Writeoffs For 2003-04 And 2002-03

The Nova Scotia government has cleared its books of uncollectible debts for the last two fiscal years. Each year the government writes off amounts owed by companies or individuals as a result of bankruptcies, unpaid fines or uncollected fees and taxes.

"Writeoffs are an unavoidable cost of doing business," said Finance Minister Peter Christie today, Feb. 12. "In some cases, these debts have been on the books for a decade or more, and removing them now is just a formality."

For 2003-04, $9.3 million was written off because of business closures. This was primarily due to the write-down of the 1997 Orenda Recip investment. Another $2.8 million was written off because of foreclosures, deaths, settlements and unpaid fines.

For 2002-03, $20.2 million was written off as a result of transactions, made from 1992 to 1999, that ended in bankruptcy, receivership, or negotiated settlement. Another $9.3 million in advances to long-term care facilities in 1996 has been forgiven. The government agreed to forgive these advances as the facilities were chronically underfunded for several years. Another $2.5 million was attributable to unpaid fines, fees and taxes.

Like any collection agency, government departments try to recover the money owed to them, but sometimes the cost of trying to recover a debt is more than the liability is worth. In other cases, even though an amount may be written off from an accounting perspective, government will continue its efforts to collect, particularly in the case of unpaid fines.

Writeoffs are expensed and audited in previous years, but are formally recognized in subsequent fiscal years.