Monday, June 5, 2023

TIME – 1 p.m.

LOCATION – Winnipeg, Manitoba

CHAIRPERSON – Mr. Jim Maloway (Elmwood)

VICE‑CHAIRPERSON – Mr. Shannon Martin (McPhillips)


Members of the committee present:

Messrs. Brar, Guenter, Isleifson, Lamont, MLA Lindsey, Messrs. Maloway, Martin, Michaleski, Smook, Wishart


Mr. Brar for Ms. Naylor


Mr. Tyson Shtykalo, Auditor General


Mr. Silvester Komlodi, Deputy Minister of Finance
Ms. Andrea Saj, Prov­incial Comptroller


Province of Manitoba Annual Report and Public Accounts, dated March 31, 2022

Auditor General's Report – Public Accounts and Other Financial Statement Audits, dated December 2022

* * *

Mr. Chairperson: Good afternoon. Will the Standing Com­mit­tee on Public Accounts please come to order.

      Before we get started with our busi­ness today, I would like to inform the com­mit­tee that a resig­na­tion letter from Mr. Nesbitt as Vice‑Chair and as a member of the com­mit­tee was received. Mr. Guenter is now the re­place­ment PAC member for the gov­ern­ment the remainder of this Legislature.

      I would also like to inform the com­mit­tee that a resig­na­tion from Mr. Wasyliw as a member of the com­mit­tee was also received. Ms. Lathlin will be the re­place­ment PAC member for the official op­posi­tion for the remainder of this Legislature.

      Would like to thank–this op­por­tun­ity to welcome the new members to the Public Accounts Com­mit­tee, and look forward to working with them in the future. [interjection] This one here? Okay.

Committee Substitution

Mr. Chairperson: I would like to inform the com­mit­tee that under rule 104(2), the following member­ship substitution has been made for this meeting and the meeting scheduled for Wednesday, June 7: Mr. Brar for Ms. Naylor.

* * *

Mr. Chairperson: Before the com­mit­tee can proceed with the busi­ness before it, it must elect a Vice-Chairperson.

      Are there any nominations?

Mr. Len Isleifson (Brandon East): I would nominate Mr. Martin.

Mr. Chairperson: Mr. Martin has been nominated.

      Are there any other nominations?

      Hearing no other nominations, Mr. Martin is elected Vice-Chairperson.

      This meeting has been called to consider the following reports: Province of Manitoba Annual Report and Public Accounts, dated March 31, 2022; Auditor General's Report–Public Accounts and Other Financial Statement Audits, dated December 2022.

      Prior to dealing with these–with the–well, with this–today's busi­ness, I am pleased to table the responses provided by the Auditor General of Manitoba to the questions pending responses from the May 31 meeting. I'm assuming I've done that.

      These responses were previously forwarded to all members of this com­mit­tee by the research officer. I'm aware that we have some new members since then, so if you would like another copy, please speak to the research officer directly.

      Are there any sug­ges­tions from the com­mit­tee as to how long we should sit this afternoon?

Mr. Shannon Martin (McPhillips): Can I suggest that the com­mit­tee sit 'til 3 p.m. and revisit at 3 p.m.?

Mr. Chairperson: It's been suggested by Mr. Martin that the com­mit­tee sit 'til 3 p.m. and review at that time. Agreed? [Agreed]

      Does the Auditor General–[interjection]

      For the infor­ma­tion of the com­mit­tee, there's been a request for the following witnesses to be able to speak on the record, and to answer questions from the members, and the Prov­incial Comptroller is the person that will be answering the questions: Andrea Saj.

      Is there leave of the com­mit­tee to allow them to speak on the record if required? [Agreed]

      Does the Auditor General wish to make an opening statement?

Mr. Tyson Shtykalo (Auditor General): First, I'd like to intro­duce the staff I have with me today. I'm joined by Natalie Bessette‑Asumadu, Deputy Auditor General, and Shane Charron, the en­gage­ment leader for the audit of the Public Accounts.

      Mr. Chair, each year my office audits the Province of Manitoba's summary of financial statements as part of the Public Accounts audit. We also audit the financial statements of a number of other gov­ern­ment-controlled and related entities. The objective of these audits is to an–express an opinion on the financial statements in accordance with Canadian auditing standards.

      Our 2021‑22 financial statement audit work is summarized in the report, Public Accounts and Other Financial Statement Audits. The report also contains my observations on a number of matters of concern.

      Mr. Chair, I'm concerned that during the 2022 audit of the Public Accounts, we continue to encounter many of the same issues as prior years, and found an increasing amount of control deficiencies. More spe­cific­ally, we found sig­ni­fi­cant control and accounting deficiencies through­out the gov­ern­ment de­part­ments we audit. This included poor compliance with controls over purchases and expenses, inadequate accounting processes and other control-environ­ment weaknesses.

* (13:10)

      Without proper accounting controls in place, there is a greater risk of errors in financial reporting. To mitigate this risk, we had to expand our audit work, which increased the time it took to complete the audit.

      New auditing standards this year will require sig­ni­fi­cant work on the part of the Province to imple­ment. Given the ad­di­tional work required this year, im­prove­ments to the Province's control and account­ing deficiencies are crucial to prevent unacceptable delays in the finalization of the Public Accounts for '22‑23.

      The report also notes the Province did not have effective controls in place to identify and address deficiencies. We heard concerns from officials regarding job vacancies and turnover, as well as the lack of accounting knowledge in de­part­ments. Despite the vacancies and lack of accounting knowledge, it remains the responsibility of the Province to ensure ap­pro­priate controls are in place.

      Mr. Chair, as a result of the concerns noted in my report, I have announced a new audit, which we will under­take to examine the Province's comptrollership model and look for root causes of some of the deficiencies that are noted in my report.

      In conclusion, I'd like to thank the De­part­ment of Finance, the Treasury Board Secretariat and all others involved in the pre­par­ation of financial statement–financial infor­ma­tion in gov­ern­ment and gov­ern­ment‑controlled related entities. Their co‑operation and assist­ance is greatly ap­pre­ciated.

      Would also like to thank my staff for their professionalism and excellent work on the financial statement audits and this report.

      I look forward to the discussion today on the report.

Mr. Chairperson: Thank you.

      Before we proceed further, I'd like to inform those who are new to the com­mit­tee of the process that's under­taken with regard to outstanding questions. At the end of every meeting, the research officer reviews the Hansard for–[interjection] I have to go back a bit, here. Thank you.

      Does the deputy minister, Mr. Komlodi, wish to make an opening statement, and would he please intro­duce his staff joining him here today?

Mr. Silvester Komlodi (Deputy Minister of Finance): Good afternoon. I'd like to thank the com­mit­tee for the op­por­tun­ity to provide some brief comments on the March 31st, 2022 Public Accounts, as well as the Auditor General's report to the Legislature submitted in December 2022.

