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www.pgfreepress.com ■ auditor general
Province under-reported deficit by $520M John Doyle says many of the stories for losses remain well-hidden Delynda pilon newsroom@pgfreepress.com
If financial statements had been prepared according to generally accepted accounting principles, the province’s deficit for the year would have been $520 million higher than what was reported. “We’ve conducted a financial audit on the summary financial statements,” said auditor general John Doyle. ”When we do that, as we go through each entity, we pick up issues that need to be brought to the attention of management.” The analysis led to four qualifications which have a major impact on the government’s bottom line. “These four qualifications are the top four out of a large number,” Doyle said. The first revolves around natural gas producers. The government told them that they can reduce the amount they pay to the government. “Because government can’t avoid that, it’s called a liability. It should be on financial statements,” Doyle said. Another issue with the records is that, even though the province received money from the federal government, it wasn’t recorded as income, but was, rather, recorded in another way. The Port Mann bridge,
Doyle said, is another issue. “The way the government is treating it is that it is allowed to be amalgamated with all the other financial statements, but in order to be treated that way it must be an entity that sells something and is self-sustaining, but it’s not,” Doyle said. Another issue with the Port Mann bridge statements is the difficulty finding the numbers showing several million in losses in certain contracts. The project will have to recover the money from those losses somehow, which will directly lead to the public paying more for tolls. “These losses means the Port Mann bridge has to recover that money in the future. In other words, tolls have to be higher.” If you add the first three qualifications, Doyle said, it leads to $52 million being understated as the deficit for the year. The fourth qualification, he said, revolves around information being amalgamated in a certain way, causing the numbers to lose a lot of the story behind them. Finding that information leads to the user having the ability to interpret it and figure out the story it tells. Listing financial information in a manner that isn’t along GAAP standards makes it nearly
impossible to find the necessary information, a practice that obscures the story and stands in the way of transparency. Though he was told the information can be found online, and that if a user is interested he or she can look it up, it is virtually impossible to do so. Instead, Doyle said, the story behind the numbers remains well hidden. “What’s happened is there’s not enough information in there to read what I think would be very interesting stories.” In the last 17 years, 13 times an auditor general has made a qualifications on the province’s financial statements. In August of this year, Doyle will release Observations on Financial Reporting: Summary Financial Statements 2011/12. This report will include: further details on the enclosed qualified audit opinion on the Summary Financial Statements; the ongoing implications of deviating from GAAP; other errors in the government’s application of GAAP on which he did not qualify his opinion; areas in which government could improve the quality of financial reporting in the Summary Financial Statements; a summary of control weaknesses noted from audits across the government reporting entity; comments regard-
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A lla n W ISHA RT/ Fre e Pre s s
Coaches from Vancouver Community, left, and Ridge Meadows meet with the umpires before the opening game in the Midget AA Provincial baseball championships. The tournament started Thursday at Citizen Field and Rotary Park and concludes Sunday. ing the future direction of accounting standards; the inefficient transfer of
working capital for colleges and school districts; and qualifications on the
financial statements of organizations in the Government Reporting Entity.
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