Province Of Nova Scotia 18-K Annual report (foreign governments)

Exhibit 2

Office of the Auditor General

1888 Brunswick Street, Suite #302, Halifax, Nova Scotia 83J 3J8 • Telephone 902 424-5907 • Fax 902 424-4350 • www.gov.ns.ca/audg

AUDITOR’S REPORT

To the Members of the Legislative
   Assembly of Nova Scotia

I have audited the consolidated statement of financial position of the Province of Nova Scotia as at March 31, 2008 and the consolidated statements of operations and accumulated deficits, change in net direct debt and cash flow for the year then ended. These statements are the responsibility of the Government of Nova Scotia, represented by the Minister of Finance. My responsibility is to express an opinion on these financial statements based on my audit.

I conducted my audit in accordance with Canadian generally accepted auditing standards. Those standards require that I plan and perform an audit to obtain reasonable assurance whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation.

In my opinion, these financial statements present fairly, in all material respects, the financial position of the Province of Nova Scotia as at March 31, 2008 and the results of its operations, changes in net direct debt and cash flows for the year then ended in accordance with Canadian generally accepted accounting principles for the public sector.

Jacques R. Lapointe, CA•CIA
Auditor General

Halifax, Nova Scotia
June 30, 2008 (except as to Note 13 which is as of July 13, 2008)

1

Consolidated Financial Statements

Statement 1

Consolidated Statement of Financial Position
As at March 31, 2008
($ thousands)

				2007
	2008			(as restated)
Financial Assets
Cash and Short-term Investments (Note 3)		609,998			873,090
Accounts Receivable and Advances		1,136,998			821,509
Inventories for Resale		4,461			3,957
Loans Receivable (Schedule 3)		1,138,779			1,107,683
Investments (Schedule 3)		44,363			43,840
Investment in Government Business Enterprises (Schedule 6)		26,826			15,615
		2,961,425			2,865,694
Liabilities
Bank Advances and Short-term Borrowings		1,090,870			790,909
Accounts Payable and Accrued Liabilities		1,531,015			1,315,433
Deferred Revenue (Note 4)		1,054,282			1,145,281
Accrued Interest		188,610			200,559
Unmatured Debt of Governmental Units (Schedule 4)		9,292,334			10,107,186
Unamortized Foreign Exchange Translation Gains, Premiums and Discounts		202,114			118,860
Federal Equalization Repayable Loan (Note 6)		96,258			108,290
Pension, Retirement and Other Obligations (Note 7)		1,620,705			1,436,381
		15,076,188			15,222,899
Net Direct Debt		(12,114,763	)		(12,357,205	)
Non-Financial Assets
Tangible Capital Assets (Schedule 7)		3,850,387			3,688,117
Inventories of Supplies		51,898			46,694
Prepaid Expenses		25,645			16,632
		3,927,930			3,751,443
Accumulated Deficits		(8,186,833	)		(8,605,762	)
Trust Funds under Administration (Note 8)		8,357,597			8,722,808
Accounting Changes (Note 2)
Contingencies and Contractual Obligations (Note 12)
Subsequent Events (Note 13)
Comparative Figures (Note 14)

The accompanying notes and schedules are an integral part of these Financial Statements

2

Public Accounts Volume 1 — Financial Statements

Statement 2

Consolidated Statement of Operations and Accumulated Deficits
For the fiscal year ending March 31, 2008
($ thousands)

