C.D. Howe hands out financial reporting grades to feds and provinces

By Staff | May 1, 2018 | Last updated on May 1, 2018
2 min read

As Canada’s federal, provincial and territorial governments tax and spend a lot, they need to improve the quality and timeliness of their financial reports, says a new report from the C.D. Howe Institute.

The organization graded governments on the transparency and reliability of their financial reports in “The Numbers Game: Rating the Fiscal Accountability of Canada’s Senior Governments.”

Both Alberta and New Brunswick received A+ grades. At the bottom of the rankings were Prince Edward Island (D) and The Northwest Territories (D+).

Ontario received a C grade this year after getting a B+ in 2017. The downgrade is due to the $1.4 billion difference (1% of spending) between what Ontario shows for total expenditures and what the provincial auditor general demands.

Quebec (C+) and British Columbia (B-) also received poor grades because of problems with their auditors.

The federal government received an A- grade. But C.D. still has concerns about Ottawa’s reporting.

“The federal government provides reliable numbers, but buries them deep in its budget, and the spending estimates members of Parliament review are on an incompatible basis of accounting,” said the report.

Read: Aging population has reduced monetary policy’s effectiveness: C.D. Howe

The report focused on the relevance, accessibility, timeliness and reliability of the governments’ key financial reports:

  • their budgets,
  • the estimates their legislatures vote on to authorize spending, and
  • the audited financial statements they publish after year-end.

The report also evaluated whether a “non-expert reader” could make sense of the financial reports.

The report’s authors (William B.P. Robson and Farah Omran) suggest the following policy changes to improve the transparency of financial reporting:

  • public accounts should reflect public sector accounting standards;
  • budgets should match public accounts;
  • estimates should match budgets, in presentation and timing;
  • key numbers must be accessible and recognizable;
  • budgets should appear before the fiscal year starts;
  • year-end results must be timely.

“Canadians need to be able to monitor and influence the ways their elected representatives and government officials manage public funds,” said Robson. “The quality and timeliness of budgets and financial statements—and therefore their usefulness to legislators, taxpayers and citizens—could help them.”

Read the full report here.

Also read:

Modernize financial regs to improve productivity: C.D. Howe

Feds to post deficits $8B bigger than expected in next 2 years: PBO

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The staff of Advisor.ca have been covering news for financial advisors since 1998.