That dollar amount isn't much in the scheme of things, not even a single drop in the bucket compared to the half-billion dollar-ish total public costs of the new convention centre deal just signed. To be honest, the misreported $170,000, and the missing $20,000 from a decade ago isn't even worth mentioning—by itself. But together with other inaccurate TCL financial reporting through the years, and a more recent financial management blunder on TCL's part that cost the city plenty, it raises an important question I'll get into in great detail in another post: When the new convention centre is built, what's going to happen to TCL's existing $40.7 million deficit?
For now, though, I just want to put the past mistakes, tiny as they are, out there.
Because TCL is a provincial crown corporation, it is required by law to submit its audited annual financial statements to the province's Public Accounts; those statements are then posted on the provincial website, here (the TCL financials are in volume 2 of each year's reports).
Normally, the audited numbers for one year's financial statement become the comparison number for the following year's "previous year" numbers. This only makes sense; the previous year's ending cash balance becomes the next year's beginning cash balance, and you want to place the budget line items one next to the other to identify any worrying trends or changes. You should be able to go through the entire corporate history, one year to the next, and get a complete picture of the flow of money into and out of the corporation.
I went through every audited TCL financial statement from 1996 through 2011. In all but one of those years, the statements are entirely consistent with the accounting principle that one year's figures become the next year's "previous year" figure. The one exception is for the fiscal year ending March 31, 2001, which is reported one way in the 2001 audited statements, and another way in the 2002 audited statements.
Pictured below are screenshots taken from the 2001 statement, followed by the same accounting found in the 2002 statement. You can find them yourselves on the internet: the 2001 statement is here, starting on page 561, and the 2002 statement can be found here, starting on page 518. Note that each year's statement was audited by the accounting firm KPMG. I've circled the discrepancies.
Revenues, expenses, income
(showing the missing $20,000)
You can find other inconsistencies at the full reports, but the above excerpts get at the heart of them. At this distant date, there's no way to tell for sure what happened, but it looks to me that about $190,000 was wiped off an account owing to TCL's newly acquired Exhibition Park operation, and somehow the books were fudged here and there in other places to cover that up. (Understand that TCL took over Exhibition Park in 2001.) That's just a guess on my part, however.
I showed TCL spokesperson Suzanne Fougere the above inconsistencies, and she ran them by TCL's chief financial officer Carrie Cussons. "The public accounts documents you provided were consistent with the audited financial statements we have on record for both 2001 and 2002," reports Fougere. "We are unable to verify why there was a change in the comparative information for 2001 or why this was not included in the note disclosure."
To be clear, Cussons didn't come on the job until 2008, and I didn't really expect anyone at TCL to have the institutional memory to explain an accounting error back in 2001. But TCL is confirming what three independent accountants I asked to look at the books told me—that there is in fact an inconsistency, and that the auditor, KPMG, should have included an accounting note (or several) to explain the inconsistencies.
Ultimately, the fault lies with KPMG, who signed off on the 2002 audited financial statement, even though it brought forward previous years numbers not found on the previous year's audited statement. I've looked at many thousands of budgets and financial reports in my career, and I've never before come across this particular error—not once.
Like I said, in the scheme of things, and in isolation, this is a tiny, tiny error (unless someone really did wipe away a $190,000 accounts receivable), and I'm sorry I've dwelt on it as long as I have. But this error is not in isolation. I'll explain further with my next post.