      Sitting at the table with me is Andrea Saj, the Prov­incial Comptroller. Andrea will also be able to respond to questions from the com­mit­tee members.

      Also present from the de­part­ment, seated behind me are deputy minister Ann Ulusoy, secretary to Treasury Board; acting assist­ant deputy minister and chief financial officer Ann Leibfried; and acting executive director in the Office of the Prov­incial Comptroller, Terry McLure.

      The 2021‑22 fiscal year began with Manitoba continuing to tackle the COVID‑19 pandemic and the ongoing global economic crisis. Manitoba was focused on the ongoing vac­cina­tion program that achieved province-wide delivery of over 30,000 vac­cina­tions per day at its peak and well over 80 per cent of Manitobans receiving at least one dose of a COVID‑19 vaccine.

      Manitoba also created two ad­di­tional de­part­ments that focused on mental health and com­mu­nity wellness and seniors and long-term care. Sig­ni­fi­cant efforts were initiated by gov­ern­ment in 2021‑22 towards the gradual reopening of broader health-care services and to begin addressing the backlog for diag­nos­tic tests and surgeries.

      During the 2021‑22 fiscal year, many regions of the Canadian economy started to reopen as the COVID‑19 virus was being managed. In Manitoba, the restart of the economy was managed by–in pro­gressive phases, with a continued focus on health care, delivering supports to vul­ner­able sectors and investing in the economy to create jobs.

      The Province's summary financial position as at March 31st, 2022 was a net loss of $704 million, an im­prove­ment of $1.42 billion over the previous year's deficit of $2.124 billion and an im­prove­ment of $893 million over the 2021‑22 projected budget deficit of $1.597 billion.

      Despite ongoing uncertainties and risks, the recov­ery is due to a sub­stan­tially longer-than-expected im­prove­ment in a number of economic sectors in Manitoba following the COVID‑19 pandemic.

      Prov­incial own-source reve­nues were $1 billion higher than the prior year due a sig­ni­fi­cant increase in personal and cor­por­ate income tax remittances. Other prov­incial taxation reve­nues increased from the previous years. Federal transfers were higher than budget, reflecting a $145-million one-time Canada Health Transfer, new funding for early learning and child care and the AgriRecovery Drought Assist­ance program.

      Gov­ern­ment busi­ness enterprises were $529 million under budget, largely lowered by a net loss of income at Manitoba Hydro as the severe drought con­di­tions in the summer months of 2021 affected the water levels. Total summary reve­nues compared to the Budget 2021 forecast were $1.269 billion higher than expected. Expenses before debt servicing were $403 million greater than budget, or $55 million below the prior year. A sizeable portion of the current-year expendi­tures were driven by COVID‑19-related spending, including the public health response and numer­ous other support programs.

      The Province's annual report and Public Accounts for the year ended March 31st, 2022 was released on September 29, 2022. That includes the following sections: Where Does My Money Go? Reve­nues and Expenses at a Glance; an Introduction to the Annual Report; Strategic Out­comes and Strategic Infra­structure Investments; Summary of the COVID‑19 Response in Manitoba in '21/22; Introduction to the Public Accounts of Manitoba; Financial Statement Discussion and Analysis; Risks and Uncertainties; Variance Analysis and Assessment of Sig­ni­fi­cant Trends; Summary Financial Statements; and Infor­ma­tion Provided Under Statutory Require­ment.

      The SFS at March 31st, 2021, had two quali­fi­ca­tions for the exclusion of the Workers Compensation Board, or WCB, and Manitoba Agri­cul­tural Services Cor­por­ation, MASC, trusts from the financial statements. It is im­por­tant to note that the SFS at March 31st, '22, is now only qualified for not recording the disposition of the WCB during 2020‑2021. The quali­fi­ca­tion had no impact on the balances and accounts for the year ended March 31st, 2022. On November 6th, 2020, legislative changes were made to The Workers Compensation Act. The Office of the Auditor General agreed that the legis­lative changes on November 6, 2020, would remove the WCB quali­fi­ca­tion from the March 31st, 2023 SFS.

      The second matter relates to the trust assets, which MASC and the Province of Manitoba excluded from their financial statements. Changes were made to the MASC act regula­tion, which prescribes the form of insurance contracts with Manitoba producers for the 2021‑22 crop year, such that the producers and the gov­ern­ment of Manitoba, and Canada, have all agreed to restrict the use of insurance premiums exclu­sively for insurance indemnities and other expenses under the AgriInsurance program. The MASC quali­fi­ca­tion was removed from the March 31st, 2022, SFS, including the comparative 2021 balances and accounts.

      The de­part­ment also welcomes the Auditor General's report to the Legislature and the findings related to the effectiveness of the de­part­mental comp­trollership. The Auditor General Act in Manitoba does not include irregular comptrollership audits.

      Some other provinces have a require­ment in legis­lation for comptrollership audits every year–every other year. The Office of the Auditor General would benefit from the more frequent comptrollership audits of the corps and its reporting entities, and the Public Accounts Com­mit­tee would benefit from knowing the comptrollership status of Crowns, health author­ities and uni­ver­sities.

      The OAG's report to the Legislature has identified several issues, which appear to be caused by a variety of challenges faced by de­part­ments related to staffing, skills and capabilities and processes. The Office of the Prov­incial Comptroller is committed to addressing these findings through col­lab­o­rative work with de­part­ments and by performing its own due diligence to understand the root causes of the challenges under the author­ity granted to the Prov­incial Comptroller under The Financial Admin­is­tra­tion Act.

      I shall endeavour to answer all admin­is­tra­tion-related questions posed by the com­mit­tee on the reports reflected on the agenda. We may need to take some questions on notice and provide a written response later.

Mr. Chairperson: Thank you.

Mr. Komlodi: Just almost done, sir. I'd like to thank the staff of the Treasury Board Secretariat, who prepared the annual report, and the Office of the Prov­incial Comptroller, who prepared the summary finan­cial statements.

      I also want to thank the De­part­ment of Justice for preparing legislative changes required to remove both quali­fi­ca­tions.

      Finally, I also thank the Auditor General, Mr. Tyson Shtykalo, and his team at the OAG for their pro­fes­sional and col­lab­o­rative relationship with Treasury Board Secretariat and the De­part­ment of Finance.

      Thank you.

Mr. Chairperson: Before we proceed further, I'd like to inform those who are new to the com­mit­tee of the process that is under­taken with regard to outstanding questions.

      At the end of every meeting, the research officer reviews the Hansard for any outstanding questions, and the witnesses–witness commits to provi­ding an answer to; we'll draft a questions-pending-response docu­ment to sent to the deputy minister. Upon receipt of the answers to these questions, the research officer then forwards the responses to every PAC member and to every other member recorded as attending that meeting.

