Good afternoon, Mr. Chair and members of the committee. Thank you very much for the invitation to appear before this committee to discuss the Public Accounts of Canada. I am pleased to be here in my role as Comptroller General of Canada.
With me are two members of my staff, Mr. Sylvain Michaud, executive director, government accounting policy and reporting; and Mr. Michel Vaillant, senior director, public accounts policy and reporting. Also with us today are Mr. Benoît Robidoux, assistant deputy minister, Finance Canada; and Mr. Doug Nevison, general director, economic and fiscal policy branch at the Department of Finance.
For the 15th consecutive year, the Auditor General has issued an unmodified opinion on the government's consolidated financial statements. This testifies to the high standards of the government's financial statements and reporting. I would like to thank the Officer of the Auditor General for the continued professional relationship that we have enjoyed.
I would also like to take the opportunity to highlight a few elements that impacted the Government of Canada financial statements during 2012-13. During the year the government retroactively adopted the new standards of the Public Sector Accounting Board regarding the presentation of certain tax expenditures that are no longer netted against tax revenues, but are reported as transfer payment expenses. Tax expenditures that provide a financial benefit through the tax system and are not related to the relief of taxes paid or payable are now shown as transfer payment expenses. Tax expenditures that reduce taxes paid or payable are considered tax concessions and will continue to be netted against the applicable tax revenue.
The impact of this reclassification on the Consolidated Statement of Operations and Accumulated Deficit is an increase to both tax revenue and the transfer payment expense of $3.1 billion—$3.2 billion in 2012—with no impact on the annual deficit.
Also during the fiscal year, the government adopted the revised accounting standard of the Public Sector Accounting Board regarding government transfers. The main impact for the government was to stop recognizing advance payments as non-financial assets and to recognize them instead as expenses. The impact of these changes on the financial results was an increase in expense of $500 million in the current year.
In addition, the Government of Canada has revised its approach for the recognition and measurement of accumulated sick leave entitlements. As a result, for the first time, the government recognized a liability for accumulated sick leave entitlements that are anticipated to be used in the future. In the past, sick leave benefit expenses were recognized when benefits were used by employees and the government did not record a liability in its financial statements.
The liability represents the government's obligation for the accumulated sick leave entitlements that are anticipated to be used in future years. It does not represent the cost of sick leave benefits that have been used during the fiscal year or to date. As a result of this restatement, the opening balance of other employee and veteran future benefit liabilities, net debt and the beginning balance of accumulated deficit of the Government of Canada have increased by $1.2 billion.
Some media reported in early 2013 that the sick leave liability for the Government of Canada was $5.2 billion. This amount represents the total value of the accumulated sick leave entitlement. It does not take into consideration the anticipated future usage. Since sick leave entitlements cannot be cashed out and it is unlikely that all public servants would exhaust all their accumulated sick leave entitlements in the future, the liability for accumulated sick leave is less than the total value of the accumulated sick leave entitlements.
We are now available to answer the questions of the committee on the public accounts of Canada.
Thank you.