To: The Minister of Finance From: Timothy Johnson Date: October 6, 2021

BUDGET AND ACCOUNTABILITY PROPOSALS:

A CASE STUDY OF PAST MEASURES

ISSUE STATEMENT: This briefing assesses the Government of Saskatchewan’s adherence to

and effective implementation of four Gass Commission recommendations between 2007-2019.
BACKGROUND: In 1991, the Provincial Auditor (PA) described Saskatchewan’s financial
statements as featuring“incomplete accounting methods” due to their utilizing cash instead of
accrual accounting, omitting figures for some organizations, and not adhereing to Canadian
Institute of Chartered Accountants’ (CICA) principles.1 In response, a commission chaired by
former CICA President Donald Gass produced 42 recommendations designed to improve
provincial financial management. Broadly, the recommendations urged the Government to:
 Present assets, liabilities, expenses, and revenues openly;
 Switch to accrual accounting;
 Report long-term liabilities accurately, and
 Provide more complete financial statements.
The intention was to improve strategic management, increase accountability and transparency,
achieve a more balanced budget, use current Canadian accounting methods, and better
communicate departmental finances and responsibilities.
This briefing examines the following four Gass Commission recommendations:
Recommendation 3.42 was intended to help balance the budget, improve long-term
sustainability, provide accurate forecasts, broaden the Government’s strategic framework, and
increase accountability. It led to the adoption of a medium-term budgeting framework (MTBF)
in the 1990s, wherein the annual budget contains the revenues, expenses, and surpluses/deficits
for four total years- the upcoming year and the three following years.
Recommendation 4.53 was intended to ensure that the Provincial Auditor (PA) remain
responsible for upholding public accountability before the Legislature, to improve usage of
appointed auditors, and codify best practices for PA and appointed auditor cooperation. It led to
amendments of The Provincial Auditor Act in 1994 and 2000. In 1994, a task force was created
to provide oversight between the Provincial Auditor, appointed auditors, the Assembly, and its
Committees.

1 Savot, Tamar. 1995.“Prairie cleaup.” CA Magazine.

2 “The Commission recommends that the Government of Saskatchewan should incorporate, as part of this spring’s Provincial Budget (the
1992/93 Budget) a financial plan which includes a strategy to restore the strength of the Province’s balance sheet.”
3 “The Commission recommends that the Provincial Auditor Act should be reviewed and, where necessary, amended to reflect the principle that

the Provincial Auditor is responsible for reporting to the Legislature on all government owned entities, but that private sector auditors can be
appointed to review the financial affairs of such entities, as long as it is clear that the use of private sector auditors is not intended to restrict
the Provincial Auditor in meeting his/her responsibilities for public accountability to the Legislature.”

www.schoolofpublicpolicy.sk.ca
Recommendation 6.184 was intended to ensure accountability and transparency through the
timely release of annual Public Accounts. It led to a clause in The Financial Administration Act
requiring Public Accounts be tabled and publicly released by October 31 of the next year.

Recommendation 6.15 was intended to facilitate public ‘literacy’ of government to promote

engagement and increase accountability by improving accessibility to information.

I. Adherence to Medium Term Forecast

Below is an evaluation of the Government’s adherence to its medium term forecasts for the fiscal
years of 2008-09, 2013-2014, and 2015-2016.

Methodology6: A mean absolute percentage error (MAPE) ‘score’ was calculated to assess the
accuracy of budget projections. Lower MAPE scores reflect less variance between projection and
actual.

The MAPE scores below display the variance percentage mean between projections contained in
the annual budget and the actual revenues, expenses, and General Revenue Fund (GRF) balances
across all four years. The annual MAPE Mean is the mean of the three MAPE means (revenue,
expense, and GRF balance). Ending up with more money than expected may seem good, but it
can also indicate poor planning or misleading accounting practices. Hence why an absolute score
was used to focus on inaccuracy.

2008-2009:
Projected Actual Projected Actual Projected GRF Actual GRF
2008-09 Revenue Revenue Expenses Expenses Balance Balance
2008-09 9,367 12,325 8,572 10,355 250 2389
2009-10 9,279 10,267 8,790 10,099 0 425
2010-11 9,369 11,061 9,142 10,965 0 48
2011-12 9,542 11,120 9,416 11,066 0 352

Rev. MAPE Exp. MAPE GRF Bal. MAPE MAPE Mean

15.78% 15.43% 97.38% 42.86%

2013-2014:
Projected Actual Projected Actual Projected GRF Actual GRF
2013-14 Revenue Revenue Expenses Expenses Balance Balance
2013-14 11,607 14,418 11,543 13,829 64.8 589
2014-15 12,053 14,059 11,889 13,997 163.8 62

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“The Commission recommends that Legislative amendments should be made to allow the speaker to release the Public Accounts for
examination by the public within 180 days after a fiscal year end regardless of whether the legislature is sitting at that time.”
5 “The Commission recommends that the Government of Saskatchewan should prepare suitable printed information on its current

organizational structure which can be provided to the general public, and which is supported by an appropriate communications strategy that
will assist the public to determine the department and agencies that are responsible for specific programs.”
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For further information, all tables, calculations, and public accounts used to generate the scores are available here.

