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Introduction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ..01 Our audit conclusions and findings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .05 Concern
with the use and reliability of the General Revenue Fund Late financial statements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ..12 Financial statements not provided to the Assembly . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .15 Public Employees Disability Income Plan . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .22 Our audit conclusions and findings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .24 Department needs to know the Plan's liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .25 Public Employees Group Life Insurance Plan . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ..31 Our audit conclusions and findings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .33 Department needs to know the Plan's liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .34
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| Introduction | .01 .02
.04 |
The Department:
Also, the Department helps the Government and the Legislature with their responsibility of managing and accounting for public money. In addition, the Department is responsible for controlling spending from the General Revenue Fund and ensuring the receipt of all revenue of the Fund. The Department also manages several pension and benefit plans. The Government appoints boards to manage these pension plans, other pension plans, and Crown corporations. These government appointed boards and the Minister of Finance created three government organizations under The Business Corporations Act. One organization provides investment advice and manages mutual funds. The other two organizations hold real estate investments. The three organizations are: Greystone Capital Management Inc. This Chapter contains our audit findings for the Government's financial statements included in Volume 1 of the 1995-96 Public Accounts. This Chapter also contains our audit findings for the following pension and benefit plans with years ending on or before December 31, 1995.
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.05 In our opinion, the Government's summary financial statements included in Volume 1 of the Public Accounts are reliable. The General Revenue Fund's financial statements included in Volume 1 of the Public Accounts are reliable except for the matter reported in paragraphs .08 to .10.
.06 In our opinion:
- the financial statements of the agencies listed in paragraph .04 are reliable except where we report otherwise in this Chapter;
- the Department and its agencies complied with the authorities governing the activities of its pension and benefit plans listed in paragraph .04 relating to financial reporting, safeguarding assets, revenue raising, spending, borrowing, and investing except where we report otherwise in this Chapter; and
- the Department and its agencies had adequate rules and procedures to safeguard and control their assets except where we report otherwise in this Chapter.
.07 At the date of this report, we have not audited Greystone Capital Management Inc., SaskPen Properties Ltd, and SP Two Properties Ltd. In past reports to the Assembly, we have reported these government corporations did not allow us access to their records. We still have not had access to the records of these companies. We will report on our continued efforts to obtain access in our 1997 Spring Report. Also, we have not completed our audits of Municipal Employees' Superannuation Plan and Public Employees Deferred Salary Leave Fund because of established priorities. We will report the results of these audits in a future report to the Assembly.
Provincial Auditor Saskatchewan
1996 Fall Report164
Concern with the use and reliability of the General Revenue Fund financial statements
.08 Our auditor's report on the General Revenue Fund's (GRF) financial statements contains a reservation of opinion. We reserved our opinion because the Department did not properly record annual pension costs and total pension liabilities.
.09 Our auditor's report also warns Members of the Legislative Assembly not to use the GRF's statements to understand and assess the Government's management of public financial affairs and resources as a whole. The GRF's financial statements do not include all the financial activities of the Government. Members should refer to the Government's summary financial statements to understand and assess the Government's management of public financial affairs and resources as a whole. See our recommendations for the Government to provide MLA's and the public better information about the Government's finances in Chapter 2 of this Report.
.10 Our opinion on the General Revenue Fund's financial statements follows:
These financial statements report transactions and events of the General Revenue Fund only. Significant financial activities of the Government occur outside this Fund. Therefore, readers should not use the General Revenue Fund's financial statements to understand and assess the Government's management of public financial affairs and resources as a whole.
Volume 1 of the Public Accounts includes a more complete set of financial statements. Those statements are called the Summary Financial Statements of the Government of Saskatchewan. Their purpose is to report the full nature and extent of the financial affairs and resources for which the Government is responsible. Please refer to those summary statements to understand and assess the Government's management of public financial affairs and resources as a whole.
I have audited the statement of assets, liabilities, and accumulated deficit of the General Revenue Fund as at March 31, 1996 and the statements of revenue, expenses, and accumulated deficit and changes in cash and temporary investments for the year then ended. These financial statements are the responsibility of Treasury Board. My responsibility is to express an opinion on these financial statements based on my audit.
I conducted my audit in accordance with generally accepted auditing standards. Those standards require that I plan and perform an audit to obtain reasonable assurance whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation.
Reservation
The Fund is responsible for the liabilities of several pension funds. Note 5 indicates those pension liabilities are not recorded in these financial statements. In my opinion, pension liabilities should be recorded in the financial statements. Had pension liabilities been recorded, liabilities and accumulated deficit would increase by $3,428 million (1995 - $3,320 million) and expenses would increase and surplus for the year would decrease by $108 million (1995 - expenses would increase and surplus for the year would decrease by $148 million).
Opinion
In my opinion, except for the effects of the failure to record pension liabilities as described in the preceding paragraph, these financial statements present fairly, in all material respects, the financial position of the General Revenue Fund as at March 31, 1996 and the results of its operations and the changes in its financial position for the year then ended in accordance with generally accepted accounting principles for the public sector recommended by The Canadian Institute of Chartered Accountants.
