Public Accounts. Prince Edward Island. Volume I Consolidated Financial Statements. For the Year Ended March 31 st. of the province of

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1 Public Accounts of the province of Prince Edward Island Volume I Consolidated Financial Statements For the Year Ended March 31 st 2009

2 To Her Honour The Honourable Barbara A. Hagerman Lieutenant-Governor of the Province of Prince Edward Island May It Please Your Honour: The undersigned has the honour to submit herewith the Public Accounts of the Province of Prince Edward Island for the fiscal year ended March 31, Respectfully submitted, Hon. Wes Sheridan Provincial Treasurer Office of the Provincial Treasurer Charlottetown, Prince Edward Island

3 To the Honourable Wes Sheridan Provincial Treasurer Sir: I have the honour to submit herewith the Public Accounts of the Province of Prince Edward Island for the fiscal year ended March 31, Respectfully submitted, K. Scott Stevens, C.G.A. Comptroller Office of the Comptroller Charlottetown, Prince Edward Island

4 Province of Prince Edward Island Table of Contents Volume I Consolidated Financial Statements For the Fiscal Year Ended March 31, 2009 Introduction... 1 Page Number Financial Statement Discussion and Analysis Glossary of Terms... 3 Summary Financial Information... 4 Financial Highlights... Revenues... 5 Expenses by Ministry... 7 Expenses by Object... 9 Gross Domestic Product Distribution Consolidated Financial Statements Statement of Responsibility Auditor's Report Consolidated Statement of Financial Position Consolidated Statement of Operations Consolidated Statement of Change in Net Debt Consolidated Statement of Cash Flows Notes to the Consolidated Financial Statements Schedules to Consolidated Financial Statements Schedule 40 Reconciliation of Consolidated Surplus (Deficit) Schedule 41 Restatement of Budget Estimates... 50

5 CONSOLIDATED FINANCIAL STATEMENTS Introduction The consolidated financial statements of the Province of Prince Edward Island are presented through the publication of the Public Accounts, Volume I. These statements consolidate the financial statements of the Province s Operating Fund with the financial statements of Agencies, Boards and Crown Corporations owned or controlled by the Province of Prince Edward Island. The consolidated financial statements, and Operating Fund financial statements, are prepared on the accrual basis of accounting in accordance with Canadian generally accepted accounting principles for the public sector. Other significant accounting policies used by the Province are described in the Notes to Financial Statements. The statements are prepared by the Comptroller and are audited by the Auditor General, who presents an annual report to the Legislative Assembly on the results of his audit. The Public Accounts for the Year Ended March 31, 2009 consists of two volumes: Volume I Financial Statements presents the audited consolidated financial statements of the Provincial reporting entity as described in Note 1 to the financial statements. Volume II Operating Fund Financial Statements, Details of Revenues and Expenditures and Financial Statements of Agencies and Crown Corporations presents the audited financial statements of the Operating Fund, the unaudited details of revenues and expenditures of the Operating Fund and a reproduction of the available audited financial statements of the Agencies, Boards and Crown Corporations owned or controlled by the Province. The Public Accounts of the Province are tabled in the Legislative Assembly in accordance with Section 61 of the Financial Administration Act. Internet Address Volumes I and II of the Public Accounts are available in PDF format on the Province s website and they can be ordered through the website at:

6 CONSOLIDATED FINANCIAL STATEMENTS Financial Statement Discussion and Analysis Financial Highlights of the Consolidated Financial Statements These financial highlights are based on information from the Consolidated Financial Statements for 2009, as presented on pages of this publication. Glossary of Terms Accumulated Deficit: Annual Surplus/Deficit: Debt Charges: Financial Assets: Gross Domestic Product: Net Debt: Non-Financial Assets: Total Debt: Liabilities of the Province net of assets acquired by the Province. It represents the accumulated balance of annual surpluses and deficits arising from operations of the Province. The difference between the Province s revenue and expense. This measure shows the extent to which revenues raised in the year were sufficient to cover expenses in the year. Interest charges on debt is the amount required to service the Province s debt. Assets (such as cash, receivable and investments) which could provide resources to discharge existing liabilities or finance future operations. GDP is a measure of the value of the goods and services produced in the Province in a year. The Province s GDP is measured and reported by Statistics Canada. Liabilities of the Province net of financial assets. Assets (such as buildings, equipment and inventories) consumed in the delivery of government services. They do not normally provide resources to discharge existing liabilities. The amount owed by the Province. It includes outstanding debentures, pension obligations, accounts payable and other liabilities.

