Thank you, Madam Speaker. I would like to present the report of the Standing Committee on Public Accounts. It reports on the review of the financial statements of the Government of the Northwest Territories and the report of the Auditor General for Canada for the fiscal year ending March 31, 1993.

Executive Summary

Madam Speaker, the public accounts for 1992-93 were tabled in the Legislative Assembly in November of 1993 and the Auditor General's report was received in April, 1994. The Standing Committee on Public Accounts conducted its public review of the report on June 20 to June 23, 1994 and also met on August 25, 1994 to prepare this report for the Legislative Assembly.

The public review initially consisted of a follow-up on issues and concerns of the standing committee from the previous year. Much of the focus was on the emerging role of the office of the Comptroller General resulting from the organizational changes within the government. The committee is concerned that combining the office of the Comptroller General with the Secretary to the Financial Management Board not lead to problems with respect to crucial information flow and accountability. In addition, the committee examined the audit and evaluation functions and noted that high priority must be given to staffing and allocation of sufficient resources to fulfil evaluation objectives. The Finance committee of the Legislative Assembly should ensure that adequate checks and balances are maintained in the system and that evaluation subscribes to the highest levels of integrity and objectivity.

It was also noted that there had been an increase in the occurrence of fraud being perpetrated against the government, the investigation of which resulted in the diversion of substantial resources away from the regular audit activities.

The committee discussed several issues noted in the Auditor General's report with the Comptroller General. Among these were the implications and impacts of the health billings dispute, the pay equity dispute, and the policing costs associated with the Royal Oak labour dispute. In light of the potential negative impact on the financial stability of the government, the committee encourages a conservative and responsible approach to financial planning and management.

The Auditor General noted that there had, once again, been delays in the preparation of financial statements, particularly those of consolidated entities, such as the NWT Development Corporation and the NWT Business Credit Corporation. Dependence upon subsidiaries' statements, and lack of internal resources were cited as the primary reasons for the delays. The Auditor General suggested allocating more resources to the office of the Comptroller General to assist these entities. However, the Comptroller General advised the committee that additional resources have been allocated to the entities, themselves, to address the situation.

The Auditor General noted a number of overexpenditures in 1992-93 due to a variety of factors. In general, the committee discussed the overexpenditures with the appropriate officials and encourages departments and agencies to identify potential resource needs at an earlier stage wherever possible, so they can approach the Legislative Assembly for supplementary funding. Tabling a comprehensive listing of payments to suppliers and contractors on a quarterly basis will also enable the Legislative Assembly to monitor financial resources more closely.

The committee discussed the government's cash position in 1992-93 with the Department of Finance and noted that, while the situation has improved compared to the previous year, in 1993-94, the deficit in the cash position was roughly $38 million. In addition, forecasts for 1994-95 predict a deficit in the cash position of $78 million at year end. The committee stresses that, given the present situation, the potential impacts of health billings, pay equity, and police costs disputes, the cash position must be closely monitored and up-to-date information provided on a regular basis to the Legislative Assembly and to the Finance committee.

In chapter three, of the Auditor General's report, some problems were noted with the recording of capital expenditures. According to the financial administration manual, expenditures are to be recorded in the year they are incurred, not when they are actually paid. On a number of occasions, the Department of Municipal and Community Affairs did not accrue liabilities for work performed in 1992-93 in municipalities because the contribution agreements weren't signed until the following year. The committee is concerned that proper accounting procedures are followed and that authority of the Legislative Assembly to approve capital planning and spending is not circumvented.

In its 1991 report, the Public Accounts committee made several recommendations regarding the development of an assets control system for the Government of the Northwest Territories. While such a system is the responsibility of each department, the Public Works and Services model is the most widely used. Generally, departments are in various stages of implementing inventory control systems for both capital and controllable assets.

Closely related to inventory control is the issue of custodial storage and warehouse procedures which was raised by the Auditor General in 1991. The Department of Public Works and Services is presently conducting a review of these procedures which will include an inventory of all government warehousing facilities and stock currently being maintained, and a plan for privatizing warehousing. The current practices of maintaining and storing valuable artifacts were discussed, and there are indications that the GNWT policy is required in this area. Due to the specialized nature of the facilities also required for abstract storage, it is anticipated that the pending privatization plan will address this issue.

Another related issue that concerned the committee is the future direction of records management and storage. The committee felt that, if storage space is limited, it would be wise to investigate alternative methods using the latest technology at the same time that departments are encouraged in addressing the operational requirements of records management such as, what to keep and for how long.

Approximately 40 per cent of the total unconsolidated government expenditures in 1992-93 were grants or contributions. In consideration of such a large portion of the government's budget being given mostly to boards and agencies to deliver programs and services, it is imperative that financial controls and accountability are maintained. The Department of Health and Social Services assured the committee that communication and working relationships will be addressed and improved through the negotiation of the master memorandum of understanding to be completed by December 1994.

Similar issues were highlighted with respect to boards of education. The Department of Education, Culture and Employment informed the committee that six of seven boards have signed MOUs as the base of their relationship with the department. However, the department is currently revising the Education Act which is expected to provide a legislative framework for the boards' responsibilities and define accountability mechanisms.

The committee discussed several other issues noted by the Auditor General with the relevant departmental officials. The possibility of further investigating the use of video-conferencing technology to cut down on travel and other costs was examined, and a future requirement in public accounting sector for assessing and recording restoration costs incurred through environmental liability were discussed with both the Comptroller General and the Department of Renewable Resources.

In order to address a number of these issues and deal with specific areas of concern, the Standing Committee on Public Accounts made the following recommendation.

Recommendation 1

The Standing Committee on Public Accounts recommends that the Government of the Northwest Territories, through the office of the Comptroller General, investigate the possibility of engaging the service of a forensic auditor for the sole purpose of dealing with attempts to defraud the government.

Regarding the health billings, pay equity and policing cost disputes, Madam Speaker, we made a number of recommendations.

Recommendation 2

The Standing Committee on Public Accounts recommends that the Legislative Assembly receive regular briefings from the appropriate officials on these and any other issues in dispute which have the potential to seriously impact the financial resources of the Government of the Northwest Territories.

Recommendation 3

The Standing Committee on Public Accounts recommends that the Department of Public Works and Services, on behalf of the government, provide a comprehensive listing of payments over $5,000 made to suppliers and contractors by the Government of the Northwest Territories on a non-cumulative quarterly basis to be tabled in the Legislative Assembly within 45 days.

Recommendation 4

The Standing Committee on Public Accounts recommends that the government review the capital planning process, and the role of the Legislative Assembly and priorize capital expenditures, and present options for ensuring legislative spending approval while improving process flexibility.

Recommendation 5

The Standing Committee on Public Accounts recommends that the Department of Personnel, in cooperation with NorthwesTel, implement a pilot project in Yellowknife to test the cost-benefit of using video-conferencing technology for staffing procedures.

Recommendation 6

The Standing Committee on Public Accounts recommends that the Department of Personnel, in cooperation with NorthwesTel, assess the option for expanding the use of video-conferencing technologies as recommended in the travel management report.

Madam Speaker, that concludes the report of the Standing Committee on Public Accounts on the review of the financial statement of the Government of the Northwest Territories, and the report of the Auditor General of Canada for the fiscal year ending March 31, 1993.

Motion To Receive Committee Report 5-12(6) And Move To Committee Of The Whole, Carried

Therefore, I move, seconded by the honourable Member for Kitikmeot, that the report of the Standing Committee on Public Accounts be received by the Assembly and moved into committee of the whole. Thank you.