      Before we get into questions, I would like to remind members that questions of an admin­is­tra­tive nature are placed to the witnesses and that policy questions will not be entertained and are better left for another forum.

      The floor is now open for questions.

* (13:20)

Mr. Brad Michaleski (Dauphin): It's great to be here today and have the op­por­tun­ity to ask a few questions on this very im­por­tant subject matter of–I just want to frame–I have a series of questions and I hope I'm staying within the lines of my questioning.

      But the context of them, I'll just give you a bit of a preamble to the questions because it deals with both of the reports, but it also deals with–we had a meeting from the Auditor General's office and explained, essentially, the process of the Office of the Auditor General, how they conduct the audits.

      So, it kind of goes into that questioning too. So, it's more related about process, but it's also related to the Public Accounts and it's also related to gov­ern­ment de­part­ments, spe­cific­ally and generally. So, it may wander off, but then the Public Accounts does have a wide range.

      So, my question's are directly to this report and spe­cific­ally the comments by Mr. Shtykalo, the con­cerns expressed by the new accounting standards for the Province and what appears to be em­pha­sis–greater em­pha­sis, impact and demand for what appears gov­ern­ment account­ability and trans­par­ency. Seems we're going in that direction generally.

      And, of course, value for money. And, you know, again, we're entering an era where more and more people are asking more and more questions, and–through connectivity–and we're going towards a–what appears to be a more competitive environ­ment.

      So, the AG has expressed–generally expressed–an increased amount of control deficiencies and I don't–I think that's–again, it's not parti­cular to one de­part­ment, but I think there's–I think we'll find that it may be wandering outside this meeting, that they're sort of that sort of same theme going on in other de­part­ments, but we'll pick on Finance for now.

      I would say these controls are needed like never before. This is my own personal observation as MLA for Dauphin. And also, at the same time, we need them, but they're actually going to be required. Correct?

      So, with this, I agree and support some of the concerns that the Auditor General has expressed regarding some of these–this environ­ment where we need to be changing the accounting systems

      So, I have a series of questions, but it may seem hypothetical, but I don't–I think there's a lot of truth grounded in some of the things we're facing now. But the first question is, because I don't know, now who else is affected? How wide of scope these accounting changes that are affecting the Province that are being required? Is this a Canadian issue? Is it an inter­national issue?

      How big of scope are these changes that the Manitoba gov­ern­ment is having to implement? Because I understand munici­palities have been doing it for some times, coming to terms with these accounting–I recall that when I was on the munici­pal gov­ern­ment level.

      So, now we're hitting this date where it's going to be imple­mented in the province, so I'm curious on the scope of–this is my first question.

Mr. Komlodi: So, just in terms of the scope, maybe I'll start with sort of the origin for the rules, and they are developed by CP, Canada's public sector com­mit­tee, who effectively oversee the PSAB rules, and our financial admin­is­tra­tion act at the prov­incial level, we are required to be in compliance with PSAB rules.

      They would also apply to the federal gov­ern­ment, to munici­palities, effectively the entirety of our summary environ­ment, except for the Crowns, which fall into the IFRS standards.

      So, it is a broad scope across the public sector landscape in Canada.

Mr. Chairperson: Mr. Michaleski, I'll recog­nize you for one more question, and then we go to Mr. Lindsey, and then we will be coming back.

Mr. Michaleski: Fair enough, Mr. Chair. I'll hope­fully have some time to ask some other questions, but I just–a quick follow‑up on this.

      So, just for clarity, when you say this is affecting Canada only, or is other areas and, in parti­cular, trade partners of Canada, are they doing or are they ex­per­iencing the same sort of change, and if so, who–which juris­dic­tions are doing that?

Mr. Komlodi: So, the PSAB board would be mindful of dev­elop­ments in other juris­dic­tions, I'll say from a competitiveness perspective in terms of our rules. When investors are looking at Manitoba as a juris­dic­tion it helps to have standards that are effectively, you know, in some kind of an alignment with rules of our major trading partners.

      So, from that perspective, in terms of the account­ability and the oversight that comes with PSAB rules and standards as they're imple­mented across the country–are an im­por­tant con­sid­era­tion for all public sector entities in Canada.

MLA Tom Lindsey (Flin Flon): Good afternoon, everyone, and thank you all for taking time out of your lives to be here and try to answer some questions for us.

      Why–first question relates to the opening state­ment that was made about the MASC trust funds and WCB changes that were made. I understand why the legis­lative changes were made to get rid of the quali­fi­ca­tion on the audit statement.

      In the process of doing that now, have we lost the ability to really keep track of how those entities are spending public money, which is the whole point of this Public Accounts Com­mit­tee and the Auditor General and all the rest of them.

* (13:30)

      So, are we losing some oversight of what's happening in those two de­part­ments?

Mr. Komlodi: Thank you for the question.

      So, both the WCB and the MASC's financial results would be publicly available. They are audited statements. The OAG, as well, would have oversight over those. The premiums that are collected in both cases are dedi­cated, so there is a, if you will, legis­lative statutory certainty around what those expenses are, what those reve­nues are being used for. So, from an oversight perspective, there is existing statutory oversight and financial reporting require­ments that are audited.

MLA Lindsey: Yes, so, on that same–so, it's publicly available. Does that mean that it comes before the Public Accounts Com­mit­tee the same as other things do?

      And in the De­part­ment of Health, how do we account for Shared Health and spending and one thing and the other there; it's not broken out completely. So, is there some way that it should be?

Mr. Komlodi: So, both the MASC and Shared Health, in terms of its inclusion as part of the De­part­ment of Health, would be part of the Public Accounts Com­mit­tee's purview. In terms of MASC, because it is consolidated into the summary financial statements, it is in front of this com­mit­tee for a discussion.

      In terms of Shared Health, there was a reference, just in terms of the Health component, into which Shared Health would be consolidated in the Public Accounts in–on page 67. That does not break out Shared Health spe­cific­ally; however, Shared Health does have audited financial statements that they would be submitting to the De­part­ment of Health, and it's through that process that it is then 'consolid' into the overall summary financial statements.

      So, Shared Health itself isn't spe­cific­ally, in terms of the com­mit­tee's purview, here, but it does show up as a consolidation within the De­part­ment of Health and mental health.

      Thank you.

Mr. Ian Wishart (Portage la Prairie): Thank you guys for coming out. It's cooler in here than at least outside, so that is some­thing. And I ap­pre­ciate the work that you've done on this.

      I just wanted to circle back, and reference was made in your opening statement to the issue with MASC and the workman's compensation fund and now having in a form that I think you found acceptable.

      In the case of MASC, that meant the creation of two different trust funds, which made us the same as some provinces but different than a number of others. And I'm sure you're aware there's also matching federal legis­lation that touches on this.

