Thank you, Mr. Speaker. The Public Sector Accounting and Auditing Board, PSAAB, policies and recommendations have been chosen as the government's accounting guidelines. In 1986, PSAAB released Accounting Statement 3, General Standards of Financial Statement Presentation for Governments. Two recommendations from this statement remain to be followed:
-a comparison of actual results with the government's original budget; and
-disclosure of the government's physical assets on hand and available for use.
Since the release of these recommendations eight years ago, these disclosures have not been made. The Auditor General maintains that in order to compare actual spending to the spending proposed at budget time, the financial statements and budgets should be on the same basis. Therefore, the government needs to include consolidated budget information in the consolidated financial statements to provide the necessary accountability.
PSAAB Accounting Statement 3 also recommends showing the value of physical assets used by the government (land, buildings, furniture and equipment) in the notes or schedules to the financial statements. Reporting these assets would show that the government has invested in physical assets with a future value and give a better picture of the true cost of programs. In addition, further PSAAB developments are currently being considered along that same lines for the reporting of public works or infrastructure as assets.
The government response from FMBS indicates a commitment to further investigate the possibility of compliance, particularly in the area of consolidated entities' budgets being incorporated in the government's main estimates and capital estimates for presentation in the financial statements.
On the question of physical assets, the government is committed to working toward a system for recording and reporting the cost of physical assets in 1995-96.
The committee notes, however, that, with division of the Northwest Territories approaching, it is imperative that the government continue to address the need to value and report its physical assets. The Auditor General's office informed the committee that it will monitor progress on this requirement.
Mr. Speaker, the next section is on information technology.
Information Technology
In chapter four, the Auditor General noted that the government's financial information system, FIS, which provides financial information on departments and programs, is over 12 years old and becoming obsolete. As timely and accurate financial information is crucial to decision-making, this system should be updated or replaced soon. A number of factors may influence this decision. The impending division of the territories and the future financial and information needs of two territories adds to the challenge. The Auditor General questions whether the new territories will inherit aged systems or will the government change now and possibly commit Nunavut to something it may not want or need.
As the development and implementation of such a system can take years to effect, a decision on this issue will need to be made soon. No matter which option is chosen, when the decision is made to replace the FIS, the necessary people and financial resources to do so must be made available.
The government's "informatics strategy" represents an important first step in the process, and the upgrade or replacement of financial information systems is a primary component of the strategy which addresses all the information systems needs of the government.
In discussions with the committee, the Comptroller General estimated that it would take three to four years to implement a new system. He also noted that the FIS was high on the priority list of things to change. The government currently spends $200,000 to $300,000 on updating each year. The cost of a new system is estimated to be between $3 million and $8 million, depending on the anticipated needs.
In order to provide an efficient and effective management foundation to address the impending decisions facing the GNWT as a result of division, the standing committee makes the following recommendation:
Recommendation 2
That the government proceed immediately to plan and implement revised financial information systems to meet the needs of Nunavut and the western territory as a priority for the division of the Northwest Territories.
Mr. Speaker, the next section is on the student financial assistance program.
Student Financial Assistance Program
In his report, the Auditor General raised the issue of the rising costs of the student financial assistance program and the limited resources available. This increases the need for reliable and useful results information. Program objectives need to be clearer and measurable to determine whether the desired program goals are being achieved.
The Auditor General notes that the "department's strategy identifies an increasing demand for student financial assistance and recognizes that the government's financial resources are limited". Regardless of how the department proposes to address the situation, whether by limiting access or lowering the level of funding available, the decisions must be based on reliable results information. The current program objectives are incomplete and the proper results are not being measured so that informed financial decisions can be made. For example, the current results information does not measure the number of students who successfully graduate from education programs or whether they return to the north and gain employment in their field of study.
Program evaluation is a useful tool to determine the effectiveness, efficiency and economy of a given program. The FMBS has an evaluation unit, one of the functions of which is to provide assistance in program evaluation to departments. The Comptroller General provided the committee with an update on the progress in staffing and organizing this unit and indicated a number of projects they were involved in, including reviewing and improving the management for results system.
The Auditor General recommended that the department, with the help of FMBS, evaluate the student financial assistance program to "determine what combination of grants, loans and remissions best provide value to the government, meet high level legislative policies and meet the needs of northerners".
The Comptroller General noted that the evaluation unit is involved in the review and evaluation of the student financial assistance program, having assisted with drafting of terms of reference and setting up a steering committee to oversee the review. The review is designed to examine and address the concerns discussed in chapter five of the Auditor General's report.
The Standing Committee on Public Accounts is encouraged by the commitment of the department and the office of the Comptroller General to address this situation. However, the committee takes the position that whether the government can afford to maintain the program as an "entitlement" is a political decision and any move to implement a policy change should not circumvent the Legislative Assembly. The education and training of northern residents is a stated priority of this Assembly and limiting access by any means must be fully debated by its elected representatives.
Mr. Speaker, I would now like to ask, if you would allow my colleague, Mr. Whitford, representing Yellowknife South, to continue the report.