Report of the Auditor General of Canada on the 2018–19 Consolidated Financial Statements of the Government of the Northwest Territories

Opening Statement to the Northwest Territories Legislative Assembly Standing Committee on Government Operations

Report of the Auditor General of Canada on the 2018–19 Consolidated Financial Statements of the Government of the Northwest Territories

22 January 2021

Karen Hogan, Chartered Professional AccountantCPA, Chartered AccountantCA
Auditor General of Canada

Madam Chair, thank you for this opportunity to appear publicly for the first time to discuss our audit of the consolidated financial statements of the Government of the Northwest Territories. With me are David Irving, the Principal who was responsible for the financial audit, and Kelsey Hogg, who is the financial audit Director.

We are appearing before you today for the 2018–19 Public Accounts, and we look forward to appearing before you later this year for the 2019–20 Public Accounts. The committee’s review of the Public Accounts is an important step in ensuring accountability for how public funds are spent and how government finances are reported. The 2018–19 Public Accounts, which include the government’s consolidated financial statements, were tabled in the legislative assembly on 10 December 2019.

Our primary responsibility as the auditor for the Government of the Northwest Territories is to form and express an opinion on the consolidated financial statements. Our work adds value by supporting the oversight role of elected officials, and by promoting transparency and encouraging good financial management in government.

The government carries out its accounting and financial reporting responsibilities through its Office of the Comptroller General, which is within the Department of Finance. The Comptroller General will answer questions about the preparation of the consolidated financial statements. We will focus on our audit.

Our link opens a PDF fileindependent auditor’s report is on pages 9 to 12 in Part I of the Public Accounts. We assessed the consolidated financial statements against Canadian public sector accounting standards. We found that the statements conformed in all material respects, and we issued an unmodified, or “clean,” audit opinion. This means that the information in the statements is reliable.

Our audit noted 2 important observations, which highlight the importance of good financial reporting: first, the presentation of the government’s public-private partnership infrastructure projects and the associated debts; and second, the consolidation in the financial statements of the several entities that the government controls. I will now briefly address these matters.

Governments are increasingly using public-private partnerships to deliver infrastructure projects. A government can use these partnerships as a way to manage costs and to benefit from private sector expertise. It is therefore important to have accurate reporting of costs for informed decision making.

Public-private partnerships are usually large and complex. During our audit, we reviewed the reporting of costs for all public-private partnerships and found that the costs were recorded accurately, with 1 exception. Correcting this exception resulted in a $30 million increase of both tangible capital assets and liabilities presented in 2017–18. We are satisfied that the adjustments more accurately reflect the costs of projects to date.

Let’s turn now to our second observation. When preparing its financial statements, the government consolidates all of the entities it controls, including revolving funds. Our audit found that certain revolving-fund revenues and expenses had been incorrectly netted. Showing revenues and expenses separately is required by accounting standards as it provides a more accurate picture of the government’s operations. The correction resulted in an increase of $34 million in both the revenues and expenses presented in 2017–18.

I would like to thank the Comptroller General, the Deputy Minister of Finance, and the staff of the departments and territorial corporations who were involved in preparing the government’s consolidated financial statements. We appreciate the effort, cooperation, and help of all involved.

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