The paper is on my desk.
Madam Speaker, your Standing Committee on Government Operations is pleased to provide its Report on the Review of the 2018-19 and 2019-20 Public Accounts and commends it to the House.
Introduction
The Legislative Assembly of the Northwest Territories' Standing Committee on Government Operations has a mandate to review the Report on the Government of the Northwest Territories' Public Accounts. This review helps ensure that issues related to public spending the GNWT's fiscal management practices are publicly examined and scrutinized to promote government accountability. Due to the COVID-19 pandemic, the committee's review of the 2018-19 public accounts was delayed to January 22, 2021. Committee reviewed the 2019-20 public accounts on June 18, 2021. Both reviews took place in Yellowknife, Northwest Territories.
During its reviews, the committee made recommendations to the government to improve financial management reporting and practices. The committee is pleased to present this joint report on its reviews and looks forward to receiving the government's response.
Acknowledgements
For their appearance before committee, committee Members would like to thank officials from the Office of the Auditor General, auditor Karen Hogan, assistant auditor general Sophie Miller, assistant auditor general Casey Thomas, principal Lana Dar, principal David Irving, audit principal Jo Ann Schwartz, director Marie-Josee Gougeon, director Kelsey Hogg, and audit director Maria Pooley.
Committee also thanks officials from the Office of the Comptroller General for their appearance: comptroller general Julie Mujcin; Assistant comptroller general Chervahun Emilien; assistant director Tegwen Jones; and manager Walter Mupedziswa.
Background
About the public accounts: The public accounts are the financial statements of the Government of the Northwest Territories which are prepared annually according to Canadian Public Sector Accounting Standards. They are also prepared in accordance with requirements contained in the Federal Northwest Territories Act and the GNWT's Financial Administration Act.
The public accounts contain: 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. Non-consolidated, unaudited financial statements for GNWT departments, the revolving funds and special purpose funds they administer, as well as the Legislative Assembly and its statutory offices.
Supplementary financial statements of boards and other entities. An unaudited financial statement discussion and analysis, which provides a management analysis by the GNWT of information reported in the public accounts.
Audit Opinion
The committee notes that the consolidated 2018-19 public accounts and the consolidated 2019-20 public accounts both received clean audit opinions from the Auditor General. In an unqualified or clean report, an auditor provides an independent opinion on two objectives:
- First, that the government presented its consolidated financial statements fairly, in all material respects; and,
- Second, that the government's transactions that came to the auditor's notice during the audit complied, in all material respects, with specified authorities.
A clean opinion indicates that the government complied 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 reported. 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 reporting is complete and transparent and has not misrepresented any important facts.
The committee commends the Government of the Northwest Territories for achieving a clean opinion for the consolidated 2018-19 public accounts and the consolidated 2019-20 public accounts.
Recommendations
Old Stanton Refurbishment: One issue that arose in the audit of the 2019-20 public accounts was whether the project to refurbish the Old Stanton should be classified as a public-private partnership.
The government concluded that the Old Stanton refurbishment is not a P3 project. The government therefore classified the Old Stanton refurbishment as a lease commitment, with contractual obligations and rights, in the public accounts. In contrast, the Auditor General concluded that the Old Stanton refurbishment meets the definition of a P3 project. According to the Auditor General, Old Stanton was leased to Ventura, which was responsible for refurbishment and subletting. The government later signed an agreement to sublet the entire building back from Ventura and decided to finance most of the refurbishment costs. Once the sublease starts, the government will pay base rent and other fees on a 30-year term and will pay additional rent to reimburse Ventura for all operations and maintenance costs. This lease commitment, estimated to begin in November 2022, will cost the government $3.5 million per year over 30 years. Ventura will contribute invested capital and is contracted to perform design work and other consulting services. The government is entitled to a 50 percent profit sharing from Ventura. The profits are net of a yearly return for Ventura on its invested capital. Therefore, the committee recommends:
Recommendation 1
The Standing Committee on government Operations recommends that the Department of Finance classify the project to refurbish Old Stanton as a public-private partnership and report on it accordingly.
Claims and Litigation
In the public accounts, the government estimates and discloses the total amount for claims and pending and threatened litigation cases outstanding against the government for which the outcome is not determinable.
The committee noted that there has been exponential growth in the amounts claimed against the government in litigation cases with uncertain outcomes. The dollar value of these claims has increased from single-digit millions to triple-digit millions over the last ten years. The committee is concerned about the significant, rapid growth in claims with indeterminable outcomes and the potential for liabilities to arise from these claims. As a result, the committee supports enhanced public reporting on these claims in the public accounts.
Several Canadian provinces and territories provide examples. British Columbia reports a breakdown of its contingent liabilities according to five broad categories, such as property access disputes and contract disputes. Ontario lists all claims against the Crown arising from legal action either in progress or threatened expected to exceed $50 million, which amounted to 73 individual claims in 2019-20. Therefore, the committee recommends:
Recommendation 2
The Standing Committee on Government Operations recommends that the comptroller general enhance reporting in the public accounts of contingent liabilities arising from claims and litigation, and specifically,.
- include a breakdown of claim amounts by category; and,
- identify individual claims above a certain amount.
Madam Speaker, I will now turn it over to the Member for Thebacha.