7 4 CONSOLIDATED FINANCIAL STATEMENTS Summary Financial Information The table below shows a summary of key financial measures for the Province over the past two years. PROVINCE OF PRINCE EDWARD ISLAND SUMMARY FINANCIAL INFORMATION (Millions) Statement of Financial Position Financial Assets $ $ Liabilities 2, ,079.9 Net Debt $ 1,408.6 $ 1,347.1 Net Tangible Capital Assets Other Non Financial Assets Total Non Financial Assets $ $ Accumulated Deficit $ $ Statement of Operations Revenue- Provincial Sources $ $ Revenue- Federal Sources Total Revenue $ 1,376.9 $ 1,303.0 Expenses $ 1,410.0 $ 1,306.6 Deficit $ 33.1 $ 3.6 Statement of Changes in Net Debt Opening Net Debt $ 1,347.1 $ 1,312.2 Deficit Increase (Decrease) in Tangible Capital Assets Increase (Decrease) in Non-Financial Assets Adjustments Total Change in Net Debt $ 61.5 $ 34.9 Ending Net Debt $ 1,408.6 $ 1,347.1

8 CONSOLIDATED FINANCIAL STATEMENTS Revenue Revenues of the Province for the past two years are shown in the table below. (Millions) Provincial Sources Taxes $ $ Fees & Services Other Total Provincial Sources $ $ Federal Sources Equalization Canada Health & Social Transfer Other Total Federal Sources $ $ Total Revenue $ 1,376.9 $ 1,303.0

9 6 CONSOLIDATED FINANCIAL STATEMENTS Total revenue for the Province in was $1,376.9 million, an increase of $73.9 million over the previous year. Explanation of the major variances are below. Taxes Taxes are up $19.1 million over the previous year, mainly due to: Real property taxes are up $15.6 million primarily due to the discontinuance of the Comprehensive Urban Service Agreement (CUSA) with municipalities. Provincial sales tax is up $7.0 million as a result of annual inflation and general growth in the provincial economy. Personal income taxes has increased by $5.8 million primarily due to employment and wage growth in the province. This is partially offset by multi-year income tax reductions that were announced in Increases were partially offset by a decrease in corporate income taxes of $10.2 million. Fees and Services Fees and Services are up by $9.0 million primarily due to the implementation of the Beverage Container Act, which generated $6.0 million in revenue. Government of Canada Government of Canada up $39.7 million mainly as a result of the following: Federal equalization increased by $27.7 million due to a change in the federal formula for equalization. As a result of strong growth in the fiscal capacities, there was an increase in payments during the year. The establishment of the Community Development Trust led to an increase of $4.6 million in federal funding.

10 CONSOLIDATED FINANCIAL STATEMENTS Expense by Ministry Expenses of the Province for the past two years are shown in the table below. (Millions) Expenses Program Expenses $ 1,263.4 $ 1,150.8 Interest Charges on Debt Amortization (Net of Capital Contributions) Total $ 1,410.0 $ 1,306.6 Total expenses for the Province in were $1,410.0 million, an increase of $103.4 million over the previous year. Explanations of the major variances are described below. Department of Agriculture Agriculture expenditures increased by $6.9 million during the year as a result of an increase in the indemnities that were paid to potato growers during the fiscal year. This was partially offset by a decrease in funding to the hog and beef industries.