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We recommend
.11 Treasury Board should record those pension liabilities that are the responsibility of the GRF in its financial statements.
.12 To be properly accountable, the Government must give the Legislative Assembly timely financial statements for the pension and benefit plans listed in paragraph .04.
.13 The Government did not give the Legislative Assembly the 1995 financial statements for the Municipal Employees' Superannuation Plan, and the Workers' Compensation Board Superannuation Plan during the 1996 Spring session of the Legislature.
We recommend
.14 The Government should give timely financial statements to the Legislative Assembly.
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.15 The Government has not provided the Assembly with the financial statements of three government corporations. These corporations are:
Greystone Capital Management Inc. (Greystone)
SaskPen Properties Ltd. (SaskPen)
SP Two Properties Ltd. (SP)
.16 As stated earlier, Government appointed boards and the Minister of Finance created Greystone, SaskPen, and SP. The Government owns almost all of Greystone's and SP's voting shares and all of SaskPen's voting shares. Therefore, these corporations are government corporations.
.17 The Assembly needs the financial statements of all government corporations to hold the Government accountable for their operations. The Government's appointed boards and the Department do not have the financial statements of Greystone, SaskPen, and SP. We think they should. Also, we do not know whether these corporations have created other corporations.
.18 The Standing Committee on Public Accounts considered the accountability of government corporations created under The Business Corporations Act several years ago and recommended:
All government corporations should table annual financial statements in the Assembly, including those where the Crown owns less than 100% of the issued share capital.
.19 We have reported this matter in previous reports to the Assembly.
We recommend
.20 The Government should table the financial statements of Greystone Capital Management Inc., SaskPen Properties Ltd., and SP Two Properties Ltd. in the Legislative Assembly.
.21 In October 1996, the Standing Committee on Public Accounts decided it would ask representatives of SaskPen and SP to appear at the Committee to discuss this matter.
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| Public Employees Disability Income Plan | .22 .23 |
The purpose of the Public Employees
Disability Income Plan is to provide a level of income
protection during periods of occupational or total
disability to plan members. The Plan had revenue of $10.5 million and held assets of $32.5 million at December 31, 1995. |
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Our audit conclusions and findings
.24 In our opinion:
- the Plan's financial statements are reliable;
- the Department had adequate rules and procedures to safeguard and control the Plan's assets, except for the matter reported in paragraphs .25 to .30; and
- the Department complied with the authorities governing the Plan's activities relating to financial reporting, safeguarding assets, revenue raising, spending, borrowing, and investing.
.25 The Department needs rules and procedures to accurately determine the Plan's liability for disability claims.
.26 The Plan's liability is the present value of future payments arising from claims made before year end by disabled employees.
.27 The Department calculates the liability annually. It uses an actuary to make the calculations. The Department provides the following information to the actuary for the calculation: member age; benefit amounts; and date benefits start and end.
.28 The Department does not do an adequate review of the actuaries work to ensure the actuary uses the information provided. As a result, the Department does not know if the Plan's liability is properly determined. For example, in 1995 the actuary incorrectly excluded one member who was still receiving benefits.
.29 The error was detected during the audit. Subsequently, the actuary determined the total error was an understatement of the liability of $192,500. The Department adjusted the financial statements accordingly.
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We recommend
.30 The Department should set up rules and procedures to accurately determine the amount of the Plan's liability.
| Public Employees Group Life Insurance Plan | .31 .32 |
The purpose of the Public Employees Group
Life Insurance Plan is to provide comprehensive life
insurance coverage to plan members. The Plan had revenue of $11.4 million and held assets of $24.1 million at December 31, 1995. |
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Our audit conclusions and findings
.33 In our opinion:
- the Plan's financial statements are reliable;
- the Department had adequate rules and procedures to safeguard and control the Plan's assets, except for the matter reported in paragraphs .34 to .39; and
- the Department complied with the authorities governing the activities of the Plan relating to financial reporting, safeguarding assets, revenue raising, spending, borrowing, and investing.
Department needs to know the Plan's liabilities
.34 The Department needs rules and procedures to accurately determine the Plan's liability for life insurance benefits.
.35 The Plan's liability is the present value of future payments arising from benefits for disabled employees. The Plan waives their premiums. The Plan's liability also includes the present value of the paid up life insurance policies given to retired members.
.36 The Department calculates the liability annually. It uses an actuary to make the calculation. The Department provides the following information to the actuary for the calculation: member age; benefit amounts; and date benefits start and end.
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.37 The Department does not do an adequate review of the actuaries work to ensure the actuary uses the information provided. As a result, the Department does not know if the Plan's liability is properly determined. For example, the actuary incorrectly included one member who had quit the plan and excluded one member receiving disability benefits. Also, the actuary included the paid up life policies of many members who had died and the Plan has no further liability.
.38 The error was detected during the audit. Subsequently, the actuary determined the total error was an overstatement in the liability of $91,800. The Department adjusted the financial statements.
We recommend
.39 The Department should set up rules and procedures to accurately determine the amount of the Plan's liability.
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1998.05.13 |