Auditor-General hits back after minister’s criticism
A combined total of about 130 years of public bodies’ financial statements are in arrears, the Auditor-General’s office revealed yesterday.
It was said that 42 per cent of those were “under the auspices of” the Ministry of Finance and there was not yet a timeline for when the accounts might be available for audit.
The office said that the Government’s challenges in properly preparing accounts were exacerbated by the coronavirus pandemic.
Heather Thomas, the Auditor-General, insisted: “The responsibility of auditing public money – your money – is not transferable.”
Her comments came after Lieutenant-Colonel David Burch, the Minister of Public Works, told the House of Assembly last week “there should be a wider look at this whole process of audits for government entities”.
Colonel Burch claimed that “on the rare occasion when the Auditor-General agrees to use an outside agency, it’s with the caveat that they must then audit the audit”.
He added: “I will go this far and say this is symptomatic of several auditors-general of late that have held on to this responsibility as if they are the only people on the planet that can do it.”
Ms Thomas said today that her constitutional and legislative role was to make sure the Government spent residents’ money wisely and “to enhance public sector efficiency, transparency and accountability through the financial statements audits”.
A statement from the Auditor-General’s office highlighted: “As at September 2022, roughly 32 publicly funded entities have approximately 131 years of financial statements in arrears.
“Of the 131 accounts in arrears 55, or 42 per cent, are under the auspices of the Ministry of Finance and the timeline for when these accounts may be available for audits remains outstanding.”
It said: “Financial statement audits enable the Parliament and the citizens and residents of Bermuda to hold the Government and individual public bodies accountable for their use of your money – public money.”
It added that audits of financial statements were also relied upon by accreditors and other parties for "assurance that management has presented a true and fair view of its financial performance and position“.
Ms Thomas pointed out that “no one said that her job will be easy” and acknowledged that criticism was expected sometimes.
The statement added: “As reported previously, information provided to her office by many publicly funded entities is often incomplete or not reviewed in sufficient detail by management or those charged with governance resulting in multiple accounting adjustments, or the financial accounts not being submitted at all.
“This situation has gotten worse because of the Covid-19 pandemic.
“However, it should be noted that even before the Covid-19 pandemic, the Government of Bermuda had significant challenges in properly preparing its financial accounts for audit as reported also by my predecessors.
“These challenges have only been exacerbated over the last two years by the Covid-19 pandemic.”
Ms Thomas said that her office “will continue to work with our auditees, which will mean that additional time will be taken to complete financial statement audits”.
Below is a list of the publicly-funded bodies that are behind on financial statement audits, and for how many years:
11 years in arrears
Confiscated Assets Fund
9 years in arrears
Contributory Pension Fund (year-end of July 31)
Government Employee Health Insurance
Public Service Superannuation Fund
7 years in arrears
The Berkeley Institute Capitation Grant Account
Whitney Institute Middle School Capitation Grant Account
Bermuda Educators Council
6 years in arrears
Ministers and Members of the Legislature Pensions Fund
Sandys Secondary Middle School Capitation Grant Account
5 years in arrears
Trustees of the National Sports Centre
CedarBridge Academy
Board of Trustees of the Golf Courses
Government Borrowing Sinking Fund
4 years in arrears
FutureCare Fund
Health Insurance Fund
Mutual Re-insurance Fund
3 years in arrears
Bermuda Land Development Company
Bermuda Economic Development Corporation
Pension Commission (year-end of December 31)
2 years in arrears
Bermuda Casino Gaming Commission
Bermuda Housing Corporation
Regulatory Authority
FinTech Development Corporation
Government Reserves Fund
Unemployment insurance Fund
1 year in arrears
West End Development Corporation
Privacy Commissioner's Office
Office of Information Commissioner
Bermuda Shipping and Maritime Authority
Bermuda Civil Aviation Authority
Bermuda Hospitals Board
Bermuda Deposit Insurance Corporation
She added: “The audits in arrears also frustrates me.
“It is frustrating hearing or reading about public money being spent on transactions and the financial accounts and supporting documentation are not provided to [my] office for audit or the information provided … is unauditable.
“Audits are posited to increase accountability and the usefulness of the financial statements is diminished each year that passes.”
The statement said there was “little financial training for board members or their volunteers”.
It added that the guidance was the responsibility of the Ministry of Finance.
Ms Thomas added that her office had carried out training for board members “on their fiduciary financial duties and how to prepare for a financial audit”.
The statement said that there was “significant momentum” on the reviews of parish councils.
The opposition One Bermuda Alliance has described the revelations made by Ms Thomas as “abominable and outrageous”.
Cole Simons, the party leader and the Shadow Minister of Finance, also said that it was unfair to blame the backlog on the Auditor-General.
Mr Simons said that the issue of audits had been “an ongoing problem”, and that the Auditor-General’s office had repeatedly suffered from a lack of staff and resources, exacerbated by the Covid-19 pandemic.
Mr Simons said: “Considering this deficiency, she and previous AGs prevailed and did the best that they could to meet the prescribed deadlines by outsourcing some functions to third party audit and accounting firms.
“What the public may not know, is that the auditing process cannot be started and completed without a set of completed financial statements. To hear the Auditor-General state that there are 130 years of outstanding public body financial statements is abominable and outrageous.”
Mr Simons also took aim at David Burt, the Premier and minister of finance.
He said: “The Minister of Finance is the official custodian of Bermuda’s public purse, and he should hang his head in shame.
“It is ironic that the responsibility for these audit challenges, and the 100 plus financial statements arose under the leadership of the two PLP finance ministers, both of whom are vying to become Premier of Bermuda later this month.
“As the Auditor-General indicated, it is a shame that the ministers of finance were spending public money on national transactions and programmes without a clear assessment of the impact on the financial budgets, and without having a full financial picture of the ministries or government agencies in question as in many cases financial statements were incomplete.
“From the PLP perspective, basic accounting standards and guidelines do not matter.
“It is shameful that the minister of finance is spending his energy and resources trying to solidify and cement his role as the Premier of our country when he could have provided resources and attention to remediating the financial statements in arrears and could have addressed the deficiencies with the CFOs and controllers responsible for the relevant government departments and government agencies.
“Where is the accountability?”
Mr Simons added that it was “unforgivable” that arrears in a slew of funds were allowed to build up for more than 11 years.
He said: “As is it felt by all of us, we are living in tough times and we must run a tight ship, whether in government or within our personal affairs.
“This undisciplined financial administration by the custodian of Bermuda’s public funds must stop.
“The Minister of Finance must operate Bermuda’s finances in accordance with best practices, Bermuda’s constitution, and in a sustainable manner which will benefit all of Bermuda.”
The Auditor-General’s office also provided a summary of work in progress.
Its statement added: “There are many entities, including Bermuda Sport Anti-Doping Authority, Bermuda Monetary Authority, Bermuda Public Accountability Board, Bermuda Tourism Authority and St George’s Preparatory School Capitation Grant Account – this list is not exhaustive – who consistently produced timely accounts for audit, in accordance with the prescribed standards.”
* To see the statement in full and the list of work in progress, please click on the PDF under “Related Media”.
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