HALIFAX, Feb. 6, 2013 /CNW/ - The legislature has cleaned up the poor
financial management practices that previously contributed to the MLA
expense account problems, but weak financial controls are a continuing
issue in many government entities, Nova Scotia's auditor general said
in his report released today, February 6.
Jacques Lapointe's annual review of the province's financial activity
identifies an array of deficiencies in internal financial controls
which expose government to unnecessary risk of losing taxpayers' money
through error and fraud.
That is no longer the case, however, with MLA expenses, where almost all
the auditor general's 2010 recommendations to tighten controls have
been implemented, and where a recent audit found no evidence of any
misuse of public funds. Mr. Lapointe said deficiencies in internal
controls had enabled some MLAs to make inappropriate, excessive and
even fraudulent expense claims that caused public outrage and also led
to some criminal charges two years ago.
Elsewhere in government, 51 per cent of accounting, control and other
deficiencies reported by external auditors of agencies in 2010-11
remain unaddressed in 2012, as do 31 per cent of problems identified
two or more years ago.
"Taking action on audit recommendations is an indication of a strong
overall control environment; so the high number of recommendations that
remain outstanding from year to year in several agencies is a concern
and a sign of poor financial management. Agency boards and management
need to address recommendations in a timely manner to ensure the
integrity of their accounting and control systems and their financial
Mr. Lapointe pointed to controls over school-based funds as an example.
In 2011-12, these funds totaled $41.9 million in schools across Nova
Scotia. A recommendation made a year ago that the Department of
Education work with boards to put in place appropriate controls to
address deficiencies identified by their external auditors was accepted
by the department. Discussions have begun on this but the department
says it will be 2014 before full board compliance can be expected.
Mr. Lapointe believes members of the public service pension plan have
not been adequately informed about fundamental changes to their plan.
He said he does not think members realize 100 per cent of future risk
is being assumed by the current and future pensioners because the
province will no longer guarantee the plan.
He also said that the government's claim that a change in pension
indexing will only impact future benefits, is "inaccurate and
misleading." Depending on the performance of the pension fund,
de-indexing could result in significant reductions in future payments,
for benefits that have already been earned, he said.
As he did last year, Mr. Lapointe raised questions about the province's
growing debt levels, and whether it is responsible or even ethical to
bind future generations with the costs of today's spending.
Since 2008 the total provincial debt has grown from $12.5 billion to
$16.2 billion, including a $400 million increase in the last fiscal
"It is fiscally irresponsible in all but extreme cases - such as
emergencies or to finance very large projects - for government to
transfer payment for current spending to future generations. In the
long term, an ethical government will live within its means and will
reverse the accumulation of debt."
Indicators of the overall financial health of the province remain
relatively steady. The report examines several factors which are
related to the sustainability and vulnerability of the province's
finances, as well as its flexibility in dealing with financial issues.
Some indicators, such as the province's assets-to-liabilities ratio,
improved between 2008 and 2012, but Nova Scotia is still in a worse
position than many similar provinces. In a comparison of six
jurisdictions, Nova Scotia's net debt per capita remains the second
highest at $13,960 per person.
Mr. Lapointe said the Department of Finance has agreed to correct budget
and forecast errors when they are known. Last year, a $27 million
revenue overstatement was known in time to be corrected before the
budget was delivered, but that was not done. As a result the deficit
was understated by $27 million.
The full auditor general report is available at www.oag-ns.ca.
FOR BROADCAST USE:
Nova Scotia's Auditor General says MLAs have cleaned up their financial
house, but too many agencies and provincial organizations still put
taxpayers' money at risk with weak financial controls.
Jacques Lapointe delivered his annual financial report to the
legislature today (Wednesday, February 6) noting that external auditors
have identified numerous financial management problems that agencies
have failed to correct.
That's not the case at the legislature, where almost all the
recommendations he made to fix problems with MLA expenses have been
The auditor general repeats concerns he had last year about the ethics
of provincial debt which grew by over $400 million in the past year
SOURCE: Alidade Marketing Limited
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