Nov 2, 2010

Auditor has reservations about the government’s books


For two years in a row BC’s Auditor General has placed reservations on his report that looks at the Province’s finances as set out in the Public Accounts.  This means that the AG disagrees with the way the province is keeping its books on three different issues.  He also presents other ideas on what the government could do better.

Why is this important?  Is it just complex bickering between accountants?  In British Columbia the Auditor General is an independent watch dog on government.  His appointment requires the consent of the legislative Opposition.  He does not report to the government, he reports to the legislature. 

The disagreements between the AG and the government played out in the Public Accounts Committee where once again in October the Auditor General and the Comptroller-General of BC laid out their respective arguments.  Unlike the Auditor General, the Comptroller is an employee of the government.  She was their top accountant.  

Having a reservation placed on the AG’s opinion of your books is a big deal in the accounting world.  It means, in the words of Auditor General James Doyle that there are “areas where the financial statements are not in compliance with Canadian Generally Accepted Accounting Principles (GAAP).”

One of the most important of these reservations relates to the way borrowing to build the Port Mann Bridge is being handled.  The Comptroller argues on behalf of the government that this is self supported debt because at some point in the future, tolls will pay for the bridge. 

The amount of money involved is not small.  When the proposed public private partnership for the bridge project collapsed the government decided to finance the project itself to the tune of $3.3 billion.  But it also did not want to be seen adding to taxpayer supported debt, which is the other kind of debt government accumulates.  It got around this by declaring that the debt was self supporting.

The Auditor General disagrees with this characterization saying in his report from last summer:

The AG feels this should be reported as taxpayer supported debt because it is not currently selling anything and because, since it is currently collecting no tolls, tolls do not pay for its expenses.

This is not the only area where the two auditors disagree about financial obligations taxpayers will pay for.  Currently the Province reports on the amount of “non debt” financial obligations but only if they come to more than $50 million for an individual project.  Under the Liberals “debt” went down until the current financial crisis.  Non debt financial obligations for things like public private partnerships and private power projects went up by more than $20 billion. 

The AG has asked for a lower reporting level.  A lower reporting level would probably make public hundreds of millions of dollars  more worth of financial obligations. 

All told, this is about transparency in government spending and finances.  This is just as important as what happened in the 2009 election when the government knew its claims about the deficit were completely false and when many people believe they knew they were going to bring in the HST.

Are disputes among accountants dull?  Not when they come to issues like this.

Topics: ,