Tobacco settlement boosted Manitoba’s budget: AG

The settlement from Big Tobacco boosted Manitoba’s bottom line by hundreds of millions of dollars in the 2024-25 fiscal year, according to the auditor general’s latest audit of the province’s public accounts and financial statements.

The province received an initial upfront payment of $290 million in August, minus legal fees, as part of a court-approved $32.5-billion settlement reached in March. Manitoba is set to receive up to $1.119 billion over the next 20 years, funded through tobacco company profits.

“It’s a big chunk of money… and the other thing, why this was highlighted, is that the court decision to award this amount wasn’t finalized until March 2025, and the province’s year-end is March 31, so up until that point, they couldn’t recognize that award settlement of revenue,” Auditor General Tyson Shtykalo said Wednesday.

He noted the precise amount the province will receive overall depends on revenue earned by the tobacco companies.

“So it would be inappropriate to recognize the full amount as revenue. They need to make a reasonable estimate.”

Manitoba joined other provinces in a lawsuit against Big Tobacco in 2012 — Imperial Tobacco Canada Ltd., Rothmans, Benson & Hedges Inc., and JTI-Macdonald Corp., along with their foreign parent companies — as they sought to recover health-care costs linked to tobacco-related illnesses.

Premier Wab Kinew has said the settlement will be used to support a new $1-billion CancerCare site.

Meanwhile, for the first time since 2017, the auditor general issued an unqualified opinion on Manitoba’s summary financial statements.

An unqualified, or clean, opinion means auditors found sufficient evidence to confirm the statements fairly reflect the province’s finances and comply with accounting standards. A qualified opinion indicates areas where evidence was insufficient or where potential errors were identified.

“This clean opinion reflects improvements in Manitoba’s financial reporting processes,” Shtykalo said of the 2024-25 financial statement audit work. “It means the public accounts fairly present the province’s financial position and activities for the year, in accordance with Canadian Public Sector Accounting Standards.”

While the report notes progress, it also says control deficiencies persist, resulting in accounting errors that must be corrected during the audit process.

“Addressing these issues is essential to improving the timeliness and reliability of financial reporting,” Shtykalo said.

He emphasized the need for continued improvement, pointing to upcoming challenges such as enterprise resource planning system modernization and the adoption of new accounting standards.

“The province has made meaningful progress, but sustained effort is needed to strengthen internal controls, reduce errors, and prepare for major system and standards changes,” he said.

scott.billeck@freepress.mb.ca