      So, are you comfortable that we are now con­sistent with the federal legis­lation and reasonably con­sistent with other provinces so that there'll be no addition quali­fi­ca­tions in the future on any financial statements?

Mr. Komlodi: I'll start with the prov­incial context, which is that we are effectively in alignment with other juris­dic­tions that do consolidate their MASC-equivalent organi­zations. We're also PSAP compliant and the OAG has indicated its agree­ment with the treatment of these trusts.

      And the–you know, the purpose of the trusts is very much in line with the ex­pect­a­tions of the individuals that would be benefitting from it. So, from that perspective, we are very much in alignment with similar kinds of entities that exist across the country.

      Thank you.

Mr. Chairperson: Mr. Wishart, for a second question.

Mr. Wishart: Yes, just one minor point. The federal legis­lation always did say that any benefits in the crop insurance and MASC pool could only be paid through to producers.

      And I guess I argued at the time that we didn't need all of this other legis­lation because the federal legis­lation applied and covered the risk that was there. There is a history in Canada of some other provinces having used these types of funds in the past inappropriately. I get that, that perhaps we want to look at putting some restrictions in place from that, but I guess I didn't see the need, at the time, and I still don't. I felt that the–that we were protected, or produ­cers were protected, by the federal legis­lation.

* (13:40)

      Why was it necessary to intro­duce separate prov­incial one, which really recapped what the federal one did?

Mr. Komlodi: So, just in terms of, you know, align­ment with the federal legis­lation, we did make regula­tory changes to ensure that there was policy align­ment, given that there was con­tri­bu­tions from both the federal gov­ern­ment and the prov­incial gov­ern­ment. There were con­sul­ta­tions and agree­ment from the federal gov­ern­ment in terms of the approach that was taken in Manitoba. So, to–you know, to make sure that there was policy alignment between the two sets of contributors to the trust.

      Thank you.

Mr. Diljeet Brar (Burrows): My question is regard­ing agri­cul­ture.

      As we all know, we are struggling with a labour shortage, and the report mentions about investing $9.2 million through CAP, Ag Action Manitoba program, and the report also talks about 150 jobs being created imme­diately and, after that, 359 jobs within three years.

      So I'm seeking more clarity on this. Like, has those 150 jobs been already created and what kind of jobs they were? And what kind of those 359 jobs we are expecting? Because it seems like invest­ment of $9.2 million and about 500 jobs being created, but where we are at in this?

Mr. Komlodi: Thank you for the question.

      Unfor­tunately, we don't have the specifics here with us on the specific question you asked around the number of jobs. We will follow up with the De­part­ment of Agri­cul­ture, and if it's permitted, take this question on notice.

Mr. Brar: About AgriRecovery, are there any out­standing claims still under AgriRecovery?

Mr. Komlodi: We will endeavour to get the response to the question before the com­mit­tee rises. So, we're just working on that right now with staff.

      Thank you.

Mr. Martin: Mr. Chair, I thank you for your attend­ance here today as part of the process as we try to get more educated in the under­standing of the processes of gov­ern­ment.

      So, one of my concerns that I have is the non-purchasing orders, and the status of that. And, obviously, when you have spending outside the–external to central financing, it opens it up to potential abuse or at least expenses not being detected or recog­nized by the various de­part­ments.

      Now I know, previously, the AG has made recom­men­dations related to this, related to non-purchase orders, but–two-part question: One is, I guess, for the com­mit­tee's infor­ma­tion, because we have some new members and that, can you perhaps give us an example of a non-purchase order spending that you can high­light to us, and more im­por­tantly, how we've gone about minimizing or addressing the issues of non-POs?

* (13:50)

Mr. Komlodi: Thank you for the question. And maybe I'll start with the second part in terms of what we've done.

      So, the Office of the Prov­incial Comptroller has issued a directive to all de­part­ments to stop using non-purchase orders. So, effectively, they were outlier purchases that were being used that are no longer permitted.

      In terms of a specific example, I would refer the question to the Auditor General in terms of examples that they found as they were conducting their audits. There was a description of NPOs, as well, in the report to the Legislature that was included on page 12.

Mr. Martin: Just a point of clari­fi­ca­tion. Do I under­stand that cor­res­pon­dence was sent to cease the practice of NPOs?

      And more spe­cific­ally, how do you deter­mine whether or not that cor­res­pon­dence has been adhered to? Or is that up to the Auditor General in a future audit to make that deter­min­ation, or is that an internalized review that is your respon­si­bility?

Mr. Komlodi: So, the direction was issued to the council of executive financial officers–so these are the EFOs, effectively, of all the major de­part­ments. We do run periodic reporting through SAP, so that's done through the Office of the Prov­incial Comptroller.

      Essentially, it's a centralized intake of all trans­actions, and so there's a periodic review of that. Additionally, the internal audit unit of Treasury Board Secretariat also had produced their own analysis which will be coming to Treasury Board.

      Thank you.

MLA Lindsey: So, my under­standing is right now, a lot of the infor­ma­tion is manually entered into systems to make sure that every­thing is accounted for in the consolidation of financial infor­ma­tion that–although, assume that's rather a complicated process, recog­nizing that are–some 136 different components that all have to get consolidated into the financial infor­ma­tion.

      So, again, my under­standing is that there was an IT capital project that was in the process to select the vendor and implement software that would stream­line the process. Tell us what the status of that project is.

Mr. Komlodi: So, the system that's being utilized will be the SAP S/4HANA system.

      We are just in the procurement phase right now. The RFP has closed, and there'll be an award coming in the near future. Once that has been accom­plished, we'll proceed to the imple­men­ta­tion phase for that module within the SAP.

MLA Lindsey: Just in follow‑up to that, then, with the risks of consolidation of the increased risks because the many reporting entities, errors could cause some serious problems. So, what is being done ahead of the next set of public accounting to ensure that those risks are mitigated or at–identified and to ensure that any errors are found? What's being done, seeing as the software's not in place yet?

Mr. Komlodi: So, until we have a more robust system in place, the Office of the Prov­incial Comptroller has put measures in place to increase manage­ment oversight over what has–what is submitted by the reporting entities.

      We are also increasing focus on greater staff training, so in terms of the processes, the accounting processes, as well as the recruitment of CPAs–that has been increased and to make sure that the oversight is robust.

      Thank you.

Mr. Isleifson: Thank you for joining us today. It's nice and cool in here.

* (14:00)

      A couple of questions, and I want to go back almost to what was started in the process piece. And I basically have a question for both the–both of you.

      Maybe I'll start with the–internally, on a standards review, do we find that there's more internal review, or reviews required because of internal action, or external action; and how does the de­part­ment monitor changes and results that come with those reviews?

