Auditor general has 'clean' opinion of N.W.T.'s 2018-19 financial statements

The auditor general of Canada has a "clean" opinion of the Northwest Territories government's 2018-19 financial statements.

"This means that the information in the statements is reliable," said auditor general Karen Hogan.

Hogan appeared remotely before the territorial government's Standing Committee on Government Operations on Friday for a belated review of the government's 2018-19 public accounts. The review was supposed to take place in May 2020, but was postponed due to the COVID-19 pandemic.

Hogan made two observations during her video presentation.

The first had to do with public-private partnerships, also known as P3s. The new Stanton Territorial Hospital — which has had a significant impact on the government's finances — came into being through a public-private partnership.

P3s are "usually large and complex," said Hogan. "It is therefore important to have accurate reporting of costs for informed decision making."

She noted that auditors found public-private partnerships were recorded accurately, with one exception, and that correcting it resulted in a $30-million increase to both tangible capital assets and liabilities presented in the 2017-18 financial statements.

Hogan's second observation had to do with the recording of certain revolving funds' revenues and expenses. Revolving funds can be continuously replenished to help ensure certain government operations.

A recording correction resulted in a $34-million increase in both the revenues and expenses presented in 2017-18, said Hogan.

"It wasn't an error in that revenues were forgotten or expenses were forgotten, it was just the way they were presented," she said.

Gov't has 'limited flexibility' to raise money

The public accounts are the annual financial statements of the government and include information on assets, liabilities, net debt and the accumulated surplus or deficit.

Each year the auditor general of Canada audits the territory's consolidated financial statements and gives its opinion on whether the statements are a fair and accurate reflection of the government's financial position. The auditor general also looks at noteworthy transactions to ensure that they fall within the government's powers.

The 2019 public accounts show that the N.W.T. government had revenues of about $2.4 billion and had expenses of about $2.03 billion, leaving an operating surplus of about $4 million, Julie Mujcin, N.W.T.'s comptroller general, told the committee.

Although the government had an operating surplus, it has "limited flexibility" to raise money, as well as "vulnerabilities" related to its revenue sources, "which requires a need for careful fiscal management," said Mujcin.

She said the government's finances in 2018-19 were affected in part by the opening of the new Stanton Territorial Hospital, as well as wage increases under government workers' collective agreement.

The comptroller general also noted public agencies' challenges in completing audits and reports within the legislated timeframes.

Yellowknife North MLA Rylund Johnson noted that the public accounts under review were based on a budget approved by the previous legislative assembly. He also said that many revenue projections from that time were "inaccurate" because, among other factors, "COVID obviously messed up a lot of this."