The Auditor-General has given a qualified audit of the financial statements of the Government’s Consolidated Fund for the 2022-23 financial year.

A qualified opinion means financials are fairly presented except for a specified issue, which is then disclosed by the auditor. It is a step lower than a clean opinion but not an adverse opinion.

The statements and auditor’s report were tabled in the House of Assembly yesterday by David Burt, the Premier and Minister of Finance.

The Consolidated Fund is the general operating fund through which Government conducts the majority of its transactions. The financial statements report the financial position, operations and cashflows resulting from the activities of the Government, including the Senate, the House of Assembly, all government departments and all courts.

Mr Burt said: “In her report, the Auditor-General highlighted that, with the exception of one matter that I will address later, the statements were deemed to fairly reflect the financial position and operations of the Consolidated Fund.

“This positive endorsement in almost all areas of work in relation to the financial statements is a testament to the efficacy of our financial processes and operations, and to the hard work of our teams to ensure that financial integrity is upheld.

“The Auditor-General has qualified her audit option in relation to the assessment of the Government’s compliance with a new accounting standard that came into effect on April 1, 2022, relating to the estimates associated with the legal obligations for the eventual retirement of tangible capital assets and the associated disclosures.

“The Auditor-General based her opinion on the audit evidence provided to support the asset retirement obligations of the Government as of the year ended March 31, 2023. However, the disclosure in the financial statements recognises that the government has not yet completed its assessment in this regard.“

Mr Burt said that outstanding work relates to the potential costs of removing asbestos in buildings without knowing when they will be retired.

He said: “Therefore, government has had to carefully weigh the cost versus the benefit of allocating funds for external experts to assess and verify our approach or investing in much needed infrastructure upgrades.

“With a full year of implementation of this standard now having been completed, we will continue to assess the best approach to ensure that the interests of the people of Bermuda are appropriately balanced.”

Mr Burt went on to say that the civil servants has already done “considerable work” to meet the new standards but that “validation by external experts of the estimates and methodology was deemed to be a key factor to meet the new requirements“.

The accounts show that $1.129 billion of revenue was raised by the Consolidated Fund in 2022-23, an increase of $43.5 million on the previous year.

Payroll tax accounted for $488 million, or 43 per cent of total revenue, and customs duty brought in $225 million, or 20 per cent.

Expenses came to $1.32 billion, an increase of $30 million, or 2 per cent on the previous year. The three largest expenses were employee costs, at $623 million, grants and contributions, at $329 million, and interest on debt, at $136.5 million.

Mr Burt said the accounts showed an accrual deficit of $260.8 million — $26.8 million lower than the prior year’s accrual deficit of $287.6 million.

But he added: “As I mentioned before, the Government’s budget reflects expenditures on a modified cash basis — adjusting for all of the non-cash expenses, which are required to be included for accounting purposes — and the cash all-inclusive results from government operations was a deficit of $34.7 million.

“This compares to a deficit of $70 million that was originally budgeted. Therefore, the actual budget deficit was down by $35.3 million, or more than 50 per cent, when compared to the original estimate. The decreased deficit is primarily a result of higher-than-budgeted revenues.

“The 2022-23 fiscal result is indicative of the Government’s ability to prudently manage current and capital expenditures while increasing revenues as we progress towards a balanced budget.”