Introduction
The Legislative Assembly of the Northwest Territories' Standing Committee on Government Operations ("SCOGO" or "the committee") has a mandate to review and report on the Government of the Northwest Territories' public accounts. This review helps ensure that issues related to public spending and the GNWT's fiscal management practices are publicly examined and scrutinized to promote government accountability.
In the course of its review, the committee makes recommendations to the government to improve financial management reporting and practices. The Standing Committee on Government Operations is pleased to present this report on its review and looks forward to receiving the government's response.
About the Public Accounts
The public accounts are the financial statements of the Government of the Northwest Territories (GNWT), which are prepared annually according to Canadian Public Sector Accounting standards (PSAS). They are also prepared in accordance with requirements contained in the federal Northwest Territories Act and the GNWT's Financial Administration Act (FAA).
The public accounts are produced in four sections:
Section I contains the consolidated financial statements, reporting the combined results of operations for all GNWT departments, revolving funds, public agencies, territorial corporations, and other related entities that are considered part of the government reporting entity. This information is audited by the Auditor General. Section I also contains an unaudited Financial Statement Discussion and Analysis, which provides a management analysis by the GNWT of information reported in the public accounts.
Section II presents the non-consolidated, unaudited financial statements for GNWT departments only, including the revolving funds and special purpose funds they administer. It also includes the financial statements for the Legislative Assembly and its statutory offices.
Sections III and IV contain the supplementary financial statements of boards and other entities.
The Significance of a Clean Audit Opinion
In an unqualified or "clean" report, the auditor concludes that the government's financial statements present its financial affairs fairly, in all material respects. This indicates that the government observed compliance with Canadian Public Sector Accounting standards and statutory requirements. It also demonstrates that any changes in accounting policies, and the impact of those changes, have been adequately determined and revealed.
A clean opinion does not necessarily tell the reader that the government is in good economic health. Its purpose is to provide assurance that the government's financial report is complete and transparent and has not misrepresented any important facts.
The committee notes that the consolidated 2016-2017 Public Accounts received a clean audit opinion from the Auditor General and commends the Government of the Northwest Territories for this achievement.
Timeliness of the Public Accounts
Section 36 of the FAA requires that the interim public accounts be completed by September 30th, following the end of the fiscal year in question, and tabled at the earliest opportunity. The interim public accounts contain the financial information of GNWT departments that later form Section II of the public accounts.
Section 35 of the FAA requires that the consolidated public accounts be completed by December 31st, following the end of the fiscal year in question, and tabled no later than the fifth day of next sitting of the Legislative Assembly. This section of the act also permits the Minister of Finance to publicly release the public accounts before they are tabled.
Deadlines for the 2016-2017 Public Accounts
The interim Public Accounts were provided to SCOGO by the Minister of Finance on September 14, 2017, and tabled on October 17, 2017 [TD 4-18(3)].
The consolidated Public Accounts were:
- signed off by the Minister of Finance on October 26, 2017;
- released to the public on November 8, 2017; and
- tabled on February 13, 2018 [TD 39-18(3)].
Both the interim and final 2016-2017 Public Accounts were completed to meet the applicable statutory deadlines. The committee acknowledges the GNWT's effort in meeting these legal requirements again this year.
Timeliness of the Financial Statements for Individual Entities Consolidated in the Public Accounts
Section 31 of the FAA requires that the public boards, agencies, and councils forming the government reporting entity (GRE) have their public accounts audited annually. The fiscal year end for these entities differs from the GNWT's and falls on either June 30th or September 30th, depending upon the legislation governing each entity. Section 32 of the FAA provides that the Minister of Finance may allow an extension to the deadline for completion of an entity's financial statements, not exceeding 60 days.
In previous years, the committee recommended that the GNWT include, in the Financial Statement Discussion and Analysis part of Section I of the public accounts, a list of the entities consolidated within the public accounts, along with the dates that they completed their financial statements. This list, titled "Completion of Entities Consolidated Within the 2016-2017 Public Accounts," identifies the fiscal year end for each entity, any revised due date resulting from the entity's request for an extension, and the actual completion date of the entity's financial statements for the year in question. In its response to last year's review, the GNWT committed to continue to include this list in the public accounts on an ongoing basis.
Again, this year, the committee reviewed the compliance of public agencies in the government reporting entity with their respective deadlines. During the public review, the committee was advised by the Comptroller General that the list included in the 2016-2017 Public Accounts was incorrect. The committee was provided with a revised list that is reproduced below (Figure 1) for the public record.
In 2016-2017, there were 22 entities consolidated in the public accounts. There were five fewer entities than in the previous year because of the amalgamation of six Health and Social Services Authorities into one NWT-wide authority. Of the 22 entities:
Five entities (Aurora College; the NWT Health and Social Services Authority; NT Hydro; the NWT Business Development and Investment Corporation; and the NWT Housing Corporation) requested 60-day extensions. Of these:
- three met their revised deadlines; and
- the remaining two entities (the NWT Health and Social Services Authority and the NWT Housing Corporation) missed their extended deadlines by six weeks;
- Seven entities failed to meet their original deadlines and failed to seek extensions. Of these:
- four entities (Beaufort Delta Divisional Education Council; Sahtu Divisional Education Council; the NWT Sport and Recreation Council; and the Status of Women Council of the NWT) were late by less than a week;
- one entity (the Detah District Education Authority) was late by less than two weeks; and
- two entities (the Arctic Energy Alliance and the NWT Human Rights Commission) were late by more than 60 days and less than 90 days.
As in past reviews, the committee recognizes that smaller government entities often face significant capacity issues that may impact on their ability to complete their financial statements in a timely manner. Nonetheless, there is little excuse for the failure of an entity to seek a 60-day deadline extension, as provided for in the FAA.
The committee again urges the Office of the Comptroller General to work with the GNWT's boards and agencies to ensure that they are working towards completing their financial statements in a timely manner and, where necessary, seeking the Minister's approval to extend the legal deadline.
The committee raised with the Comptroller General the question of whether smaller boards and agencies might benefit from a more formalized arrangement of support from the Office of the Comptroller General, such as a memorandum of understanding or service agreement. The Comptroller General expressed a willingness to consider this proposal if recommended to do so by the committee. Accordingly, the standing committee makes the following recommendation: