Auditor General Heather Matthews called for greater efforts chasing up delinquent employers as pension and tax arrears climbed once again.And Government’s Consolidated Fund for 2009 failed to get a clean bill of health, for the second year in a row, with the Auditor General noting deficiencies in internal controls in the management of major capital development projects.Government’s accounting and reporting of its pension funds also came heavily under fire as Mrs Matthews tabled her annual reports for 2008 to 2010 yesterday.But Premier and Finance Minister Paula Cox took heart that the Auditor General’s report was not as scathing as in previous years, with Mrs Matthews pointing to a “marked improvement in the quality and timeliness of information” presented with respect to the 2009 Consolidated Fund.More than $58 million was owed in pension contributions, payroll tax and land tax in 2009, up from $51 million the previous year.In her report, Mrs Matthews said she would be pushing Government to follow through with plans to collect its debts more efficiently.Four years ago, Cabinet approved proposals for a tax court, but it’s understood such a project has stalled.The Finance Ministry says the new Debt Enforcement Unit has made a positive impact and claimed it will continue taking an “aggressive stance” on recouping tax and pension arrears.Figures published in yesterday’s report show pension contributions greater than 90 days in arrears totaled $18.1 million for 2009, up from $15.9 million the previous year.Payroll tax arrears were at $25.4 million, up from $23.8 million, while land tax arrears were $14.7 million, up from $11.6 million.Mrs Matthews stated: “Despite the efforts of the Director of Social Insurance and the Tax Commissioner over the years, arrears of pension contributions as well as payroll and land taxes have grown.”She said of the 2009 figures: “These amounts would be even greater if uncollectable accounts were not written off. When taxes are written off, Government loses revenue.“When pension contributions are not collected, employees lose pension benefits for which they have made contributions.“Timely collection of outstanding revenue by Government helps to reduce the need for borrowing along with its associated finance costs.”Noting a failure to take up previous Auditor General recommendations to intensify efforts claiming overdue taxes, Mrs Matthews said: “I look forward to pursuing the recommendations with those responsible for their implementation.”The Ministry of Finance responded: “As previously illustrated with the establishment of the Debt Enforcement Unit this Government places a high priority on collecting outstanding amounts owed.“The Debt Enforcement Unit has had a significant impact on the ability of the Office of the Tax Commissioner and the Department of Social Insurance to collect outstanding receivables.“The timely processing of and publicising of writs has seen a significant increase in collections.“The Government must continue to take an aggressive stance in recouping tax and pension arrears in order to establish the settlement of Government debt as a priority.”Government’s response in January 2008, reiterated in the Auditor General report yesterday, stated: “The tax court has been approved by Cabinet but has not yet been established. Needless to say, the tax court will greatly assist the Tax Commissioner in the collection of outstanding debt.”The Auditor General issued qualified opinions on the financial statements of the Consolidated Fund for 2009, Bermuda Hospitals Board for 2008, and CedarBridge Academy for 2008.The Consolidated Fund is the entity through which the majority of Government business is carried out.Mrs Matthews stated: “There was one significant area — capital development projects — where we were not able to obtain sufficient, appropriate audit evidence.”Explaining the significance of qualified opinions, Mrs Matthews said: “In a general sense, they mean that all is not well and that, typically, appropriate, sufficient documentary support for amounts recorded in the financial statements is not available.”The Ministry replied: “The Ministry notes that the annual accounts of the Consolidated Fund of the Government of Bermuda were given a qualified audit opinion for the second consecutive year.“The qualification was based on the Auditor General’s opinion that there were deficiencies in internal controls in the management of various capital development projects.“Even though the Government did not fully agree with the qualification on the accounts, this Government will take the required steps to ensure that this qualification is removed in the future; in the same manner that actions were taken when the accounts were qualified in 2000 and on other previous occasions.“The qualification on the accounts of the Consolidated Fund 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; Bermuda’s high credit ratings attest to this.”Mrs Matthews was also critical of the accounting and reporting of Government’s pension funds, which she described as deplorable and in an unacceptable state.The funds, which are the responsibility of the Ministry of Finance, hold more than $1 billion of investments and other public assets.Mrs Matthews wrote: “Although financial statement audits are not designed to detect fraud, they can help to deter fraud.“When financial statement audits are as far in arrears as some of the Government-controlled organisations, public funds, parish councils and aided schools, this deterrence is lost.“Weak internal and accounting controls and delayed audits create opportunities for misappropriation and fraud to occur and remain undetected.“Aside from the risk of fraud, late financial reporting indicates that there is a fundamental lack of compliance with legislative requirements for accountability and reliable financial information, decision-making is severely compromised and resources cannot be effectively managed.”Giving a general reaction to the reports, Ms Cox stated: “The Auditor General plays a significant role in the accountability process within Government. It is not the role of the Auditor General to report on the very many things that are right in the financial affairs of the public sector.“The Audit Act requires her reports to focus mainly on observed problems and deficiencies. Accordingly her reports identify deficiencies in accounting and accountability systems.”A Ministry statement said: “The Government notes that the overall tenor of the current report has been restrained when compared to previous years, and welcomes constructive criticism that will lead to improvements in the stewardship of the public purse.“This is the first annual report published by the current Auditor General and the Government looks forward to working with her to improve Government’s financial reporting.“While these statements are not current for this fiscal year it does highlight the work that has been done and improvements made since the statements were reviewed by the former Auditor General.”