Annual Accountability Report

Minister's Message

Pursuant to the 2002 Speech from the Throne, it is my honor to present the Annual Accountability Report for the Consumer Protection Fund for Prepaid Funeral Services, fiscal year 2001-02.

The Department of Government Services and Lands administers more than 85 acts and our staff of 500 provides a wide range of services in various communities throughout the Province. Our purpose is to provide responsive, accessible services to protect public health and safety, ensure wise stewardship of the Province's land resource, safeguard consumer interests, and preserve vital event and commercial transaction records. This legislated mandate and the assigned tasks of the Department of Government Services and Lands are accomplished through three branches - Consumer and Commercial Affairs, Government Services, and Lands.

The purpose of this document is to promote a better understanding of purpose and activities of the consumer protection fund for prepaid funeral services, thereby contributing to Government's efforts to implement effective and up-to-date accountability measures throughout the public sector.

At this time I would like to acknowledge all those who contributed to this report and the diligent work and dedication of our staff.

George Sweeney
Minister

Consumer Protection Fund for Prepaid Funeral Services

The Consumer Protection Fund for Prepaid Funeral Services (the Assurance Fund) was established pursuant to section 5 of the Prepaid Funeral Services Act. The purpose of the Assurance Fund is to play claims arising out of a prepaid funeral contract against a funeral home licensed under the Act. The Assurance Fund consists of money paid into the fund by the funeral homes, any monies borrowed under the Act and the interest earned on monies in the fund.

The Act requires funeral homes that are licensed to sell prepaid funerals to pay into the Assurance Fund an amount of money based on the amount of prepaid funeral contracts. The Regulations specify the calculation for the assurance fund assessment as 1% of the cost of a prepaid funeral contract, the cost calculated as the total contract price reduced by fees and commissions and the cost of the purchase of a cemetery plot.

The Costs and expenses in administering the Assurance Fund are to be paid from the fund. Section 5(4) of the Act states that the Minister may establish a board to administer the Assurance Fund. This was not done as the Minister dedicated a staff person to its administration. The Assurance Fund is required to be audited annually and a report on the audit is to be submitted to the Minister not more than 90 days after the end of the year (see appendix).

The Assurance Fund bank account was established April 6, 2001. As of March 31, 2002, the account was in overdraft by $118,561 and the following transactions had occurred:

Source: Consumer Protection Fund for Prepaid Funeral Services

In accordance with the Regulations, one condition which may force the payment of claims from the Assurance Fund is the bankruptcy of a funeral home licensed to sell prepaid funerals. The $137,830 in payments for claims arising from prepaid funeral contracts resulted form the failure of a funeral home in Port aux Basques in November 2000. Since the Act did not come in to force until December 2000, amendments were made to protect those consumers.

Appendix A: Consumer Protection Fund for Prepaid Funeral Services Financial Statements, March 31, 2002

The appendix is only available in hard copy.