The Legislature Raids

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BC Mary comment: Dearie me, what's come over the good Reverend Palmer today?? Has he seen some significant handwriting upon the wall or something?

The government of ‘accountability’ taken to task for its bookkeeping

By Vaughn Palmer,
Vancouver Sun columnist - Sept 30, 2011

VICTORIA - Auditor-General John Doyle’s latest verdict on the B.C. Liberal government’s bookkeeping can be reduced to a single word: “Unacceptable.”

The longer version of the independent financial watchdog’s “observations” on provincial financial accounting was spread over a 54-page report, released Thursday in Victoria.

Doyle cited the Liberals for a range of accounting errors, some major, some minor, some debatable, others falling under the heading of just plain wrong.

One of the latter concerns prompted him to brand the B.C. public accounts with the most damning label in the auditing lexicon — a “qualification,”  meaning that in one key respect, “the information is not auditable or is misleading.”

Such findings are supposed to be a “rare occurrence” in the realm of public-sector auditing, but that has not been the case in B.C.

“During the last 15 years, this office has issued qualified audit reports on the provincial financial statements 12 times,” said Doyle, referring to his own tenure and that of four predecessors. “For a government that strives for transparency and accountability, this is unacceptable.”

Some overlap there with the term of the previous New Democratic Party administration. But the B.C. Liberals took office a decade ago promising to implement the highest standards for public sector accounting. Whereas Doyle rounded on them for several decisions that defied those standards.

He challenged the government’s recent decision to exempt itself from a key provision in accounting standards, thereby continuing the practice of deferring hundreds of millions of dollars in costs at BC Hydro. Without that escape clause the deficit would be half a billion dollars larger this year alone.

He also elevated a growing concern about long-term contractual obligations, undertaken as part of public-private partnerships and other contracts. They currently total $80 billion, an almost three-fold increase in five years, largely because of long-term power purchases by BC Hydro.

The government reports a running tally in the fine print of the public accounts, a point noted here previously. It thereby meets the bare minimum requirements of public sector accounting standards, a point Doyle concedes.

But he goes on to say that’s not good enough to satisfy the broader public interest in accountability.

“The expected payment streams associated with these obligations directly impact the remaining amount of discretionary funds available to government to meet future needs,” wrote Doyle, as he urged the government to disclose considerably more detail to help taxpayers better understand the multi-billion-dollar commitments being undertaken in their name.

The Liberals insist that many of Doyle’s findings — he cites 77 errors of one kind or another — amount to no more than a clash of accounting philosophies between the auditor-general and the in-house comptroller-general.

Doyle acknowledges that sometimes “we agree to disagree.” Still he insists that all errors should be fixed: “Call me old-fashioned if you like.” According to the running tally in the report, only half of the identified errors were rectified, the rest being dismissed by the government as “not significant” (25) or a matter of opinion (14).

On the clash of philosophies, Doyle says “that’s a nice line,” but sometimes the government is “just plain wrong.”

Heading that list is the matter that provoked his decision to put a qualification on the books, namely the government’s persistence for the third year in a row in treating the Port Mann Bridge project as a self-supporting enterprise.

The B.C. Liberals maintain that the overseer agency for the Port Mann, the Transportation Investment Corp., qualifies as “a government business enterprise” because “it is able to maintain its own operations from revenues raised outside the government reporting entity. The corporation will support its operations from toll revenue.”

Doyle: “The new bridge is under construction. Until it is built and the toll booths are operational, it will not be ‘selling’ a service to anyone. The only revenue source the corporation has at present is the interest income being earned on the funds provided by government debt.”

Moreover, a lot of “high-risk assumptions” have gone into the assertion that the twinned Port Mann, when fully up and running in 2013, will bring in enough tolling revenue to service a projected $3.3-billion debt plus hefty operating costs.

Just think of the way TransLink’s new Golden Ears Bridge has fallen short of delivering its projected revenue streams, never mind the precarious  state of the economy overall.

The financial shape of things to come was very much on Doyle’s mind as he prepared his report, he told me during an interview Thursday.

These are times of “very limited financial flexibility.” Provincial spending, debt and obligations are on the rise. Only revenues are flat. “Good financial management is critical.”

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Read more: http://www.vancouversun.com/news/Opinion+government+accountability+taken+task+bookkeeping/5480274/story.html#ixzz1ZSPfTmrH