1.1	On 26 October 2004 I released Volume I of our 2004 
Report. That volume reported our findings as a result of an audit of 
New Brunswick’s salmon aquaculture operations. Our work was 
done concurrently with related audits undertaken by the Office of 
the Auditor General of Canada and the Office of the Auditor 
General of British Columbia. The reports from all three offices 
were released on the same day. In this volume you will find the 
results of our other work undertaken in 2004.

1.2	Last year in my opening chapter I raised three issues 
concerning the Province’s financial statements: timeliness, financial 
statement discussion and analysis and the Fiscal Stabilization Fund.  
I called for more timely release of the audited financial statements, 
and an informative and easy to read financial statement discussion 
and analysis. I also included a request that any communication that 
introduces confusion concerning the financial results be avoided.

1.3	This year the audited financial statements were released on 
3 November, eighteen days earlier than last year. This is now the 
seventh time in the past eleven years that the financial results were 
published in November or December. Substantial improvement 
must be made in this area. Legislators and citizens should not have 
to wait more than seven months after the year end to learn how 
their money was spent and whether there was a surplus or deficit.

1.4	I was very pleased to see an enhanced commentary at the 
front of Volume I of the Public Accounts on the financial results for 
the year. The commentary included a discussion, with charts, of the 
Province’s net debt position. Unfortunately I cannot give “two 
thumbs up” because there is still a lot more that should be done. 
The Province could look to the Public Accounts of Canada and 
Ontario as two good examples of clear and concise reporting of 
financial results and financial condition. Also, during the year the 
Public Sector Accounting Board of the Canadian Institute of 
Chartered Accountants released a Statement of Recommended 
Practice on financial discussion and analysis. This statement gives 
excellent guidance on the types of information that governments 
should consider making available to their legislators and citizens. I 
urge the government to build on the improvements made this year.

1.5	The information on the Fiscal Stabilization Fund has been 
removed from the Statement of Revenue and Expenditure and is 
now shown in the Notes to the Financial Statements. I am extremely 
pleased to see this change made. The Statement of Revenue and 
Expenditure now clearly reports the financial result for the year. 
The way in which the Fiscal Stabilization Fund was disclosed and 
reported in previous years created confusion.

Comments on the 
Province’s financial 
position

1.6	There is often misunderstanding over the role which my 
Office plays with respect to the Province’s financial statements.  
For instance, some citizens think we prepare the financial 
statements. This of course is not true, and in an effort to explain the 
role and responsibility of government in preparing the financial 
statements and our role in auditing them I have included some 
commentary in chapter 2 of this Report.

1.7	For the past seven years we have been tracking six financial 
indicators which show the Province’s financial condition from the 
perspective of sustainability, flexibility and vulnerability.  While 
the Province did incur a deficit in the current year of $103.2 
million, which increased net debt by a similar amount, the trends 
over the past ten years have, for the most part, been positive. The 
results of our work in this area can also be found in chapter 2.

Beverage Containers 
Program

1.8	New Brunswick’s Beverage Containers Act was proclaimed 
in 1992 and the Beverage Containers Program came into effect soon 
afterward. We were interested in determining if the program was 
achieving its intended results and whether the Department of the 
Environment and Local Government was satisfactorily measuring 
and reporting these results. We also wanted to provide the 
Legislative Assembly with an update on progress the Department 
has made in responding to the work we performed in 1994.  

1.9	Since the inception of the program, approximately three 
billion beverage containers have been diverted from landfills and 
roadsides.  However, there are no target-specific objectives to 
indicate whether or not the program is achieving its goals. And 
limited action has been taken on our recommendations from 1994.

1.10	We also found that, since the beginning of the Beverage 
Container Program, distributors and/or their agents have retained 
close to $34 million from unredeemed deposits on beverage 
containers that were not returned to a redemption centre. In 
addition they collected $17 million in fees to help cover the cost of 
recycling these containers, which did not occur. We recommended 
the Department of Environment and Local Government review the 
arrangement that has been in place for the past twelve years.

