Auditor General On Govt Financial Statements

December 15, 2018 | 13 Comments

Auditor General Heather Thomas’ opinion on the financial statements of the Consolidated Fund of the Government of Bermuda for the year ended March 31, 2018, is included in the financial statements tabled in the House of Assembly yesterday [Dec 14] by the Minister of Finance.

“My responsibility is to express an opinion on the financial statements based on my audit,” said Ms. Thomas. “I conducted my audit in accordance with auditing standards generally accepted in Bermuda and Canada.

“Those standards require that I comply with ethical requirements and plan and perform the audit to obtain reasonable assurance about whether the financial statements are free from material misstatement.”

The Auditor General noted that her Auditor’s Opinion on the Consolidated Fund financial statements was qualified for two reasons.

The first reason, Ms. Thomas explained, was that she was unable to obtain sufficient and appropriate audit evidence to support the accuracy and completeness of capital development expenditures incurred during the year, amounting to $10.3 million.

“Purchases of a capital nature initially recorded as capital development expenditures are adjusted later to tangible capital assets once analyzed by management at year-end,” stated Ms. Thomas. “Management did not complete this analysis of capital development expenditures.

“As a result, I could not determine whether adjustments might be necessary to tangible capital assets, capital development expenses, amortization expense, total non-financial assets, annual deficit and accumulated deficit.”

Ms. Thomas stated that “the second reason for my qualification was because at year end management did not complete a payroll tax returns validation process, which is critical in identifying errors and ensuring the reasonableness of payroll tax, accounts receivable and revenue, I was unable to determine whether adjustments might be necessary to revenues and related accounts receivable, total financial assets, annual deficit, accumulated deficit, and net debt.”

The Auditor General confirmed that, in her Qualified Audit Opinion, she was able to conclude that, “except for the effect of the two matters described above, the financial statements present fairly, in all material respects, the financial position of the Consolidated Fund as at March 31, 2018, and the results of its operations, changes in its net debt, and its cash flows for the year then ended in accordance with public sector accounting standards generally accepted in Bermuda and Canada.”

The Auditor’s Opinion is included in the Independent Auditor’s Report on the Consolidated Fund financial statements.

The Auditor General stated that the Report also includes a section entitled “Other matters”. She explained that the “Other matters” do not represent a qualification of her Auditor’s Opinion, but are used to report significant matters that in her professional opinion should be brought to the attention of Parliament and to the public, as permitted by professional auditing standards and the Audit Act 1990.

“The first issue I comment on in the “Other Matters” section is to draw attention to the level of the Consolidated Fund’s increasing net debt,” said Thomas. “As at March 31, 2018, the net debt is $3.8 billion, an increase of $63 million over the last fiscal year.”

“The public sector accounting standards generally accepted in Bermuda and Canada defines Net debt as the difference between a government’s liabilities and financial assets. This difference bears directly on the government’s future revenue requirements and on its ability to finance its activities and meet its liabilities and contractual obligations,” the statement said.

The Auditor General said that the second issue included in “Other matters” is a caution to readers that the usefulness of the financial statements of the Consolidated Fund for the year ended March 31, 2018, is limited.

“It is important that Parliament and the public understand that the Consolidated Fund financial statements are not summary financial statements of the Government of Bermuda and, therefore, do not represent the full nature and extent of the overall financial affairs and liabilities of the Government of Bermuda,” explained Ms. Thomas.

“The financial statements cover only the financial results and position of Government ministries and departments, the House of Assembly, the Senate and the courts.

“They do not include the financial results or the financial position of other Government-controlled organizations, such as the Bermuda Hospitals Board, the Bermuda Housing Corporation, and the Bermuda Land Development Company Limited, through which significant financial activities of the Government occur.”

Ms. Thomas noted that her Annual Reports include detailed comments on the results of her audits of the Consolidated Fund financial statements. Those comments include sections on Matters of Special Importance, Audit Observations and Recommendations, and Key Indicators of the Financial Condition of the Consolidated Fund.

