Manitoba government’s financial reporting raises questions about transparency and competence

The Manitoba government’s fiscal year-end is March 31, but now well into the summer, the Kinew government still has not published its annual financial results, meaning Manitobans remain in the dark about their government’s books. This lengthy delay is nothing new—last year, the Kinew government didn’t publish its financial results until September 26.

Why should it take six months for the government to report on its finances? The answer is, it shouldn’t. The Saskatchewan government published its results on June 30, three months after the fiscal year-end. And when compared to the private sector, the Manitoba government’s financial reporting delay is even worse (more on that in moment).

A new report from Manitoba’s auditor general helps explain why the government’s financial reporting takes so long. None of the explanations will satisfy taxpayers concerned about government accountability, fiscal transparency or government competence.

“Over the past several years,” writes the auditor general, “we have consistently identified significant errors and deficiencies in the processes and controls used by the Province to prepare the Summary Financial Statements. This contributed to increased audit work, delays in completing the audits, and qualified audit opinions.”

While last year the auditor general was finally able to issue a clean audit opinion after seven consecutive qualified audit opinions (meaning financial misstatements were material in some places but not widespread enough to invalidate the report as a whole), “we continue to find errors that require correction, indicating that further improvement is needed.” So, last year was an improvement, but far more must be done.

The auditor general report, which spans more than 50 pages and includes 18 recommendations, also notes that the “Provincial Comptroller lacked a risk-based plan to fulfill responsibilities outlined in The Financial Administration Act” and “responsibilities related to the Public Accounts audit were not addressed in the draft plan.” In plain language, that’s poor planning and insufficient oversight.

Even worse, when it came to the actual process of reporting the government’s finances, “roles, responsibilities, and reporting relationships were not always followed,” communication was not always timely and sufficient, departments “lacked formal documented review processes,” there was insufficient oversight with implementing new accounting standards, the review processes did not consistently detect errors, and recordkeeping and training “require improvement.”

Again, the long delay in financial reporting for the Manitoba government is particularly offensive given that in Canada, publicly-listed companies must publish their annual financial statements within 90 days of their fiscal year-end. And Canada’s large- and mid-sized publicly-traded banks have an October 31 year-end and typically publish their annual results in the first week of December. Canada’s five largest banks have more annual revenue than the Manitoba government, so there’s no obvious reason to suppose the provincial government’s finances are more complex or should take longer to report. Yet it still takes the government six months to report results versus only five weeks for the banks.

Famed economist Milton Friedman had a rule of thumb that “it costs government about twice as much to accomplish any given task as that same task would cost if done by private entities operating in a competitive environment.” Apparently, this applies to financial reporting. It takes the Manitoba government up to five times as long as the private sector. And even while moving far more slowly, the government makes—as the auditor general reports—tons of mistakes along the way.

Manitobans should demand better and more timely financial reporting that allows them to properly scrutinize their government’s fiscal management. It’s their money, after all.