Report and Observations of the Auditor General on the 2013–14 Consolidated Financial Statements of the Government of Canada

Opening Statement to the Standing Committee on Public Accounts

Report and Observations of the Auditor General on the 2013–14 Consolidated Financial Statements of the Government of Canada

6 November 2014

Nancy Cheng, FCPA, FCA
Assistant Auditor General

Mr. Chair, thank you for the opportunity to discuss our audit of the consolidated financial statements of the Government of Canada for 2013–14. I am accompanied today by Louise Bertrand and Karen Hogan, co-principals responsible for the audit.

We thank the Committee for taking an interest in the Public Accounts of Canada. This is an important government accountability report.

It is the responsibility of the government to prepare the consolidated financial statements. It is our responsibility to express an opinion on whether these consolidated financial statements are fairly presented. I will focus my comments on our audit opinion and observations.

As you are aware, the Public Accounts of Canada are tabled in three volumes. Our Independent Auditor’s Report and our Observations are contained in section 2 of volume 1. Unless otherwise noted, the information in all other sections of this volume and the two other volumes is unaudited.

Our Independent Auditor’s Report on the 2013–14 consolidated financial statements can be found on page 2.4 in volume 1 of the Public Accounts. This marks the 16th year that we have expressed an unmodified audit opinion.

As required by section 6 of the Auditor General Act, we provided an opinion on the government’s consistency of application of its accounting policies. Our Independent Auditor’s Report signalled a change in the government’s accounting policy for premiums and discounts arising from the buy-back of bonds. This change has been properly presented and disclosed in note 2 to the consolidated financial statements.

Our Observations over the past several years have highlighted concerns about the financial reporting of inventories and asset pooled items at National Defence. Last year, we indicated that National Defence was working on several initiatives to improve its financial reporting capabilities. This year, although some progress has been made, we continued to find errors.

Since 2003, we have been reporting concerns about inventories and asset- pooled items at National Defence. The Department needs to address several fundamental concerns with the proper recording and valuation of these assets. Strong financial management controls reduce the risk of misstating the consolidated financial statements and making decisions without accurate information.

We thank the Comptroller General and his staff, as well as others in the departments that were involved in preparing these accounts. A great deal of work was involved, and we appreciate the co-operation and assistance that was provided to us.

Mr. Chair, this concludes my opening remarks. We would be pleased to answer the Committee’s questions.