B.C.’s generally accepted accounting principles (GAAP) are still generally unacceptable to B.C.’s top bean counter.
The B.C. government continues to use accounting practices that B.C. Auditor General Carol Bellringer says is inconsistent with standards used by other governments in Canada, and as a result is under reporting how much money it gets from sources like the federal government.
It’s the third year in a row that the auditor general has taken issue with the practice in her annual audit of B.C.'s finances.
B.C.’s comptroller general disagrees with Bellringer, saying it is an acceptable practice for governments to record revenue that is restricted for a specific purpose as a liability in one year and later record it as revenue.
Bellringer says the B.C. government took in $191 million more from the federal government in the 2014-2015 fiscal period than it reported, and has under reported $4 billion worth of revenue in previous years.
It also continues to allow BC Hydro to use deferral accounting – something criticized by Bellringer’s predecessor, John Doyle.
BC Hydro accounts for a sizeable share of B.C.’s ballooning contractual commitments.
These include long-term commitments for things like RCMP services and power purchase agreements signed with independent power producers.
B.C. had a total of $53 billion in commitments in 2009-2010. It has now nearly doubled to $102 billion today, with BC Hydro’s power purchase agreements accounting for $25 billion.
B.C. follows the Public Sector Accounting Standards (PSAS), which are GAAP principles that governments in Canada follow. But B.C. has made a few exceptions to those standards.
It moves forward both expenditures and revenues to future years, meaning it may take in money from the federal government or some other source in one year, but only record it as revenue later.
“Our office remains concerned that government has created accounting policies that are inconsistent with independently developed accounting standards for governments in Canada,” Bellringer’s report states. “As we have reported previously, this may obscure the true financial performance and position of government.”
The B.C. government reported a $1.7 billion surplus for 2014-2015 when, in fact, it should actually be higher, according to Bellringer.
That’s a problem, the report says, because “deferring the revenue means that government is not recording revenue in these good years. When that revenue is eventually recorded, maybe in years when financial results could otherwise be less favourable, it may cloud the true financial health of the province.”
Other highlights from Bellringer’s report on the 2014-2015 financial period include:
• B.C.’s total debt stands at $63 billion, not including the $102 billion in contractual obligations;
• In 2014-2015, the province took in $22 billion in taxation revenue, $7.4 billion from the federal government and $3 billion from natural resources;
• Education and health account for 68% of B.C.’s total expenditures;
• The health budget was $18.7 billion, education $11.9 billion;
• Of the $187 million the government saved in salaries during the 2014 teachers’ strike, it spent $156 million on a program to help parents with child care.