Public Accounts. For the Fiscal Year Ended March 31, Ministry of Finance Office of the Comptroller General

Transcription

1 Public Accounts Ministry of Finance Office of the Comptroller General For the Fiscal Year Ended March 31, / 2004 Ministry of Finance Office of the Comptroller General

2 National Library of Canada Cataloguing in Publication Data British Columbia. Office of the Comptroller General. Public accounts for the year ended /2001 Annual. Report year ends Mar. 31. Continues: British Columbia. Ministry of Finance. Public accounts. ISSN ISSN = Public accounts British Columbia. Office of the Comptroller General 1. British Columbia Appropriations and expenditures Periodicals. 2. Revenue British Columbia Periodicals. 3. Finance, Public British Columbia Periodicals. I. British Columbia. Ministry of Finance. 2. Title. HJ13.B C

3 June 29, 2004 Vic to ria, Brit ish Co lum bia Lieu ten ant Gov er nor of the Prov ince of Brit ish Co lum bia MAY IT PLEASE YOUR HON OUR: The un der signed has the hon our to pres ent the Pub lic Ac counts of the Gov ern ment of the Prov ince of Brit ish Co lum bia for the fis cal year ended March 31, GARY COLLINS Minister of Finance Ministry of Finance Vic to ria, Brit ish Co lum bia Honourable GARY COL LINS Min is ter of Fi nance I have the hon our to sub mit here with the Pub lic Ac counts of the Gov ern ment of the Prov ince of Brit ish Co lum bia for the fis cal year ended March 31, Respectfully submitted, ARN VAN IERSEL Comptroller General

4

5 British Columbia s Public Accounts Setting the Course The Pub lic Ac counts are one of the ma jor ac count abil ity doc u ments for the Pro vin cial Gov ern ment. They dem on strate ac count abil ity to the cit i zens of Brit ish Co lum bia by pro vid ing ac tual au dited fi nan cial in for ma tion in a con sis tent, timely and un der stand able for mat. They fur ther al low the reader to see how gov ern ment per formed rel a tive to its fis cal plan for the year, as laid out in the Bud get and Es ti mates of rev e nue and ex pen di ture. Fi nally, they re port on the fi nan cial state of the Prov ince in terms of its as sets, li a bil i ties and net debt. The proper fo cus of the Pub lic Ac counts is the Sum mary Fi nan cial State ments that rep re sent the con sol i dated fi nan cial results and fi nan cial po si tion for all those or ga ni za tions that make up the gov ern ment re port ing en tity. These state ments provide an ag gre gate over view of how the Prov ince and its var i ous or ga ni za tions per formed against the fi nan cial plan. Supplementary in for ma tion is also pro vided through the Con sol i dated Rev e nue Fund Ex tracts (avail able on the internet) that compare actual to planned spending on an appropriation basis, which represents another significant accountability of ministries back to the Leg is la tive As sem bly. The Prov ince con tin ues to im prove the Pub lic Ac counts in terms of their use ful ness to read ers. A new front sec tion has been de vel oped for Fis cal 2003/04, that pro vides a sum mary of the fis cal year. It fur ther pro vides ex pla na tions of rev e nue, ex pense, as sets and li a bil i ties that tie into both the 2003/04 bud get and the 2003/04 fi nan cial state ments. This sec tion is intended to make the Pub lic Ac counts more un der stand able and con tin ues our ef fort to better in te grate all our ma jor fi nan cial ac count - abil ity doc u ments. Our in ten tion is to fur ther im prove this sec tion of the Pub lic Ac counts in the com ing years by adding com - par a tive data for prior years so that read ers can better iden tify trends. The Pub lic Sec tor Ac count ing Board also has a pro ject to de velop seg mented fi nan cial re port ing that will pro vide in for ma tion on the ma jor com po nents of gov ern ment. They in tend this ini tia tive to ad dress some cur rent con cerns that the gov ern ment en tity has be come so large and has lost some of its meaningfulness in terms of describing the government s major responsibilities, for example, health and education. The 2003/04 Pub lic Ac counts are them selves, a tran si tion doc u ment given that the gov ern ment re port ing en tity, that is, those or ga ni za tions con sid ered to be part of gov ern ment, has al ready been ex panded in the 2004/05 bud get, to in clude schools, universities, col leges, and health au thor i ties(such sec tor). How ever, since these Pub lic Ac counts are a re port against the 2003/04 Bud get that did not in clude the SUCH sec tor, they do not yet of fi cially in clude these organizations. As has been the case for the past eight years, how ever, the pro jected im pact of in clud ing SUCH sec tor is shown in the supplementary ma te rial (see page 83-86). Rec og niz ing that as of 2004/05 and be yond, the Pub lic Ac counts will be based on the larger gov ern ment re - port ing en tity, we have pro vided some ad di tional in for ma tion on the im pact of SUCH sector. Con sis tent with re cent ex pe ri - ence, add ing in the SUCH sec tor would have im proved our bot tom line, as ac knowl edged by the au di tor gen eral, by $337 mil lion. As the 2003/04 Pub lic Ac counts are still based on the old re port ing en tity and do not of fi cially in clude the SUCH sector, the state ments again in clude a res er va tion by the Au di tor Gen eral in keep ing with the past num ber of years. As of 2004/05, with the expanded en tity be ing in cluded in the budget, we ex pect this res er va tion will dis ap pear. The gov ern ment has agreed to in - clude the SUCH sector ef fec tive 2004/05, based on our le gal re quire ment to fol low Gen er ally Ac cepted Ac count ing Principles (GAAP). Brit ish Co lum bia, there fore, leads the coun try in terms of the or ga ni za tions it in cludes in its re port ing en tity. We have stated, how ever, that with re spect to uni ver si ties, we will mon i tor the prac tices of other se nior gov ern ments to de ter mine if uni ver si ties truly should be con sid ered part of gov ern ment in the long term. Besides the SUCH sec tor, there have been other changes to the re port ing en tity for 2003/04. New or ga ni za tions have been added, while oth ers have been de leted, and some have changed sta tus. Ma jor changes in clude the con ver sion of BC Fer ries into a new au thor ity model, the trans fer of the Pa cific Na tional Ex hi bi tion to the Mu nic i pal ity of Van cou ver, and the start ing of operations for the Forestry Innovation Investment Ltd and the Vancouver Convention Center Expansion Project. There is a com plete list ing of the re port ing en tity for gov ern ment on pages For Brit ish Co lum bia Ferry Cor po ra tion, page 47, (As sets Held for Re sale, Note 11), pro vides fur ther in for ma tion. Also, page 65, (Sig nif i cant Events, Note 34), pro - vides in for ma tion re gard ing the BC Rail trans ac tion an tic i pated to close in 2004/05. This in for ma tion is pro vided to show the im pact of the BC Rail trans ac tion on the Sum mary Fi nan cial State ments.