Mr. Komlodi: If I could just ask for a clari­fi­ca­tion–if the member's referencing the accounting standards, in terms of–or is it variances that–resulting from, you know, budget to what is being reported.

Mr. Isleifson: The audit standards.

Mr. Komlodi: I'd like to request the Prov­incial Comptroller to respond to the more technical nature of this question.

Ms. Andrea Saj (Prov­incial Comptroller): In order to mitigate the risks due to uncertainty, complexity and subjectivity of estimates, we have prepared a policy in our financial admin­is­tra­tion manual, which is our internal guidance that we provide to the financial com­mu­nity within the core gov­ern­ment in the following areas whenever an esti­mate is used.

      This is–an accounting esti­mate is one of the more broad categories that the auditing standards apply to that we've been focusing on of late in my office.

      So, we've outlined the require­ments for de­part­ments for docu­men­ta­tion of their methodology, sup­port for their assumptions, assessment of the need for the use of experts, where applicable, and then a risk-based review of accounting estimates by the Office of the Prov­incial Comptroller.

      So, all accounting estimates require docu­men­ta­tion that is signed off and certified by the respon­si­ble executive financial officer, detailed calculations sup­porting the value of the esti­mate signed by the pro­fes­sional who's in a position to verify the esti­mate and third-party confirmation of the esti­mate in the form of report statements and third-party validation.

      The OPC, the Office of the Prov­incial Comp­troller, performs a risk-based review for de­part­mental Estimates. So, in the areas of higher risk where there's a higher accounting esti­mate–a larger dollar-value accounting esti­mate–my office will perform a risk-based review.

      And I will refer the rest of the question over to the Auditor General, if that's ap­pro­priate.

Mr. Shtykalo: So, I'll just–maybe I'll just get some clari­fi­ca­tion on, more spe­cific­ally, which standards or all standards the question was referring to.

Mr. Isleifson: I will make this–actually, that was my second question. So, I will make this my second question then, so that I'm not taking up the floor here and coming up with another question.

      But, my question was going to be to the Auditor General. On your aspect of it, when you go out, do your agents do annual reviews of the standards or is it–not monetary, but more ongoing?

      And the reason I ask is I used to do audits, and I used to keep my eye open for upcoming and new–and always try to stay ahead of the curve. So, it wasn't an annual review; it was an–almost a monthly review that I would do.

      So, I'm just wondering, you know, what the standards are used by your agents and what process they use to remain current so that when it does come back to the de­part­ment, they're not behind the eight ball trying to figure out what we're trying to do.

      So, I don't know if that makes sense.

Mr. Shtykalo: For my office, the–I think the simple response is it's an ongoing process.

      If we're talking about–or, speaking to accounting standards spe­cific­ally issued by the Public Sector Accounting Board, the process they have for issuing a new standard is, it's not just one day they issue it; it's a long, robust process with con­sul­ta­tion with stake­holders both on the preparer side and the auditor side, including stake­holder–obtaining stake­holder feed­back through exposure drafts, statements of positions, et cetera.

      So, a standard–the process for–when a standard–the idea of a standard is first intro­duced to when it's actually put into place is years, it could be three to four years.

      So, as CPAs in the office, part of the pro­fes­sional dev­elop­ment that is required as a CPA and that we push in the office for our staff is to be aware of upcoming standards and make that part of their learning plan on an annual basis.

      So, when these exposure drafts come out two years ahead of when they're actually going to be imple­mented, we already have gone through a process both individually and then as a team to look at the standards and what the implications may be for the office.

      We also will high­light upcoming standards in our audit plans that we present to the agencies and to the Province. For example, this year–so, we're already talking about–let me get the year right–2023‑24. In our audit results packages that we prepare for agencies, we're high­lighting two standards that are going to be in effect for this coming year, and one is a revenue standard on accounting for revenue and the other is an auditing standard. So, it's how we audit, which may have some impact for the clients that will be in effect for the '24‑25.

      So, we do have a process both internally and for com­muni­cating, if that answers the question.


Mr. Dougald Lamont (St. Boniface): Thank you very much for coming today.

      Yes, I had a bigger–a big-picture question, I suppose. I know that one of the things that's men­tioned in the annual report is a concern about excess–or, I say, I guess, vul­ner­ability to too much reliance on federal transfers.

* (14:10)

      So, I'm just wondering–or, you know, because that could change in the future, we don't know–I was wondering what steps the de­part­ment had taken to address that concern. Or what–

Mr. Chairperson: Mr. Komlodi.

Mr. Komlodi: Thank you for the question. And I would just note that it's more of a policy-related question in terms of the forward-looking nature of that.

      We do report on the federal transfers to total revenue as a vul­ner­ability indicator in the Public Accounts. There was a historical trend that we would, of course, track, in terms of the Manitoba share on the prov­incial weighted average.

      These are statutory programs in terms of, you know, them falling under federal legis­lation. So we do, you know, keep track, and we understand, as we have reported, that there are a number of factors that would drive, you know, the extent to which provinces receive equalization growth would be impacted.

      So, very much formula driven, which we have full line of sight into, and we do report on that, of course, in the Public Accounts as a vul­ner­ability.

      Thank you.

Mr. Lamont: Yes, and just another question about–it's, again, another big picture one about inflation. I know that you're talk–look, we've seen a higher than expected, both cor­por­ate and personal incomes, which is being reflected in higher reve­nues. It seems to me that these are all tied together with inflation.

      So, I guess I have two questions related to inflation. One is: Are there sectors that have ex­per­ienced a downturn in–due to inflation? And the other is: If, as is being forecast by some, that we will see a slow down–not necessarily a recession, but a slow down–and would you also anticipate that, if we see a slow down in inflation, we'll also see a slow down in gov­ern­ment reve­nues in the same way in a related fashion?

Mr. Komlodi: Thank you for the question.

      So, inflation would be one of the factors that impacts, you know, our reve­nues. I mean, it's a dynamic space, in terms of how the economy functions. So to the extent that prices are changing, will lead to different behaviours by different cor­por­ate and individual actors.

      We do report regularly through the Manitoba Bureau of Statistics in terms of our consumer price index, and Manitoba's diversified economy would generally and historically be more–be a lot more resilient. The Public Accounts, of course, reports on, you know, the revenue reporting through the summary environ­ment, so it would be factoring in any of those dynamics that I mentioned would be playing out in the real economy.

Mr. Brar: I'm referring to page 48, at–in the annual report. There's a table called expense by function.

      And most of the numbers in two columns that we compare are comparable; but for Agri­cul­ture; Environ­ment, Climate and Parks; Munici­pal Relations; Sport, Culture and Heritage; the numbers jump a bit.

      Can you just explain that? And also, we are comparing restated and actual; why not actual and actual? Just trying to understand.

