over the health of the Contributory Pension Fund (CPF).

The latest opinion, which is addressed in a Government Green Paper on a proposed National Pensions Scheme, differs from a 1989 report that said the fund was "quite sound'' and would even absorb inflationary increases "within the foreseeable future.'' The latest opinion was at the heart of a Green Paper conclusion that by the year 2001, the CPF "will begin to experience deficits''.

But the actuary's report at July, 1989 held the view that contributions were expected to exceed benefit payments up to the year 2015, and that in the following period up to 2026 "the surplus will equal approximately three years' benefits, and this size of surplus has been established as a minimum target for solvency purposes''.

The shift in opinion is highlighted by the release of the latest Report of the Auditor on the accounts of the Government of Bermuda.

The latest report, which may be delivered to the Senate today, is for the year to March 31, 1990.

It is a report in which the Government Auditor, Mr. Larry Dennis, has again criticised record keeping for the pension fund, and refused, as he has done in past years, to give his seal of approval.

The Contributory Pension Fund has been a target of criticism of the Auditor in the past because of serious deficiencies within the system of internal controls.

During the period under review, he again was unable to satisfy himself that the recorded transactions were proper. He refused to express an opinion as to whether the financial statements of the fund were presented fairly in accordance with the fund's stated accounting policies.

The Contributory Pension Fund at July 31, 1989 showed $130.4 million in assets.

In releasing the latest report, Mr. Dennis makes it clear that the tardiness of his annual reports, a long running problem, was not his fault.

He prefaces this report by noting: "While the Auditor's annual reports are not up-to-date, the audits of the Consolidated Fund and all major organisations controlled by Government have been completed and the related audited financial statements issued, except where information that is required to support or clarify significant accounts or policies has not been forthcoming from the Government's accounting officers and financial officials.

"The 1993 audited financial statements of the Consolidated Fund were released to Government on May 10, 1994, and the audit of the 1994 accounts has been completed since January 1995, except for the verification of certain supporting information and schedules which have not yet been provided. The 1994 financial statements will be released as soon as we receive the requested information and complete our verification.'' The Consolidated Fund is Government's main bank account.

Mr. Dennis also pointed out: "No record can be found of the 1991 and 1993 financial statements being tabled in the House of Assembly. The Accountant General is investigating the matter.'' The report for the fiscal year ending March 1990, placed total Government assets at $494 million.

The Bermuda Monetary Authority experienced a $1.3 million net loss during the year on the sale of investments primarily as a result of six short-sell transactions of treasury bonds.

BMA's investment loss BMA's policy had, at the time, adequately defined investment parameters, it's unlikely the BMA would have been exposed to risk of this magnitude and experienced these losses.

Mr. Dennis closes the matter by saying: "The Authority was receptive to our comments and corrective action was taken immediately. No similar losses or circumstances have since been recorded.'' Other items emerging from the report include the fact that inventories estimated in excess of $4 million are not included in the financial statements.

This, after a review of procedures at the Public Transportation Board, Post Office and Works and Engineering has indicated that the computerised inventory system still does not produce reliable information. And adequate controls had not been satisfactorily established during 1989/90.

The Auditor continued: "Since 1987, I have commented on the inadequacies in inventory control systems throughout Government and I have noted that if controls have not reached a satisfactory standard to support the inventory figure for financial statement purposes, it is not likely that they are satisfactory to safeguard the inventory.

"I therefore urged the Government as a matter of priority, to address these deficiencies. Government has invested in an inventory package which is expected to be implemented with effect from April 1, 1996 and should result in improvements in this area.'' The Ministry of Finance has also agreed in 1996 to review the financial statement presentation of the net accrued benefit liability for the civil servants' pension fund, the Public Service Superannuation Fund.

The net accrued pension benefit liability due to past service was estimated at $117 million as of March 31, 1990. If at anytime the fund is insufficient to meet payments chargeable against it, the deficiency is required by law to be made up from the Consolidated Fund.

Prevailing government practice has been to record the unfunded liability for future contractual pension claims in the accounts and to show them as a liability on the balance sheet.

Such treatment, said the report, would highlight the impact which this liability may have on the future cash requirements of the Government and the Government's ability to meet its financial obligations, both in the short and long term.

"If the 1990 actuarial estimate of this liability had been included in the Consolidated Fund financial statements, the Consolidated Fund liabilities would be increased by $117 million, reversing the $10 million undesignated surplus to a $107 million deficit.''