6 Ac count ing pol i cies are re viewed each year for con tin ued rel e vance and con sis tency with GAAP. Since we are re quired by law to be GAAP com pli ant, we have to ad just our pol i cies ac cord ingly. For fis cal 2003/04 there were no ac count ing pol icy changes, how ever de ferred for eign ex change gains or losses on debt are now in cluded in the re ported debt num bers rather than ap pear ing as a de ferred rev e nue or de ferred ex pense. Policy and format changes are made in consultation with the independent Accounting Policy Advisory Committee created under the Budget Transparency and Accountability Act in This Com mit tee has ad vis ed gov ern ment on the re quire ments to be fully com pli ant with GAAP by the leg is lated date of April 1, Based on prog ress to date, we are on track to meet this requirement. Brit ish Co lum bia re mains a leader in bud get ing and fi nan cial re port ing based on the com pa ra bil ity of its Es ti mates and Pub lic Ac counts, with its fo cus on One Bot tom Line ; that is, the Sum mary Fi nan cial State ments of the Prov ince in clud ing ministries, Crown cor po ra tions and other agen cies. While we con tinue to go through sig nif i cant change, we re main ded i cated to im prov ing both the bud get ing and re port ing of the Prov ince. Again, I thank the Se lect Stand ing Com mit tee on Pub lic Ac counts of the Leg is la tive As sem bly, gov ern ment min is tries, Crown cor po ra tions and agen cies, and the Of fice of the Au di tor Gen eral for their guid ance and sup port in pre par ing the 2003/04 Pub lic Ac counts. The ef forts of all par tic i pants were crit i cal in main tain ing an early re lease date com pa ra ble with the best practitioners in Canada. Com ments or ques tions re gard ing the Pub lic Ac counts doc u ments are very much ap pre ci ated and can be di rected to me by mail at PO Box 9413 STN PROV GOVT, Vic to ria BC V8W 9V1, at arn.vaniersel@gems8.gov.bc.ca or by tele phone at or fax at ARN VAN IERSEL Comptroller General

7 Contents Overview (Unaudited) Pub lic Accounts Content... 9 Financial Statement Discussion and Analysis Summary Accounts' Surplus (Deficit) Changes from 2003/04 Bud get Changes in Actual Results from 2003 to Total Provincial Debt Economic Highlights Rev e nue by Source Rev e nue by Cat e gory Expense by Func tion Expense by Func tion -Chart Expense by Major Account abil ity Financial Assets Liabilities Financial Statement Debt Total Provincial Debt Credit Rat ing -Chart Non-Financial assets Net Liabilities and Accumulated Deficit Sum mary Accounts' Staff Utilization Impact of SUCH Summary Financial Statements Report of the Audi tor Gen eral of Brit ish Colum bia 25 State ment of Respon si bil ity for the Sum mary Finan cial State ments of the Gov ern ment of the Prov ince of Brit ish Colum bia State ment of Finan cial Posi tion Statement of Operations State ment of Change in Net Lia bil i ties State ment of Changes in Cash and Tem po rary Invest ments Notes to Sum mary Finan cial State ments Reporting Entity State ment of Finan cial Posi tion by Sec tor State ment of Oper a tions by Sec tor Statement of Self supported Crown Corporations and Agen cies Sum mary of Finan cial Posi tion.. 73 Statement of Self supported Crown Corporations and Agen cies Sum mary of Results of Oper a - tions and State ment of Equity Statement of Tangible Capital Assets State ment of Guar an teed Debt Supplementary Information (Unaudited) Adjusted Net Income of Crown Cor po ra tions and Agen cies Impact of SUCH Sec tor on the Sum mary Finan - cial State ments' State ment of Finan cial Posi tion. 83 Impact of SUCH Sec tor on the Sum mary Finan - cial State ments' State ment of Oper a tions Summary Financial Statements Including SUCH Sec tor State ment of Finan cial Posi tion by Sec tor 87 Summary Financial Statements Including SUCH Sec tor State ment of Oper a tions by Sec tor Consolidated Revenue Fund Extracts (Unaudited) Operating Result Sched ule of Net Rev e nue by Source Sched ule of Com par i son of Esti mated Expenses to Actual Expenses Schedule of Financing Transaction Disbursements. 98 Sched ule of Infor ma tion Required Under Sec tion 9(2)(d)(ii), (iii) and (iv) of the Bud get Trans - par ency and Account abil ity Act Provincial Debt Summary Over view of Pro vin cial Debt (Unau dited) Provincial Debt (Unaudited) Change in Pro vin cial Debt (Unau dited) Reconciliation of Summary Financial Statements (Sur plus) Def i cit to Change in Tax payer sup - ported Debt and Total Debt (Unau dited) Rec on cil i a tion of Total Debt to the Sum mary Finan cial State ments Debt (Unau dited) Change in Pro vin cial Debt, Com par i son to Bud get (Unau dited)

8 Contents Continued Inter pro vin cial Com par i son of Tax payer sup - ported Debt as a Per cent age of Gross Domes - tic Prod uct (Unau dited) Interprovincial Comparison of Taxpayer supported Debt per Capita (Unau dited) Report of the Audi tor Gen eral of Brit ish Colum bia on the Sum mary of Pro vin cial Debt, Key Indi ca - tors of Pro vin cial Debt, and Sum mary of Per for - mance Mea sures Summary of Provincial Debt Key Indicators of Provincial Debt Sum mary of Per for mance Mea sures Definitions

