With the first quarter of British Columbia’s current fiscal year ending, public agencies and crown corporations will soon release annual reports and audited financials for the year ended March 31, 2012.
A vast quantity of money is wasted, filling these PR publications with purple prose and graphics that few persons read, beyond the creators. Serious analysts pay attention to audited financial statements but rather little else is of interest in documents of management self-justification.
After the Fukushima nuclear disaster, I bet the annual report of the Tokyo Electric Power Company talked not of disaster but of unprecedented opportunities to modernize and renew operations.
Like other armchair auditors, I aim for a better understanding of public spending through review of annual reports. Unfortunately, most content is not designed to inform, it’s intended to promote the subject organizations and ensure that analysis is difficult. Publications are issued almost exclusively as pdf images, files that hamper data extraction. Additionally, reports tend not to be consistent from year to year nor from one agency to another. Nor do they routinely match other government data purporting to explain the same operations. I’ve often encountered this situation in reviewing executive remuneration.
Probably worst of all is that material amounts and situations are often given no more weight than comparatively minor issues, particularly if inconvenient. For example, BC Hydro’s last financial statements commit only five sentences to “Liquidity Risk”, the possibility that BC Hydro will encounter difficulty in meeting obligations associated with financial liabilities. Commitments under BC Hydro’s energy purchase agreements increased from $17 billion to $43 billion in fiscal 2011 alone yet the Annual Report provides almost no explanation and no trend expectations. It covers that amazing change with this statement:
“BC Hydro does not believe that it will encounter difficulty in meeting its obligations associated with financial liabilities.”
In British Columbia, it’s easy to be cynical but I see signs the Liberals are headed for rough times as detailed financial matters are revealed. The strongest indicator is delay. When corporations or agencies drag their feet issuing financials, arguments may be raging between external auditors and the spin doctors. When news is awkward, the PR staff must work on excuses and refined presentations. That results in delay. Last year, BC Hydro’s audited financial statements were dated May 18, 2011; the year before, May 10, 2010. Here it is mid-June and we’re still waiting for BC Hydro’s 2012 financials.
Hydro’s third quarter statement suggested BC consumers should be concerned. While the quantity of energy purchased was down by 1.5% compared to the same period a year before, the cost of energy was up by 33%. Notes to the unaudited quarterly financial statements fail to disclose Hydro’s energy purchase commitments although it repeats the relatively insignificant contingency arising from California pricing disputes in 2000 and 2001. This, I’m afraid, is the standard for financial disclosure in British Columbia. They’ll report harmless information and withhold the meaningful.
The Clark Liberals claim a commitment to open government and boast about granting citizen access to a broad range of datasets, such as birth rates, carbon emissions statistics and information on schools. Just don’t expect anything that reveals their incompetence.
Between 2005 and 2010, the average date Pavco’s financials were complete was May 12. This year, we have no financials but we have lawsuits and a spate of resignations, including that of CEO Warren Buckley and directors Peter Brown and Derek Brindle. Along with executive turnover, Pavco’s delay in issuing financials and its failure to report on the final costs of rebuilding BC Place suggest the real news, when we get it, will not be good news.
Financials of the British Columbia Investment Management Corporation have historically been dated May 13 but as of June 17, the 2012 financials statements are not issued.
Until 2010, BC Ferries annual financial statements were dated, on average, May 12. As of June 17, 2012, they are still not available to the public although financial information was released to media late last week. Given the delay, not surprisingly, the company is reporting its worst ever operating loss. Spinmaster and CEO Mike Corrigan claims the result is actually good news since they had budgeted for an even larger loss.
Yeah, right. More good news like that we don’t need.
The Profiligate BC Hydro, Erik Andersen, The Common Sense Canadian, June 18, 2012