Office of the Auditor General
December 13, 2006
General Releases Report on Audit of Financial
John L. Noseworthy, CA, 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 2006.
The report provides information on the financial condition of government and comments on government's compliance with generally accepted accounting principles and adherence to principles of sound financial accountability.
Financial Condition of Government � For the year ended 31 March 2006, government recorded a surplus of $199 million � the first annual surplus since 1998 � debt expenses totalling $947 million and a net debt of $11.7 billion. Compared to other provinces in Canada, Newfoundland and Labrador:
In 2006 the province recorded a surplus of $199 million, the first annual surplus since 1998. However, consider the following:
In addition to these factors, there are others which could result in changes to the annual surplus or deficit, including an aging infrastructure, an aging population, out-migration, interest and currency rate fluctuations, changes in GDP, and demand for government programs and services.
Mr. Noseworthy stated: "Because of the annual recurring theme of deficits in the province, there has been much discussion and focus on deficit reduction and elimination. However, the province still has billions of dollars in debt along with the resulting significant interest bite. Continued annual surpluses and a reasoned plan of debt reduction will be required if progress is to be made in eliminating this debt� prudent fiscal management has to continue and a debt reduction plan has to be developed and followed before the financial condition of the province is turned around."
Internal Audit - Internal audit in government is not sufficiently resourced to adequately perform the duties expected of a modern and effective internal audit function. In recent years, standards of practice for internal auditing have prescribed increased duties and responsibilities for the internal audit function in such areas as accountability, governance, risk management and assurance. Internal audit within government is currently comprised of only three positions - in 1991 there were 21 positions. The lack of internal control and management safeguards at the House of Assembly establishment which led to excess claims and questionable payments to companies highlights the importance of independent scrutiny. An effective internal audit function can help ensure that preventative and detective controls are implemented and functioning. Mr. Noseworthy stated: "Government should ensure its internal audit function is sufficiently resourced."
Environmental Liabilities � Although government has started to capture information on contaminated sites, there is still no complete central inventory of such sites in the province. Furthermore, although the province's environmental liability relating to remediation costs for contaminated sites may be a significant amount, only $10.7 million has been recorded as a liability in the province's financial statements. Mr. Noseworthy stated: "Government should be more proactive in identifying all contaminated sites in the Province for which it is potentially liable, determining the estimated liability associated with remediation costs, and recording the resulting liability in the province's financial statements."
Transparency and Accountability Act � On 29 November 2004, government tabled the Transparency and Accountability Act which received Royal Assent on 16 December 2004. However, nearly two years later, the act has still not been proclaimed and, therefore, is not in force. Mr. Noseworthy stated: "Although government has been diligent in having annual reports tabled for departments and Crown agencies, the reports provide only general information on the operations of the department or agency. The reports do not provide the information necessary to hold each entity accountable for its performance, including fiscal performance, in relation to its approved plans, using established measurable criteria. The Transparency and Accountability Act should be proclaimed." Furthermore, government should require that appropriate accountability information be included in annual reports tabled in the House of Assembly.
Mr. Noseworthy�s report is available on the Office of the Auditor General Web site at //www.gov.nl.ca/ag/reports.htm
2006 12 13 10:40 a.m.
All material copyright the Government of Newfoundland and Labrador. No unauthorized copying or redeployment permitted. The Government assumes no responsibility for the accuracy of any material deployed on an unauthorized server.