Ontario comptroller goes down with her failed accounting methods
This column was previously published in the Toronto Sun.
A blow up between a senior bureaucrat and a government can be serious, but the resignation of Ontario comptroller Cindy Veinot goes deeper. Veinot isn’t merely at odds with the finance minister, she’s at odds with the auditor general and many others over the previous government’s accounting standards. When voters gave the new provincial government a mandate to clean up Ontario’s financial mess, Veinot’s departure was inevitable.
Here’s what happened.
On Dec. 5, the Toronto Star reported that Veinot, the province’s former comptroller, quit after refusing to sign off on Finance Minister Vic Fedeli’s $15-billion deficit because she says the number is inflated.
But it should come as no surprise that Veinot quit, or that she disagrees with the new government’s deficit numbers or its accounting standards. After all, Veinot is one of the people who signed off on the Wynne government’s books. In fact, she signed the statement of responsibility on the government’s financial statements that Auditor General Bonnie Lysyk said used “bogus” accounting methods.
The dispute grew out of multiple multi-billion-dollar issues.
There’s the structure of the Wynne government’s Fair Hydro Plan and the Independent Electricity System Operator’s adoption of something called rate-regulated accounting.
Veinot was involved in devising the Fair Hydro Plan and ordered a “closer look” at how the IESO conducted its accounting. The Auditor General later took issue with the accounting method that the IESO ultimately adopted. The Auditor General found that the new rate-regulated accounting standard adopted by the government violated government accounting standards and allowed the government to hide the full cost of the extremely expensive Fair Hydro Plan.
The dispute also hinged on whether the government could count $11 billion contained in the pension funds for Ontario Public Sector Employees’ Union and in the Ontario Teachers’ Pension Plan towards deficit reduction.
OPSEU president, Smokey Thomas, issued a statement that Lysyk is “100 per cent correct” that the government cannot count employees’ pension funds as government assets.
You don’t need to be an accountant to understand why. Unless the government can take the money in the OPSEU and Teachers’ pensions to pay down the deficit, it shouldn’t be counting the money in those funds as if it can use it that way. The money in the pensions belongs to the beneficiaries and can’t be raided by the government.
The fact that Veinot quit doesn’t make her right. And the fact that she sent a 12-page unsolicited letter to the legislative committee on financial transparency doesn’t make her right. It just means that she stands by the work she did for the previous government and she continues to disagree with the auditor general’s finding that her work used “bogus” accounting methods that materially understated the deficit.
The new government is siding with the auditor general’s accounting methods. As a matter of fact, is the Ontario Financial Accountability Officer, who adopted the auditor general’s accounting method for the report last December. What’s more, the union leaders for the pensions at issue agree with the auditor general. Most importantly, voters emphatically rejected the previous government’s financial duplicity.
The Liberals and the NDP both believe Veinot should be invited to testify at the legislative committee on financial transparency. The Progressive Conservatives did not invite her and have said that they “don’t believe she’s going to be able to add anything.” The disagreement is old and the work of Veidot is self-evident – if she wants to speak up at committee, she should outline what new insights she hopes to share. But she has a tough case to make as the government, the unions, the auditor general, the financial accountability officer, and, ultimately, the voters, have all made it clear Ontario needs a higher accounting standard.