Auditor General Michael Pickup submitted a report to the BC Legislature titled Summary Financial Statements Audit: Supporting the Role of MLAs. It is to assist understanding of the province’s annual financial statements.

This will seem like old news. The BC government has chosen not to follow Canadian public sector accounting standards. These are carefully formulated by authoritative professionals to ensure financial statements are fair, complete, consistent, and comparable from one period to another.

Governments typically value political advantages over accurate reporting of financial information. Transparency is not a priority. BC politicians have decided not to follow generally accepted accounting principles, preferring to set their own standards through legislation.

The role of Auditors General is to review, assess, and report. They exercise little control over financial statements, AGs rely on the power of persuasion. This is first exercised privately and if resolved, the issues will be largely unknown. Failing agreement on how material financial matters are reported, the AG issues a qualified opinion about the fairness and appropriateness of statements under review.

This is the 16th time the BC Auditor General has concluded the province’s financial statements were not fairly and accurately presented. The government simply says, “We don’t agree.” A private business taking that approach would quickly be in trouble with its bankers, investors, and probably the tax department.

In the November report, the AG states why the qualified opinion is important:

• We qualified our audit report because of three significant areas (material misstatements) where government’s financial statements don’t adhere to Canadian Public Sector Accounting Standards.

• Qualified audit reports are rare.

• MLAs using the statements to assess accountability and for decision making can’t depend on the accuracy of them without considering the misstatements.

• Other accounting errors were identified and reported to the comptroller general. The resulting corrections added $134 million to the surplus.

• We have issued a qualified Independent Auditor’s Report in each of the past 16 years with 38 material misstatements over that period.

The specific issues concerning the Auditor:

• BC defers recognition of $7 billion in revenues already received. If that sum were included, financial statements would show a sizeable surplus.

• Government fails to disclose $5 billion that it is committed by contract to spend in the future. Contractual commitments arising from private financing of public projects have been used to minimize reporting of public debt.

• Government does not report revenue and expenses related to transfers of $114 million in gaming revenues under the First Nations Gaming Revenue Sharing Agreement. This may result in non-disclosure of cash recipients, a recipe for fraud or improper payments.