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2015-16 12,529 13,634 12,246 15,153 283.2 -1,520
2016-17 13,024 13,626 12,613 14,844 410.8 -1,218

Rev. MAPE Exp. MAPE GRF Bal. MAPE MAPE Mean

11.57% 16.45% 89% 39%

2015-2016:
Projected Actual Projected Actual Projected GRF Actual GRF
2015-16 Revenue Revenue Expenses Expenses Balance Balance
2015-16 14,280 13,634 14,173 15,153 107 -1,520
2016-17 14,692 13,626 14,471 14,844 121 -1,218
2017-18 15,154 14,019 14,806 14,322 148 -303
2018-19 15,658 14,449 15,176 14,717 182 -268

Rev. MAPE Exp. MAPE GRF Bal. MAPE MAPE Mean

7.26 % 3.87% 107.04% 39.39%

ANALYSIS:

I. Recommendation 3.4

Adherence: Adherence was assessed by verifying whether annual budgets contained a four-year
MTBF. The Government failed to consistently provide a four year MTBF, thereby failing to fully
adhere to recommendation 3.4, as detailed below:
 2006-07 provided projections for only two of the four years (2006-07 and 2007-08),
including instead numbers for two past years;
 2007-08 did not provide any future projections with a fiscal outlook that accounted for
2007-08, 2006-2007, 2005-2006, 2004-2005;
 2008-2009 provided projections for revenues and expenditures, but projected a GRF
balance of exactly 0 for the upcoming three years;
 2014-2015 provided no four-year MTBF in its GRF Financial Outlook section;
 Toward 2019, increasingly honest GRF deficit accounting suggests a more committed
effort to adhere to an accountable MTBF.

Most years between 2007-2019 provided a multi-year forecast; by this measure, the
recommendation was somewhat adhered to. However, the lack of accuracy on GRF projections,
and tendency to overspend suggest a lackluster commitment to hitting targets.

Effectiveness: The bar graph below shows a tendency to under-forecast future expenses.

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The consistency of missing expenditure targets shows an ineffective use of an MTBF.

The PA also repeatedly flags problematic accounting practices surrounding the use of the GRF.
In 2010 the PA warned that “Government can manage the results of the GRF by moving money
between the GRF and government agencies”,7 while in 2011 stating that “reported surplus or
deficit for the [GRF] are incorrect according to generally accepted accounting principles.” 8 The
following year saw only a “Qualified” audit opinion, whereas 2013’s opinion was “Adverse” due
to significant errors in GRF accounting. 9

The GRF Balance MAPE mean between 2008-2014 was 190%. The four fiscal years between
2015-2019 posted GRF deficits, peaking in 2015-16 at -1.5 billion. Recommendation 3.4 has not
yet proven effective in helping to balance the budget. However, GRF accountability has
improved with more honest deficit accounting even though its forecasts remain unreliable.
The revenues and expenditures MAPE means between 2008-2014 are more promising with 13%
and 14% respectively. Bearing in mind that lower numbers can lead to higher MAPEs,
forecasting has been more effective with revenues and expenses than it has with the GRF.
Given these mixed results, this recommendation has proven to be somewhat effective in assisting
with strategic management and in improving accountability.

II. Recommendation 4.5

Adherence: Between 2007-2019, audit reports on the use of appointed auditors reiterated10 the
primacy of PA responsibility regardless of who performs audits as per the The Provincial
Auditor Act. They also stated an ongoing commitment to Report of the Task Force on Roles,
Responsibilities and Duties of Auditors recommendations by The Office, the Crown agencies,
Crown corporations, and the appointed auditors

The recommendation has legislation to ensure clarity regarding roles and responsibilities and the
task force and standing committee provide ongoing oversight. This recommendation was
therefore adhered to between 2007-2019.

7Provincial Auditor. December 1, 2010. “Medical equipment not properly maintained, says Auditor.” https://auditor.sk.ca/pub/
publications/public_reports/2010/Volume_2/2010v2_PR_Newsrelease.pdf
8 Provincial Auditor. June 2, 2011. “New Provincial Auditor Issues Report.” https://auditor.sk.ca/pub/publications/public_reports/2011/

Volume_1/2011v1_PR_Newsrelease.pdf.
9 Provincial Auditor of Saskatchewan. 2013 Report: Volume 2, p. 10. https://auditor.sk.ca/pub/publications/public_reports/2013/

Volume_2/2013v2_01_PublicAcct-GRF.pdf.
10 Report Financial Statements of CIC Crown Corporations and Related Entities (2007-2019); Report on the Financial Statements of Crown

Agencies, (2007-2019). Available at https://auditor.sk.ca/publications/public-reports.

