal,'' Mr. Lister said.

"The team also commented favourably on the work of the public/private sector group which is working in parallel with us outside Government to make sure Bermuda generally is properly prepared.'' But he said he did not want to give the impression that KPMG found Government to be in perfect shape.

He said the Government accepted the team's recommendation that it should establish a programme management office with a small, full-time team to oversee and to give focus to its efforts during the last months of the year. A project management team will be formed in September and will take over work already begun in the public service to make sure that the interaction between the business community and the Government is trouble-free.

And Government departments have been instructed to develop detailed contingency plans in case something goes wrong on January 1.

The KPMG team also recommended that more testing of systems be done -- especially systems which interact with other systems -- and that Government chase up on suppliers in the private sector whom it has asked for assurances that they are themselves are Y2K compliant.

"Many of those we have written to have given us the assurances we require, but some have not replied,'' Mr. Lister said.