Government’s spending continued to oustrip its revenue over the past year according to the latest figures released yesterday.Total revenue raised by Government’s operating fund for fiscal 2009/10 decreased by 3.53 percent ($33.5 million) to $917.3 million from fiscal 2008/09.But expenses for the same period climbed to $1.3 billion from $1.2 billion the previous year - driven by employee costs, grants and contributions and professional services.The fund was given a qualified audit opinion for the third straight year, based on concerns raised by the Auditor General Heather Jacobs Matthews over “serious deficiencies” in internal controls in the management of certain capital development projects.These deficiencies led Ms Matthews to question the “appropriateness” of some of the transactions and the underlying value of the assets at March 31, 2010.In response to the consolidated fund statements, the Auditor General expressed her disappointment that it had taken so long for them to be tabled in the House of Assembly considering they had been issued in October last year. “This delay is not in keeping with the principles of transparency and accountability and has resulted in Members of the House of Assembly and the public not having timely access to important information,” she said in a statement.She continued: “As a consequence of last year’s qualification, and without the benefit of an independent professional valuation on the assets in question, I am still unable to determine whether adjustments might be necessary to tangible capital assets, assets under construction and the accumulated deficit as at March 31, 2010.”But the Ministry of Finance has refuted the Auditor General’s assertion, saying that the financial statements were tabled at the earliest possible time following the compilation of the full set of statements by the Accountant General, receipt of a cost effective quote, the printing process and returned bound copies being sent to the Ministry in December, after the House had recessed for the Christmas break.Ms Matthews said that the key trends of the report highlighted Bermuda’s increasing financial challenges, including a shrinkage in revenue, a weak cash position, expenditures significantly outstripping revenues, rising long-term debt and a growing deficit and public debt.Net debt, which is the difference between total liabilities and financial assets, rose by 25 percent ($348.5 million) to $1.7 billion at March 31, 2010.Accumulated deficit, the difference between total liabilities and assets, was also up 55 percent from March 2009 at $1 billion for the same period.Meanwhile public debt - debt owed or guaranteed by the consolidated fund, net of the sinking fund stood at $969.5 million, up 100 percent ($483.2 million) from March 31, 2009.Government currently holds $530 million in US dollar senior notes due at various dates between 2014 and 2022, a $200 million US dollar loan facility due in June 2010, a $200 million guarantee for Butterfield Bank, $93.4 million in Bermuda dollar overdrafts, a $10 million loan guarantee for the West End Development Corporation and a $542,367 national education guarantee scheme.During the same period from March 31, 2009 to March 31, 2010, interest expense on debt rose 67 percent from approximately $60,000 per day to approximately $100,000 per day.The Auditor General revealed that she was encouraging Government to publish a discussion and analysis in conjunction with its financial statements to help the public understand its financial position and results.She will also be publishing her first annual report on the consolidated fund statements, including more detail to put the current year’s figures into context.Premier and Finance Minister Paula Cox said: “The Government fully understands, respects and values the office of the Auditor General.“The Government will work with the Auditor general and take the required steps to ensure that this qualification is removed in the future, in the same manner they did when actions were taken on qualified accounts in 2000 and on other previous occasions.”In its release, Government said that the 2009/10 budget estimates were made against a backdrop of challenging economic and financial conditions with a global recession and sustained turmoil in the world’s capital and financial markets, as well as a lack of confidence in the banking and financial sectors.Revenue for 2009/10 was generated primarily from payroll tax, which accounted for 38.1 percent ($349 million), and customs duty, which was 23.9 percent ($219 million), coming in below budget due to shortfalls in customs duty ($23.6 million), stamp duty ($18.1 million), hotel occupancy tax ($4.2 million) and immigration receipts ($3.3 million).Employee costs amounted to $607.9 million or 51.7 percent of total expenses, including $143.7 million in non-cash retirement benefit expenses (up from $123.1 million in 2009), while grants and contributions made up $261.1 million or 22.2 percent (up from $234.9 million in 2009) and professional services $111.9 million or 9.5 percent (up from $95.5 million in 2009), which covered all contracts.Total current expenditure on a modified cash basis for fiscal 2009/10 was $1 billion $31.3 million higher than original budget estimates due to unanticipated increases in police salaries from arbitrated awards and overtime, substitute and para-professional salaries and increased spending on Government’s health subsidy programme.Total capital account cash expenditure was $25 million lower than original estimates at $125.5 million, while capital development expenditure was $10 million below and capital acquisitions were $15 million below.Total liabilities were $1.9 billion compared to total financial assets of $194 million and total non-financial assets of $720 million.Government raised $315 million in long-term debt during this fiscal year with the notes issued in different tranches to maintain a balanced maturity structure and allow for earlier repayment of some of the notes using the sinking fund.The net debt to GDP ratio at March 31, 2010 was about 13.6 percent, 52 percent below the median of similarly rated advanced industrial countries, while Bermuda’s debt ratios are more than 40 percent below the median for Fitch rated ‘AA’ category median.“I wish to assure the public that the Government is sensitive to the challenges which may arise when deficits reach short-term peaks, however the Government is moving ahead with a credible plan for long-term fiscal consolidation in order to reduce public debt and to keep the country on a sustainable fiscal path,” said Premier Cox.