Thank you, Mr. Speaker.
I'm here today to present to you the audited financial statements for the House of Commons for the fiscal year ending March 31, 2020. These audited financial statements are prepared by the House administration and present only one of our financial reports that we bring to the board to help you in your role of oversight of House financial activities. They are a formal record of our House financial activities for the financial positions as they were as of March 31, 2020.
As part of the financial reporting cycle, you'll recall that last June I provided you with a year-end financial report for the fiscal year 2019-20. The purpose of the report was to present the detailed comparators between the spending and the spending authorities for 2019-20 with those of 2018-19.
Today we are looking at the 2019-20 audited financial statements. These audited financial statements are prepared using the accrual basis of accounting rather than the expenditure basis. This means that they reflect the effect of a transaction in an event in the period in which it occurs rather than in the period in which the appropriations are used. Some of the main differences you'll be noting as a result of this is that the net cost of operations include the services we've received without charge—that is, the cost of the buildings we occupy and the employer's share of the employee benefits. You will also note that the inclusion of a statement of financial positions includes inventory, capital assets and amortization, liabilities for employee benefits as well as the liabilities for vacation pay and compensatory leave.
The House of Commons financial statements were prepared in accordance with the Canadian public sector accounting standards. Also, as you'll hear in the next presentation, each year these financial statements are audited by an external independent auditor, currently KPMG.
This year, as for as long as we've had our financial statements audited, we've received an unqualified audit opinion. To me this is a testament to the efforts made by my team to ensure the systems and practices are in place to ensure reliable financial information is available for decision-making in all our financial reporting.
I would like to take a few minutes to talk about the highlights regarding financial statements.
The statement of financial position provides an overview of the House of Commons' asset and liability balances.
The assets, in the amount of $89 million on March 31, mainly consist of funding provided to the House to support its activities; receivables, which mainly consist of money to be collected from departments, agencies and other federal parliamentary institutions to which the House provides support; as well as capital assets, namely assets whose purchase price exceeds $10,000.
On March 31, 2020, the House's liability was $84 million. That mainly includes amounts payable to suppliers and employees' social benefits. The budget item that has changed the most is that of accounts payable and accrued liabilities. That increase is attributable to a longer period during which normal wages were incurred but unpaid, compared with the previous year. There is also the 2018-19 retroactive economic increase for employees, which was approved before March 31, but paid only the following year.
Let's now go to the statement of operations and the net financial position.
Our net operating costs have increased by about $10.5 million. Those costs fluctuate from year to year depending on various factors, such as different initiatives presented in the House of Commons administration's strategic plan 2019-22. As we mentioned in other reports, those initiatives include investments for computer and printing equipment renewal in constituency offices, additional resources for services for members as employers, and costs stemming from an election year.
I will not spend a lot of time explaining the different significant differences in the net operating costs, as they are the same as those we discussed in June, when we presented the financial report on the year-end results.
It should be noted that many of those differences are due to the fact that 2019-20 was an election year. That mainly led to an increase in wages and social benefits of the teams who supported the transition, as well as severance payments for members and their employees. There is also an increase under the budget item related to computer and office equipment owing to the computer equipment renewal done during an election. However, there is a decrease in travel costs, which come under the transportation and communications budget item.
Those financial statements will be published on the website today, following the meeting.
I will now yield the floor to the KPMG representatives, our auditor, so that they can present the result of their audit on those financial statements. I could answer questions after their presentation.
Andrew, I'll hand it over to you.