9 PROV INCE OF BRIT ISH CO LUM BIA 9 Public Accounts Content Financial Statement Discussion and Analysis (Financial Highlights) provides a written commentary on the Summary Financial Statements plus additional information on the financial performance of the government. Summary Financial Statements these audited statements have been prepared to disclose the financial impact of the government s activities. They aggregate the Consolidated Revenue Fund and taxpayer supported Crown corporations and agencies (government organizations) and self supported Crown corporations and agencies (government enterprises). Supplementary Information (Unaudited) this section provides supplementary schedules containing detailed information on the results of those Crown corporations and agencies that are part of the government reporting entity. Additional information is also included on the impact of including schools, universities, colleges and institutes, and health care authorities in the government reporting entity. Currently, they are not considered part of the government reporting entity because each is part of a province wide program, is locally based and has an initial accountability to a local board. These organizations will be included in 2004/05. Consolidated Revenue Fund Extracts (Unaudited) the Consolidated Revenue Fund (CRF) reflects the core operations of the province as represented by the operations of government ministries and legislative offices. Its statements are included in an abridged form. The CRF Extracts include a summary of the CRF operating result, a schedule of net revenue by source, a schedule of expenses, a schedule of financing transactions, and a schedule of write-off, remission and forgiveness, as required by statute. Provincial Debt Summary presents schedules and statements that provide further details on provincial debt and reconcile the Summary Financial Statements to the province s total debt. Also included are the audited Summary of Provincial Debt, Key Indicators of Provincial Debt and Summary of Performance Measures. This publication is available on the Internet at: Additional Information Available The following information is available only on the Internet at: Consolidated Revenue Fund Supplementary Schedules this section contains schedules that provide details of financial activities of the province s Consolidated Revenue Fund, including details of expenses by ministerial appropriations, including an analysis of statutory appropriations, Special Accounts and Special Funds, and financing transactions. Consolidated Revenue Fund Detailed Schedules of Payments this section contains detailed schedules of salaries, wages, travel expenses, grants and other payments. Financial Statements of Government Organizations and Enterprises this section contains links to the audited financial statements of those Crown corporations and agencies that are included in the government reporting entity. Segregated Funds and Trust Funds Financial Statements this section contains the audited financial statements of the pension, superannuation and long term disability funds administered by the province. A summary of financial information for trust funds is also included in this section. Summaries of Financial Statements of Corporations and Agencies to which the Financial Information Act applies this section contains summaries of the financial statements of corporations, associations, boards, commissions, societies and public bodies required to report under the Financial Information Act (R.S.B.C. 1996, chap. 140, sec. 2).

10 10 PROV INCE OF BRIT ISH CO LUM BIA Financial Statement Discussion and Analysis Report The focus of the province s financial reporting is the Summary Financial Statements that consolidate the operating and financial results of the province s Crown corporations and agencies with the Consolidated Revenue Fund. These are general purpose statements designed to meet, to the extent possible, the information needs of a variety of users. The Public Accounts are prepared in accordance with the Financial Administration Act and the Budget Transparency and Accountability Act (BTAA). The BTAA was amended in 2001 with the passing of Bill 5. Under section 20 of that Bill, the government has mandated that all accounting policies and practices applicable to documents required to be made public under this Act for the government reporting entity must conform to generally accepted accounting principles (GAAP). This move to fully comply with GAAP must be completed effective with the 2004/05 fiscal year. For senior governments, GAAP is generally considered to be the recommendations and guidelines of the Public Sector Accounting Board (PSAB) of The Canadian Institute of Chartered Accountants. While the province generally follows the recommendations of PSAB, there are two areas that have been or will be reviewed in the move to full GAAP reporting: i) school districts, universities, colleges and institutes, and health authorities (SUCH sector) were examined to determine whether or not they belong in the government reporting entity (GRE). These organizations will be included in the GRE in 2004/05. ii) prepaid capital advances, currently used to capitalize grants to entities outside the GRE for tangible capital assets, will be reviewed to determine if they are still required once the move to fully comply with GAAP is complete. An Accounting Policy Advisory Committee has been established as an independent body and is assisting the province in addressing these two issues. The Public Accounts are printed in one volume and include the Overview, the Summary Financial Statements, Supplementary Information, the Consolidated Revenue Fund Extracts and the Provincial Debt Summary. Additional information is available to the public on the Internet at:

11 PROV INCE OF BRIT ISH CO LUM BIA 11 Fi nan cial High lights Fi nan cial High lights The in for ma tion con tained within the Fi nan cial High lights is taken from the Sum mary Fi nan cial State ments on pages 31 to 77. The bud get fig ures are from pages 3 to 5 of the Es ti mates Fis cal Year Ended March 31, De spite sig nif i cant rev e nue and ex pen di ture shocks in 2003/04, the prov ince ended the year with a def i cit of $1,339 mil - lion, an im prove ment of $961 mil lion com pared with the bud geted $2,300 mil lion def i cit and an im prove ment of $1,860 mil lion compared with the prior year. Sum mary Ac counts' Sur plus (Def i cit) 2003/04 Budget 2003/04 Actual 2002/03 1 Actual Vari ance 2003/04 Actual to Bud get Tax payer sup ported pro grams and agen cies $ $ $ $ $ 2003/04 vs 02/03 Revenue ,619 24,793 22, ,906 Expense 2... (27,800) (27,891) (27,577) (91) (314) Tax payer sup ported bal ance (3,181) (3,098) (4,690) 83 1,592 Self supported Crown corporation net earnings... 1,381 1,881 1, Sur plus (Def i cit) be fore un usual items (1,800) (1,217) (2,924) 583 1,707 Results of discontinued operations... (106) 106 Restructuring exit expense... (122) (169) (122) 47 Forecast allowance... (500) 500 Sur plus (Def i cit) for the year (2,300) (1,339) (3,199) 961 1,860 1 The 2002/03 fig ures have been re stated to con form with the pre sen ta tion of the 2003/04 Pub lic Ac counts /04 Bud get ex cluded $319 mil lion in ad di tional CHST funds from the fed eral gov ern ment that were not known at the time of the Bud get, but were in cluded in the Sup ply Act passed on May 29, Improvements in taxation and energy revenues and self-supported Crown corporation operating results helped to offset un an tic i pated events, such as re duced Equalization rev e nues and the costs of for est fires, floods and Bo vine Spongiform Encephalopathy (BSE). At the same time, lower debt ser vice costs and min is try sav ings cre ated ad di tional fis cal room to ac com - mo date pri or ity ini tia tives, in clud ing the ac cel er a tion of $72 mil lion of the gov ern ment's com mit ment to sup port the 2010 Olym pic and Paralympic Win ter Games. During the 2003/04 fiscal year, the Legislative Assembly approved four Supplementary Estimates totalling $837 million. The Sup ple men tary Es ti mate au tho rized the spend ing of $319 mil lion in fed eral health ac cord fund ing re ceived. The Sup ple - mentary Estimates provided information and authorization to support spending of $446 million in additional expenses related to di sas ter costs, $72 million in accelerated funding for the 2010 Olympics, and $274,000 in ad di tional ex penses for the In for - ma tion and Pri vacy Com mis sioner.

