Good afternoon, Mr. Chairman. Thank you for the invitation to be here this afternoon.
Mr. Chairman, because our December 2008 report was tabled earlier today in the House of Commons, the Auditor General is not able to be with us this afternoon. On her behalf, I would like to extend our congratulations to all of you on having been elected to this 40th Parliament, and a particular congratulations to you, Mr. Chairman, on having been re-elected to the chair of this committee. We look forward to working with each and every one of you over the course of the coming weeks and months.
I am pleased to be here today to brief the committee members on the Auditor General's report on the audited 2007-08 financial statements of the Government of Canada. As you indicated, Mr. Chairman, I'm accompanied today by Mr. Doug Timmins, Assistant Auditor General, and Tammy Squires, the principal. They are responsible for the audit of those financial statements.
We are pleased to see that the committee is holding this hearing on the Public Accounts, a key accountability report of the government. The Comptroller General will be explaining the main points in the government's financial statements to the committee. I will focus on the highlights of our audit opinion and observations.
The Auditor General's report on the 2007-2008 financial statements is included on page 2.4 of Volume I of the Public Accounts. The opinion provides Parliament with the assurance that the government's financial statements are fairly presented in accordance with the government's stated accounting policies which conform with generally accepted Canadian accounting principles. It can be referred to as a “clean” opinion. Our Office has been able to issue such an opinion on the government's financial statements in each of the past 10 years.
We commend the government for producing financial statements that are fairly stated, in conformity with Canadian generally accepted accounting principles. In our view, Canada continues to demonstrate leadership in financial reporting by a national government.
I would now like to discuss several issues that we have presented in our observations. Those can be found on pages 2.32 to 2.39 of volume 1 of the Public Accounts of Canada.
First of all, a project to develop a new methodology for the government's allowance for doubtful tax receivables began in the fall of 2006. Delays were encountered in finalizing the estimate for the year-end 2008. In our view, improvements are still required for the government to have a reliable methodology for estimating its allowance for doubtful tax receivables. We have received a plan from the government that addresses these concerns, and we therefore expect it to deliver on those commitments in the plan.
Second, in March 2008 this committee asked for modifications to the tax revenue estimation methodology, the largest and the most significant management estimate affecting the Government of Canada's financial statements. In response to this, changes were made to the methodology and were reflected in the March 31, 2008 tax revenue estimates. The impact of these changes on the overall accuracy of the government's reported tax revenues will only be known in the future, when tax assessments are completed. It is important that the government continues to regularly monitor the reliability of this estimate and to identify improvements on a timely basis.
Third, in relation to departmental financial statements, as announced in 2004, the government's plan to transform public sector management included measures to strengthen comptrollership and oversight. One of the initiatives was to have the annual financial statements of all departments audited. The strategy of the Office of the Comptroller General to implement this initiative continues to focus on the 22 large departments.
We reiterate one of our comments from last year, that when departments are ready for an audit, our office will gladly play its part in the process. It is our view, however, that most departments have much work to do to achieve the goal of readiness for an efficient audit of their departmental financial statements.
In our observations, we also raised the question of accrual-based budgeting and appropriations by departments and agencies. The government has outlined the plan to phase-in accrual-based budgeting. The implementation plan will start with a two-year pilot project involving ten departments.
After many years of studying this issue, we are disappointed that the models proposed by the government all have an annual focus that still does not include long-term budgeting for assets and liabilities and that the government has yet to make a commitment to an implementation date for accrual appropriations.
Other matters are discussed in more detail in our observations, which are found starting on page 2.32 of Volume I of the Public Accounts. In these observations, we have also provided an update on issues raised in previous years.
In conclusion, we would very much like to thank the staff of the Office of the Comptroller General and those in all of the departments involved in this work. The preparation of these accounts reflects many hours of painstaking work.
Mr. Chair, we would be pleased to answer any questions the Committee may have.