FRIDAY, FEB. 19: MEDIA RELEASE - #3/2010

Auditor General Heather Jacobs Matthews comments on the former Auditor General's final Annual Report which was released today

Auditor General, Heather Jacobs Matthews, has released the final annual report of former Auditor General, Larry Dennis. The report was tabled today in the House of Assembly and covers the work of the Office of the Auditor General up to February 28, 2009 and the accounts of the Government of Bermuda for the year ended March 31, 2008. The 200 page report will be available online next week at www.oagbermuda.gov.bm and a limited number is available in hardcopy at the Office of the Auditor General. Mrs. Jacobs Matthews noted that there are important issues included in the report, but advised that the report is the work of her predecessor. She explained that when she assumed the post of Auditor General on September 1, 2009, the report had not been finalized for publication. "I endeavoured to get the report ready for publication as quickly as possible and this is the earliest opportunity I have had to release it," she said. Mrs. Jacobs Matthews commented that a recurring theme in her predecessor's audit findings in recent years is a pervasive lack of accountability, including the following:

• Inadequate control over bank accounts;

• Accounts in arrears and late financial reporting;

• Lack of proper supporting documentation;

• Denials and qualifications of opinions in audit reports;

• Lack of tendering for major construction projects;

• Failure to comply with Government's Financial Instructions, policies and procedures;

• Failure to comply with legislation;

• Failure to comply with contractual obligations; and

• Unaddressed audit recommendations.



The former Auditor General also speaks of negligence of senior management to carry out their oversight and fiduciary responsibilities, thereby creating an environment conducive to error, misappropriation and fraud. Two of the issues highlighted by the former Auditor General and for which he has called for a police investigation are as follows:

• Poor or non-existent controls over the use of public money directed to Faith-Based Tourism and a lack of due-diligence and compliance with Financial Instructions by senior civil servants disbursing these funds. Faith-Based Tourism was awarded a contract in April 2007 in the amount of $400,000.

• A complete breakdown of internal controls and a pervasive lack of accountability for the expenditure of $20.2 million by the National Drug Commission over the five year period from 2002 to 2006 leading to a denial of opinion in each of those years. The former Auditor General found evidence of fraudulent activity including payment of personal expenses, and a serious lack of Board oversight.

"In this final report of the former Auditor General, he also raises significant concerns with respect to the manner in which spending is controlled, especially for major capital projects", commented Mrs. Jacobs Matthews. She noted that those concerns caused her to qualify her auditor's report on the Government's 2009 Consolidated Fund Financial Statements in respect of three capital projects. Mrs. Jacobs Matthews further indicated that special audits are currently being conducted on two of these projects - the 2nd Cruise Port (Dockyard) and the TCD Emissions and Safety Testing Facilities. On completion, formal reports will be tabled in the House of Assembly and made available to the public at that time.