12 12 PROV INCE OF BRIT ISH CO LUM BIA Fi nan cial High lights Changes From 2003/04 Bud get In Millions Rev e nues Ex penses Def i cit $ $ $ Budget (before forecast allowance) 26,000 27,800 (1,800) Forecast Allowance... (500) Sur plus (Def i cit) per Bud get (2,300) Increase in taxation revenue Decrease in equalization funding... (1,005) (1,005) In crease in Can ada Health and So cial Trans fer Increase in energy revenue In crease in self sup ported Crown cor po ra tion net earn ings In crease in other rev e nue (De crease) in debt in ter est ex pense... (341) 341 In crease in for est fires, floods, and BSE costs (410) In crease in other spend ing (144) Decrease in forecast allowance Ac tual Re sults 26,674 28,013 (1,339) Changes In Ac tual Re sults from 2003 to 2004 In Millions Rev e nues Ex penses Def i cit $ $ $ 2002/03 1 Sur plus (Def i cit) 24,653 27,852 (3,199) In crease in tax a tion rev e nue (see page 14)... 1,531 1,531 Increase in natural resources revenue (see page 14) In crease in other rev e nue (see page 14) In crease in self sup ported Crown cor po ra tion net earn ings (see page 14) (Decrease) in federal contributions (see page 14)... (232) (232) In crease in health ex penses (see page 16) (221) (De crease) in so cial ser vices ex pense (see page 16)... (280) 280 In crease in other ex pense (220) Sub to tal of changes in ac tual re sults... 2, , /04 Surplus (Deficit) 26,674 28,013 (1,339) 2002/03 1 Ac cu mu lated Sur plus (Def i cit) (8,015) 2003/04 Accumulated Surplus (Deficit) (9,354) 1 The 2002/03 fig ures have been re stated to con form with the pre sen ta tion of the 2003/04 Pub lic Ac counts.

13 PROV INCE OF BRIT ISH CO LUM BIA 13 Fi nan cial High lights Fis cal 2003/04 also marks the fi nal year of the gov ern ment's three-year re struc tur ing ini tia tive for gov ern ment min is - tries. Over the three-year pe riod, ac tual min is try re struc tur ing costs to talled $574 mil lion. Crown cor po ra tions re struc tur ing costs over the same pe riod were $309 mil lion. Debt re ported on the fi nan cial state ments at the end of 2003/04 was $36,938 mil lion, up $814 mil lion from 2002/03. As noted in the ta ble be low, to tal pro vin cial debt was $399 mil lion higher than the amount re ported in the prov ince's fi nan cial state ments due to dif fer ences in how debt guar an tees and non-guar an teed debt are re ported for ac count ing pur poses. To tal Pro vin cial Debt Vari ance 2003/04 Budget 2003/04 Actual 2002/03 1 Actual 2003/04 Actual to Bud get 2003/04 vs 02/03 $ $ $ $ $ Financial statement debt... 40,527 36,938 36,124 (3,589) 814 Third party guar an tees and non guar an teed debt (40) (16) To tal Pro vin cial Debt 40,966 37,337 36,539 (3,629) The 2002/03 fig ures have been re stated to con form with the pre sen ta tion of the 2003/04 Pub lic Ac counts. A more com pre hen sive over view of pro vin cial debt, in clud ing key debt in di ca tors is lo cated on pages 103 to 116. Eco nomic High lights Brit ish Co lum bia's econ omy grew by 2.2% in cal en dar 2003, tying for fourth high est among prov inces, ac cord ing to preliminary re sults from Sta tis tics Can ada. The es ti mated 2.2% growth last year ex ceeded the na tional av er age of 1.7%. Eco - nomic growth in Brit ish Co lum bia was fu eled by a strong hous ing mar ket and robust job creation in Em ploy ment grew 2.5% last year with just over 50,000 jobs cre ated, al most all of them full-time. Hous ing starts posted growth of 21% in cal en dar 2003 and non-res i den tial con struc tion also saw a pick-up in growth to 6.1%. 3 Economic Growth for Calendar 2.5 Annual % change in Real GDP Actual Budget 2003 Economic Forecast Council -Dec 2002

14 14 PROV INCE OF BRIT ISH CO LUM BIA Fi nan cial High lights Strong and Sta ble Credit British Co lum bia con tin ues to main tain a strong and sta ble credit rat ing, most no ta bly ev i denced by the re cent up grade to the prov ince's credit rat ing out look by two of the three credit rat ing agen cies. (See page 19 for de tails.) Fi nan cial Per for mance Revenue For the 2003/04 fis cal year, rev e nue to talled $26,674 mil lion, $674 mil lion higher than bud get and $2,021 mil lion higher than 2002/03. Revenue by Source 2003/04 Budget 2003/04 Actual 2002/03 1 Actual Vari ance 2003/04 Actual to Bud get 2003/04 vs 02/03 $ $ $ $ $ Taxation... 13,341 13,808 12, ,531 Contributions from Federal Government ,992 3,346 3,578 (646) (232) Natural Resources... 3,396 3,653 3, Fees and Licen ces... 2,262 2,427 2, Net earn ings of self sup ported Crown Cor po ra tions... 1,381 1,881 1, Mis cel la neous Investment Earnings (146) (57) Total Revenue... 26,000 26,674 24, ,021 1 The 2002/03 fig ures have been re stated to con form with the pre sen ta tion of the 2003/04 Pub lic Ac counts /04 Bud get ex cluded $319 mil lion in ad di tional CHST funds from the fed eral gov ern ment that were not known at the time of the Bud get, but were in cluded in the Sup ply Act passed on May 29, The main rea sons for the dif fer ence be tween bud get and actuals were higher self-sup ported Crown cor po ra tion net earn ings and higher taxation and nat u ral re source rev e nues, par tially off set by lower fed eral trans fer pay ments. Tax a tion rev e nues, which com prise over 50% of all rev e nues, were $467 mil lion higher than bud get and $1,531 mil lion higher than 2002/03, re flect ing per sonal in come tax and prop erty trans fer tax im prove ments.

