Audit Of Consolidated Fund Financial Statements

“ I rise today to advise Honourable Members of the completion of the audit of the Consolidated Fund Financial Statements for the year-ended March 31, 2024,” Junior Minister of Finance Wayne Furbert said in the House of Assembly today [March 21].

The Junior Minister’s full statement follows below:

Mr. Speaker, I rise today to advise Honourable Members of the completion of the audit of the Consolidated Fund Financial Statements for the year-ended March 31, 2024, which were tabled in this Honourable House today.

As Honourable Members are aware the Consolidated Fund [CF] is the general operating fund of the Bermuda Government and is the Fund through which Government conducts the majority of its transactions. The CF financial statements report the financial position, operations, change in net debt and cash flows resulting from the activities of the Government. This includes the accounts of the Senate, the House of Assembly, all Government departments and offices and all courts.

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

Mr. Speaker, the Auditor General has qualified her audit opinion, based on insufficient support for the legal obligations associated with the eventual retirement of tangible capital assets as required by the Asset Retirement Obligation standard.

Mr. Speaker, the Government has undertaken considerable work since the introduction of this standard in the 2022/2023 fiscal year, using its team of internal professional along with the engagement of external experts, resulting in the Government recognizing a liability and the related expenses in the March 31, 2024, financial statements. The March 2023 comparatives have been restated to show the effect of the adoption of the standard. The Government will continue to work to identify all legal obligations associated with the retirement or disposal of its assets to ensure the completeness of the obligations recorded in the CF’s financial statements.

Mr. Speaker, under the Audit Act 1990 section 6[1] [b] the Auditor General is able to include in her report any comments she considers appropriate. Accordingly, the Auditor General has, as in prior years, included an “Emphasis of Matter” paragraph to draw attention to the “Usefulness of the Financial Statements” and her view that the usefulness of the financial statements is limited because they are not “Summary Financial Statements.” In other words, they do not represent the combined financial position and activities of all Government entities, only the Consolidated Fund. This section of the report does not alter the Auditor General’s opinion on whether the financial statements are presented fairly.

The Other Information section is inclusive of the Financial Statement Discussion and Analysis which is included with the audited financial statements. The audit report date is December 24, 2024.

Mr. Speaker, liabilities related to pension and other employee future benefits are included in the “Net Debt” amount disclosed in the Financial Statements and the Government has already started the review of these benefits to ensure their sustainability.

Mr. Speaker, financial highlights of the CF Financial Statements are as follows:

• The all-inclusive result from [both current and capital] on an accounting accrual basis for the year ending March 31, 2024, was a deficit of $161.5M, lower than the prior year’s deficit of $270.5M. The modified cash all-inclusive results from government operations [on the same basis that is shown in the Budget Book] was a deficit of $29.4M. This compares to a deficit of $43.5M that was originally budgeted. Therefore, the actual overall deficit was down by $14.1M when compared to the original estimate. The decreased deficit is primarily a result of higher than budgeted revenues. This deficit reduction is part of the Government’s Medium-Term Expenditure Framework [MTEF] strategy to achieve a balanced budget.
• The total revenue raised by the CF for fiscal 2023/24 was approximately $1.18 billion, representing an increase of $45.6M [4%] from fiscal 2022/2023’s total revenue of $1.13 billion. This exceeded original budget estimates by approximately $21.8M [1.8%]. The most significant generators of revenues for fiscal 2023/24 were Payroll Taxes, accounting for $537.0M or 45.5% of total revenue [2022/23 – $488.1M or 43.2%] and Customs Duty, accounting for $227.6M or 19.3% [2022/23 – $225.1M 19.9%].
• Current expenses for fiscal 2023/24 were $1.28 billion [2022/23 - $1.36 billion]. The three largest components of current expenses were employee costs, grants and contributions and interest on debt. Total employee costs were $584.7M or 45.6% [2022/23 – $622.6M or 45.7%] of total expenses. Grants and contributions were $337.9M or 26.4% [2022/23 – $329.0M or 24.2%] and interest on debt was $129.2M or 10.1% [2022/23 – $136.5M or 10.0%]. Total current expenditure on a modified cash basis was $1.1 billion [2022/23 – $1.1 billion], which was $6.0M [2022/23 – $22.8M more] than original budget estimates.
• The March 31, 2024, total accounts receivable net of provision for doubtful accounts increased by 18.0% to $265.2M, as compared to $224.8M at March 31, 2023. The most significant contributor to the accounts receivable balance before provision was the Office of the Tax Commissioner of $376.1M, [March 2023 - $334.7M] representing an approximate $41.4M increase in accounts receivable. A significant portion of the gross receivable at March 31, 2024, $242.2M represents Payroll Tax which was due and payable on April 15, 2024. During the month of April 2024, the Government collected approximately $170.5M in Payroll Taxes [April 2023 - $144.7M].
• Interest Bearing Debt – Net of the Sinking Fund increased by $129.6M to $3.2 billion at March 31, 2024, from $3.1 billion at March 31, 2023. This was mainly due to the withdrawal of $79.4M from the Excess Borrowing Fund for payroll funding and interest payments and the $50 million of the 2023 BMD$ Senior Notes which matured on December 16, 2023.

Mr. Speaker, in closing I would like to express my sincere appreciation to the Auditor General and her team, the persons in the Accountant General’s Department and persons in other ministries who were involved progressing the audit. The 2023/24 fiscal result is indicative of the Government’s ability to prudently manage discretionary current and capital expenditures. Further, I would note that the statements of the Consolidated Fund provide valuable information on the financial position of the Government, and I would encourage the public to examine these statements.

Thank you, Mr. Speaker.

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