Auditor General Report On Consolidated Fund

August 10, 2018 | 25 Comments

“Government should make getting to grips with the debt and the deficit its highest priority,” Auditor General Heather Thomas said today [Aug 10], as she released the results of her Office’s audits of the Consolidated Fund’s financial statements for the years ended March 31, 2013 to 2016.

In releasing the report, the Auditor General’s office said, “Auditor General Heather Thomas’ observations and recommendations arising from the audits together with an analysis of the financial condition of the Government of Bermuda’s Consolidated Fund [“the Fund”] are included in the Report of the Auditor General on the audits of the Fund’s financial statements for the years ended March 31, 2013, 2014, 2015 and 2016.

Mrs. Thomas said, “Importantly, for all four years covered by today’s report, the Auditor General was able to express an unqualified opinion that the financial statements of the Fund for the year being audited presented fairly, in all material respects, the financial position of the Fund as at the year end, and the results of its operations, changes in its net debt, and its cash flows for the year ended in accordance with public sector accounting standards generally accepted in Bermuda and Canada.”

“The Auditor General’s observations and recommendations on matters arising during the audits are divided into two sections in the report. “As the title suggests, the section of the report dealing with Matters of Special Importance covers those issues that require the full attention of Government,” explained Mrs. Thomas.

“The matters of special importance describe the need for summary financial statements for the whole of Government. Because Government is not producing such financial statements, it is making decisions without knowing the combined financial position of all the organizations that make up the Government reporting entity. Neither is it providing the House of Assembly nor the public with the analytical information that would help them understand Government’s financial statements and its financial condition.

“The report also notes that there is no effective long-term plan for reducing the annual and accumulated deficits or the associated debt, the unfunded liabilities of the Fund’s major pension plans or the size of taxpayer indebtedness, all of which continue to grow unsustainably.

“Consequently, the resources available to carry out Government programmes effectively are predictably being impacted by increasing debt servicing costs,” the Auditor General said.

“Government needs to be clear about how its goals and priorities will be affected by fewer resources and needs to ensure that the reduced resources are aligned in a way that maximizes their effectiveness and has the least impact on the quality of its service delivery.”

“Another special matter comments on reports issued recently by the Spending and Government Efficiency [SAGE] Commission and the Commission of Inquiry established to investigate the matters arising under the Audit Observations and Recommendations section of the Report of the Auditor General on the Consolidated Fund of the Government of Bermuda for the Financial Years ended March 31, 2010, March 31, 2011 and March 31, 2012.

The Auditor General said, “The Commissions’ reports contain a wide range of recommendations focusing on governance, high-level policy, accountability and administration. I recommended that the Government should indicate clearly the extent to which it accepts the Commissions’ recommendations along with the rationale if there are any recommendations not accepted; set out a plan and a timeline for their implementation, and report out periodically on the status of the recommendations’ implementation”.

“A separate section of the report contains some key indicators of the financial condition of the Fund, along with the Auditor General’s commentary thereon. The indicators focus on the Fund’s future sustainability and flexibility.

Mrs. Thomas explained that, “Sustainability is important because it focuses on the impact that the level of debt could have on the Fund’s ability to provide future services to the public as well as to honour financial and other commitments to lenders, creditors, employees and others.

“Flexibility is the degree to which Government can change the Fund’s debt or tax burden on the economy to meet its existing financial obligations both in respect of its service commitments to the public and financial commitments to creditors, employees and others.”

The Auditor General said, “The indicators of financial condition set out in my report demonstrate a level of unsustainability and impaired flexibility for the Fund, which Government must make every effort to address”.

“Following the practice established by my predecessors, my major recommendations in today’s report include responses from the Ministry of Finance indicating how it intends to deal with them,” said Mrs Thomas.

“Given this, I am extremely concerned that most of the matters of special importance were raised some time ago by previous Auditor Generals. Each year of inaction exacerbates the problems, and must be addressed with a sense of urgency.

“There have been discussions and communications with respect to these matters but no formal plan of action has been developed to date. In my view, Government should make getting to grips with the debt and the deficit its highest priority and provide realistic expectations and timelines with respect to desired outcomes.”

“My report on the audit of the Consolidated Fund financial statements for the year ended March 31, 2017, will be ready for tabling in the House of Assembly in this fiscal year.”

“The Report can be downloaded here, along with previous reports prepared and published by the Office of the Auditor General of Bermuda.”

The Auditor General Report follows below [PDF here]:

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Comments (25)

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  1. Yes says:

    Hah PLP is Deaf, they will continue to play the blind until the real facts come out. Then they will make up some next bs story

  2. Vortex says:

    Ok, let’s repeat what is important here.

