Montreal, Gatineau and Longueuil score low on fiscal accountability report card; Quebec City, Laval get top grades

C.D. Howe Institute research officer explains how they rate Canadian cities and why accounting transparency matters.

Montreal, Longueuil and Gatineau all failed in a fiscal accountability report while Quebec City beamed and Laval did admirably, according to the C.D. Howe Institute.

The policy and economic practice think tank reviewed 32 Canadian municipalities’ budgets at the beginning of the fiscal year and compared those with the audited financial statements at the end of the year to come up with a grade.

The report looks at budgets presented at the beginning of the year and the financial statements that report the actual results for year-end.

“They obviously are the cornerstones of the fiscal year for cities and it’s very important that they’re timely, [and] they’re comprehensive,” said C.D. Howe research officer Nicholas Dahir.

Quebec City, Ottawa, Vancouver and Richmond got the highest grades “standing out for clarity, completeness and promptness.”

“All these municipalities had timely budgets and financial statements. Their key numbers were up front, and they prominently presented PSAS-consistent [Public Sector Accounting Standards] numbers in their budgets,” the institute said.

Hamilton, Regina, Windsor and Gatineau, on the other hand, all got Fs for “multiple problems with transparency, reliability and timeliness.”

Montreal and Longueuil received D+ grades, while Laval scored a better B-.

“Laval’s documents were timely, and it compared its budget projections to previous years using PSAS-consistent numbers, but problems with its auditor and restated budget projections in its financial statements kept it from achieving a higher grade,” said the institute.

Montreal and Longueuil, along with Toronto, Halifax, Calgary and others, failed for a variety of reasons.

“Halifax, Longueuil Montreal, and Waterloo Region’s financial statements restated budget projections without reconciliations to their original budget numbers,” the report said.

Dahir said, for example, cities often release budgets months into a fiscal year, meaning money is being raised and spent without approval from stakeholders. In addition, he said the basic data of revenues, expenses and their difference to the bottom line should be clear and easy to access.

This is not always the case.

“Nobody should have to go through dozens of pages, with redundant material, spin, with numbers that omit important numbers,” he said.

The report looks at timing, location of key numbers, qualified audit opinions and other accounting practices.

Dahir said that citizens should demand that numbers come out in a timely fashion and be accessible.

“It all comes down to accountability,” he said. “The municipal government is overseen by councillors, we oversee the councillors, so it’s important that as Canadians, we insist that their councillors get their budgets before the start of the fiscal year, [and] give them plenty of time to consider it and approve it before January first. They should also insist that the accounting standards be the same in the budgets and in the financial statements, and that is not a large ask.”

He said a lot of people do not understand budgets, and clear documents are essential.

Here is how the five Quebec municipalities ranked in the past several years: