Thank you for the invitation to appear before this committee to discuss the public accounts.
The preparation of the financial statements for the Government of Canada is a challenging task that requires sound judgment in the application of professional accounting standards. This process also requires the frequent and thorough discussion of issues with the Auditor General and her office. We are extremely pleased that, for the eight consecutive year, the Auditor General has issued an unqualified opinion on the Government's financial statements.
Canada is one of only three countries in the world, the others being Australia and New Zealand, to have such a track record of unqualified audit opinions on its consolidated financial statements. This is an accomplishment of which we should all be proud.
The government reported a surplus of $13.2 billion last year, which resulted in a reduction of the accumulated deficit from $494 billion to $481 billion. This is the ninth consecutive year that a surplus has been recorded.
The surplus of $13.2 billion was more than the forecasted surplus of $8 billion, as announced by the Minister of Finance in the May 2006 budget. Revenues were $1.3 billion higher than forecast, primarily as a result of a $1 billion foreign exchange adjustment on Canada's investment in the International Monetary Fund, which was reflective of the strengthening of the Canadian dollar. Program expenses were $4 billion lower than forecast, primarily related to lower-than-expected program spending and year-end adjustments.
This is also the first year that the Government's financial statements include the results of four foundations that met the revised definition of control for financial reporting purposes. This adjustment resulted in a $5.1 billion decrease to the opening accumulated deficit.
I would like to stress that accounting standards are evolving both nationally and internationally. The pace and complexity of these changes are not without their challenges for both preparers of financial statements and auditors. Currently on the horizon are new standards related to segmented reporting, government transfers, and financial instruments, which will significantly impact the government's financial statements.
The international scene is also changing, with movement to harmonize standards for the private sector. One can assume that the public sector standards will eventually follow this trend. It was announced earlier this month that the International Public Sector Accounting Standards Board will be relocating its offices to Canada. This is a significant event, and it further solidifies Canada's reputation as a world leader in public sector financial reporting.
Mr. Chairman, we have tabled a presentation outlining some of the key financial results for last year. That presentation is now available.
Before starting to make the presentation, I would like to thank the Auditor General and her office for the continuing professional working relationship we have enjoyed.
I would also like to publicly thank all the many government officials in Public Works and Government Services Canada, Canada Revenue Agency, all departments, and my office for the very long hours and great work in enabling the tabling of these accounts.
Thank you very much. I look forward to our discussion.