This is the third part of a review of the Bermuda consolidated fund audit report for the years 2010, 2011, 2012 by a former auditor. The first two parts were published on December 19 and January 16.>In part 3, we focus on some of the serious reasons why the Auditor-General (AG) of Bermuda did not give the Bermuda Government Consolidated Fund results for 2010, 2011, 2012 a clean bill of health. Readers, since space does not allow for fuller explanations, you are encouraged to personally read this document (and special reports on misuse of public funds) on the Auditor-General of Bermuda’s website (http://www.oagbermuda.bm/index.php).Four years late! Four years after requesting again (and again) verifiable documentation that Government’s financial management of our money was acceptable; after four years that required 267 accounting adjusting entries by the Auditor-General’s staff just to bring the 2010 financial statements up to generally accepted account standards (note: the same machinations were required for 2011 and 2012), the AG of Bermuda was not satisfied. Thus, her opinion on the Bermuda Consolidated Fund results for all three years was qualified — the financial results were not fairly stated in all material respects.The colour of our money. It should have been very green and growing in value. Every individual, every working family in Bermuda (some holding two or three jobs just to make ends meet) knows exactly how much and where their green is coming from, how much they have spent, and whether there is any left to save. Government, however, didn’t seem to know exactly where our money came from or where it was spent for the years 2010, 2011, 2012 even though there was no cash surplus at the end of those years. I sure hope that years 2013, 2014, 2015 — not yet audited — demonstrate some improvement. And it is our money. Our green is taken in taxes (without our permission) as the price of holding a job, owning or renting a home, licensing a car, shipping our shopping back to Bermuda, using every road we drive, every government service, our necessities: food, gas, electricity, internet, mobile phone, and the have-to-have personal treats. Why the passivity? Bermuda consumers will fight to the teeth to fix an overcharge on a bill, or protest another fee on a credit card or chequing account. Yet, the AG financial results when released seemed to have been greeted with passive indifference — with the exception of a few vocal individuals. We do have to ask ourselves why we, as taxpaying residents, are not more concerned about why our money was not more carefully protected? The long litany of the AG’s audit observations and comments. The list below begins with matters arising that are considered significant enough to warrant the attention of the House of Assembly. Among the top comments were the “general failure to follow financial instructions established by Government to safeguard public assets”. Keep in mind that numbers below are derived from only a percentage sampling of the total transactions executed during the three years audited. This overview discusses lack of approval of contracts by Cabinet, non-tendering of contracts, supporting payment documentation for large projects non-existent, overspends without approval, duplicate payments, and the like:• $35 million spent on capital contracts with $5.2 million having no supporting documentation.• $30 million in capital contracts did not comply with approval standards, with the majority not approved by Cabinet. • $14 million of expenditures did not have Cabinet approval, ie commercial courts, Ministry of Finance renovations, maintenance and stores building, etc in 2010.• $43 million of expenses, greater than $1 million each, did not have Cabinet approval including land, buildings survey, airport, tourism, transport control, IT, etc in 2011.• Works & Engineering made $5 million in payments without contracts or agreements in 2010.• $16 million-plus in departmental expenditures were not put out to tender bid in 2010.• $62 million in department expenditures were not tender bid in compliance with instructions in 2011. • 24 ministries / departments overspent approximately $36 million without prior legislative approval in 2012.• Duplicate payments: more than $6 million in 2010, $500,000 in 2011 and a circumstantial overpayment in 2012 of $700,000 where the contractor charged for cost overruns, had an outstanding payroll tax debt of $321,000 that was never deducted from his/her payment. Presumably that tax is still outstanding. • Payments made to the wrong individuals — in millions.• Inadequate bank reconciliations: lack of support for reconciling items and unsupported transactions, duplicate payments, stale-dated cheques not cancelled, unrecorded foreign exchange transactions, deposits and wire transactions improperly or never recorded in the general ledger, disbursements not recorded and deposits (revenue) not timely made. • $33 million paid to consultants in 2012. Of the 5 per cent audited ($2 million) payments, none received approval from the Cabinet Secretary.• Inappropriate application and lack of accounting principles.• Bank overdraft exceeded legislative limits by $24 million in 2012. • Information Technology serious deficiencies that encompassed serious infringements on confidentiality and integrity of information: weak passwords, access rights, disaster recovery plans, open-ended contracts and reliance upon only one individual, weaknesses in Virtual Private Network, security policies not in place, and no policy for disposal of IT devices. • Very serious indeed: the AG was unable to obtain information or audit transactions (page 7). The AG was denied the right to audit material expenditures subsequent to construction of the Magistrate’s Court Building and the Hamilton Police Station. A prior special report of the AG’s office detailed override of controls at the highest level of management, a high level of unsupported payments and insufficient documents and lack of approvals to support such payments, concerns expressed by the project manager relative to the legitimacy of some costs claimed by the contractor, $6.5 million paid without invoice support and related documents. This litany does not cover the financial statements themselves and the notes to the statements — always illuminating reading. But, dear readers, that is enough for this week. I remain deeply concerned after wading through another review of this powerful document. Final part next week: notes to financial statements, accountability and responsibility, the power of subpoenas. Martha Harris Myron CPA PFS JSM: Masters of Law — International Tax and Financial Services; principal: The Pondstraddler Life Consultancy providing cross-border financial planning for Bermuda residents with international connections. Appointed to the Professional Tax Advisory Council, American Citizens Abroad — The Voice of Americans Overseas: Geneva and Washington, DC (https://americansabroad.org/). Contact: martha@pondstraddler.com