For the 10th year in a row, the Office of the Auditor General has qualified its audit opinion on the government’s summary financial statements.This means the office disagrees with the government’s presentation of its financial accounts.

“The reason for this disagreement is that the summary financial statements are not presented using public sector generally accepted accounting principles,” said Michael Pickup, auditor general. “It is important for government to record revenue according to these principles to create consistency in financial reporting and allow the financial statements of the Province to be more easily compared with most other Canadian jurisdictions. By under-reporting revenues by $6 billion, the government’s summary financial statements do not give a clear picture of the Province’s financial position.”

This year’s report summarized errors identified in the audit with a deficit impact totalling $550 million. These errors required fixing in the government’s summary financial statements. Simply put, this means that without the audit, there would have been errors significantly affecting the financial statements.

The audit also resulted in management letters, in which auditors identified areas where programs could strengthen or streamline their internal controls and business practices.

Insights into key audit matters – the issues of most significance to the audit – include consideration of which organizations should be included in government’s summary financial statements, personal income tax revenue estimates and the impact of the COVID-19 pandemic on the summary financial statements.

The report also discusses three COVID-19 programs: the BC Emergency Benefit for Workers program, BC Recovery Benefit for families and individuals, and the Small and Medium Sized Business Recovery Grant. While the office had no concerns in relation to financial reporting, it found that the eligibility controls for the emergency benefit program were insufficient.

It also discusses financial areas of interest to the province, including the complex accounting for the $850-million sale of St. Paul’s Hospital, a $66-million write-off for personal protective equipment and the government’s executive salary freeze directive for Crown organizations.

Background

At the end of every fiscal year, the B.C. government combines the financial information of all the entities within its control and produces a consolidated set of financial statements, called the summary financial statements. The information in these statements is important because it indicates the financial well-being of the province. The Office of the Auditor General audits these statements from more than 160 public-sector organizations (including ministries, Crown organizations, post-secondary institutions, school districts and health authorities), making it the largest audit undertaken in the province.