Public Accounts committee  If I may say, I do take the information from the Auditor General very seriously. There are two things. First, in the public accounts there are the financial statements themselves, and there are notes to the financial statements. The notes to the financial statements talks about spending and borrowing authority.

Public Accounts committee  Perhaps my colleague, John Morgan...he has had many more years than I have.

Public Accounts committee  I would say that legal opinion was a determining factor of those who made the decision at the time.

Public Accounts committee  Well, as I mentioned earlier, we live in both worlds--both the accounting world and the parliamentary vote world. The accounting world talks about the generally accepted accounting principles on a full accrual basis. The parliamentary vote talks about the modified accrual basis, which has been modified by the PAYE policy; it asks the government to record transactions that have not been paid for at March 31, subject to certain criteria.

Public Accounts committee  I have been here for only two years; I would say the same.

Public Accounts committee  I would say that in circumstances where you have multiple factors, this is an issue you look at very carefully with your auditor at that time. That would be my position. This is a significant aspect. I take the point of John that it would not have been his key point, but I also take the comments from my colleagues here that if you ignore legal advice, you do it at your own peril.

Public Accounts committee  If I may, the departmental performance report has a full page that explains that transaction. So to disclose it as an unrecorded liability against appropriation may be--

Public Accounts committee  If I may answer the--

Public Accounts committee  I'm told by the Deputy Minister of Justice that this is an important statement.

Public Accounts committee  My apologies, Members. In all essential ways, this is the same as the privilege that applies to privileged communication in the private sector. Normally, the client does not waive this privilege. It's only done in rare instances and for good reason. Frequent waiving would erode the purpose of privilege.

Public Accounts committee  We have two sets of books. One is the appropriations book and the other one is the financial statements book. In the financial statements it was recorded. It was not recorded in the appropriations. It was disclosed in the DPR in 2004-05.

Public Accounts committee  If I may, sir, I take your point, but as I said, when I came on it was June 1, 2004. I was not there at the time. When I was informed of the situation around the transaction--I was advised in mid-June of 2004--I wanted to make sure that the Office of the Auditor General was made aware of the circumstances.

Public Accounts committee  The legal advice tells me to say that this is not a charge against the....

Public Accounts committee  I would have to qualify the answer, sir, on two sides. As a professional accountant, I can say that this transaction is a liability, it should be recognized as a liability, and it should be recorded as a liability. My first reaction is that it should—

Public Accounts committee  If I may say so, we live in both worlds. Listen, this is a very important matter. We live in the world of accounting and in the world of parliamentary votes. Accounting tells us that we have to record it as a liability, and as a professional accountant, I would like to record it as a liability against the vote.