Summary
Matters from the current audit
Disaster recovery program (DRP)—updating the estimated liability—see below
Findings and Recommendations
Matters from the current audit
Disaster recovery program (DRP)—updating the estimated liability
Background
The Department of Municipal Affairs administers and manages the funds and programs needed to recover from significant natural and other disasters. The department’s disaster recovery program provides funding for residents, small businesses, agricultural producers, municipalities and other government departments when events like overland flooding cause uninsurable damage and loss. The Alberta Emergency Management Agency is responsible for administering these programs. AEMA is part of the Department of Municipal Affairs.
When the Lieutenant Governor in Council declares a disaster, AEMA estimates the total expected cost for the emergency and the department’s financial services branch records the total expected expense and associated liability in the department’s financial statements.
Disasters can involve widespread damage as well as damage to significant infrastructure. The costs of disaster recovery may be eligible for cost sharing with the Government of Canada through Public Safety Canada’s Disaster Financial Assistance Arrangement. Five years or more can pass from the time of the disaster to the time the damage is repaired and the department submits expenses to the Government of Canada for reimbursement.
Provincial disaster recovery costs, and the revenue from the Government of Canada for disaster recovery, are often significant to the department’s finances and, occasionally, to the Government of Alberta’s finances. This is particularly true for the 2013 southern Alberta flood, which was significant to both the department and the Government of Alberta. The 2013 southern Alberta flood created a heavy demand on the government processes to deliver financial assistance and recovery funding. In 2014 the department estimated the total eligible DRP costs for the 2013 southern Alberta flood at $2.4 billion and recorded this as an expense in its financial statements. In 2015, using more current information, the department updated its estimate to $1.6 billion, a decrease of $756 million. As of March 31, 2015, the department had a liability of $699 million for claims it had not yet paid.
Before January 2014, the department relied on a contracted service provider for all engineering and claim assessment services related to municipalities, residents, small businesses and agriculture producers. The service provider estimated the extent of damage, assessed the claims and calculated the claim payout.