The parliamentary committee which scrutinises public spending released a damning report on Government yesterday — but Finance Minister Paula Cox was quick to rebut the criticism.

The Deputy Premier said she was taking the "unprecedented" step of replying to the report of the Public Accounts Committee (PAC) on the same day it was tabled in the House of Assembly.

She told MPs she wanted the report — for the financial years ending March 2007 and March 2008 — and the response to be considered in tandem.

"It avoids unnecessary misstatement and hysteria-inducing misleading headlines, radio and television news programmes," said the Minister.

The report details the committee's concerns with the tender process for the new multimillion dollar Police and court building and "huge cost overruns" on the second cruise ship pier at Dockyard, the renovation of Port Royal Golf Course and the rebuilt Transport Control Department facility.

It also refers to the "very serious matter" of the Auditor General qualifying the accounts for the Consolidated Fund — Government's main bank account — and the accounts of some publicly-funded entities.

"In the private sector, such an event could easily cause confidence in a company to disintegrate and subsequently collapse," deputy PAC chairman Patricia Gordon-Pamplin told the House yesterday.

"It is impossible to hold Bermuda out to the rest of the world as a well run jurisdiction under these circumstances."

She added: "An audit qualification within the Consolidated Fund, which is the heart of government finances, is both serious and alarming."

The PAC reviewed the annual reports of the Auditor General for the years in question and a special report from February 2009 on the Department of Tourism's relationship with advertising agency GlobalHue.

On the latter issue, committee members concluded that GlobalHue got its contract with Tourism without an open tender process and that the Tourism permanent secretary was responsible for the failure to follow Government's financial instructions. They recommended that all contracts above $50,000 be put out to open tender in future.

The Ministry of Finance came in for criticism with the PAC finding that it didn't do enough to ensure government departments stayed within their budgets.

The report describes a "culture of casual regard for parliamentary-approved budget parameters" throughout the Civil Service.

Ms Cox said in her response that the PAC report was a "historical document" and had been overtaken by events and real progress.

The Minister said considerable efforts had already been made to address outstanding recommendations of the Auditor General, a role she said Government respected.

"We have set a realistic timetable for action and committed to effecting systemic improvements to Government's accounting and financial control systems."

She agreed with the PAC that the qualification of the financial statements was a very serious matter but said it "should in no way reflect on Government's ability to manage the fiscal and economic affairs of the Country".

"I would like to unequivocally state that the current Government is capable of running the financial affairs of this Country and continues to exhibit good stewardship of the public purse and has done so since coming into office."

Ms Cox revealed that her Ministry recently completed a "diagnostic review of a collection of recent capital projects" including the Dockyard pier and the Police and court building.

"Recommendations have been made with respect to project planning, project management and procurement, including a transparent process for the identification of potential conflicts of interest," she said.

Ms Cox said the PAC spoke of perennial cost overruns in "a most unhelpful light".

"Budgeting is not an exact science and the actual record will show that the additional budgetary spending has been kept to tolerable margins of plus three percent, except for a handful of years when there were unusual underlying factors."

The Finance Minister's reply included a response from the Department of Tourism, which pointed out that the GlobalHue contract was approved by Cabinet so "it is unclear why the PAC would conclude that the permanent secretary was responsible for award".