The government Wednesday passed an amendment to the law governing how it does its accounting.
An earlier version of the amendments to the Public Management and Finance Law had been met with criticism as it exempted the government from adhering to generally accepted accounting principles.
The government introduced a new version of the bill, which Premier McKeeva Bush said would streamline the existing “cumbersome” system. It was passed by all members present at the time the vote was taken Wednesday.
In presenting the motion to amend the Public Management and Finance Law, Mr. Bush said the timelines of the tabling of annual reports to the Legislative Assembly had not been adhered to and this went “against the basic fundamentals and spirit of the law”.
The change in the law was prompted by the fact that proper auditing of financial reports of several public entities have proven almost impossible for the auditor general for several years because so little information about accounts for those years has been available.
In 2008, the former Auditor General Dan Duguay reported that about $1.5 billion in government spending had not been audited because appropriate records were not presented to his office. His successor, Alastair Swarbrick, said late last year there was no point in attempting to update and audit accounts for the financial years 2004/5 and 2007/8.
Mr. Bush described his government’s efforts to identify why government departments, ministries and agencies were having problems with the existing law or its underlying accounting systems and procedures and how to fix them as “mammoth”.
A consultant hired by the government, Keith Luck, reviewed the government’s financial and human resources management systems and issued his final report in April 2011.
Several of Mr. Luck’s recommendations, as well as input from the auditor general, were addressed in the amendments to the law.
These include suspending quarterly reporting; removing the need to audit output reports for the financial years 2004/5 to 2007/8; reducing the volume of reporting by statutory authorities and government companies; removing the need to audit out-of-date financial statements from 2004/5 to 2007/8.
An earlier version of the amendments to the law, tabled in the Legislative Assembly in May, was officially withdrawn. Explaining why the government withdrew the earlier version, Mr. Bush said it contained references to noncompliance to GAAP that were “much misunderstood – perhaps mischievously so”.
“To the general public, it would have appeared as though the government was suspending all accounting rules, procedures and conventions, but this was not the case nor was it the intention of the government,” he said. He said the government had met with the auditor general and the Legal Drafting Department “to ensure that the government’s intention was accurately reworded in this present version of the bill now before the House.”
He said that instead of amending the law to suspend compliance with GAAP, notes would now be included in the financial statements to show with which sections of International Public Sector Accounting Standards the financial records did not comply. He said such departures from accounting standards would only apply to the years 2004/5 to 2007/8.
All clauses of the previous bill that suspended compliance with generally accepted accounting principles were removed from the bill.
Opposition MLA Kurt Tibbetts said the exclusion of clauses exempting the Civil Service from complying with generally accepted accounting principles from 2004/5 to 2010/11 in the new version of the bill made it “a lot more palatable” to the opposition.
“Even though 2004/5 to 2007/8 will not be required [to have] a full audit process, the generally accepted accounting principle will still apply for whatever examination is done to those accounts by the auditor general. That changes the whole picture. That was the biggest objection that we on this side had to the bill,” he said.
The removal of “onerous” quarterly reporting was also welcomed by Mr. Tibbetts, who said the Opposition would support the bill.