NLIS 1
November 18, 2003
(Office of the Auditor General)

 

Auditor General releases Report to the House of Assembly on the Audit of the 
Financial Statements of the Province of Newfoundland and Labrador
for the Year Ended 31 March 2003

John L. Noseworthy, C.A., Auditor General, today released his Report to the House of Assembly on the Audit of the Financial Statements of the Province of Newfoundland and Labrador for the Year Ended 31 March 2003.

The report provides information on the financial condition of government measured by using indicators issued by the Canadian Institute of Chartered Accountants. The report also offers comments on government�s compliance with generally accepted accounting principles and adherence to principles of sound financial accountability.

Mr. Noseworthy highlights three specific areas - the financial condition of government; the unfunded pension liability; and the Budget.

Financial Condition of Government - For the year ended 31 March 2003, government recorded a deficit of $690.8 million - the highest deficit ever reported by the province. As well, the debt (including the unfunded pension liability) increased by $341 million during the year and totals $10.2 billion. On a per capita basis this debt amounts to approximately $19,600 for each Newfoundlander and Labradorian. Interest costs amounted to $979 million or 24 per cent of total revenue in that year - the highest interest costs as a percentage of total revenue of any province in Canada.  Mr. Noseworthy states: "... the debt burden is at a point where, I believe Government must carefully examine whether the economy can sustain any further increases in debt and the impact on programs and services that more debt servicing costs will bring."

Unfunded Pension Liability - The unfunded pension liability at $3.56 billion continues to be a significant issue for government. The unfunded pension liability increased by $164 million during the year even though government made special payments of $148.5 million. Mr. Noseworthy states: "Addressing the unfunded pension liability should be a priority for Government."

Budget - The report concludes that government�s budgeting practices in 2003 were significantly inconsistent with its financial reporting practices. The 2003 budget approved by the Members of the House of Assembly projected, on a cash basis, a deficit of $93.3 million while the actual deficit reported in the Consolidated Summary Financial Statements was $690.8 million. Last year Mr. Noseworthy recommended that the budget should be prepared on the same basis of accounting used to prepare the Consolidated Summary Financial Statements. This year Mr. Noseworthy states: "I am pleased to note that for fiscal year 2003-04, Government has prepared such a budget."

Mr. Noseworthy�s report is available on the Office of the Auditor General Web site at www.gov.nl.ca/ag.

Media contact: John L. Noseworthy, C.A., Auditor General, (709) 729-2700.

2003 11 18                                        12:15 p.m.


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