Opening Statement before the Standing Committee on Public Accounts
Report and Observations of the Auditor General of Canada on the 2022–23 Consolidated Financial Statements of the Government of Canada
23 November 2023
Karen Hogan, Fellow Chartered Professional AccountantFCPA
Auditor General of Canada
Mr. Chair, thank you for this opportunity to discuss the results of our audit of the Government of Canada’s consolidated financial statements for the fiscal year ended 31 March 2023. I would like to acknowledge that this hearing is taking place on the traditional unceded territory of the Algonquin Anishinaabe people. With me today are Sana Garda and Etienne Matte, financial audit principals.
The consolidated financial statements provide an overview of the government’s financial position and performance. These documents are an important source of information for Parliament and Canadians to hold the government accountable for its management of public funds.
This yearly financial audit is the largest that my office conducts. It involves the work of almost all of our 260 financial auditors. This audit promotes transparency and supports continuous improvement in the stewardship of public resources. Our auditor’s report starts on page 56 of Volume 1 of the Public Accounts of Canada 2023.
We issued an unmodified or clean audit opinion on the consolidated financial statements. In other words, we found the financial statements to be credible and prepared in accordance with generally accepted accounting principles for the public sector. Parliament can rely on the information presented in these statements.
Of note this year, the auditor’s report is longer, as it is now required to include key audit matters. These are matters of significant importance to our audit, such as tax revenues and pensions. Their disclosure is important to help readers such as the members of this committee understand our work.
As we have done every year since 2016, we have also provided a commentary report that highlights matters of importance coming out of all the federal financial audits we completed.
This year’s commentary draws attention again to a significant uncertainty about the continued operations of the Trans Mountain Corporation. The uncertainty relates to the corporation’s ability to fund the remaining construction costs of the Trans Mountain expansion project and to continue repaying its existing debt. The corporation reported this uncertainty in its financial statements.
The commentary also reiterates our concerns about the government’s process for identifying and recovering overpayments or payments made to ineligible recipients of COVID‑19 benefits. Where the government identified amounts that should be recovered, it has properly recorded them in the financial statements. However, the government stated that it has not determined the cumulative value of overpayments and that it expects post-payment verification activities will take several years to complete.
The commentary also includes an observation on the government’s adoption of a new accounting standard that requires it to record liabilities related to the future retirement of tangible capital assets, such as buildings, equipment, and vehicles. Our audit noted that some federal organizations relied on poor or incomplete data to calculate the retirement cost of assets and that a lack of centralized guidance led to duplication of efforts and inconsistencies. These weaknesses highlight the need to improve how they estimate these long‑term liabilities.
The commentary also notes a weakness in controls over the access to key government information technologyIT systems such as the ones that store and process data related to payments. Certain users had access to systems and databases that they did not need to fulfill their duties. While we did not come across any inappropriate changes made to data or data breaches, this weakness opens a door to potential wrongdoing.
Lastly, this year’s commentary once again contains observations about pay administration and National Defence’s inventory. These are recurring issues that we continue to monitor.
Mr. Chair, we appreciate the ongoing collaboration of senior officials and staff of the many departments, agencies, and Crown corporations involved in preparing the government’s financial statements.
This concludes my opening remarks. We would be pleased to answer the committee’s questions. Thank you.