Thank you, Mr. Chairman. An Act to Amend the Financial Administration Act, No. 2, is being proposed to respond to concerns that have been raised by the Auditor General and the standing committee on public accounts in previous years. Mr. Chairman, under the present act the legislation restricts authorized expenditures from exceeding the budget at the activity level. However, in each of the years since the Financial Administration Act was assented to in 1987, overexpenditures at the activity level have occurred.
The government has thoroughly considered this issue in cooperation with officials from the Auditor General's office. We have determined that it is unworkable to try legislatively prevent overexpenditures at the activity level. For example, it is common for the government to receive invoices subsequent to year end and in substantially larger amounts than were anticipated. These increased costs and other year end accruals can occur even though management has taken all reasonable steps to control expenditures. Rather than retaining legislation which is unworkable, the Auditor General and the previous Assembly's standing committee on public accounts recommended that the provisions related to activity budgets be amended. The government is proposing that instead of it being a breach of legislation for an overexpenditure to occur, such an occurrence be dealt with by management accountability and recording.
Mr. Chairman, with this amended legislation all overexpenditures will continue to be reported in the public accounts. The proposed amendments will also bring the act into tine with government standards and will hold management accountable for the actions they take.
Finally, overexpenditures that exceed the total department budget will continue to be a breach of legislation. Thank you, Mr. Chairman.