Auditor General of Newfoundland and Labrador, Denise Hanrahan, today delivered her  report on the province’s 2025 Financial Statement Audits to the House of Assembly, in accordance with the requirements of the Auditor General Act, 2021.

The report provides outlines observations and opportunities for improvement across the public sector, which were identified and communicated to government and its entities in 2025. The report also provides details on the financial health of the province, based on the information contained in the Public Accounts.

“The way the province manages its financial and operational responsibilities is critical to Newfoundlanders and Labradorians. My role is to examine how well government manages its responsibilities, and my team often identifies opportunities for improvement during their financial statement audit work,” commented Auditor General Hanrahan. “I encourage government to give careful consideration to the 132 recommendations in this report, especially those 57 that I am noting again, and to take the appropriate action.”

2025 marked the province’s 31st unqualified audit opinion on its financial statements, meaning the province’s Consolidated Summary Financial Statements were presented fairly, in all material respects. The full report can be found by visiting the link below and additional details can be found in the Backgrounder below.

“This year’s report also includes several focus areas, such as how the province recognized the recent national tobacco settlement and my observations about two land transactions, external legal services, and budget transfers. I encourage government to take the necessary steps to remedy these issues and ensure the best solutions are found,” added Auditor General Hanrahan.

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Media contact
Chrysta Collins
Office of the Auditor General
709-730-1568
chrystacollins@oag.nl.ca

Backgrounder – Executive Summary

Audit Results

Financial Audit Opinions and Observations

• The province’s Public Accounts are reliable, with its 31st consecutive clean audit opinion issued September 5, 2025.
• The Office of the Auditor General issued 52 clean audit opinions to government entities throughout 2025, covering 89 per cent of the province’s revenues and expenses.
• Our Office completed the compliance audit for the 50th General Assembly in 2025. The Management Commission is reviewing the recommendations made and will inform the House of Assembly of them in due course.

Select Focus Areas

• Tobacco Settlement: The province will receive $398.3 million, with $104.1 recorded in the 2024-25 Public Accounts. In our opinion, Budget 2025 understated the deficit by including the entire settlement.
• Land Transactions: We reviewed two land transactions this year. We recommend that government establish formal policies for land purchases and disposals which fall outside the Expropriation Act. We note that our Office has not been contacted regarding the commitment given in the House of Assembly on March 2025 to have the Snow’s Lane transaction reviewed.
• Legal Services: Government spent $9.4 million in external legal fees last year, with some used to seek legal advice about other public sector entities. Government should consider the best value for public money when engaging outside services.
• Budget Transfers: More than half of the budget transfers made within a department or across government departments happened in March 2025. We recommend government review year end transfers to ensure future appropriations voted in the House of Assembly are sufficient.
• Fraud Reporting: There were 490 incidents of fraud reported over the past year – 64 per cent related to attempted cheque fraud by recipients and 26 per cent related to fraud by clients who received income support payments under false pretenses. More work is needed to ensure clear and consistent action is taken when fraud is identified.
• Health Sector Bonuses: Efforts since 2023 have cost $57 million for physicians and $20 million since 2022 for nurses. Monitoring their effectiveness should continue to be a priority. The usage of agency nursing contracts has decreased to 208 as of September 2025, with government previously targeting 60 contracts by April 2026.

Opportunities for Improvement

• Our Office has provided government with 75 new opportunities for improvement this year. There are 57 recommendations outstanding from last year. In total, there were 132 management letter points addressed to those charged with governance, with government entities receiving the majority that require action.
• It is concerning that 43 per cent have been outstanding for more than one year, meaning that risks of fraud, loss or error may continue.
• Five entities received 74 per cent of the recommendations: Newfoundland and Labrador Health Services – 29; Memorial University – 29; Conseil scolaire francophone (French School Board) – 18; Newfoundland and Labrador Housing – 12; and Pippy Park Commission – 10.

Financial Health of the Province
Financial Position

• The province’s financial position is disclosed through six financial statements that are released as part of the Public Accounts annually.
• Revenues increased by 7.6 per cent to $10.4 billion for the year ended March 31, 2025, primarily due to more money coming in from offshore royalties and income taxes.
• Expenses increased by 5.7 per cent to $10.7 billion, mainly due to more money going out as grants and subsidies offset by savings in employee costs.
• Since revenues grew more than expenses last year, the deficit is lower at $296.6 million, but worse than expected when the budget was approved by the House of Assembly.

Key Financial Indicators and Risks

• The province’s key financial indicators show a mix of positive and negative trends with respect to the province’s flexibility to meet its obligations, sustainability to maintain its programs, and vulnerability to revenue sources outside its control.
• Liabilities of $34.4 billion are more than two times that of financial assets at $15.9 billion, with the resultant gap – net debt of $18.4 billion – continuing to grow because of annual deficits. This debt burden is worth over $33 thousand for each person residing in the province.
• Because the province continues to generally spend more than it brings in, the annual deficits continue to increase the debt burden on the province. The province is paying $890 million a year for interest on the debt the province holds – that’s $1,630 for every resident. The total debt expense the province paid in the year was $1.173 billion – $2,137 for every resident.
• The province faces a wide range of fiscal risks and opportunities, as illustrated in its economic outlook documents.

Our Office encourages discussion and education on the financial health of the province, noting that no single indicator or piece of information can provide the full picture. The public is encouraged to review the six consolidated financial statements and their notes, the provincial budget and economy documents, the discussion and analysis report within Public Accounts as well as this report and the other audit reports released by our Office when assessing the financial health of the province.