Office of the Auditor General Victoria Hall 11 Victoria Street Hamilton HM 11, Bermuda Tel: (441)296-3148 Fax: (441)295-3849 Email: auditbda@gov.bm Website: www.oagbermuda.gov.bm AUDITOR'S REPORT To the Minister of Finance I have audited the balance sheet of the Government Employees Health Insurance Fund as at March 31, 2001 and the statement of revenues and expenses and fund equity for the year then ended. These financial statements are the responsibility of the Fund's management. My responsibility is to express an opinion on these financial statements based on my audit. Except as explained in the following paragraph, I conducted my audit in accordance with auditing standards generally accepted in Bermuda and Canada. Those standards require that I plan and perform an audit to obtain reasonable assurance whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. I was unable to obtain sufficient appropriate audit evidence to support the accuracy and completeness of contributions revenue of $20,127,924. As a result, I was unable to determine whether any adjustments might be necessary to contributions, excess of revenues over expenses, assets and fund equity. In my opinion, except for the effect of adjustments, if any, which I might have determined to be necessary had I been able to verify contributions revenue as described in the preceding paragraph, these financial statements present fairly, in all material respects, the financial position of the Government Employees Health Insurance Fund as at March 31, 2001 and the results of its operations for the year then ended in accordance with accounting principles generally accepted in Bermuda and Canada. Larry T. Dennis, C.A. Auditor General Hamilton, Bermuda March 21, 2003 226 GOVERNMENT EMPLOYEES HEALTH INSURANCE FUND BALANCE SHEET MARCH 31, 2001 2001 2000 $ $ 12,752,426 79,588 10,357,728 12,892 12,832,014 10,370,620 ASSETS CURRENT ASSETS Due from the Consolidated Fund of the Government of Bermuda (note 3) Premiums receivable LIABILITIES AND FUND EQUITY CURRENT LIABILITIES Accounts payable and accrued liabilities Claims payable to Bermuda Hospitals Board Other claims payable Premiums payable to Mutual Re-insurance Fund (note 5) Portability received in advance Contributions received in advance 71,500 1,136,357 4,534,437 7,234,398 7,562,839 5,597,616 2,807,781 12,832,014 FUND EQUITY 88,000 999,226 4,230,867 87,822 333,108 1,495,375 10,370,620 J*' ' ? 489,479 1,331,066 The accompanying notes are an integral part of these financial statements. 227 w v GOVERNMENT EMPLOYEES HEALTH INSURANCE FUND STATEMENT OF REVENUES AND EXPENSES AND FUND EQUITY FOR THE YEAR ENDED MARCH 31, 2001 2001 2000 $ $ 20,127,924 772,506 18,352,943 616,402 20,900,430 18,969,345 16,759,011 1,040,170 253,500 24,700 16,500 7,272 5,131 3,310 1,001 15,856,560 926,399 249,100 27,400 16,500 2,066 3,014 8,270 1,739 400,000 18,110,595 17,491,048 EXCESS OF REVENUES OVER EXPENSES 2,789,835 1,478,297 FUND EQUITY, BEGINNING OF YEAR 2,807,781 1,329,484 FUND EQUITY, END OF YEAR 5,597,616 2,807,781 REVENUES Contributions (note 4) Interest EXPENSES Claims (note 4) Premiums - Mutual Re-insurance Fund (note 5) Salaries Administration Audit fees Supplies Postage Actuary Telephone Reinsurance (note 6) The accompanying notes are an integral part of these financial statements. 228 GOVERNMENT EMPLOYEES HEALTH INSURANCE FUND NOTES TO THE FINANCIAL STATEMENTS MARCH 31, 2001 1. AUTHORITY The Government Employees Health Insurance Fund ("the Fund") was established under the Government Employee (Health Insurance) Act 1986 and its subsequent amendments. The Fund provides health insurance benefits for government employees, Ministers and Members of the Legislature, and their enrolled dependants and covers medical expenses, such as hospital stays, doctor's visits and prescription drugs. The Fund derives its revenue from contributions received from its members and the Consolidated Fund of the Government of Bermuda. Enrolment in the Scheme is compulsory for all government employees and voluntary for Ministers and Members of the Legislature. Contributions are matched by an equivalent amount from the Consolidated Fund. 2. SIGNIFICANT ACCOUNTING POLICIES The financial statements have been prepared in accordance with accounting principles generally accepted in Bermuda and Canada and include the following significant accounting policies: (a) Translation of Foreign Currencies The financial statements are reported in Bermuda dollars. The Bermuda dollar is at par with the United States dollar. Assets and liabilities are translated at the exchange rate prevailing at the balance sheet date. Revenues and expenses are translated at the exchange rate in effect of the transaction date. Translation gains and losses are included in the statement of revenues and expenses and fund equity. (b) Use of estimates The preparation of financial statements in accordance with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues earned and expenses incurred during the year. Actual results could differ from these estimates. 229 GOVERNMENT EMPLOYEES HEALTH INSURANCE FUND NOTES TO THE FINANCIAL STATEMENTS MARCH 31, 2001 3. DUE FROM THE CONSOLIDATED FUND OF THE GOVERNMENT OF BERMUDA The amount of $12,752,426 (2000 - $10,357,728) due from the Consolidated Fund of the Government of Bermuda represents the net position of certain revenues received and expenses paid by the Consolidated Fund on behalf of the Fund, which has not yet been reimbursed. The rate of interest accruing on the balance is 7% per annum. 4. PRESENTATION OF THE FUND The Government Employees Health Insurance Fund (GEHI) and the Supplementary Insurance Scheme Fund (SIS) have been combined as of April 1, 1996. The two Funds fall under the Government Employee (Health Insurance) Act 1986 and its subsequent amendments and, in management's opinion, should be presented together. 2001 $ Contributions GEHI SIS 2000 $ 19,559,056 568,868 20,127,924 15,503,047 353,513 16,759,011 5. 18,352,943 16,273,700 485,311 Claims GEHI SIS 18,092,760 260,183 15,856,560 PREMIUMS - MUTUAL RE-INSURANCE FUND The Fund pays premiums to the Mutual Re-insurance Fund which provides reinsurance for the costs of haemodialysis treatment, long-stay hospital care, hospice care and diabetic counselling. 6. REINSURANCE In prior years, reinsurance was purchased for claims in excess of $100,000. reinsurance was not purchased for the current year. 230 This GOVERNMENT EMPFOYEES HEALTH INSURANCE FUND NOTES TO THE FINANCIAL STATEMENTS MARCH 31, 2001 7. RELATED PARTY TRANSACTIONS The Bermuda Hospitals Board, the Mutual Re-insurance Fund, the Consolidated Fund and the Government Employees Health Insurance Fund are under the common control of the Government of Benmida. All transactions between the Government Employee Health Insurance Fund and the related parties are in the normal course of operations. 8. STATEMENT OF CASH FLOWS A statement of cash flows has not been prepared as it would not provide additional useful information. 9. COMPARATIVE FIGURES Certain comparative figures have been restated to conform to the current year's presentation. 231