Statement by Minister of Finance, the Hon. Paula A. Cox
Statement by the Minister of Finance the Hon. Paula A. Cox, JP, MP
Auditors Report for the period ending March 31, 2007
July 14, 2007
“It is both appropriate and timely that I provide at this stage some preliminary and general comments on the Report of the Auditor General which covers the financial year ending 31st March 2007. The official response is given in the House of Assembly once the Public Accounts Committee issues its report, but given some discussion already in the media, this serves as a preliminary and limited response at this juncture.
“Commentary in the report covers transactions of the Consolidated Fund and the systems and procedures associated with this Fund. The Consolidated Fund is established by the Bermuda Constitution and is the single most important Fund in the public sector. The Report also includes commentary on a range of subsidiary funds and public sector entities.
“First and foremost I would like to state unequivocally that the current Government continues to exhibit good stewardship of the public purse and has done so since coming into office in November, 1998.
”I wish to note that during the reporting period the audited financial statements of 42 entities were issued and made available to the House of Assembly, up from 26 entities the previous year. The public sector entities in the audit report for the financial year 2006/07 include:
* The Consolidated Fund which is the Government of Bermuda’s main operating account received a clean audit opinion. More than $1 billion of expenditure on current programmes and capital outlays as well as $884 million of revenue were audited and accounted for. A portion of the capital outlays were financed by borrowing.
* Other entities that filed audited statements for the same financial year included the Bermuda Hospitals Board, the Bermuda Housing Corporation, the Bermuda Land Development Company Limited, Trustees of the National Sports Centre and the West End Development Corporation, the Government Borrowing Sinking Fund and the Pension Commission.
* Thirty-four other entities including some parish councils, school capitation accounts and the Bermuda Small Business Development Corporation filed accounts as they come up to date in their financial reporting.
“The Auditor-General commended Government and public sector boards for this 62 per cent increase in the filing of audited statements. Indeed, the Auditor-General described the turnaround as “an excellent year-over-year achievement”. The Government understands the importance of timely financial information and is pleased that there has been some demonstrable improvement. However, this does not equate to satisfaction or complacency. Much more needs to be done and is required by all of us who are accountable for actions that need to be accelerated across the board. I include myself. As the Minister of Finance I consider it essential that all public sector entities prepare annual financial statements on a timely basis and it is expected that this improvement in financial reporting will continue this year and that there is even more marked improvement in addressing the highlighted deficiencies.
“The report also includes commentary on various matters that the Auditor General considers matters of ongoing or Government wide concern. Some items may be considered contentious and it is the Government’s intention to address them in a fair and practical manner.
“Bermudians demand the best possible value from their tax dollars. Confidence in our democratic system rests on the belief that public funds are spent wisely and effectively. As such, clear and timely accountability by the Government and other public sector entities is essential.
“The Auditor-General plays a significant role in the accountability process by providing independent audit reports to Parliament on the quality of financial and resource management of public bodies. Those reports contain recommendations and suggestions for improving financial and resource management and reinforcing accountability within public sector agencies.
“It is not the role of the Auditor-General to report on the very many things that are right in the financial affairs of the public sector. The Audit Act requires his reports to focus mainly on observed problems and deficiencies. Accordingly his reports identify deficiencies in accounting and accountability systems.
“In addition, it is important to note that audit reports are historical documents. By the time that they are released, sometimes more than a year has passed. Very often Government officials or boards of public sector entities – who have the fiduciary responsibility for their own accounts – have taken action already to address weaknesses or to make enhancements to financial systems and controls.
“This Government welcomes the scrutiny of the various departments that comprise the Government of Bermuda and is open to suggestions for improvement to the stewardship of the public purse. Government considers it is performing in a credible manner and has launched several initiatives to raise the bar in financial governance.
“The Accountant General’s Department is working with Controllers in Ministries to ensure audit recommendations that have been noted in prior years are addressed.
“I note the Auditor General’s call for the Government to produce consolidated financial statements for Bermuda, a recommendation going back as far as 1992.
While legislative changes are required to effect consolidated reporting, they are simply one aspect of a complex approach that would be required to achieve this accounting objective. However, I can report that the Accountant General has identified a dedicated resource to lead this initiative.
”To improve the control over bank accounts, additional staff and consultants have been brought on and significant overtime has been approved to assist with timely and accurate bank reconciliations this year. The bank reconciliation section is striving to keep reconciliations up to date while the section becomes fully staffed and thoroughly trained. In this regard, significant improvement in this area is anticipated for fiscal year 2007/08.
“I note the Auditor General’s ongoing and long-standing concerns with regard to late financial reporting of certain government entities and public funds. I can report to the general public that progress is being made. In many cases, management accounts have been prepared and significant progress has been made with regard to bringing all public fund accounts falling under the Ministry of Finance’s purview up to date. Progress has been made on the financial statements of other public sector entities as well.
“Relevant government entities are eager to play their part to rectify this problem by bringing all outstanding accounts up to date and delivering them in an auditable state to the Office of the Auditor General.
“One concern noted by the Auditor and shared by the Government is the matter of pension contributions and taxes in arrears. This Government places a high priority on collecting outstanding amounts owed.
“The Debt Enforcement Unit in the Attorney-General’s Chambers has had a significant impact on the ability of the Office of the Tax Commissioner and the Department of Social Insurance to collect outstanding receivables. The timely processing of writs has seen a significant increase in collections. Also utilising Letters of Action written by the Attorney-General’s Chambers on behalf of the Department and sent to delinquent employers has enhanced collections.
“Whilst I acknowledge there are still obstacles to overcome, these obstacles are being addressed and will be resolved.
“Government’s plan for the improvement of management practices, controls and reporting systems is in the process of implementation.
“No organization is perfect, especially one as large and as complex as the Government of Bermuda. The audit process is designed to detect weaknesses and deficiencies. A responsible government recognizes the importance of the audit process and it takes corrective action to improve financial management of the public purse.
“The public is assured that as a responsible government, we have a system in place to do exactly that, and the Auditor General is an essential partner in the process. Our shared goal is to ensure the continued trust of Bermudians in their public institutions.”
As the Minister of Finance I stand ready to formally reply to the Public Accounts Committee in more detail when the Committee presents its report to the House of Assembly in due course.
