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No accounting for the way Saskatchewan crunches its numbers

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Last week, I gave Saskatchewan an A-plus for its fiscal responsibility. Unfortunately, I have to give it a C-minus for its fiscal reporting.

Shortly after last week's Insight commentary on Saskatchewan's streak of budget surpluses, I heard from Saskatchewan's provincial auditor, Bonnie Lysyk. She pointed out that Saskatchewan likes to use its General Reserve Fund (GRF) as the basis for the budget numbers it highlights to the public – but that's not actually the province's fiscal bottom line: That would be its summary financial statements (SMS), which the government produces, but doesn't generally talk about publicly.

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Now, in fairness, it turns out that for fiscal 2013 (estimated) and fiscal 2014 (forecast), the surpluses under SMS are actually slightly better than those for the GRF. That's not the point. Ms. Lysyk has repeatedly recommended against the province's use of "two sets of books," as she called it in a December, 2012, report, calling it "both poor practice and misleading to the public."

Not that Saskatchewan is the sole province that dresses up its budget presentation in an opaque coat. Alberta's recent budget adopted a new reporting format that split the budget into three "plans" (operating, capital and savings) but offered no consolidated bottom line that combined the three, sparking that province's auditor-general to investigate the propriety of the new approach.

But Saskatchewan is the only province in the country that uses the GRF as its main source for reporting its finances publicly – at the expense of a more widely-recognized SMS reflecting the fiscal bottom line under Canadian generally accepted accounting principles.

The GRF – which, among other things, excludes Crown corporations and can be adjusted through transfers to and from the province's "rainy day" fund – has consistently reported budget surpluses that may not be surpluses at all. In the 10 budget years between fiscal 2002 and fiscal 2011, when the province reported a surplus based on the GRF every year, six of those years were actually deficits under the SMS.

What's more, Ms. Lysyk has charged, the GRF numbers "contain significant errors," most notably in how they account for the province's pension liabilities. In a 2011 report, she argued that if the government followed "appropriate accounting policies," the reported surpluses in the GRF itself in the 2002-2011 period would have been deficits in five of those years. Ms. Lysyk has attached "qualifications" to her formal audit opinion on the GRF financial statements, saying people shouldn't use the GRF statements "to understand and assess the government's overall management of public financial affairs and provincial resources."

Saskatchewan Finance Minister Ken Krawetz last week defended the use of the GRF as the basis for budget reporting. In an address to the Regina & District Chamber of Commerce, reported by the Regina Leader-Post, he stressed that the GRF provides Saskatchewan voters with a clearer picture of each government ministry's finances.

"That's your revenues and expenditures, that's your chequing account. We want people to understand what happened in the chequing account," he said.

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I'm not even sure what that means. But I do know that voters – in Saskatchewan or anywhere else – deserve a full, honest and accurate financial disclosure, not just the balance in one favourite account.

David Parkinson is a contributor to ROB Insight, the business commentary service available to Globe Unlimited subscribers. Click here for more of his Insights, and follow him on Twitter at @ParkinsonGlobe .

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About the Author
Economics Reporter

David Parkinson has been covering business and financial markets since 1990, and has been with The Globe and Mail since 2000. A Calgary native, he received a Southam Fellowship from the University of Toronto in 1999-2000, studying international political economics. More


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