Govt Account Receivables Reach $482 Million

Government accounts receivable increased from $405 million in 2023 to $482 million in 2025, an increase of approximately $77 million and equating to approximately $7,531 per Bermuda resident, according to a new audit by the Auditor General.

A spokesperson said, “The Auditor General, Heather Thomas, has completed an audit of the Government of Bermuda’s management of accounts receivables and outstanding debt, finding significant opportunities to strengthen the collection of monies owed to Government and improve the Government’s financial management practices.

“Government accounts receivable increased from $405 million in 2023 to $482 million in 2025 – an increase of approximately $77 million.

“The 2025 balance equates to roughly $7,531 per resident of Bermuda.

“The audit assessed whether the framework, processes, procedures and controls established by Government to manage accounts receivable and outstanding debt were operating as intended.

“Ms. Thomas said the growth and ageing of receivables presents a financial risk because unpaid amounts reduce funds available to Government to deliver public goods and services and finance government debt, initiatives, and programmes.”

“Accounts receivable represents amounts owed to the Government of Bermuda by customers for goods or services provided. As receivable balances grow or remain outstanding for longer periods, the risk of bad debt increases. Unpaid receivables become debts owed to the Government, reducing the funds available to deliver public goods and services and to support government debts, initiatives and programmes”.

A spokesperson added, “The audit examined the five departments with the highest accounts receivable balances over the three fiscal years 2023, 2024, and 2025.

*Average receivable turnover in days- this is the number of days it takes for the department to receive payment after it has issued an invoice or bill. For example, it takes the Judicial Department an average of 488 days to receive payment for an invoice it has issued.

“The findings highlight significant differences in collection performance across the departments reviewed. Works and Engineering Department had the longest average collection period at 695 days, followed by the Judicial Department at 488 days. The Office of the Tax Commissioner, which had the largest average receivable balance at 372 million, had an average turnover period of 183 days.

“The audit identified a number of factors that may have contributed to the increase in the accounts receivable. The Auditor General noted that consensus on the root causes was not reached across all departments; however, the departments all outlined some activities contributing to resolution of the underlying issues.

“The factors identified include:

• “Weak enforcement – The departments reviewed noted that restrictions in section 22 of the Public Treasury [Administration and Payments] Act 1969 has contributed to the increase in the accounts receivable balance. The legislation limits the Minister’s authority to approve the waiver or deferral of public money payments, and waivers can only be granted within the same financial year in which the public money is waived or deferred. In other words, the legislation provides that collection on accounts should be completed within one year of the balances due.  But what happened is that accounts receivable continued to grow without the corresponding collection that was expected.

• “Lack of accountability- As management usually makes an estimate of doubtful accounts [or uncollectible allowance] for financial reporting purposes, this may have affected the extent of effort given to collect receivables. In addition, the departments face constraints in addressing these circumstances [a] resource limitations, [b] organization structure, [c] cost-benefit ratio, [d] self-reporting, [e] leverage.

• “System limitations- The accounting systems used by departments reviewed did not have adequate receivables management and reporting application.

• “Poor data quality- Departments were unable to accurately determine the validity and accuracy of the outstanding receivables due to inaccurate or incomplete information captured at the time the transactions were initiated.

• “Cultural tolerance of non-payment- Government is engaged in providing public services, not primarily based on people’s capacity or non-capacity to pay.

• “Silo operations- There is no formal or structured collaboration among the departments to share information to facilitate debt collection.

• “Political influence over operations decisions- Departments may receive recommendations from their ministries, to defer collection on account, and other solutions.

“The report emphasizes that Government must move beyond simply reporting receivables and place greater emphasis on collecting amounts owed.

… ‘Receivables have no value until collected.’ The report highlights the importance of converting outstanding balances into cash as a key performance measure for every revenue-generating department.

“The audit identified several opportunities to strengthen Government-wide receivables management, including:

• “Integrating knowledge transfers into the routine processes and across departments.

• “Providing continuous training and guidance to maintain timely, complete and reliable records and to facilitate timely collection efforts.

• “Ensuring departments have relevant systems and procedures in place [either manual, automated or a combination] for the process to be effective.

• “Enabling cross-sharing of information among interrelated departments and other government entities.”

The Auditor General stated “Departments reviewed should take up their receivable management processes with more rigor and effort, to see improvement in the performance indicators.  Those departments that were not scoped-in, to review their processes and the findings within this report”.

The full report from the Auditor General can be accessed via the banner below or here [PDF]

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