I conducted an audit of the financial statements of the Ministry of Executive Council for the year ended
March 31, 1999. My auditor’s report contained a reservation of opinion. The auditor’s report itself should be read for full details of the reasons for the reservation. On page 262, I have provided a summary of the reasons for reservations in my auditor’s reports on Ministry and Departmental financial statements.
In addition, I reserved my opinion on the financial
statements for the year ended March 31, 1999 with respect to Ministry expenses amounting to approximately $504,000, which were charged to the supply votes of other Ministries.
In my view, these expenses should have been charged to the Ministry of Executive Council’s supply vote. As set out by management in the Related Party Transactions Note 7 to the Ministry financial statements, certain transitional costs “to support a new policy role and information technology function for the Ministry amounting to an additional
$504,000 were borne and reflected by other Ministries in their financial statements.” The expenses related to:
• information technology costs of approximately $406,000 charged to the Department of Public Works Supply and Services (PWSS),
• the salary of the Executive Director - Policy
Coordination of approximately $76,000 charged to the Department of Intergovernmental and Aboriginal Affairs (IAA), and
• the salary of the Director - Research and Analysis of approximately $22,000 charged to the Department of Community Development.
In my opinion, the amounts charged to the supply votes of
PWSS and IAA were contrary to both the Appropriation Act (1998) and section 38(6) of the Financial Administration Act.
Charging Ministry expenses to the supply vote of another Ministry frustrates the fundamental expenditure control exercised by the Legislative Assembly. The proper course of action when there is insufficient spending authority is to obtain Legislative Assembly approval for a supplementary supply vote. I understand that the approved 1999-2000 budget of the Office of the Premier/General Administration includes an increase of $800,000 to address information technology needs and the Ministry’s new policy role.
Scope of work In addition to the annual financial audit, the following work was completed:
• Application of specified audit procedures to key performance measures reported in the Ministry’s 1997-98 annual report
• A review of the Ministry’s progress in addressing the Year 2000 problem
Guidance to reader
The mission of the Ministry of Family and Social Services as stated in its 1998-2001 business plan is to “help families to be responsible and accountable, help adults to beindependent, and keep children safe.” The business plan indicated that the Ministry will consist of four basic components:
• A delivery system for income and employment programs that is fully coordinated with complementary provincial and federal programs.
• An integrated, community based delivery system for services to children and families.
• A coordinated community based delivery system for services to persons with developmental disabilities.
• Service centres that provide administrative systems for the above three systems.
The main expenditure programs in the Ministry of Family and Social Services for 1998-99 were:
Budget Actual
Income Support to Individuals and Families 677,249 632,334
Services for Children and Families 364,384 393,784
Services to Persons with
Developmental Disabilities 277,822 301,345
(in thousands)
Starting in April 1998, six community boards for Persons with Developmental Disabilities along with a Provincial Board and a Facility Board (Michener Centre) became responsible for the management of all services to persons with developmental disabilities. The initiative is intended to give communities more opportunities to plan and deliver services that meet local and regional needs.
The structure for these boards is established under the Persons with Developmental Disabilities Community Governance Act. The Act sets out the powers of the different boards and establishes that the programs are for adults with developmental disabilities. The Act also
prohibits boards, with the exception of the Provincial Board, from hiring and paying staff. The financial and
administrative support for board operations was to be provided by regional and head office resources of the Department of Family and Social Services. Program delivery staff were to be employed by the Department and the costs to be assigned to the boards.
Calgary Rocky View Child and Family Service Authority commenced operations on April 1, 1998. The remaining seventeen Child and Family Services Authorities (CFSAs) became responsible for the delivery of services to children and families after March 31, 1999.
Our risk assessment concluded that there was considerable risk associated with the reorganization of community based services. As a result, emphasis was placed in this area during our audit work.
Subsequent to the year ended March 31, 1999, the
government announced organizational changes affecting the Ministry. The Persons with Developmental Disabilities boards now report to the Minister of Health and Wellness.
The CFSAs report to the Minister of Children’s Services and the remaining programs within the Department form part of the Human Resources and Employment Department.
On July 8, 1999, the Minister of Health and Wellness appointed his Associate Minister to conduct a review of the programs, funding and accountability of the Persons with Developmental Disabilities Boards. A final report is to be presented to the Minister by the end of December 1999.
Ministry Financial Statements
I conducted an audit of the financial statements of the Ministry and Department of Family and Social Services for the year ended March 31, 1999 together with the following entities:
• Persons with Developmental Disabilities Foundation
• Persons with Developmental Disabilities Provincial Board
• Persons with Developmental Disabilities Northwest Alberta Community Board
• Persons with Developmental Disabilities Northeast Alberta Community Board
• Persons with Developmental Disabilities Central Alberta Community Board
• Persons with Developmental Disabilities Calgary Region Community Board
• Persons with Developmental Disabilities South Alberta Community Board
• Edmonton Community Board for Persons with Developmental Disabilities
• The Michener Centre Facility Board
• Calgary Rocky View Child and Family Services Authority
My auditor’s reports contained reservations of opinion on all of the above except for the Foundation, and each auditor’s report should be read for full details of the reasons for the reservations. On page 262 of this report, I have provided a summary of the reasons for reservations in my auditor’s reports on Ministry, Department and other entity financial statements with respect to corporate accounting policies.
Also, my report on the financial statements of the Department of Family and Social Services was reserved because certain costs related to employees assigned to the
PDD boards were not allocated to the boards. Costs
associated with the provision of certain services to children were not reflected in the Department’s financial statements.
In addition the Ministry of Advanced Education and Career Development (AECD) incurred $6.8 million delivering labour market training programs to clients of the Ministry of Family and Social Services (F&SS). The voted appropriation for
F&SS included $6.2 million since F&SS intended to reimburse
AECD for delivering these programs up to that amount.
However, since F&SS was projecting a Ministry budget overrun for 1998-99, an agreement was reached between the two Ministries that $4.4 million of the $6.8 million would be expensed by AECD instead, such that F&SS reduced its budget overrun and accordingly applied for a smaller supplementary vote than originally anticipated. AECD was legally entitled to deliver these programs and had sufficient available voted funds to absorb these costs. However, in my
opinion, these costs should not have been reassigned without the Legislative Assembly’s agreement to the revision of
F&SS and AECD performance expectations.
Scope of audit work In addition to the annual financial audits, the following work was completed:
• A review of shared services.
• Application of specified audit procedures on the Ministry’s performance measures
• An examination of the systems used by the Department to review and approve business plans of the child and family service authorities to ensure proper accountability.