Transparency and Openness in Government Budgeting and Reporting

British Columbia is generally recognized as a leader in enhancing transparency and openness in its budgets and other related reports.

Full Compliance with GAAP

Among the most important achievements for the province is the fact that British Columbia's financial reports, such as budgets and quarterly updates, are now fully consistent with generally accepted accounting principles (GAAP). In fact, in February 2004, BC was the first province to introduce a balanced budget that by law must comply with GAAP. This means that all provincial finances are fully, accurately and consistently reported, ensuring that BC remains a Canadian leader in sound financial disclosure.

An accounting policy advisory committee was established in mid-April 2002 to guide BC in fully adopting GAAP. The seven-member committee was originally mandated to advise Treasury Board through March 31, 2004. While the move to GAAP is complete, the committee's mandate has been extended to March 31, 2006 to help government keep current with emerging accounting standards from the Public Sector Accounting Board of the Canadian Institute of Chartered Accountants.

Comprehensiveness in Reporting

The move to GAAP means more comprehensive reporting in at least two important ways:

• full consolidation of the Consolidated Revenue Fund (CRF) with the taxpayer-supported Crown corporations and agencies; and
• expansion of the government reporting entity to fully include school districts, universities, colleges and health care organizations.

In the past, financial reports were focused on the CRF, which is not GAAP compliant.

Comprehensiveness has also been improved with the focus on three-year planning. Not only is a detailed three-year fiscal plan presented with the annual budget; a report on the progress of, and updates to, the three-year plan are provided in a mid-year update through the province's first quarterly report.

Key budget deliverables have been expanded to include not only the three-year fiscal plan and annual and supplementary estimates, but also the three-year government strategic plan and the three-year service plans for each ministry and Crown corporation. The same is true of year-end reporting: service plan reports for government as a whole, as well as for each ministry and Crown corporation, are released with the Public Accounts.

This integrated reporting of three-year fiscal and service plans provides detailed information on the goals, priorities and actions of government, as well as how they will be financed, and how progress and success will be measured. Similarly, the year-end reports (Public Accounts and Service Plan Reports) disclose actual financial and performance/service results; that is, the extent to which the goals, priorities and actions identified in the three-year fiscal and service plans were achieved.

Timeliness in Reporting

Regular and comprehensive reporting is of limited use unless it is timely as well. British Columbia's fixed budget date (the third Tuesday in February) ensures that the government's three-year fiscal plan is known well in advance of the start of the first year of the plan. Timely release of planning documents is further ensured by the requirement that the government strategic plan as well as the service plans for all ministries and Crown corporations be released on budget day.

Legislation also ensures that quarterly reports on the Province's fiscal situation are released in a timely fashion: no later than September 15 for the first Quarterly Report; no later than November 30 for the second Quarterly Report; and, no later than February 28 (with typical release at the time of the budget) for the third Quarterly Report.

Year-end reporting is also done on a timely basis in BC. Along with Saskatchewan and Alberta, BC is a leader in the timely release of its Public Accounts; for example, all three provinces released their 2003/04 Public Accounts on June 29, 2004, months earlier than the federal government and other provinces.

Year-end performance reporting in British Columbia is also subject to legislated deadlines: annual service plan reports for each ministry and Crown corporation must be released within five months of the fiscal year end (typically, by August 31). In practice, these reports are released with the Public Accounts, well in advance of the legislated requirement. In the past, annual reports for some government organizations were delayed for two years or more.

Increasing Transparency through Quality and Consistency in Disclosure

The information provided in financial and performance reports is most useful when it is of high quality and consistency. Efforts aimed at improving the information provided include:

• the full disclosure of material assumptions, policy decisions and risks underlying economic and fiscal estimates and forecasts;
• the use of consistent formats and reporting structures to facilitate comparison from one report to the next;
• the provision of sufficient information to allow actual results to be readily compared to targets and objectives, in order to enhance accountability; and
• the requirement that budget documents include an attestation statement signed by the Secretary to Treasury Board as to the completeness of disclosure.

An excellent example of efforts to improve transparency is the adoption of the BC Performance Reporting Principles. In October 2003, the BC government, the Public Accounts Committee and the Auditor General agreed on a set of reporting principles to form the basis for how service plans and annual service plan reports are written and assessed. These principles, which are now incorporated in the guidelines to ministries and Crown corporations, are as follows:

• Explain the public purpose served.
• Link goals and results.
• Focus on the few critical aspects of performance.
• Relate results to risk and capacity.
• Link resources, strategies and results.
• Provide comparative information.
• Present credible information, fairly interpreted.
• Disclose the basis for key reporting judgments.

(See http://www.bcauditor.com for additional information on the reporting principles).

Summary

BC has come a long way in improving its financial and performance reporting. From full compliance with GAAP, through the timely release of detailed three-year fiscal and service plans, to numerous enhancements to the quality and consistency of the information provided, BC now takes its place as one of leading jurisdictions in Canada in terms of budget transparency and openness.