11 8 CONSOLIDATED FINANCIAL STATEMENTS Department of Community, Cultural Affairs, & Labour Community, Cultural Affairs, & Labour expenditures increased by $20.1 million primarily as a result of the following: New equalization funding for municipalities to help offset the discontinuance of CUSA and provide for enhanced general municipal services, $15.5 million, Department of Community, Cultural Affairs & Labour appropriations given increased by $1.8 million, and Increase of $1.2 million in infrastructure grants. Department of Education and Early Childhood Development Education expenditures increased by $12.0 million as a result of the following: Increase in school board salaries of $8.4 million, Increase in the Department of Education salaries of $2.5 million, and Increase in Early Childhood appropriations of $1.1 million. Department of Environment, Energy, & Forestry Environment, Energy, and Forestry s expenditures increased by $5.1 million primarily as a result of the implementation of the Beverage Containers Management Program of $4.1 million. Department of Health Health s expenditures increased by $32.4 million mainly due to: Increases in salaries of $18.5 million that are attributable to the collective agreements, physician contracts, and new health initiatives, Increases in professional and contract services of $8.8 million are due to in-province physician services, out-of-province hospital referrals, CIS, and the Intergrated Health System, Increases in materials, supplies and services of $2.9 million are resulting from surgical supplies, utilities, infection control supplies, food costs, and Increases in grants of $1.2 million are resulting from subsidies to private nursing homes and ambulance services. Department of Social Services & Seniors Social Services & Seniors expenditures increased by $9.1 million mainly as a result of the following: Increase in Social Services appropriations of $3.5 million, and Increase in funding for the Provincial Drug program of $3.3 million.

12 CONSOLIDATED FINANCIAL STATEMENTS Department of Transportation & Public Works Transportation and Public Works expenditures increased by $5.0 million due to the following: Increase in bridge maintenance of $2.0 million, and Increase in salaries of $1.5 million. Interest Charges on Debt Interest Charges on Debt decreased by $10.5 million as a result of a reduction in short term & long term borrowing rates. Expense by Object Total expenses for the Province in were $1,410.0 million, an increase of $103.4 million over the previous year. Increases were mainly in Materials & Supplies $12.3 million, Professional & Contract Services $42.1 million, and Salaries $65.6 million. Increases in expenses were partially offset by a decrease in Debt-Interest Charges/Provisions &Other of $17.7 million.

13 10 CONSOLIDATED FINANCIAL STATEMENTS Gross Domestic Product Distribution Prince Edward Island ACCOMMODATION AND FOOD SERVICES - 3.4% ARTS, ENTERTAINMENT AND RECREATION - 1% PUBLIC ADM INISTRATION % OTHER SERVICES (EXCEPT PUBLIC ADM INISTRATION) - 2.7% AGRICULTURE, FORESTRY, FISHING & HUNTING - 7.8% UTILITIES - 1.4% CONSTRUCTION - 6% M ANUFACTURING - 8.6% HEALTH CARE AND SOCIAL ASSISTANCE - 9.6% WHOLESALE TRADE - 3.2% EDUCATION SERVICES - 6.9% ADM INISTRATIVE AND SUPPORT, WASTE M ANAGEM ENT AND REM EDIATION SERVICES - 2% PROFESSIONAL, SCIENTIFIC AND TECHNICAL SERVICES - 2.4% FINANCE, INSURANCE, REAL ESTATE AND RENTING AND LEASING AND M ANAGEM ENT % RETAIL TRADE - 7.2% TRANSPORTATION AND WAREHOUSING - 2.8% INFORM ATION AND CULTURAL INDUSTRIES - 3.4% This information was provided by the Department of Provincial Treasury from data provided by Statistics Canada.

14 CONSOLIDATED FINANCIAL STATEMENTS Government of the Province of Prince Edward Island Statement of Responsibility Responsibility for the integrity, objectivity and fair presentation of the consolidated financial statements of the Province of Prince Edward Island rests with the Government. The financial statements are prepared by the Comptroller in accordance with the stated accounting policies of the Government as described in Note 2 of the financial statements. These financial statements include a Consolidated Statement of Financial Position, a Consolidated Statement of Operations, a Consolidated Statement of Change in Net Debt, a Consolidated Statement of Cash Flows and notes and schedules integral to the statements. Together, they present fairly, in all material respects the Government's financial position at the fiscal year end and results of operations for the year ended March 31, More detailed information regarding the Government's financial position and operating results can be found in other sections of either Volume I or Volume II. The Government is responsible for maintaining a system of internal accounting and administrative controls in order to provide reasonable assurance that transactions are appropriately authorized, assets are safeguarded and financial records are properly maintained. On behalf of the Government Hon. Wes Sheridan Provincial Treasurer November 2009

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