* (14:20)

Mr. Komlodi: Thank you for the question.

      I'll start with the restatement, and on page 104–one zero four–the Public Accounts, under note 22, there's a description of why there was a restatement, and I'll just read that. So, on January 18, 2022, the gov­ern­ment announced reorganization changes that resulted in certain functions being transferred between de­part­ments. As a result, certain 2021 financial state­ment balances have also been reclassified to be presented on the basis of the 2022 results.

Mr. Brar: I just wanted to quick check, on page 11 it talks about inflation rate quickly increased from 0.4 per cent in Feb. '21 to 3.2 per cent in April 2022. Should it be 2021? Seems like a typo. Page 11.

Mr. Komlodi: If I understood the member's question correctly, I'm looking at page 11, at the far right section of the chart there, March 2022 is reported, which would align with the–effectively, the fiscal year to which this Public Accounts relates.

      So, that would be the reason why we have the March '22 there.

Mr. Brar: So, when I look at the graph, it tells me that the inflation quickly increased from 0.4 to 3.2 between February and April 2021, but the report says April 2022. Page 11 of this report. It's the second–third line from the top.

Mr. Komlodi: So, it appears there is a typo, an error, on that page. So, the description should say April 2021. Thank you for catching that.

MLA Lindsey: So, looking at the delegation of finan­cial signing author­ity, it seems that there have been some issues as to who has delegated and how often those kind of charts are up updated.

      Now, I understand that there was an issue previously, and then again, in 2022: five of the six de­part­ments had not updated their charts as required.

      So, the action plan, it talked about training and spot checks that were intro­duced to try and fix this problem, however, it's still considered unresolved by the OAG as required approvals were not done in a timely manner after 2022 de­part­ment reorganization.

      Training and spot checks, it seems, have not been effective. All of this, of course, was compounded by NOSI creation or changes in the de­part­ments, so that what was in one de­part­ment is now in a different de­part­ment, but also, due to potentially being com­pounded by staff shuffling or staff shortages.

      So, could you tell us what ad­di­tional actions are being taken to address this shortfall that seems to be on-going with the delegation of financial signing author­ity?

Mr. Komlodi: Thank you for the question.

      So, through the Office of the Prov­incial Comp­troller there was training under way, as well as spot checks, with each of the de­part­ments, to ensure that there was both more timely updating to the designated financial–the DFSA docu­ments, as well as ensuring that there is robustness, in terms of how they updated for accuracy.

* (14:30)

      As I mentioned in my opening statement, the OPC is doing that diligence work–due diligence work right now to make sure that all de­part­ments are in com­pliance with require­ments in terms of both timing and accuracy of the DFSAs.

MLA Lindsey: So, then one would assume there must be some kind of guide­line that says how long it takes for a de­part­ment to update the chart after there's a change made within the de­part­ment.

      And looking at that, then, how long did it take to update charts after the 2021 Cabinet shuffle? Were they updated according to a standard, or is there no standard?

Mr. Komlodi: So, in terms of the standard itself, it is included in the internal policy to the Prov­incial Comptroller and the financial admin­is­tra­tion manual.

      In general, the require­ment is for the docu­ments to be updated before the next Estimates of expenditure is approved.

Mr. Michaleski: I'm going to just continue on with my–I won't make such a long preamble, Mr. Chair, as I did last time, but it–my questions are all related in the same line. But, spe­cific­ally to the Auditor General–but feel free, Mr. Komlodi, or the Comp­troller, to weight in on this.

Mr. Vice-Chairperson in the Chair

      My question is about the future role of the Office of the Auditor General, and because–again, I go back to the report of Public Accounts from December 2022. Like, there is an in­cred­ible stressing of concern expressed by the Office of the Auditor General regarding poor compliance, inadequate accounting processes and, oh, I am–and I'm quite sure these are–have some legacy attached to them. And it's great that changes are being made and incorporated, I hope.

      But be that as it may, there's a lot of concern here. So I'm going to go back to the Auditor General's office with in mind that we're flagging and finding concerns. We also have, running in the back­ground, the shift to a Canadian standard here in Manitoba and, of course, we have to–we're required to change to this new accounting 'proce.'

      So, with all that in mind–so, as the fiscal changes and pressure on gov­ern­ment expand, I think that's a fair comment to make, I would see there's an increase for more qualifiable and validated spending results, and measurements are needed.

      So, my question for the Auditor General is, how do you intend to spe­cific­ally conduct and access performance audits when there is really, I think, a shift in focus based on the accounting changes? How are you going to address that, and essentially put a–qualifiers, whether it's financial or measurements. I think–I don't think that's necessary as a policy thing, but I–my question whether that's–becomes, now, a role on the respon­si­bility Auditor General's office.

      So, if you could comment and answer that.

Mr. Shtykalo: Thanks for the question.

      With respect to financial statement auditing, these types of shifts, while they may affect the financial results, I don't see as big of impact on how we go about conducting our financial statement audits. Because we are auditing against the public sector accounting standards, as well as using Canadian auditing standards.

      However, on the performance audit side, as you mention, any of these shifts I would see being captured in the criteria that we use. Because each performance audit has a different list of criteria at the start of the audit; we developed–we have an objective, we develop what would be ap­pro­priate criteria and have con­ver­sa­tions with the de­part­ment or entity that we're auditing that those are ap­pro­priate criteria.

      So, I would see in the performance audit–I would look to that, and the shift in the criteria being used to capture any of that. But as far as the financial statement audits, I don't see as big an impact.

Mr. Chairperson in the Chair

Mr. Michaleski: Just one follow-up question. Again, it's cleaner, I guess, when you're doing just a financial audit as financial, and it's very grey–subjective when you get into performance.

      My point, though, is we're–I think the financial aspect of a performance audit in–is emerging as a bigger and bigger issue that we need to put a number to, a line item to qualify, right? Because if we're looking at, you know, comparing Manitoba to other juris­dic­tions, then it becomes a very relevant question in terms of how well gov­ern­ment is doing.

      So, again–and I think the Office of the Auditor General indirectly inherits a fiscal evaluation, or a financial evaluation, of performance audits. So, again–and that's my point. And do you see that, or does finance–like, does de­part­ment see that as a role that De­part­ment of Finance would want to see Auditor General play that sort of qualifying role in their audit.

* (14:40)

      Just–again, you understand what I'm saying? Because I think you're–to do a com­pre­hen­sive audit, it's not reasonable only to assume performance, but that it should have a number attached to it.

Mr. Shtykalo: So, if I'm under­standing correctly, it sounds like some of the things you're describing would be similar to what we see someone in the role of a parlia­mentary budget officer would do: com­menting on budgets and estimates and feasibility-type issues.

