Accounting spat leads to differing Ontario deficit figures

Depending on whom you believe, Ontario’s deficit last year was either $3.5 billion or $5 billion.

TheStar.com
Oct. 3, 2016
By Robert Benzie

Depending on whom you believe, Ontario’s deficit last year was either $3.5 billion or $5 billion.

And the province’s net debt was either $294.5 billion or $305.2 billion.

Finance Minister Charles Sousa and Treasury Board President Liz Sandals insist it’s the former.

Auditor General Bonnie Lysyk says it’s the latter.

That’s because she no longer believes the government should include on its bottom line its share of assets from the teachers’ and public servants’ pension funds that it co-sponsors.

Against the backdrop of the accounting dispute, Sousa and Sandals on Monday released an unaudited version of the province’s public accounts for the fiscal year that ended March 31.

“I’m disappointed that the government decided that this was the appropriate thing to do,” Lysyk, an independent watchdog, said of the Liberals’ extraordinary move.

While the ministers agreed to her deficit and debt numbers for the time being, there will be an independent review by experts of accounting practices in coming months that could result in the lower figures being used.

Sousa stressed the province will balance the books in next year’s budget regardless of the interpretation of the $10.7 billion in pension assets.

“The impact of this change resulted in our deficit number being $1.5 billion higher than it otherwise would have been in the 2015-16 had we used the same standards employed for the past 14 years,” the finance minister said, noting the auditor general signed off on the pension assets in previous years.

“These standards have been consistently accepted by the past four auditors - including the current auditor general,” he said.

“This year - two weeks before the Sept. 27 deadline for the tabling of public accounts - we learned in writing from the auditor general of her new interpretation of the accounting treatment for our jointly sponsored pension funds.”

Asked what changed, Lysyk said her office took a closer look at the government’s claim to the Ontario Public Service Employees’ Union Pension Plan and the Ontario Teachers’ Pension Plan, which it co-sponsors.

“I had my staff review that asset much more than in past years,” she told the Star, concluding that, because the government does not have ready access to the funds, they should not be considered assets.

While the government and the auditor have been at odds over issues as disparate as the cost of green energy and her diminished authority over reviewing government advertising, Sandals insisted the new disagreement is just about accounting.

“This really, truly, is not about politics,” the treasury board president said.

But Progressive Conservative MPP Vic Fedeli (Nipissing) accused the Liberals of trying to “usurp” the auditor general’s independence and authority.

“When the auditor finds an $11 billion hole in the budget the Liberal accounting, the Liberal answer, is to release this unaudited report,” said Fedeli, referring to the $10.7 billion.

“They’re in full-blown panic mode. There were 40 or 50 Liberal staffers here,” he said of the joint Sousa and Sandals media briefing Monday afternoon.

“Now, I think the accounting world will have even larger questions.”