15 PROV INCE OF BRIT ISH CO LUM BIA 15 Fi nan cial High lights Con tri bu tions from the fed eral gov ern ment were $646 mil lion lower than bud get and $232 mil lion lower than 2002/03 since re duced equal iza tion entitlements for 2003/04 and prior years were only par tially off set by higher rev e nues for Can ada Health and So cial Trans fer (CHST) and fed eral gov ern ment re lief for for est fire costs. Equal iza tion rev e nue was $1,005 mil - lion be low bud get re flect ing a $499 mil lion lower en ti tle ment in re spect of 2003/04 and a neg a tive $506 mil lion prior year ad - just ment mainly for 2002/03. CHST rev e nue was up $281 mil lion from bud get mainly due to the Health Ac cord fund ing and fed eral contributions for for est fire re lief totalled $121 mil lion. Rel a tive to 2002/03, equal iza tion rev e nue was $873 mil lion lower and CHST rev e nue was up $438 mil lion. The year-over-year change in CHST rev e nue re flects the Health Ac cord fund ing, the higher entitlement for prior years and an in creased base in 2003/04. Nat u ral re source rev e nues were $257 mil lion higher than bud get and $372 mil lion higher than 2002/03, re flect ing higher en ergy rev e nues, mainly due to the re cord natural gas and pe tro leum drill ing rights sold in Sep tem ber These gains were par tially off set dur ing the year by lower nat u ral gas rev e nues re sult ing from lower pro duc tion and lower for est rev e - nues due to the ef fects of a higher Ca na dian dol lar and lower coastal har vest vol umes. Net earn ings of self-sup ported Crown cor po ra tions were $500 mil lion higher than bud get and $115 mil lion higher than 2002/03. The change from bud get was pri mar ily due to im proved res er voir lev els, lower than ex pected en ergy and in ter est costs for the Brit ish Columbia Hy dro and Power Au thor ity (BC Hy dro), and higher pre mium rev e nue and re duced op er at ing costs for the In sur ance Cor po ra tion of Brit ish Co lum bia (ICBC). The im prove ment over the 2002/03 fis cal year was due to increased sales and re duced costs for the Li quor Dis tri bu tion Branch, in creased BC Lot ter ies' revenues, and higher pre mium rev e nues from ICBC. These in creases were par tially offset by lower in come from BC Hy dro due to an increase in elec tric ity pur chases to meet do mes tic de mand and a pro vi sion for the Van cou ver Is land Gen er a tion Pro ject /Geor gia Strait Cross ing Pipeline costs. Pri mary sources of pro vin cial rev e nue are out lined in the chart be low. Revenue by Category for Fiscal Year 2003/04 Federal Transfer Payments 12% Net earnings of self-supported Crown corporations 7% Natural Resources 14% Taxation 52% Other Revenue 15%

16 16 PROV INCE OF BRIT ISH CO LUM BIA Fi nan cial High lights Expense In 2003/04, pro vin cial ex penses to talled $28,013 mil lion, $213 mil lion higher than bud get and $161 mil lion higher than 2002/03. Ex pense by Func tion 2003/04 Budget 2003/04 Actual 2002/03 1 Actual Vari ance 2003/04 Actual to Bud get 2003/04 vs 02/03 $ $ $ $ $ Health ,718 10,945 10, Ed u ca tion... 6,936 6,899 6,898 (37) 1 Social Services... 2,856 2,871 3, (280) Interest ,792 1,451 1,493 (341) (42) Pro tec tion of Per sons and Prop erty... 1,428 1,565 1, Transportation... 1,354 1,267 1,150 (87) 117 Natural resources and economic development... 1,127 1,496 1, (37) Other... 1, (217) 239 General Government (48) Total Operating Expense... 27,800 27,891 27, Results of discontinued operations (106) Restructuring exit expense (47) Total Expense... 27,800 28,013 27, The 2002/03 fig ures have been re stated to con form with the pre sen ta tion of the 2003/04 Pub lic Ac counts /04 Bud get for Health ex cluded $319 mil lion in ad di tional CHST funds from the fed eral gov ern ment that were not known at the time of the bud get, but were in cluded in the Sup ply Act passed on May 29, In ter est ex pense does not in clude in ter est re lat ing to pre paid cap i tal ad vances. These in ter est costs are re corded in the re lated health, ed u ca tion and trans por ta tion func tions. See Note 29 on page 63 for more details. Health spend ing was $227 mil lion higher than bud get and $221 mil lion higher than 2002/03, pri mar ily due to ad di - tional fed eral fund ing aris ing from the fed eral/pro vin cial Health Ac cord. So cial ser vices spend ing was $15 mil lion higher than bud get and $280 mil lion lower than 2002/03. The de crease from the prior year was pri mar ily due to an over all re duc tion in case loads and other pro gram costs. In ter est ex pense was $341 mil lion less than bud get and $42 mil lion less than 2002/03 as a re sult of lower in ter est rates, re duced debt bal ances com pared to bud get and a stron ger Ca na dian dol lar. Nat u ral re sources and eco nomic de vel op ment spend ing was $369 mil lion higher than bud get and $37 mil lion lower than 2002/03. The change from bud get was pri mar ily due to un an tic i pated for est fire sup pres sion, BSE, and flood re lated costs. The de crease from the prior year mainly reflected the ef fect of a one-time pro vi sion of $275 mil lion made in 2002/03 for forestry re vi tal iza tion off set by the additional di sas ter costs in 2003/04. Other spend ing was $217 mil lion lower than bud get and $239 mil lion higher than 2002/03. The dif fer ence be tween ac - tual and bud get was due to lower than ex pected spend ing by tax payer-sup ported Crown cor po ra tions. The 2003/04 to 2002/03 ac tual vari ance re lated to the ac cel er ated spend ing as so ci ated with the 2010 Olym pics.

