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.oagbenmtda.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, 2004 and the statement of revenues and expenses and deficit 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 paragraphs, 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 claims expense of $29,717,123 and claims payable of $6,387,880. As a result, I
was unable to determine whether adjustments might be necessary to claims expense, deficiency
of revenues over expenses, liabilities and deficit.
In addition, in respect of the year ended March 31, 2003, I qualified my opinion with respect to
the lack of audit evidence relating to claims expense and claims payable. As a result, I am
unable to satisfy myself over the accuracy of opening net assets at April 1, 2003.
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 claims expense, claims payable, and opening net assets as
described in the preceding paragraphs, these financial statements present fairly, in all material
respects, the financial position of the Government Employees Health Insurance Fund as at March
31, 2004 and the results of its operations and its cash flows 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
June 1,2007

299

GOVERNMENT EMPLOYEES HEALTH INSURANCE FUND
BALANCE SHEET
MARCH 31, 2004

2004

2003

$

$

ASSETS
CURRENT ASSETS
Due from the Consolidated Fund of the Government of
Bermuda (note 3)
Premiums receivable
Portability receivable
Other receivable

8,351,860
979,918

1,157,777
321,449
215,036
1,694,262

9,331,778

90,000

CAPITAL ASSETS (note 4)

1,784,262

9,331,778

62,625

180,525

LIABILITIES AND NET ASSETS
CURRENT LIABILITIES
Accounts payable and accrued liabilities
Due to the Consolidated Fund of the Government of
Bermuda (note 3)
Claims payable to Bermuda Hospitals Board
Other claims payable
Portability received in advance
Contributions received in advance

831,269
1,353,471
5,034,409

8,785,121

8,161,570

(7,000,859)

1,170,208

1,784,262

(DEFICIT) NET ASSETS

1,503,347

1,547,052
5,010,105
24,541
1,399,347

9,331,778

The accompanying notes are an integral part of these financial statements.
300

GOVERNMENT EMPLOYEES HEALTH INSURANCE FUND
STATEMENT OF REVENUES AND EXPENSES AND DEFICIT
FOR THE YEAR ENDED MARCH 31, 2004

2004

2003
$

REVENUES
Contributions
Interest

22,920,734
305,821

22,019,268
854,880

23,226,555

22,874,148

29,717,123
1,123,388
443,710
42,018
22,424
20,000
10,787
8,000
1,514

8,658

25,666,917
1,405,621
564,104
117,475
73,000
20,000
11,426
24,000
6,496
121,212
40,374
12,682
1,527

31,397,622

28,064,834

(8,171,067)

(5,190,686)

1,170,208

6,360,894

(7,000,859)

1,170,208

EXPENSES
Claims
Premiums - Mutual Re-insurance Fund (note 5)
Salaries
Loss due to theft (note 6)
Administration
Audit fees
Postage
Actuarial fees
Supplies
Provision for bad debts
Consulting
Furniture, computer hardware and software
Miscellaneous

DEFICIENCY OF REVENUES OVER EXPENSES
NET ASSETS, BEGINNING OF YEAR
(DEFICIT) NET ASSETS, END OF YEAR

The accompanying notes are an integral part of these financial statements.
301

GOVERNMENT EMPLOYEES HEALTH INSURANCE FUND
NOTES TO THE FINANCIAL STATEMENTS
MARCH 31,2004

1.

AUTHORITY
The Government Employees Health Insurance Fund ("the Fund") was established under the
Government Employees (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) Basis of presentation
These financial statements are prepared on the going concern basis, meaning the Fund
will continue in operation for the foreseeable future and will be able to realize assets
and discharge liabilities in the normal course of operations. They present the
aggregate financial position of the Fund as a separate financial reporting entity
independent of the Government of Bermuda and its employees. The financial
statements show only the net assets available for benefits of the Fund and do not
purport to show the adequacy of the Fund to meet future obligations.
(b) Capital assets
Expenditures for items such as computers, furniture and fixtures, and other office
equipment in excess of $5,000 and software with development costs in excess of
$20,000 are capitalized at cost.
Capital assets are amortized on a straight-line basis over the estimated useful lives of
the asset, as follows:
Computers
Office equipment
Furniture and fixtures
Software

3 years
5 years
7 years
10 years

(c) Revenue recognition
Contributions and interest revenues are recognized when earned. Amounts earned but
not received at year end are recorded as receivables.

302

GOVERNMENT EMPLOYEES HEALTH INSURANCE FUND
NOTES TO THE FINANCIAL STATEMENTS
MARCH 31, 2004

2.

SIGNIFICANT ACCOUNTING POLICIES (continued)
(d) 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 deficit.
(e) 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.

3 DUE FROM/TO THE CONSOLIDATED FUND OF THE GOVERNMENT OF
.
BERMUDA
The amount of $831,269 due to (2003 - $8,351,860 due from) the Consolidated Fund of the
Government of Bermuda represents the net position of expenses paid and certain revenues
received by the Consolidated Fund on behalf of the Fund. The rate of interest accruing on
the balance is 7% per annum.
4.

CAPITAL ASSETS
The balance of capital assets represents amounts paid to develop GEHI claims software.
This software was still in development as of March 31, 2004. Subsequent to year end, the
GEHI claims software was ready for use on April 1, 2006. As a result, amortization of the
software will begin in the 2006/2007 fiscal year.

5.

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, home health care, kidney
transplants and the required anti-rejection drugs.

303

GOVERNMENT EMPLOYEES HEALTH INSURANCE FUND
NOTES TO THE FINANCIAL STATEMENTS
MARCH 31, 2004

6.

LOSS DUE TO THEFT
An employee of the Fund was convicted of submitting fictitious claims approximating
$160,000 for fiscal years 2003 and 2004. Thus, his employment was terminated. As of
April 2007, approximately $31,500 has been recovered.

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 Bermuda.
All transactions between the Government Employees 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.

304