P.E.I.'s finance department working to fix problems identified in AG report, officials say

P.E.I.'s deputy finance minister and other senior staffers answered MLAs' questions Tuesday about an auditor general's report that was critical of their department.

Auditor General Darren Noonan's report, released in February, citedthegovernment'slack of aninternal auditing functionand high costs related to spending through so-called special warrants, among other issues.

The report also flagged $4.53 million in overpayments the provinceissued to 23municipalities last year, which those communitieswere then told they had to pay back in some cases after the money had already been spent.

Denise Lewis Fleming, the province's deputy finance minister, told a legislative standing committee on Tuesday that those overpayments were dueto human error.

When it came to government's use ofspecial warrants expenditures that fall outside the provincial budget that are authorized by cabinet without a vote in the legislative assembly the AG's report said there were 23 late special warrants issuedafter August 2023.

Those totalled about $143.8 million, the most the province has ever reported.

Green Party MLA Peter Bevan-Baker said Tuesday that the use ofthese warrants avoids oversight by the legislative assembly.

"It takes that trust and that level of transparency that Islanders have to have in their government away," he said. "And so we really should limit the use of special warrants to very particular circumstances."

Bevan-Baker said other provinces and the federal government limit special warrantsto urgent circumstances.

Fleming said there's been work done over the past year to help governmentdepartmentsdecrease their number of special warrants. She said there were a lot used during the COVID-19 pandemic andinto 2023, butthe number is trending lower this year.

"The number of special warrants may very well always be a little bit higher than what it was historically in the past," Fleming said.

"We now have more appropriation votes because we have more individual appropriation vote lines for Crown corporations, so when you add more in, you increase the likelihood that [the]budget is never going to be exactly right."

Department looking for auditing consultant

The committee heard that the finance departmentstill has no internal auditing function.

Judy Killam, the province's comptroller, saidinternal auditing is done on a day-to-day basis to ensure payments are accurate and complete. When an internal auditing function is established, it will be under her purview.

She said heroffice will be hiring aconsultant to examine how that could work.

Killam said theestablishment ofaninternal audit office isn'texpected until early inthe 2025-26 fiscal year.

'They can't pay that money back'

Fleming told the committee that the department has put measures in place to avoid errors like the overpayments to municipalities.

In the case of the $4.53-million overpayment, she saidafinance employee did not go back to the source documents to make sure the calculations were done correctly.

"When it's down to that final stage, a paper copy gets printed, and that's the copy that then a second set of eyes looks at separately now and verifies," said Fleming.

Liberal MLAHal Perry saidit's not right for municipalities to be given money for projects in waiting, then be asked to pay it back.

"Now they find themselves in the situation where they really can't pay that money back because of limited revenue coming into those municipalities."

The finance officials said some of the municipalities have alreadypaid back the money, while others are using payment arrangements.