17 PROV INCE OF BRIT ISH CO LUM BIA 17 Fi nan cial High lights In accordance with Generally Accepted Accounting Principles (GAAP) for senior governments and Public Sector Ac - count ing Board (PSAB), pro vin cial ex penses are re ported on a func tional ba sis in the Pub lic Ac counts. Un der func tional reporting, ex penses are grouped and clas si fied ac cord ing to their prin ci ple pur pose us ing a mod i fied ver sion of the Sta tis tics Can ada ac count clas si fi ca tion sys tem. Pri mary ex pense func tions are out lined in the chart be low: Ex pense by Func tion for Fis cal Year 2003/04 Health 39% 5% 6% 5% 5% 3% 2% 39% Education 25% Social Services 10% Interest 5% Protection of Persons and Property 6% 10% 25% Transportation 5% Natural Resources and Economic Developement 5% Other 3 % General Government 2% Min is try, Pro gram and Agency Re port ing While func tional re port ing al lows for greater com pa ra bil ity across ju ris dic tions, it is not con sid ered the pri mary tool for man ag ing re sults as the level of aggregation does not pro vide spe cific information about the op er a tional ob jec tives and ma jor ac tiv i ties of the re port ing en tity. Re port ing by en tity pro vides man age ment and the pub lic ad di tional information re gard ing the al lo ca tion of re sources and related costs of the different op er a tional ac tiv i ties of gov ern ment. For example, Health Ser - vices shows an ex pense of $10,453 mil lion while the Health Func tion in the above ta ble shows an ex pense of $10,945 mil lion. The dif fer ence re sults from the Health Func tion in cluding the Health Ser vices Min is try, tax payer-sup ported Crown cor po ra - tions and agen cies and other min is tries' pro grams that are re lated to health func tion spend ing. Ex pense by Ma jor Ac count abil ity Vari ance 2003/04 Budget 2003/04 Actual 2002/03 1 Actual 2003/04 Actual to Bud get 2003/04 vs 02/03 $ $ $ $ $ Health Ser vices... 10,209 10,453 10, Ed u ca tion... 4,860 4,787 4,807 (73) (20) Ad vanced Ed u ca tion... 1,899 1,897 1,897 (2) Man age ment of Pub lic Funds and Debt (188) 27 Other Min is tries and Pro grams... 6,950 7,235 7, (111) Gov ern ment re struc tur ing (All min is tries) (22) (44) Con sol i dated Rev e nue Fund Ex pense... 25,034 25,278 25, Less: Grants/internal transfers... (1,087) (1,128) (1,155) (41) 27 Add: Re cov er ies... 1,615 1,733 1, Other tax payer sup ported en ti ties (net of ac count ing ad just - ments)... 2,238 2,130 2,158 (108) (28) Total Expense... 27,800 28,013 27, The 2002/03 fig ures have been re stated to con form with the pre sen ta tion of the 2003/04 Pub lic Ac counts.

18 18 PROV INCE OF BRIT ISH CO LUM BIA Fi nan cial High lights Ma jor vari ances in the Ex pense by Ma jor Ac count abil ity are: Health Ser vices was $244 mil lion higher than bud get and $247 mil lion higher than 2002/03, due pri mar ily to ad di - tional fed eral con tri bu tions for health care. A Sup ple men tary Es ti mate to au tho rize the spend ing of the fed eral con tri bu tion was ap proved in May Af ter tak ing into account the Supplementary Es ti mate, health care spend - ing was $75 mil lion below bud get. Other min is tries and pro gram spend ing was $285 mil lion higher than bud get and $111 mil lion lower than 2002/03. The change from bud get pri mar ily re flects the ad di tional costs as so ci ated with for est fire sup pres sion, BSE, and flood re lated costs par tially off set by lower spend ing in other ar eas. Man age ment of Pub lic Funds and Debt (in ter est) was $188 mil lion lower than bud get due to gov ern ment in ter - est sav ings aris ing from lower in ter est rates, re duced debt bal ances and a stron ger Ca na dian dol lar. Other tax payer-sup ported en tity spend ing was a $108 mil lion lower than bud get and $28 mil lion lower than 2002/03, pri mar ily due to de lays in the implementation of Min is try of Chil dren and Fam ily gov er nance au thor i - ties. Fur ther de tails on min is try, pro gram and agency spend ing can be found in the 2004 Brit ish Co lum bia Fi nan cial and Eco nomic Re view avail able in July 2004, at: Fi nan cial As sets Fi nan cial as sets as at March 31, 2004 to talled $15,810 mil lion, $269 mil lion lower than bud get and $1,439 mil lion higher than 2002/03. The in crease com pared to 2002/03 is pri mar ily due to a $344 mil lion in crease in BC Hy dro loans re ceiv - able, a $399 mil lion in crease in ICBC eq uity and a $428 mil lion loan re ceiv able from Brit ish Co lum bia Ferry Ser vices Inc. Fi nan cial As sets 2003/04 Budget 2003/04 Actual 2002/03 1 Actual Vari ance 2003/04 Actual to Bud get 2003/04 vs 02/03 $ $ $ $ $ Accounts receivable... 2,539 2,542 2, Eq uity in self sup ported Crown Cor po ra tions and Agen cies. 2,594 2,989 2, Loans for pur chases of as sets re cov er able from agen cies... 8,270 7,602 7,336 (668) 266 Other financial assets... 2,676 2,677 2, To tal Fi nan cial As sets... 16,079 15,810 14,371 (269) 1,439 1 The 2002/03 fig ures have been re stated to con form with the pre sen ta tion of the 2003/04 Pub lic Ac counts.