1.11	The results of our work on the Beverage Containers 
Program are found in chapter 3.

Nursing Home Services

1.12	There are 61 nursing homes in New Brunswick providing 
approximately 4,100 beds. Provincial legislation requires these 
homes to have a license and to follow operating standards. The 
purpose of our work was to see if government is enforcing this 
legislation. We found that the Department of Family and 
Community Services does not have appropriate practices to ensure 
that licensed nursing homes are complying with provincial 
legislation. The results of this work are found in chapter 4.

Regional Development 
Corporation - 
provincially funded 
programs and 
initiatives

1.13	A major activity of the Regional Development Corporation 
is to fund, coordinate, and monitor Funds and projects, with the 
intent of supporting provincial economic development endeavors.  
In performing an audit in this area we found that the Corporation 
does not have satisfactory procedures to measure and report on the 
effectiveness of the provincially funded programs and projects 
which it administers. And while it has developed goals for its major 
Funds, it has not developed appropriate objectives for these Funds 
and the related projects. The results of our work at the Corporation 
can be found in chapter 5.

Program evaluation in 
government 
departments

1.14	Most of our work is directed towards a particular service or 
program. We believe the Legislative Assembly and the public are 
interested in receiving objective information as a result of these 
audits whether it is on day care centres, pupil transportation or 
nursing homes. Periodically we will undertake a project that 
highlights a significant matter that applies to all of government. 
Last year we looked at the governance of Crown agencies and 
highlighted the importance of risk management and the need for 
risk management training and skills. This year we decided to 
examine the status of program evaluation in provincial departments. 
It is extremely important that programs continue to be relevant, 
cost-effective and successful in achieving their objectives. Citizens 
have a right to expect this and governments have a stewardship 
responsibility to demonstrate that they have met the expectation.

1.15	We conducted a survey of government departments to 
determine the approach they follow in evaluating programs. The 
results are found in chapter 6.  From the survey results we noted 
there is a lack of formal guidelines specifying an approach to 
program evaluation. Also there appears to be an imbalance in the 
program evaluation capabilities between departments and resource 
limitations appear to be restricting the ability of departments to 
improve their program evaluation process. We see this as being an 
extremely important area and plan to do more work next year.

NBCase system

1.16	NBCase is the social assistance payment and case 
management system in the Department of Family and Community 
Services. We performed an audit on this system because we believe 
it is a key computer application in the provincial government – it 
processes annual payments in excess of $186 million. Our objective 
was to determine if we can rely on the system for purposes of 
expressing an opinion on the Province’s financial statements for the 
year ended 31 March 2004. As a result of our work we were able to 
reach positive conclusions on the computer control environment and 
the application controls. We did however make a number of 
observations and recommendations. These can be found in 
chapter 7.

Pre-arranged funeral 
services program

1.17	In June 2004 there were approximately 15,500 pre-arranged 
funeral service contracts outstanding in the Province of New 
Brunswick, totaling approximately $80 million. The Pre-Arranged 
Funeral Services Act requires that this money be kept in separate 
trust funds at approved financial institutions. We decided to do an 
audit in this area to determine if the Province had taken appropriate 
steps to protect the public with respect to these pre-arranged 
funerals. We concluded that the interests of the public are being 
reasonably protected as a result of the role being played by the 
Department of Justice.

1.18	We did make a few recommendations and these can be found 
in chapter 7.

Comments on action 
taken to address 
recommendations of 
prior years

1.19	Our policy is to track the disposition of our 
recommendations for a period of four years after they first appear 
in our Report. We have noted significant interest in this aspect of 
our work by legislators and citizens. They want to know how well 
government is doing in implementing the recommendations from 
audits of previous years. The results of our follow-up work are 
found in chapter 8. I will highlight a number of issues at this time.