    “The report notes there is no effective long term plan for reducing the deficits or debt, all of which continue to grow unsustainably.”

    Which is a very different view to those of David Burt yesterday, who seems intent on spending his way out of this, echoing the disastrous policies of his predecessors.

    Its always useful to revisit the words of much missed Larry Burchall. “How Bermuda was governed between 2004 and 2012 plays the largest part in today’s economic crisis.” Those PLP years under the eye of Paula Cox as Minister of Finance and Premier saw debt as a % of revenue rise from 1.5% to 15%. A disaster.

    Until we cut our cloth – which may be unpopular with the voters, the situation will worsen, and ultimately leads to full scale meltdown. I just don’t see Burt having the backbone to do that.

  3. Wahoo says:

    Unfortunately the “base” don’t seem to care about these things.

  4. PANGAEA says:

    What Country puts all it money in one fund, the inflated balance is like honey to bees & others.

  5. Too little says:

    Well if we had the real truth from the America’s Cup then we could all know where we stand! Spending $70M we did not have was just crazy and then giving away our money on the airport for 30 years was also crazy! Doubling the debt was crazy but party on Mr Dunkley and friends!

    • Question says:

      It wasn’t $70m, it wasn’t “spent”, it was invested and returned $335m, the PLP is now taking credit for the jobs created at the airport, and the debt did not double under the OBA.
      Putting exclamation marks at the end of every sentence does not make it true.

  6. LaVerne Furbert says:

    PSA – Those reports have nothing to do with PLP Government. They are for the years that the OBA was in power.

    • Justin says:

      Laverne,

      You can try to pin the blame wherever you want but the fact is that Bermuda is $2.5bn in debt and has no plan to get out. The PLP is the current gov’t so how are they going to react to it? When your pension check doesn’t show up one day then maybe you’ll stop being so childish.

      • Ringmaster says:

        LaVerne is correct but she missed the point that for those 4 years the Audits received an unqualified opinion. Unlike the years under the PLP that were qualified year after year.
        While the PLP are in power the debt will not be paid down. It will only get worse as interest rates rise and more debt is needed. Should a surplus be generated it will be spent and not used to pay down debt. The only way to pay down debt is to increase the sinking fund contribution, but that will need Parliament approval and the PLP will never vote for an increase.

        • Toodle-oo says:

          *Should a surplus be generated it will be spent and not used to pay down debt.*

          It will indeed be spent . Spent to buy votes and make it look like they care about Bermudians . All the while further bankrupting us into a situation so untenable that heads will explode once they figure it out . 24-11

        • Hey says:

          Qualified opinion = bad, Unqualified = good , for this Ethan don’t know what the terms mean.

    • Retro says:

      Thanks for the clarification. Now , will the Plp come to the rescue and correct the oba’s policies of not growing the tax base (immigration) and not practicing austerity. I really hope so.

  7. simple says:

    the oba spent 70 mil we didnt have and got a return and the plp spent 800 mil with money we had and no return! sad

    • Wahoo says:

      I believe the $800m “disappeared”.

      • Toodle-oo says:

        There are many people who still argue vociferously that it’s impossible to make that much vanish unaccounted for , especially in a weenie place like Bermuda and that it has been resolved , etc . But I still can’t recall any statements from the AG rescinding her remark and saying that she was wrong , it’s all be found .

      • Question says:

        The $800m was borrowed and we will never be able to pay it back. The PLP sold our children to foreign bankers.

  8. Ringmaster says:

    “Another special matter comments on ……….Recommendations section of the Report of the Auditor General on the Consolidated Fund of the Government of Bermuda for the Financial Years ended March 31, 2010, March 31, 2011 and March 31, 2012.

    What is the PLP doing to address this which certainly occurred when they were last in power? Oh yes, nothing, apart from dropping the lawsuits. Same old PLP, spend, waste money and more debt.

  9. Paul says:

    Thank the lord that we are still a British territory,We need someone to see what is going on.

    • Vortex says:

      Agreed, and to take the prisoners we can’t handle (see earlier story about sex offender).
      Independence is a ridiculous idea.

      • rodeny smith says:

        Don’t get the two points confused .Independence is the next and final step for Bermuda .

        • Question says:

          You’re so special ‘rodeny’.

          Having trouble spelling your own name? Oh yeah, independence will sort that out.

  10. cpm says:

    I still cannot believe that this government is led by the nose by laverne furbert and the plp propaganda show

  11. Cut the ties now. says:

    At least when we are independent we can make our own money and lots of it! As for those debts, leave them, after all we’ll have our own money we made ourselves. We can all be millionaires too – but we need to go independent first to make any of this happen.

    • Question says:

      No, idiot. You keep the debts whether or not we’re independent. You can thank Ewart and Cox for that.

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