Auditor General says B.C. government should adjust its accounting method


Finance Minister Selina Robinson announced that British Columbia’s public accounts recorded an “unexpected” surplus of $1.3 billion.

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VICTORIA — British Columbia’s auditor general is defending his criticism of the provincial government because of a long-standing difference of opinion over how certain public accounting numbers should be calculated.

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Michael Pickup said Thursday he thinks the Department of Finance should change the way it reports on payments from other governments and non-government sources.

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The ministry, meanwhile, said it could mislead the public into thinking there is more money in the safe than is immediately available.

On Wednesday, Pickup’s office said the 2021-22 surplus announced by the government this week should have been several billion dollars higher.

“Each year, my office is mandated to report whether the government’s financial statements are fairly presented in accordance with generally accepted accounting principles,” Pickup told reporters.

“My job is to report what I see, it’s to report what I believe, it’s to give the opinion I believe. So I think those things should be fixed.

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On Tuesday, Finance Minister Selina Robinson announced that British Columbia’s public accounts recorded an “unexpected” surplus of $1.3 billion, in stark contrast to a projected deficit of nearly $10 billion.

She said the improved results could be attributed to the reopening of the economy and the resulting increase in tax revenue, one-time federal contributions for COVID-19 and disasters, increased revenues of natural resources and the increase in the profits of state-owned companies, in particular at Insurance Corp. from British Columbia

The problem between the Auditor General’s office and the department is how earmarked grants are on the books.

Pickup argued Thursday that federal government funds, for example, should be counted as revenue rather than deferred revenue — an adjustment that would add $6.5 billion to the surplus.

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However, the Department of Finance said it records the figures this way for grants spanning multiple years so that reported revenues more accurately reflect their allocation over time, rather than appearing as a lump sum.

When Pickup raised the same concern last year, he said it didn’t mean the money hadn’t been properly accounted for or was somehow missing, but rather a disagreement over how of which it was written.

Robinson said on Tuesday that the auditor had expressed dissatisfaction with the reporting of deferred revenue for restricted grants since the 2011-12 fiscal year.

“If the federal government provided contributions to build a school, we would be expected to build a school and use it as a school. Accounting requires us to amortize this school over 40 years, declaring an expense in each of those 40 years as the school is used to provide education,” Robinson said Tuesday in a public accounts update. .

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“From a tax perspective, it makes sense to recognize federal contributions as revenue on that same basis. We are not alone in this treatment, other provinces continue to defer restricted contributions as it better serves our accountability to the public.

Pickup said its method aligns with Canadian public sector accounting standards, which are generally accepted accounting standards for senior levels of government.

The problem was one of three so-called reservations identified by Pickup in the government’s summary financial statements.

The second issue with what Pickup said was incomplete disclosure of future expenditures, resulting in understatement of contractual obligations by $708 million in 2023 and $315 million in 2024.

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The third related to the gaming revenue-sharing agreement with BC First Nations, which the audit office said was a $91 million understatement of the agreement’s revenues and expenses. .

Robinson said on Tuesday that the revenue reported by the government does not include the First Nations share because it belongs to the First Nations, not the provincial government which distributes it.

“The Comptroller General assures me that our recognition is in accordance with generally accepted accounting principles,” she said.

“Our current disclosure includes all material and material obligations under a contract or agreement that will result in future expenditures.”

  1. BC Auditor General Michael Pickup.

    Auditor general casts doubt on British Columbia’s books, says surplus was $6.5 billion higher

  2. Finance Minister Selina Robinson said more tax revenue thanks to a booming post-pandemic economy, a one-time federal government boost for COVID and natural disasters, higher natural resource revenues and profits higher net worth from Crown corporations such as ICBC and BC Lottery Corp.  helped the province get back into the black after a $9.7 billion deficit projected in the 2021 budget.

    British Columbia ends 2021-22 fiscal year with $1.3 billion surplus thanks to post-pandemic economic boom

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