1.20	This is the last time we will be tracking recommendations 
from the 2000 audit year. One recommendation from our work in 
the Department of Agriculture, Fisheries and Aquaculture was that 
the Department should provide the Legislative Assembly with 
written reports every three or four years on the effectiveness of the 
legislation it administers in meeting its intended purposes. We 
pointed out last year that this recommendation was really relevant to 
all departments that are responsible for administering legislation.  
To our knowledge, no action has been taken. I draw this to the 
attention of the Legislative Assembly because of the importance of 
legislation in fulfilling public policy. Does the legislation remain 
effective? Is it fulfilling the original purpose or objective? Periodic 
reporting to the Legislative Assembly is necessary to ensure there is 
accountability for the legislation that is currently in place.

1.21	In 2000 we conducted an audit to determine if appropriate 
systems and practices were in place to encourage the management 
of private forest lands as the (sustainable) primary source of timber 
for wood processing facilities in the Province. In the past four years 
there has been some progress on our recommendations. Still 
outstanding are the recommendations related to establishing 
appropriate goals, objectives and performance indicators to address 
the Department’s mandate relating to private forest lands.

1.22	In chapter 8 we are reporting for the first time on progress 
made in implementing the recommendations from our 2002 work. 
We were very pleased to see the progress made by the Department 
of Public Safety in implementing fourteen and partially 
implementing another five of the twenty-three recommendations we 
made in connection with an audit of the Office of the Fire Marshal. 
And we were also pleased to see that the Departments of Finance 
and Business New Brunswick implemented all fifteen 
recommendations we made in relation to audits of accounts 
receivable.

About our Office

1.23	As a result of completing a strategic plan in 2003 our Office 
has three main goals that we will be concentrating on over the next 
five years. These are:

•	the Legislative Assembly and the public are aware of and value 
all the work that we do, and have confidence in our ability to 
provide timely, objective and credible information;

•	departments and agencies accept and implement our 
recommendations; and

•	our stakeholders - the Legislative Assembly, the public, 
auditees and our employees - view us as leading by example.

1.24	We have identified twelve performance indicators that we 
are using to measure our progress against these goals.  While we 
are pleased with our progress in a number of areas in the last year 
there is room for improvement in others. Information on our 
performance during the last year can be found in chapter 9.

1.25	In that chapter we also point out that our request for 
$200,000 in additional funding for 2004-2005 was rejected by 
Board of Management. This funding would have enabled us to hire 
two additional senior auditors and increase our investment in 
training, technology and other support services. We currently have 
funding for only twenty-three staff members, a reduction of four 
since 1997. There continue to be challenges to provide acceptable 
audit coverage of government operations and programs and as a 
result I plan to request additional funding for 2005-2006.

Action still needed to 
strengthen the role of 
the Auditor General

1.26	Last year in my opening chapter I raised two significant 
issues concerning the operation of my Office. The first was related 
to the process for approving our annual budget. At that time I 
concluded by saying “The independence of the Office would be 
greatly enhanced and the Legislative Assembly would have 
increased assurance that the Office was capable of fulfilling its 
responsibilities, if the Legislative Assembly or a legislative 
committee was involved in the budget review process.”

1.27	The second issue was related to the process followed for the 
appointment of the Auditor General. I concluded by saying “Since 
the Auditor General must be a non-partisan appointment, there 
should be some involvement of all political parties in the process. I 
understand that this has been done in the past as a matter of 
courtesy, but there is no requirement to do so.”

1.28	Both issues are still outstanding and I raise them again to 
remind the Legislative Assembly that action should be taken to 
properly reflect the role of the Auditor General as an Officer of the 
Legislative Assembly.

Acknowledgements

1.29	The two volumes of this year’s Report are the culmination 
of a lot of hard work by the staff in my Office. Once again I am 
indebted to their professional advice and dedication.







Daryl C. Wilson, FCA

Auditor General