Government Operations committee  Well, they would factor in on that side of the equation. I have to confess, I don't know what the cost of that is, but I would absolutely--

Government Operations committee  Whatever it is, it certainly has to go on that part of the equation. You're absolutely right.

Government Operations committee  Actually, I happen to believe it's an advantage. It really is. It's a good point, because the problem is that people want too much out of a set of financial statements. They want that to do the work of too many things. They want it to be both good for stewardship reporting, accountability, telling the picture, telling the story, and they also want to be able to use it for cashflow management and all those things, and I don't think it's very good at that.

Government Operations committee  I'm not going to disagree with any of that, but I'm going to go back to a couple of comments I made earlier, because I think the context has to be understood. I firmly believe, and I think it is well and generally accepted, that the accrual basis of accounting for historical cost statements is the best way we can tell the story of what transactions and events happened with a particular organization--be it a company, a not-for-profit organization, a hospital, a church, or a government.

Government Operations committee  Once again, for the whole-of-government statements, the Government of Canada has taken some really bold steps and has been able to manage some of this with some difficulty. I tend to have agreed with all of the decisions they made and how they were going to handle military assets.

Government Operations committee  I'm going to ask Martha in a minute to see if she's got any bright ideas, because she's been into this a little bit--

Government Operations committee  That are not attitudinal?

Government Operations committee  Owning versus leasing--that's one that I think would make better decision-making, but I would have thought that Defence might have some areas that may have some significant issues that have to be dealt with. The whole issue of what's inventory, what's assets, what's expendable, what's not expendable, I think would have its own set of problems.

Government Operations committee  I have to first of all qualify what I said by saying that I haven't studied this, so I don't talk from having researched the area; therefore, I'm loath to make sweeping statements. But I can understand a position that says, “I don't see the payback, economically,” or “If it's so long in the future, because I'm going to make better decisions, when I have some higher-priority spending decisions that I have to make....

Government Operations committee  It's tough to argue with you, and it's part of my message as well. For anybody to make a good decision, one needs to have good quality information. That's why I think accrual accounting is good, because it gives you better-quality information. This decision itself I think needs to have that same high-quality information that will allow you to be able to make the decision.

Government Operations committee  Thank you. There are always pros and cons on any issue, and clearly there are some cons on this particular issue. I haven't studied it in-depth and I don't know that I'm going to be able to identify every one, but I would imagine that the single biggest disadvantage, the biggest difficult hurdle that will have to be overcome, would be the way in which decisions are made.

Government Operations committee  In the private sector this problem doesn't exist. They don't focus on estimates on a cash basis. But I do want to caution you, going back to something I said earlier, that financial reporting on an accrual basis of accounting by itself probably doesn't give you enough information.

Government Operations committee  Yes.

Government Operations committee  Your question implied that you probably did. I'm very impressed.

Government Operations committee  You're right. At the present time, the government prepares its budget on the accrual basis, so that accountability is available. We ought to applaud the government on moving to the accrual basis for both accounting and budgeting. This is one of the very few jurisdictions in the world that prepares what we call whole-of-government financial statements that consolidate all of the funds and activities of the government into one set of financial statements.