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Introduction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ..01 Our audit conclusions and findings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .03 Investment rules not met . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ..05 |
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| Introduction | .01 .02 |
The Corporation (Management) manages
government administered venture capital funds under the
Federal Government's Immigrant Investor Program.
Saskatchewan Government Growth Fund Ltd. (SGGF I),
Saskatchewan Government Growth Fund II Ltd. (SGGF II) and
Saskatchewan Government Growth Fund III Ltd. (SGGF III)
are the active corporations set up by Management to
manage investors' money. Therefore, these corporations
are government corporations. Management provides
operating and financial services to SGGF I, SGGF II and
SGGF III. Management charges a fee for these services. Management's financial statements report 1995 revenues of $1.8 million and assets of $ .6 million at December 31, 1995. Management's annual report contains its financial statements. The financial statements of SGGF I, SGGF II and SGGF III respectively report 1995 revenues of $12.9 million, $2.4 million, and $78 thousand, and assets of $62.6 million, $32.6 million, and $5.8 million. The annual reports of SGGF I, SGGF II, and SGGF III contain their respective financial statements. |
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.03 My Office worked with Deloitte & Touche, the appointed auditor for Management, SGGF I, SGGF II, and SGGF III, using the framework recommended by the Task Force on Roles, Responsibilities and Duties of Auditors. Deloitte & Touche and my Office formed the opinions in paragraph .04.
.04 In our opinion:
- the financial statements of Management, SGGF I, SGGF II and SGGF III are reliable;
- Management had adequate rules and procedures to safeguard and control its assets and those of SGGF I, SGGF II, and SGGF III; and
- Management complied with the authorities governing its activities and those of SGGF I, SGGF II, and SGGF III relating to financial reporting, safeguarding assets, revenue raising, spending, borrowing, and investing except for the following matter.
Provincial Auditor Saskatchewan
1996 Fall Report191
.05 Management did not meet the minimum investment rules set by law for money held for SGGF II investors.
.06 The Canada Immigration Regulations set investment rules for approved funds. One rule requires SGGF II to invest at least 70 per cent of money held for investors in eligible businesses within nine months. Management did not have 70 per cent of the money held for SGGF II's investors invested in eligible businesses.
.07 As stated earlier, at December 31, 1995, SGGF II held assets of $32.6 million. According to the Regulations, SGGF II was required to have at least $25 million of its assets invested in eligible businesses at that date. SGGF II had $14.4 million invested in eligible businesses at December 31, 1995.
.08 We also reported this matter in our 1995 Fall Report.
We recommend
.09 Management should invest money held for investors in eligible businesses as required by The Canada Immigration Regulations or seek changes to the Regulations.
.10 Management told us that it needs to complete adequate due diligence procedures for all new investments approved by its board. Management believes it will comply with the investment rules, once it completes due diligence procedures and disburses approved investments.
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1998.05.13 |