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Effectiveness: The aforementioned reports consistently show that the Provincial Auditor deems
audits by appointed auditors as reliable, aside from the occasional outlier in certain years. The
reports clearly show the auditor responsible for auditing each listed agency.

The reports also consistently state something like, “We reported the results of the 2014 audits
that were completed by October 31, 2014. We will report the results of the remaining 2014 audits
in our 2015 Report – Volume 1”.11 The wording on audit reports leaves open the potential for
appointed auditors to not table before October 31.

Since almost all audits from appointed auditors are deemed reliable by the PA and it is easy to
see who is responsible for audits, this recommendation outlining the use of appointed auditors
has proven effective in both aiding management and ensuring accountability. Tabling deadlines
however are not entirely clear.

III. Recommendation 6.18

Adherence: The tables12 show that both volumes of Public Accounts were released within the
180 day deadline every year between 2007-2019, in adherence with recommendation 6.18.

Public Accounts 2006-07 2007-08 2008-09 2009-10 2010-11 2011-12 2012-13

Volume 1 June 29 June 27, June June 24 June 24 June 26 June 28
Volume 2 October October September September October October October
Deadline: October 31 October 31 October 31 October 31 October 31 October 31 October 31

Public Accounts 2013-14 2014-15 2015-16 2016-17 2017-18 2018-19

Volume 1 June June 26 July 22 July 21 July 19 June 27
Volume 2 October October 29 October 27 October 26 October 25 October 31
Deadline: October 31 October 31 October 31 October 31 October 31 October 31

If the above dates are accurate, the deadline recommendation saw a 100% adherence rate
between 2007-2019.
Effectiveness: As evidenced by the 2012-2013 “Adverse” audit, Public Accounts can be released
in a timely manner but still present unreliable numbers. The recommendation has been effective
in bringing about the timely release of Public Accounts, but only in conjunction with transparent
accounting practices can it be fully effective.

IV. Recommendation 6.1

11
Acting Provincial Auditor of Saskatchewan. 2015. Report on the Financial Statements of Crown Agencies for Years Ending in the 2014 Calendar
Year. Available at https://auditor.sk.ca/pub/publications/public_reports/2015/2014_Crown%20Agencies%20Report.pdf
12 Volume 1 release dates are from the Ministry of Finance Annuals Reports, as are release dates for Volumes 2 starting in 2014. Prior to that,

Volume 2 release dates are found in their respective Public Accounts Letters of Transmittal. Public Accounts Volumes 1 (2007-2019) and
Volumes 2 (2007-2014) available at https://publications.saskatchewan.ca/#/categories/893.

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Adherence: These outcomes are less easily measured. The 2014-15 Budget Summary contains a
Summary Budget Organizational Structure section and an account of budgets by organization
and by organization type. This appears to be the only budget document in the time period which
offers such an account of organizational structure.

Saskatechewan.ca was in existence by (at least) 2002 and provides an account of the
government’s Cabinet, Ministries, Agencies, and Other Governments.

The government has adhered to this recommendation by providing an accessible account of

organizational structure on its website.

Effectiveness: Saskatchewan.ca is user friendly; descriptions of specific programs for which

each department or ministry are responsible can be reached within 4 clicks from the homepage.
The language used to describe ministries and their programs is simple and appropriate for an
English speaking general public. The website is an effective communication tool and contributes
to accountability by providing an accessible overview of the government’s organizational
structure.

RECOMMENDATIONS:

I. Recommendation 3.4
Adherence to long-term strategy and genuine commitment to hitting targets is required for
effective implementation of a MTBF. The use of stricter top-down ceilings on expenditures
would enable fiscal discipline in the wake of consecutive GRF deficits. Realistic strategizing,
greater emphasis on budget preparation, iterative monitoring, and increased enforcement
measures could improve central authority`s ability to balance the budget and promote
transparency.

II. Recommendation 4.5

With respect to the use of appointed auditors, it might improve accountability if the Provincial
Auditors’ reports also included a list of the outstanding audits not submitted by
organizations/auditors prior to October 31. It would be useful to know the percentage of entities
meeting their tabling deadline; if this information is available, it could be made more accessible.

III. Recommendation 6.18

The practice of including release dates for both Volumes of Public Accounts in Annual Reports
should be continued. Clearer specificity and accessibility improve accountability. Timely release
of reliable documents should continue to be a priority.

IV. Recommendation 6.1

Consider broad creative collaborations to promote effective communication and contemporary
website development. To expand access, Saskatchewan.ca could be translated into French and
other languages. Proactive and inclusive information sharing cultivates public trust.