      Currently I see, under my mandate, not–it's more of a historical focus. But, so, on the financial state­ment side, it's, you know, historical financial account­ability: expressing an opinion on them–on the accur­acy of the historical financial infor­ma­tion.

      On the performance audit side, that's where we have a little more flexibility. Again, aspects of what you're speaking about could be worked into the criteria, but to dedicate more on the financial side, unless my mandate was spe­cific­ally expanded, I don't see going in that direction.

MLA Lindsey: So, in the answer to my previous question about updating the delegation of financial signing stuff, it seemed to me that the answer I got was really–that it would be updated before the next set of Estimates. Seems that would be designed to pass an Esti­mate as opposed to actually update the chart or the signing author­ity in a real manner so that it's updated ongoing.

      So, I mean, if somebody leaves the de­part­ment, somebody else takes over, the chart should be updated within X number of days type of thing, so that you always have the right people doing the right signing.

      Just doing it once a year in time to say you've met the audit require­ment seems somehow to be some­what deficient. Am I misinterpreting what the answer was, or does there need to be some­thing more done there?

Mr. Komlodi: Yes, I will clarify, and I'll read the actual policy that applies in this instance: Whereby all delegated financial signing author­ities should be reviewed annually at year-end or on an as-required basis, as deter­mined by the executive financial officer. In all instances, financial signing author­ities must be updated on a timely basis to ensure that delegation infor­ma­tion is at all times complete, accurate and current.

      Central Finance within the De­part­ment of Finance should be provided with copies of the most current delegation of financial signing author­ity charts at year-end, or advised in writing if no changes to dele­gations have occurred since the last submission of charts.

      There are instances where a complete review and update of the departmental financial signing author­ity will be required; for example, the ap­point­ment of a new minister, a reorganization that affects the de­part­ment and any change to an act which affects the delegations.

      Thank you.

MLA Lindsey: So, I think that still leaves us a little deficient in making sure, although the answer does say that they have to be updated in a timely fashion. I would hope that that means that somebody is actually checking that when changes within a de­part­ment take place to ensure that the proper signing author­ity is there.

      Just–I have a different question. Talks about retroactive wage settlements, and I understand that the amount of those retroactive settlements isn't neces­sarily disclosed yet for the Estimates in March 2022.

      How do those retroactive wage settlements get accounted for, and will there potentially be some dramatic changes by the time the next set of Estimates comes out, by the time the next–the whole budgetary process takes place?

      If those numbers are all agreed to now but they're not accounted for until the next budget, what impact would that have on future budgets that are not necessarily captured in current budgets so that we would have a realistic Esti­mate or an idea of what the future obligations would be?

* (14:50)

Mr. Komlodi: So, I'll just maybe split that into two components.

      One is, from a budgeting perspective it is built in as a contingency in terms of the ex­pect­a­tion for the coming year. From a Public Accounts perspective, effectively, retroactively this would be accrued for each of the impacted de­part­ments.

Mr. Lamont: I had a couple of questions about–let me just check and see where it is. It's the expense analysis on page 47, 48. There were a couple of very–it seemed to be very sig­ni­fi­cant reductions, both in Finance.

      Finance was apparently reduced by, is it $306 million, if I'm correct–and do correct me if I'm wrong–and that Munici­pal Relations expenses decreased by $357 million.

      So, if you could just–can you just expand on the details of those reductions, and how is it that Finance and munici­pal affairs each handled that reduction, and what did that reduction consist of in a bit more detail than the numbers we've got there?

Mr. Chairperson: Okay, so just a reminder to members of the com­mit­tee that all com­mit­tee members' questions should be put through the Chair.

      And we're approaching 3 o'clock. As previously agreed, we should revisit as how long we should sit.

      Are there any sug­ges­tions?

Mr. Martin: Mr. Chair, can I make the sug­ges­tion that the com­mit­tee continue to serve to allow myself, Mr. Michaleski, and I believe, Mr. Lamont had an ad­di­tional question. So for–allow those three questions to be heard and then, at that time, the com­mit­tee rise?

Mr. Chairperson: So, it's been suggested that we allow the questioners who are on the list at the moment to finish their questions and then we–yes–we decide whether we're going to pass the report or not.

MLA Lindsey: I would suggest 3:45, Mr. Chair.

* (15:00)

Mr. Chairperson: So, the original sug­ges­tion is not unanimous. So, will somebody say no to that?

An Honourable Member: No.

Mr. Chairperson: Okay. So, Mr. Lindsey, your sug­ges­tion was 3:45. Is that agreed?

An Honourable Member: No.

Mr. Chairperson: That is not agreed?

An Honourable Member: Can I suggest 3:30?

Mr. Chairperson: Okay. Suggested that–[interjection]–yes, Mr. Smook.

Mr. Dennis Smook (La Vérendrye): Could I suggest 3:30? That way we allow Mr. Lindsey more time for questions in there.

Mr. Chairperson: It's been suggested 3:30 by Mr. Smook. Mr. Lindsey, do you agree with that? So, Mr. Lindsey, could you repeat that please?

MLA Lindsey: I'd suggest then that we revisit it at 3:30 to ensure that we've concluded the busi­ness that needs to be done.

Mr. Chairperson: Okay. So, can we agree, then, that we will revisit at 3:30? [Agreed]

      So, Mr. Komlodi.

Mr. Komlodi: Just to respond to Mr. Lamont's ques­tion.

      In terms of the Munici­pal Relations, there are two programs: the federal restart program and the Manitoba restart program, both from the prior year that would have been one‑time expenditures, so they no longer show up.

      We're just in the process, on the finance side, to look up the list for the COVID programs that are listed there, but those also would have been ones that no longer continue.

      So, thank you.

Mr. Lamont: I just–a question. I know that interest rates have risen sharply. I believe today the Bank of Canada has indicated they may continue to raise them, and I know that we saw a sub­stan­tial increase in debt servicing fees.

      So, I'm just wondering if the deputy minister would be able to just talk about the risks that impact, and any mitigating actions that are being taken to deal with possible higher interest charges as far as our public debt and deficit are concerned.

Mr. Komlodi: So, in terms of tracking the infor­ma­tion that, you know, is part of our regular reporting through the Manitoba Bureau of Statistics, that would inform, obviously, our planning, both in-year and looking forward as we build budgets.

      In terms of the fiscal sensitivities, there is analysis that we include in the Public Accounts; on page 43, for example, where we do list, you know, the increase of interest rates and what that would mean for the portion of our debt that's exposed to refinancing. So, in terms of what was included on page 43, a 1 percentage point increase in interest rates would be an esti­mated annual fiscal impact of about $35 million.

MLA Lindsey: So, started with some stuff that took place during the pandemic where people were work­ing from home and they needed to find a new way to make sure things were approved, so there was electronic approval processes put in place at that time.

