Mr. Chair, thank you for the opportunity to discuss our audit of the consolidated financial statements of the Government of Canada for the 2012-13 fiscal year. I am accompanied today by Louise Bertrand and Karen Hogan, co-principals responsible for the audit.
We thank the committee for taking an interest in the Public Accounts of Canada. This is an important government accountability report. I will focus my comments on our audit opinion and observations.
As you are aware, the Public Accounts of Canada are tabled in three volumes. Our audit covers the consolidated financial statements. These statements, our Independent Auditor's Report and our observations are contained in section 2 of volume I. Unless otherwise noted, the information in all other sections of this volume and the two other volumes is unaudited.
Our Independent Auditor's Report on the 2012-13 consolidated financial statements can be found on page 2.4 in volume I of the Public Accounts. This marks the 15th year that we have expressed an unmodified audit opinion.
As required by section 6 of the Auditor General Act, we provide an opinion on the government's consistency of application of its accounting policies. Our independent auditor's report reflects the changes in the government's accounting policies related to tax revenues and transfer payments. These changes were made because the government has adopted new public sector accounting standards in those two areas. They have been properly presented and disclosed in note 2 of the consolidated financial statements.
Our observations in past years have highlighted concerns about the financial reporting of inventories and asset-pooled items, or repairable spare parts, at National Defence. Last year we indicated that National Defence was working on several initiatives to improve its financial reporting capabilities.
In this year's audit, we continued to find significant errors, and noted that limited progress had been made by the department in implementing effective compensating controls and processes to improve the recording and valuation of its inventory and asset-pooled items.
Mr. Chair, we have been reporting concerns about those items at National Defence for 10 years. We wish to re-emphasize the importance of taking action and actively monitoring the completion of these improvement initiatives. Given the nature and value of inventories and asset-pooled items, significant errors increase the risk of misstating the consolidated financial statements and making decisions without accurate information.
Our observations also included certain other matters that we have reported on for the past several years. Some of them still require further action.
We thank the Comptroller General and his staff, as well as others in the departments that were involved in preparing these accounts. A great deal of work was required, and we appreciate the cooperation and assistance that was provided to us.
Mr. Chair, that concludes my opening remarks. We would be pleased to answer the committee's questions.