15 August 2006

House of Assembly overspending known and approved?

Budget documents and reports on the provincial government's public accounts contain glaring discrepancies, a review of financial statements revealed.

Beginning in Fiscal year 2004, members of the House of Assembly had their constituency and similar allowances capped at a total of $5, 090, 800.

However, Volume III of the Public Accounts, an annual compilation by the Comptroller General shows the account was overspent that year by more than $479, 000. (page 43) The next year, the accounts were overspent by over $550, 000 according to a new report introduced by finance minister Loyola Sullivan purportedly to improve budgeting and accountability of government spending.

"This government is committed to accountability and transparency and this is just another mechanism to keep the people of the province in tune with our province's financial picture," Sullivan said in a news release.

Despite the details contained in the Public Accounts, both Budget 2005 and Budget 2006, the estimates - which contain reported actual spending for the previous year - the House of Assembly spending is shown as being exactly on budget.

The Public Accounts are released some time after the budget period, however, the figures should match since the data used comes from the same sets of records in the Department of Finance, including records maintained by the Comptroller General.

The discrepancy is too great for two years in a row to suggest mere coincidence or problems in addition.

Under section 58 of the Financial Administration Act, the Comptroller General is required to maintain the records of the Consolidated Revenue Fund and under s. 29, to ensure no payments are made in excess of appropriations by the House of Assembly. The Comptroller General is also required under that section to report instances of overpayments to the treasury board for action. Treasury board is an executive committee of the cabinet responsible for the financial administration of government.

One of the continuing mysteries of the current scandal is how $3.9 million of public money could be disbursed by the Comptroller General over a five year period without being noticed.

Details contained in the Public Accounts suggest that some individuals were aware of the discrepancies and that the overspending was sanctioned either by treasury board, the House of Assembly's Internal Economy Commission or both. The Internal Economy Commission is the executive committee of the legislature that, like treasury board for government, handles the financial administration of the legislature itself.

The Comptroller General obviously was aware of significant budget overpayments since they are reported faithfully for FY 2004 and FY 2005. The finance minister and president of treasury board would ordinarily also be aware of the overpayments since he or she typically sits on both IEC and treasury board.Itt would beunusuall - especially under the current circumstances - if the finance minister was not briefed on these specific discrepancies.

None of the reviews approved by cabinet will examine the operations of treasury board, the Comptroller General and the Internal Economy Commission to determine what, if anyapprovalss were given during FY 2004 and FY 2005 for overspending.

The Auditor General's previous reports suggest that at least half of the $3.9 million in questionable spending took place after April 2004. Under Order in Council 2006-295, Auditor General John Noseworthy's second review will not examine accounts after March 2004. The order in council directs Noseworthy "to determine whether overspendingoccurredd at the constituency level beyond funds which were approved, authorized or provided for through Internal Economy Commission policy." [emphasis added]

If overspending was approved by IEC , treasury board or both, then the spending is legal unless other criminal acts took place such as fraud or forgery.