      The AG had previously recom­mended that there need to be more clear guide­lines for how that works, and part of the response was that the–they were going to explore special electronic approval software.

      So, could you update us on just what the status of that parti­cular work is, as far as the electronic approval software, and are there, in the meantime, more clear guide­lines?

Mr. Komlodi: If I could ask the–if I could ask Andrea Saj to respond to the question, please.

Mr. Chairperson: Sure.

      Ms. Saj.

Ms. Saj: Thank you for the question.

      Yes, so, initially, when the pandemic began in March of 2020, the Office of the Prov­incial Comp­troller issued some direction to de­part­ments around the use of electronic financial approvals, which was fairly broad, as that was a brand new way of doing busi­ness for the gov­ern­ment de­part­ments. An update was issued to de­part­ments to provide further guidance on April 6, 2022, to give them a little bit more specific direction.

      In terms of the electronic approvals process, that, again, is some­thing that we continue to work on with our IT de­part­ment, and we are in the midst of a procurement process relating to that. When the new software is intro­duced and the procurement process concludes and we've been able to implement the software, we will certainly be provi­ding more guidance and direction from the Office of the Prov­incial Comptroller to the de­part­ments.

MLA Lindsey: Just in a follow‑up to that, what kind of assurance or con­fi­dence do you have that any of the issues that had previously been identified with the electronic approval process, that they've been addressed and that you have sufficient guide­lines in place to ensure there's no problem?

* (15:10)

Ms. Saj: Okay. Thank you for that question. This is some­thing that the Office of the Prov­incial Comp­troller is very concerned about, as well, in terms of de­part­ments' ability and consistency in application of the directives issued by my office.

      So, we have taken this directive that was issued in April of 2022 forward to our council of executive financial officers. We've had some robust discussion with the–those executives. We've provided training to them on the ex­pect­a­tions as to what is an acceptable use for digital signatures and made it known that the ex­pect­a­tion is with manage­ment of the de­part­ments, as far as their direct oversight within their de­part­ments.

      The Office of the Prov­incial Comptroller is also involved in spot checking and monitoring of their application and–of the directive.

Mr. Michaleski: I want to thank the members for being here today and answering our questions. They're–they've been doing a great job.

      My question–my last question–is directed towards the deputy minister and, again, it's framed very much the same way as my other questions are. There's–running in the back­ground there is a shift towards a Canadian standard in compliance, Manitobans required to change their accounting standards. And all this is happening at a time of change and concern where the Auditor General is flagging genuine concern. And you know, of course, that has long-term impact.

      But my question, then, in light of these changes and with respect to the new accounting standards and/or the Canadian standards, as DMs–parti­cularly for Finance, but, you know, may wander off into other de­part­ments–is it now a new respon­si­bility to ensure compliance?

      I know we have the Auditor General that's saying, you know, we remind you if you need to do that and it doesn't get–has the respon­si­bility changed so there's greater em­pha­sis on senior public servants like yourself–like a deputy minister of Finance–does the respon­si­bility and liabilities change with these new Canadian and Manitoba standards? And has it changed from the deputy minister on down through the de­part­ments to supervisors, managers, regional, you know–I'm just–has any of that changed because of these new accounting practices and standards?

Mr. Komlodi: Thank you for the question, and certainly the environ­ment has become more complex. There are standards that have evolved.

      I would say on the whole, the legis­lative environ­ment, in terms of that respon­si­bility, has not changed. We are subject to The Financial Admin­is­tra­tion Act in terms of the author­ities that are the respon­si­bility of the deputy minister that are then delegated to the executive financial officers, and further down into the de­part­ment to all staff that are responsible for managing finances. It is there, also, where the DFSA, the designated financial signing author­ity docu­ment plays a critical value.

      I would also add that deputy ministers and executive financial officers sign the manage­ment respon­si­bility letter. That is a repre­sen­tation to the OAG that the financial statements have been compiled in a way that hold true to the Public Sector Accounting Board standards and are in line with internal controls.

Mr. Chairperson: Are there any further questions? If not, we will go to the reports.

MLA Lindsey: One quick final question that hopefully will be quick.

      So, the control environ­ment, I understand that the Province uses a decentralized comptrollership model where every de­part­ment then–officials are account­able for their own de­part­ments.

* (15:20)

      And I understand, in past audits, there's been–where account­ability and control by the de­part­ments, sig­ni­fi­cant control deficiencies, insufficient support. And some of the explanations that have been given were lack of resources due to increasing vacancies and unfilled positions due to turnover, efficiency and accounting knowledge and related 'compencies', again, because of the turnover, new folks showing up.

      So, can someone tell us what, exactly, has been done to address those issues and what controls are in place to ensure that the proper controls are being addressed?

Mr. Komlodi: So, in terms of the vacancy rates, similar to other gov­ern­ments, we have been impacted with what we're referring to–it has been referred to as the great resig­na­tion or the great retirement.

      And, you know, in terms of what we're doing spe­cific­ally, the reviewing of pay rates is–has been under­taken, as well as expanding what's called the Leaders in Training Program. In parti­cular, there's a financial stream within that where we'd be hiring CPAs or individuals that are wanting to obtain their CPAs while they are working. So, we would be funding the designation of those candidates that are part of that specific program.

      We've also formed a finance human resources steering com­mit­tee through the Office of the Prov­incial Comptroller to address the recruitment issue. And we are working on increased written com­muni­cation and direction to de­part­ments on the respon­si­bilities and deadlines related to the financial controls that they would have to meet in this new environ­ment.

      Thank you.

Mr. Chairperson: Thank you.

      Hearing no further questions or comments, I'm ready, now, to put the question on the reports.

An Honourable Member: Question.

Mr. Chairperson: Province of Manitoba Annual Report and Public Accounts, dated March 31, 2022–pass; Auditor General's Report–Public Accounts and Other Financial Statement Audits, dated December 2022–pass.

      The hour being 3:25 and a half, what is the will of the com­mit­tee?

Some Honourable Members: Com­mit­tee rise.

Mr. Chairperson: Com­mit­tee rise.

COMMITTEE ROSE AT: 3:25 p.m.  



TIME – 1 p.m.

LOCATION – Winnipeg, Manitoba

Mr. Jim Maloway

Mr. Shannon Martin


Members of the committee present:

Messrs. Brar, Guenter, Isleifson, Lamont,
MLA Lindsey,
Messrs. Maloway, Martin, Michaleski, Smook, Wishart


Mr. Brar for Ms. Naylor


Mr. Tyson Shtykalo, Auditor General


Mr. Silvester Komlodi, Deputy Minister of Finance
Ms. Andrea Saj, Prov­incial Comptroller


Province of Manitoba Annual Report and Public Accounts, dated March 31, 2022

Auditor General's Report – Public Accounts and Other Financial Statement Audits, dated December 2022

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