“I expect to issue my Annual Report for the year ended March 31, 2018 shortly. That report will include my comments on my audit of the financial statements of the Consolidated Fund for the year to March 31, 2017.

“My comments on the audit of the 2018 Consolidated Fund financial statements will be included in my 2019 Annual Report,” said the Auditor General.

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Comments (13)

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  1. Hey says:

    Not good reading PLP.

    What is this capital expenditure on??????

    3.8billion debt with debt increased by 63 million up to March 31….since then the govt has increased the debt and the total cost of the debt again with the recent refinancing.

  2. Paul says:

    Here comes the I.M.F.

  3. cpm says:

    Friends and family?

  4. Trump supporter says:

    China be coming soon to take over..
    Well done voters.

  5. 2 Bermudas says:

    25-11 and that’s all that matters till the civil service doesn’t get paid one week. Ha ha ha!!

  6. Charlly X says:

    Thank you for your Reports Auditor General .Mrs W H Thomas and Staff Qualified Bermudians doing a great service for their country.
    Seasons Greetings

  7. Navin Johnson says:

    that is how you know the PLP is back in power qualified opinions on audit reports…next the reports will be late as they start to withhold information…somethings never change..

  8. Question says:

    They’re Baaaack!

    Qualified Audit Opinions, that is.

  9. inna says:

    Points of interest:

    1- “The first issue I comment on in the “Other Matters” section is to draw attention to the level of the Consolidated Fund’s increasing net debt,” said Thomas. “As at March 31, 2018, the net debt is $3.8 billion, an increase of $63 million over the last fiscal year”

    2- “It is important that Parliament and the public understand that the Consolidated Fund financial statements are not summary financial statements of the Government of Bermuda and, therefore, do not represent the full nature and extent of the overall financial affairs and liabilities of the Government of Bermuda…They do not include the financial results or the financial position of other Government-controlled organizations, such as the Bermuda Hospitals Board, the Bermuda Housing Corporation, and the Bermuda Land Development Company Limited, through which significant financial activities of the Government occur.”

  10. Lol@The OBA says:

    One thing I noticed you trolls missed two important points, 1 this has been happening since 2013 in regards to negative opinions on the report but somehow the news never reported that, I wonder why( oba propaganda machines) 2 3.8 billion in debt which makes me asks what did the OBA do in those 4 and half years in power? You all keep trying to blame the PLP, but when the OBA got voted out the debt was OVER 3 billion from 1.4 billion when they inherited it! You all are not going to deflect from that at all you are really not going to. The OBA did absolutely NOTHING and it’s time to admit that instead of playing your blame the PLP game. But when the PLP fixes this mess that they initially created AND the OBA caused further inflections, I wonder what the lie will be then…

    • Hey says:

      That is a lie, just looked up 2013 to 2016, there were no qualified (bad) audits. Why lie? What is in it for you?

    • 2 Bermudas says:

      Agree with you on Point 2. Bob Richards made a massive error in guaranteeing all gov’t workers would not get made redundant. Didn’t get him votes and the country is worse off for it. Will the Pee El Pee have the courage to do so, or will they keep burdening the private sector with more taxes to keep gov’t employees employed and keep paying the higher interest payments on our debt.

    • Truth says:

      What you have to realize is that at this stage of the game, the blame game is fun but it’s not the most important issue by a country mile.

      What we need to know is:

      1. What is the plan for debt reduction. Specifically.
      – does it involve layoffs, furlough days or a combination of the two?
      – is the government looking at the size of the civil service?
      – is the Government looking and value proposition of having certain government department carry out works that could be done better and cheaper by the private sector?

      2. What is the plan to grow the economy and how do we balance that with ensuring the Bermudians get a fair shake in their own Country with respect to jobs?

      – They also need to carry a message to a portion of our people who think it’s perfectly acceptable to consistently deliver substandard work. That comes at a cost for all stakeholders.

      There are far more pertinent issues to be sorted out than do attempt to assign blame for the debt. Anyone with half a brain and a modest understanding of finance can plainly see where it went off the rails.

      It’s done now. The question is, what are we doing about it. Specifically.

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