19 PROV INCE OF BRIT ISH CO LUM BIA 19 Fi nan cial High lights As at March 31, 2004, the prov ince's eq uity in vest ment in self-supported Crown corporations was $2,989 mil lion. In 2003/04, these or ga ni za tions pro vided gov ern ment with $1,881 mil lion in net in come. More than 90% of the $7,602 mil lion in re cov er able cap i tal loans rep re sents loans to BC Hy dro to ward the ac qui si tion of power gen er a tion and dis tri bu tion as sets. The change from bud get is pri mar ily due to lower than anticipated bor row ing re - quire ments for BC Hy dro. Other financial assets include cash and cash equivalents, temporary investments, inventory, and loans receivable. Li a bil i ties To tal li a bil i ties were $2,250 mil lion lower than bud get and $2,285 mil lion higher than 2002/03. Li a bil i ties Vari ance 2003/04 Budget 2003/04 Actual 2002/03 1 Actual 2003/04 Ac tual to Bud get 2003/04 vs 02/03 $ $ $ $ $ Taxpayer supported Debt... 31,871 29,431 28,899 (2,440) 532 Self supported Debt... 8,156 7,507 7,225 (649) 282 Forecast Allowance (500) Total Financial Statement Debt... 40,527 36,938 36,124 (3,589) 814 Accounts Payable... 3,790 3,543 3,353 (247) 190 Other Li a bil i ties ,527 1,246 1,586 1,281 To tal Li a bil i ties... 45,258 43,008 40,723 (2,250) 2,285 1 The 2002/03 fig ures have been re stated to con form with the pre sen ta tion of the 2003/04 Pub lic Ac counts. Financial Statement Debt To tal fi nan cial state ment debt was $3,589 mil lion lower than bud get, but $814 mil lion higher than 2002/03. Pri mary rea sons for the change from bud get in cluded lower than fore cast debt bal ances at the end of the 2002/03 fis cal year, im proved government operating results and reduced capital spending requirements. Other Li a bil i ties Other li a bil i ties were $1,586 mil lion higher than bud get and $1,281 mil lion higher than 2002/03. Of this dif fer ence, $733 mil lion re lated to the in crease for the re pay able Equalization ad vance from the fed eral gov ern ment and an increase of $390 mil lion in de ferred rev e nue re lated to the fed eral trusts for CHST. To tal Pro vin cial Debt When re port ing to rat ing agen cies, the prov ince adds to its fi nan cial state ment debt, all debt guar an tees and the debt di - rectly in curred by the self- sup ported Crown cor po ra tions. This bal ance is re ferred to as the to tal pro vin cial debt. To tal pro vin cial debt at March 31, 2003/04, was $37,337 mil lion, which is $3,629 mil lion less than bud get and $798 million higher than 2002/03. In April 2004, two of the three rat ing agen cies up graded the prov ince's credit rat ing out look to pos i tive from sta ble. The Moody's In ves tors Ser vice Inc., pres ents the out look for the prov ince at Aa2 (Pos i tive) and Stan dard and Poor's out look for the prov ince is at AA-(Pos i tive). The out look from Do min ion Bond Rat ing Ser vice (DBRS) re mains un changed at AA (low).

20 20 PROV INCE OF BRIT ISH CO LUM BIA Fi nan cial High lights Credit Rat ings June 2004 Rat ing Agency 1 Province Moody's In ves tors Stan dard and Poor's Do min ion Bond Services Inc. Rating Service Brit ish Co lum bia Aa2 AA- AA(low) Al berta Aaa AAA AAA Saskatchewan Aa3 AA- A Man i toba Aa2 AA- A (high) On tario Aa2 AA AA Quebec A1 A+ A New Bruns wick Aa3 AA- A Nova Sco tia A3 A- BBB(high) Prince Ed ward Is land A2 Not rated A(low) Newfoundland A3 A- BBB Canada Aaa AAA AAA 1 The rat ing agen cies as sign let ter rat ings to bor row ers. The ma jor cat e go ries, in de scend ing or der of credit qual ity are: AAA/Aaa; AA/Aa; A; BBB /Baa; BB/Ba; and B. The "1", "2", "3" "high", "low", and "-" mod i fi ers show rel a tive stand ing within the ma jor cat e go ries. For ex am ple, AA+ ex ceeds AA A more com pre hen sive over view of pro vin cial debt, in clud ing key debt in di ca tors is lo cated on pages of this publication. Non-Financial Assets At March 31, 2004, non-fi nan cial as sets to talled $17,844 mil lion, rep re sent ing a $507 mil lion de crease from bud get and a $493 mil lion de crease from the pre vi ous year. The de creases were a re sult of lower than an tic i pated cap i tal re quire - ments in min is tries and the health and ed u ca tion sec tors. Non-Fi nan cial As sets Vari ance 2003/04 Budget 2003/04 Actual 2002/03 1 Actual 2003/04 Actual to Bud get 2003/04 vs 02/03 $ $ $ $ $ Tangible Capital Assets... 10,735 10,482 10,381 (253) 101 Prepaid Capital Advances... 7,313 7,136 7,108 (177) 28 Prepaid Program Costs (16) (25) Non fi nan cial as sets held for re sale (593) Other As sets (61) (4) To tal Non Fi nan cial As sets... 18,351 17,844 18,337 (507) (493) 1 The 2002/03 fig ures have been re stated to con form with the pre sen ta tion of the 2003/04 Pub lic Ac counts. Non-fi nan cial as sets typ i cally rep re sent re sources that gov ern ment can use in the fu ture to pro vide ser vices. The ma jor - ity of the prov ince's non-fi nan cial as sets re flect cap i tal as set re lated ex pen di tures and take the form of ei ther tan gi ble cap i tal as sets or pre paid cap i tal ad vances. Pre paid cap i tal ad vances rep re sent the gov ern ment's claim on pro vin cially funded as sets acquired by external entities in the health, education and transportation sectors.

