Background

16.1	We do not audit the financial statements of the Crown
	Corporations, Boards, Commissions and other Agencies listed
	below.
	
16.2	Agencies included in the Public Accounts:

	•	Board of Commissioners of Public Utilities
	•	Forest Protection Limited
	•	New Brunswick Geographic Information Corporation
	•	New Brunswick Investment Management Corporation
	•	New Brunswick Liquor Corporation
	•	New Brunswick Museum
	•	New Brunswick Power Corporation
	•	Strait Crossing Finance Inc.
	•	Workplace Health, Safety and Compensation Commission of
		New Brunswick
		
16.3	Other Agencies:

	•	Atlantic Lottery Corporation Inc.
	•	Provincial hospital corporations.
	
16.4	The Auditor General Act requires the auditors of these
	agencies to submit the agencies’ audited financial
	statements to our Office annually. The auditors must also
	provide copies of any reports and recommendations arising
	out of their audits.
	
Scope

16.5	We review the financial statements and other documents
	as they are received. We also visit the auditors periodically
	to review their working papers. We do this to determine
	whether we can continue to rely on their work in carrying
	out our audit of the financial statements of the Province.
	During the year we reviewed the 1998 working papers of the
	auditors of New Brunswick Power Corporation and the 1997
	working papers of the auditors of three hospital
	corporations.
	
New Brunswick Power Corporation

16.6	We were generally satisfied with the work done by the
	auditors of the Corporation for the year ended 31 March 1998.
	However, we did not agree with the auditors’ conclusion on
	the deferred asset of $450 million relating to the Point
	Lepreau nuclear generating station. This matter is discussed
	in chapter 2 of our Report where we explain our reservations
	on the Province’s financial statements.
	
16.7	The auditors issued a management letter to the
	Corporation at the conclusion of their audit. The auditors
	noted that a large number of issues raised in the previous
	year had been resolved to their satisfaction. However, they
	again stressed the importance of the security of core
	business systems and the need for the completion of a
	disaster recovery plan for critical operations.
	
16.8	A number of new matters were raised by the auditors in
	their 1998 management letter. One related to financial risk
	management in the Corporation. The auditors encouraged the
	Corporation to continue its current review of existing
	financial risk management strategies. This review should
	take into account the use of any new financial products,
	anticipated activity in transactions in foreign currencies
	and expectations around energy costs and debt management.
	The Corporation indicated that they had engaged consultants
	in this regard, and had created a new Financial Planning and
	Treasury department.
	
16.9	A second matter concerned the outcome of the discussion
	paper “Electricity in New Brunswick Beyond Year 2000”. The
	auditors recommended the Corporation develop a decision
	support system to ensure it has sufficient time to review
	and react to issues such as the carrying value of assets,
	which may be affected by fundamental changes in the electric
	utility industry in New Brunswick. The Corporation undertook
	to review the carrying value of their plant assets “when
	there is sufficient information about the future operating
	and regulatory environment to make such a review meaningful.”
	
Workplace Health, Safety and Compensation Commission of New
Brunswick

16.10	The auditors issued a management letter to the
	commission at the conclusion of their audit for the year
	ended 31 December 1997. A number of their recommendations
	dealt with computer controls in areas such as security
	standards, software change procedures, Year 2000 readiness
	and disaster recovery planning. Management agreed with the
	recommendations and noted the actions that had been taken or
	will be taken to address the issues raised.
	
Hospital Corporations

16.11	We have received copies of management letters issued to
	hospital corporations by five of the eight auditors. These
	letters arose out of their audits of the financial statements
	for the year ended 31 March 1998. The letters dealt with
	weaknesses in internal controls and included recommendations
	to improve accounting procedures. One auditor also raised
	concern regarding the hospital corporation’s working capital
	deficiency. The auditor pointed out that “cash and
	investment reserves have been exhausted and it is unlikely
	that the existing bank line of credit will prove adequate in
	the long term to enable the Corporation to discharge its
	liabilities as they come due.” We comment on the financial
	position of hospital corporations in chapter 2 of this
	Report. 
	
16.12	We were satisfied with the work done by the auditors of
	the three hospital corporations whose 1997 audit files we
	reviewed.