Report B: FISCAL REVIEW AND OUTLOOK

TOPIC BOX
ESTIMATES ACCOUNTING POLICIES AND PRESENTATION CHANGES

ESTIMATES ACCOUNTING POLICIES AND
PRESENTATION CHANGES

Estimates Accounting Policies

  1. Commencing with the 1992/93 fiscal year, the Estimates have been prepared on the Consolidated Revenue Fund (CRF) basis. The CRF consists of the General Fund (voted appropriations and all Special Accounts), and the Natural Resource Community Fund Special Fund. In most fiscal years prior to 1992/93 the Estimates were prepared on the General Fund basis only.
  1. The accounting policies followed in the Estimates are, in all material respects, those that are used by the government in preparing the Consolidated Revenue Fund Financial Statement.
  1. The accounting policies on which the 1999/00 Estimates have been prepared are based on those detailed on pages B10 to B14 in the 1997/98 audited Public Accounts of the CRF and revised for changes to those policies, as approved by Treasury Board, since that fiscal year.
    These changes are (i) the extension of the scope of the capitalization policy to include parkland in 1998/99 and specialized equipment and highways in 1999/00 and (ii) the treatment of fiscal agency loans for school and post-secondary institutions capital acquisitions (1998/99), which has been extended to health and transit related capital acquisitions (1999/00). This change in the treatment of loans to school districts, post-secondary institutions, regional health districts, British Columbia Transit and Rapid Transit Project 2000 Ltd. comprises (i) forgiving those fiscal agency loans and assuming the related guaranteed debt within the CRF, and (ii) replacing the loans on the balance sheet of the CRF with the unamortized cost of the related underlying capital assets, and including as an annual operating expense of the CRF, amortization based on the useful life of those assets. These changes were adopted following discussions with, and the approval of, the Auditor General.

 
Significant Presentation Changes in the 1999/00 Estimates

  1. Capitalization — To date, the government's accounting policy to capitalize, and amortize over-time, the cost of ministry capital assets (such as computer systems), has been shown in the Estimates at an aggregate level only. Commencing with the 1999/00 Estimates, the capitalization policy is presented for each ministry, special office and other appropriation. Capital assets will no longer be included as a ministry operating expense. The amortization expense related to the capital assets held by each ministry will be included as a component of ministry operating costs, and shown, by ministry, in the Supplement to the Estimates. The cost of ministry capital assets is shown, by asset category. Further detail is provided in the Supplement to the Estimates.
  1. Debt — The Borrowing Requirements and Debt Summary on page 2 of the 1999/00 Estimates document, has been changed to provide more information on changes in CRF debt. These presentation changes focus on borrowings associated with capital expenditures for education, health and transit related assets (referred to as prepaid capital advances), capital acquisitions of the CRF and net new loans and investments of the CRF. Details of those expenditures can be found in Schedules C, D and E respectively.
  1. Pension Liability — Commencing with the 1999/00 Estimates, a schedule has been included in the Estimates (Schedule F) that provides information on the unfunded pension liability and the annual impact of changes in that liability on the CRF surplus (deficit).
  1. Transit Agreement — As a result of the agreement between the province and the Greater Vancouver Regional District to transfer certain transportation responsibilities to the Greater Vancouver Transportation Authority, including maintenance responsibilities for certain roads, bridges and ferries, the province has reduced its contributions to British Columbia Transit, has accepted responsibility for all debts of the Greater Vancouver Regional Hospital District, including that portion previously the responsibility of taxpayers within the Greater Vancouver Regional District, and has transferred additional fuel and sales tax revenue to the Greater Vancouver Transportation Authority. The effect of these changes in the 1999/00 Estimates is to reduce contributions to British Columbia Transit by approximately $140 million and to reduce operating costs in the Ministry of Transportation and Highways by approximately $5 million, to increase debt interest costs in the Ministry of Health by approximately $50 million, and to reduce fuel and sales tax revenue by approximately $85 million and $10 million respectively. There is, therefore, no net effect on the 1999/00 deficit. There has been no adjustment of the 1998/99 Restated Estimates amount in the 1999/00 Estimates since this agreement reflects a governance change between the Province and a third party.
  1. Other — (i) Ministers' offices are no longer shown as separate votes. The expenses of those offices are now shown as a separate sub-vote in each ministry's operations vote and (ii) the expenses of the Officers of the Legislature, and certain items within Other Appropriations have been aggregated, for presentation purposes only, on the Summary of Estimated Revenue and Expense on page 3 of the 1999/00 Estimates document. There is no change to the manner in which the expenses for the Officers of the Legislature and Other Appropriations are voted.

 

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