Progress on resolving audit issues with financial statements but concerns remain regarding sustainability of province’s finances29 November 2016
FREDERICTON (GNB) – Auditor General Kim MacPherson noted in her report released today that she is pleased with recent progress to resolve the province’s audit issues. As a result, in September she was able to issue a clean audit opinion on the province’s 2015-16 financial statements.
Areas where progress on audit issues was achieved included: accounting for the province’s shared-risk pension plans, consolidation of not-for-profit nursing homes, exclusion of the contingency reserve in the province’s financial statements, as well as implementation of a recommendation dating back to 2012 to form a provincial audit committee.
“Overall I am satisfied with government’s response on these important issues,” MacPherson said. “The province’s change in its shared-risk pension plan accounting policies, as well as new information being available, helped achieve resolution on this key issue.”
This situation is different from 2015 where a reservation was required in the province’s audit opinion, due to concerns regarding accounting for the shared-risk pension plans. At that time, MacPherson indicated it was impossible to know the province’s true deficit and net debt.
However, the auditor general remains concerned about the sustainability of the province’s finances. For the year ended March 31, 2016, the province incurred a deficit of $260 million, its eighth annual deficit in a row, and additional deficits are forecast through 2020. Net debt per New Brunswicker is now about $18,000 in 2016 (2015- $17,400), with the province’s net debt climbing to almost $14 billion in 2016. As well, long-term sustainability indicators continue to be unfavourable.
“New Brunswick’s pace of accumulating deficits and net debt growth is not sustainable for the province’s population size and financial resources,” MacPherson said. “We cannot continue to place ever-increasing demands on our future revenue streams to pay for past expenses.”
The chapters on financial audits can be found in Volume IV of the 2016 Auditor General Report. Volume IV focuses on matters arising from the annual financial audit of the province and Crown agencies. Volume III, also released today, reports a new performance audit completed in 2016 on Meat Safety - Food Premises Program as well as followup work on prior year’s performance audit recommendations. These volumes and one-page summaries for select chapters are available online.