"If the summary financial statements were prepared fully in accordance with Canadian public-sector accounting standards, the recorded deficit for the year would have been $520 million higher." B.C. Auditor General John Doyle, July 25, 2012
HOW about we play a game of what-if?
You own a multi-milliondollar business.
After considerable thought, you assemble a business-savvy team you trust to do a good job of running your affairs. What would you do if your external auditor says: "I cannot sign off on these financial statements; they're neither accurate nor complete"?
What if the auditor says your team has not used acceptable accounting conventions, has failed to provide essential documentation, has recorded some entries in the wrong fiscal year to make it appear budgets were being met - and then reminds you your accountants have ignored his warnings and recommendations for the past five years?
Would you retain your team, or fire them for cause?
When my July 25 column suggested our citizen "shareholders" replace the province's board of directors in Victoria, I had not yet seen B.C. Auditor General John Doyle's July 25 audit of the government's books, or his audit of the legislative assembly's financial records, which was released the next day.
The news release on the first report refers to a government that "understated its deficit" by over a halfbillion dollars, while the headline on the assembly audit says it "reveals messy finances."
Both documents refer to deficiencies in internal controls and accounting practices that leave the government and the people of the province vulnerable to "fraud or error."
Although not in so many words, Doyle's reports suggest that, whether by intent or inexcusable negligence, taxpayers were defrauded of their right to impeccable accounting of their dollars.
Both documents provide so much evidence of disregard for taxpayers' best interests - and for Doyle's professional expertise and previous reprimands - we have every right to terminate the current government for cause and to demand an early provincial election.
We can do it. Volunteers amassed around 750,000 signatures to achieve a referendum on the HST, so there's no reason why a carefully controlled "citizens' poll" could not gather one to two million votes to demand an immediate election.
What is the evidence? Doyle, who assumed his position in Oct. 2007, has found himself repeating many of the qualified opinions, reservations and recommendations about government accounting that had been voiced by his predecessors on numerous occasions before his arrival.
In the accounting world, an auditor uses the words "qualified" and "reservation" when he or she cannot sign off on an audit with any degree of confidence, because the books contain material errors or insufficient information upon which to base a professional opinion.
In his July releases, Doyle reiterates that the summary statements do not meet the standards of Generally Accepted Accounting Principles. Had they done so, we would have known the year-end deficit - not the debt; just the provincial deficit - was $2.36 billion - $520 million higher than Victoria had claimed.
An August report is pending in which the A-G plans to discuss his reservations in more detail. What's the betting he will also explain the ongoing risks of the government's deviations from GAAP?
The finance ministry claims the discrepancy is due to use of differing accounting methods - or as Speaker of the House Bill Barisoff phrased it, " to personality differences" between Doyle and Stuart Newton who has been Comptroller-General since Oct. 2010.
How insulting - to both men, but especially to Doyle who, as he stressed, carries out his mandate according to the legislation.
But as serious as the half-billion dollar clash may be, the irregularities in legislative accounting are even more disturbing, because they involve an all-party legislative management committee and all members of the assembly.
In case you have not read or heard the information, Doyle reported that deficiencies ran the gamut from a lack of bank reconciliations, lack of management oversight and missing receipts, all the way to lack of disclosure of payments made to MLAs past and present.
The is not a case of some member failing to produce a Starbucks receipt to support his/her $7.99 claim for reimbursement; these were significant transgressions. Doyle said, for example, that the "Legislative Assembly . . . was consistently unable to provide documentation to support (MLAs') travel expenses."
We have no way of knowing which MLAs played by the rules and which, either by design or carelessness, overcharged the taxpayer.
Unfortunately, the deficiencies exposed in Doyle's audit - specifically those accumulating since 2007 - are so numerous, "significant and pervasive" they call into question any hope we have that an election might clean house - unless NDP leader Adrian Dix agrees to sign a declaration that, should his party win the next election, Doyle's recommendations will be implemented by the close of the next fiscal year or he will resign as premier.
Judging from past experience, a 2013 New Era declaration by the B.C. Liberals would not be worth reading.
