August 6, 2012

Auditor general takes issue with B.C. government accounting

RICHARD GILBERT

staff writer

For the second year in a row, the B.C. Government is being publicly chastised by the auditor general for failing to follow fair and transparent accounting principles in relation to the Crown corporation constructing and managing the new Port Mann Bridge.

“In the auditing profession, in both the private and public sectors, a qualified audit report is a rare occurrence. It indicates to the users of the financial statements that some of the information is not auditable or could be misleading,” said B.C. Auditor General John Doyle.

“During the last 17 years, this office has issued qualified audit reports on the province’s financial statements 13 times. For a government that strives for transparency and accountability, this is unacceptable.”

Doyle released the annual report on the provincial public accounts on July 25, which provides details about his audit opinion for government’s 2011/12 financial statement.

The report includes four qualifications on the provincial government’s Summary Financial Statements, which indicates that parts of the statements don’t follow Canadian Generally Accepted Accounting Principles (GAAP).

The impact on the government’s bottom line is a larger deficit than has been previously disclosed.

“If the summary financial statements were prepared fully in accordance with GAAP, the recorded deficit for the year would have been $520 million higher at $2,360 million,” said Doyle.

For one of these qualifications, Doyle is concerned with how the provincial government is consolidating the Transportation Investment Corporation (TIC) on the 2011/12 Summary Financial Statements.

In particular, the government prematurely classified the Transportation Investment Corporation (TIC) as a government business enterprise.

Under Canadian public sector accounting standards, to be classified as a government business enterprise, an organization must maintain its operations and meet its liabilities from revenues received from outside the government reporting entity.

“As of March 31, 2012, the TIC does not have this characteristic and, therefore, is not properly classified as a government business enterprise,” said Doyle.

Had the TIC been properly classified, contractual obligations for taxpayer-supported Crown corporations (transportation) would have increased by $661 million to $1.114 billion in 2011.

The TIC is a public Crown corporation established by the B.C. government in 2008 to undertake the construction and operation of the Port Mann/Highway 1 Project.

The government was instructed by Doyle last year to consolidate TIC into the Summary Financial Statements as a regular government organization or ministry.

This means the organizations financial statement is added into the provinces statement on a line-by-line basis.

However, the government continues to consolidate TIC in the provincial financial statement as a government business enterprise, despite the fact it doesn’t meet the established criteria.

Doyle said the TIC is currently responsible for the construction of the Port Mann Bridge. Until facilities to collect tolls from users are built and operational, it will not be selling a service to anyone.

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