Thank you very much, Madam Chair. Thank you for this opportunity to answer that question.
Reference is being made here to events that took place in January, February and March 2004. As the Auditor General mentioned, this is a very serious matter, which I also take very seriously.
I began my job on June 1, 2004. A few weeks after I took up my position, I was made aware of the complex nature of this matter. I was told that there were different accounting and legal opinions on the subject.
The departments are responsible for the proper keeping of their books. Deputy ministers are responsible for preparing their financial statements and for what are called public accounts plates. Where there are problems of interpretation, they consult their colleagues at the Treasury Board Secretariat and Office of the Comptroller General.
When the question was brought to the attention of the Treasury Board Secretariat in early 2004, it was noted that supplementary parliamentary appropriations might be necessary. A number of differing opinions within the Office of the Comptroller General and Treasury Board Secretariat led us to consider the question from various standpoints.
The Canadian government and the public sector in general live in two worlds. There is the pure accounting world, that is to say the world of generally accepted accounting principles, or GAAP, and the world of parliamentary appropriations. While the former operates exclusively here in Canada on what is called an accrual basis, parliamentary appropriations must be recorded on a modified cash accounting basis. That has changed over the years, more significantly in 1991, to include what is being referred to here, that is to say the payables at year-end policy, which provides that certain expenses are recorded against parliamentary appropriations at March 31 of every fiscal year, where certain conditions are met.
In general, this type of situation does not cause a problem, but, in this case, problems of interpretation led various people to view the situation in different ways. They wondered whether this should be debited from parliamentary appropriations or recorded under the payables at year-end provision. The amount of $21.8 million was entered in the Canadian government's accounts payable at March 31, 2004 for public accounts purposes. However, it was not debited from the centre's parliamentary appropriations at March 31, 2004.
As the Auditor General said, when there appeared to have been a technical error and so on for 2002-2003, that was the subject of a number of discussions and decisions in 2003-2004. The decision was therefore made to opt for this accounting treatment. Legal opinions were obtained, which led the government to think that it shouldn't be debited from parliamentary appropriations, but rather recorded for public accounts purposes. That, briefly, is the situation regarding that matter.