21 Net Liabilities and Accumulated Deficit PROV INCE OF BRIT ISH CO LUM BIA 21 Fi nan cial High lights In ac cor dance with GAAP, the gov ern ment's state ment of fi nan cial po si tion is pre sented on a net debt or net li a bil i ties basis. Net liabilities represents the difference between a government's financial assets and its liabilities and is often used as a mea sure of the fu ture rev e nues re quired to pay for past trans ac tions and events. The ac cu mu lated def i cit rep re sents the sum of prior years' operating results. Net Li a bil i ties and Ac cu mu lated Def i cit 2003/04 Budget 2003/04 Actual 2002/03 1 Actual Vari ance 2003/04 Actual to Bud get 2003/04 vs 02/03 $ $ $ $ $ Financial Assets... 16,079 15,810 14,371 (269) 1,439 Less: Li a bil i ties... (45,258) (43,008) (40,723) 2,250 (2,285) Net Li a bil i ties... (29,179) (27,198) (26,352) 1,981 (846) Less: Non financial Assets... 18,351 17,844 18,337 (507) (493) Ac cu mu lated def i cit... (10,828) (9,354) (8,015) 1,474 (1,339) 1 The 2002/03 fig ures have been re stated to con form with the pre sen ta tion of the 2003/04 Pub lic Ac counts. Sum mary Ac counts' Staff Uti li za tion for the Fis cal Year Ended March 31, The ta ble be low pro vides a sum mary of full-time equiv a lent (FTE)employment. Vari ance 2003/04 Budget 2003/04 Actual 2002/03 2 Actual 2003/04 Ac tual to Bud get 2003/04 vs 02/03 Consolidated Revenue Fund ,049 28,684 29,751 (365) (1,067) Taxpayer supported Crown corporations and agencies 4, ,270 4,570 7,747 (700) (3,177) Re gional au thor i ties (150) Total Staff Utilization... 34,469 33,254 37,498 (1,215) (4,244) 1 Staff uti li za tion is the full time equiv a lent of the num ber of per sons em ployed in the fis cal year whose sal a ries are paid by tax payer sup ported en ti ties within the Sum mary Accounts. 2 The 2002/03 fig ures have been re stated to con form with the pre sen ta tion of the 2003/04 Pub lic Ac counts. 3 See the Con sol i dated Rev e nue Fund Sched ules at for de tails. 4 See fi nan cial state ments of Crown cor po ra tions and agen cies at for de tails of amounts in cluded in this total. 5 The 2003/04 Bud get in cludes an es ti mate for Ca na dian Blood Ser vices. This or ga ni za tion is not in cluded in the Pub lic Ac counts figures. 6 In 2003/04, the gov ern ment re port ing en tity was ex panded to in clude the Min is try of Chil dren and Fam ily De vel op ment gov er nance authorities.

22 22 PROV INCE OF BRIT ISH CO LUM BIA Fi nan cial High lights The FTE re duc tions for the CRF against 2003/04 bud get and 2002/03 actuals re flect the gov ern ment's three-year re - struc tur ing and workforce ad just ment ini tia tive, off set by 150 FTEs not trans ferred to re gional authorities in 2003/04. The difference between budgeted utilization for taxpayer-supported Crown corporations and actual utilization was 700 em ploy ees. This dif fer ence in cluded an es ti mate of 545 employees for Ca na dian Blood Ser vices while no ac tual uti li za tion was avail able for this en tity at year end and there were also 82 fewer em ploy ees than bud geted for in the Le gal Ser vices So ci ety. No em ploy ees were trans ferred to re gional au thor i ties in 2003/04 al though 150 em ploy ees were bud geted to be transferred. The ma jor change be tween 2003/04 and 2002/03 (4,244 em ploy ees) was the trans fer of the Brit ish Co lum bia Ferry Corporation in the 2003/04 fis cal year, to an or ga ni za tion out side of the gov ern ment re port ing en tity. This ac counted for 3,345 employees. Move to Generally Accepted Accounting Principles Al though the prov ince is not re quired to in clude the schools, uni ver si ties, col leges and health au thor i ties (SUCH sec - tor) in its fi nan cial state ments un til fis cal 2004/05, the 2003/04 Pub lic Ac counts does pro vide an im pact state ment as if these en ti ties were in cluded. This in for ma tion has been in cluded in the Pub lic Accounts since fis cal year end 1997/98. The fol low ing ta ble out lines the fi nan cial im pact to gov ern ment had the SUCH sec tor or ga ni za tions been in cluded under Generally Accepted Accounting Principles for the 2003/04 fiscal year. Im pact of SUCH Sector Be fore Inclusion of SUCH Af ter Inclusion of SUCH Impact of SUCH $ $ $ Revenue ,674 28,974 2,300 Expenses ,013 29,976 1,963 An nual Def i cit (1,339) (1,002) 337 Financial Assets... 15,810 19,540 3,730 Less: Li a bil i ties... (43,008) (46,900) (3,892) Net Li a bil i ties (27,198) (27,360) (162) Less: Non financial Assets... 17,844 22,617 4,773 Accumulated Deficit (9,354) (4,743) 4,611 1 Changes to ac count ing ad just ments re sult ing from the im pact of the SUCH sec tor. Fur ther de tails on the im pact of the SUCH sec tor are avail able on pages 83 to 90 of this pub li ca tion.

23 Summary Financial Statements Province of British Columbia For the Fiscal Year Ended March 31, 2004

24

25 Report of the Auditor General of British Columbia ON THE SUMMARY FINANCIAL STATEMENTS OF THE GOVERNMENT OF THE PROVINCE OF BRITISH COLUMBIA To the Legislative Assembly of the Province of British Columbia I have audited the summary financial statements of the Government of the Province of British Columbia consisting of the statement of financial position as at March 31, 2004, and the statements of operations, change in net liabilities, and changes in cash and temporary investments for the year then ended. These financial statements are the responsibility of the Government. My responsibility is to express an opinion on these financial statements based on my audit. I conducted my audit in accordance with Canadian generally accepted auditing standards. Those standards require that I plan and perform an audit to obtain reasonable assurance whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by the Government, as well as evaluating the overall financial statement presentation. Reservation As explained in note 1(c) to these financial statements, the Government s stated accounting policies contain exceptions to generally accepted accounting principles (GAAP) for senior governments, as recommended by The Canadian Institute of Chartered Accountants, related to schools, universities, colleges and institutes, and health care organizations. Had GAAP been followed as at March 31, 2004, it would be expected that financial assets increase by $3.7 billion ($3.4 billion at March 31, 2003), liabilities increase by $3.9 billion ($3.7 billion at March 31, 2003), non-financial assets increase by $4.8 billion ($3.6 billion at March 31, 2003), and the accumulated deficit decrease by $4.6 billion ($3.3 billion at March 31, 2003). Similarly, for the year ended March 31, 2004, revenues increase by $2.3 billion ($2.4 billion for 2003), expenses increase by $2.0 billion ($2.2 billion for 2003), and the annual deficit decrease by $0.3 billion ($0.2 billion for 2003).... 2