	Estimate			Actual			Actual
	2008			2008			2007
Revenue (Schedule 1)
Provincial Sources		4,753,364			4,886,676			4,529,586
Federal Sources		2,907,883			3,035,703			2,598,883
Prior Years’ Adjustments — Federal/Provincial Fiscal Arrangements		—			98,056			19,657
Other Revenue		528,673			775,114			682,711
Sinking Fund and Public Debt Retirement Fund Earnings		113,529			112,834			121,591
Total Revenue		8,303,449			8,908,383			7,952,428
Expenses (Schedule 2)
Agriculture		62,990			75,971			54,552
Community Services		1,007,761			892,272			836,008
Economic Development		96,497			83,049			—
Education		1,535,986			1,586,129			1,510,086
Assistance to Universities		258,920			422,589			268,710
Energy		22,795			44,828			19,808
Environment and Labour		93,642			114,565			82,393
Finance		29,699			47,894			39,441
Fisheries and Aquaculture		6,950			6,934			—
Health		3,147,411			3,248,225			3,054,867
Health Promotion and Protection		46,041			48,230			49,477
Justice		234,562			235,881			214,604
Natural Resources		82,022			94,866			74,654
Public Service		142,979			179,474			222,418
Service Nova Scotia and Municipal Relations		229,506			237,921			195,862
Tourism Culture and Heritage		57,394			59,466			56,275
Transportation and Infrastructure Renewal		329,547			364,642			296,011
Restructuring Costs		121,421			33,643			95,539
Pension Valuation Adjustment		68,603			107,504			83,137
Loss (Gain) on Disposal of Crown Assets		—			(4,169	)		(1,963	)
Debt Servicing Costs (Note 10)		954,338			953,698			958,744
Total Expenses (Note 9)		8,529,064			8,833,612			8,110,623
Surplus (Deficit) from Governmental Units		(225,615	)		74,771			(158,195	)
Net Income from Government Business Enterprises (Schedule 6)		344,044			344,158			340,641
Provincial Surplus		118,429			418,929			182,446
Accumulated Deficits, Beginning of Year					(8,605,762	)		(8,788,208	)
Accumulated Deficits, End of Year					(8,186,833	)		(8,605,762	)

The accompanying notes and schedules are an integral part of these Financial Statements

3

Consolidated Financial Statements

Statement 3

Consolidated Statement of Change in Net Direct Debt
For the fiscal year ended March 31, 2008
($ thousands)

	Estimate			Actual			Actual
	2008			2008			2007
Net Direct Debt, Beginning of Year		(12,357,205	)		(12,357,205	)		(12,239,170	)
Changes in the Year*
Provincial Surplus		118,429			418,929			182,446
Acquisition of Tangible Capital Assets		(270,882	)		(437,103	)		(548,239	)
Amortization of Tangible Capital Assets		176,917			267,360			241,874
Disposals and Adjustments to Tangible Capital Assets		—			7,473			5,566
(Increase) Decrease in Inventories of Supplies		—			(5,204	)		866
(Increase) Decrease in Prepaid Expenses		—			(9,013	)		(548	)
Total Changes in the Year		24,464			242,442			(118,035	)
Net Direct Debt — End of Year		(12,332,741	)		(12,114,763	)		(12,357,205	)

* Except for the Provincial Surplus figure, the estimates for items shown as Changes in the Year reflect the activity of the Consolidated Fund only.

The accompanying notes and schedules are an integral part of these Financial Statements

4

Public Accounts Volume 1 — Financial Statements

Statement 4

Consolidated Statement of Cash Flow
For the fiscal year ended March 31, 2008
($ thousands)

	2008			2007
Cash Inflow (Outflow) from the following activities:
Operating:
Provincial Surplus		418,929			182,446
Sinking Fund and Public Debt Retirement Fund Earnings		(112,834	)		(121,591	)
Foreign Exchange Amortization		2,039			2,130
Amortization of Tangible Capital Assets		267,360			241,874
Net Income from Government Business Enterprises		(344,158	)		(340,641	)
Profit Distributions from Government Business Enterprises		332,947			329,958
Net Change in Other Items (Note 11)		266,709			141,938
		830,992			436,114
Investing:
Repayment of Loans		225,273			182,908
Advances and Investing		(256,892	)		(209,832	)
		(31,619	)		(26,924	)
Capital:
Acquisition of Tangible Capital Assets		(437,103	)		(548,239	)
Proceeds from Disposal of Tangible Capital Assets		2,973			4,189
Loss on Disposal of Tangible Capital Assets		4,499			1,377
		(429,631	)		(542,673	)
Financing:
Debentures Issued		156,580			1,474,021
Repayment of Federal Equalization Repayable Loan		(12,032	)		(12,032	)
Foreign Currency Swaps and Adjustments		(12,131	)		(8,204	)
Sinking Fund Installments		(55,912	)		(63,246	)
Proceeds from Sinking Funds for Debt Repayment		—			360,000
Repayment of Debentures and Other Long-term Obligations		(709,339	)		(1,135,827	)
		(632,834	)		614,712
Cash (Outflows) Inflows		(263,092	)		481,229
Cash Position, Beginning of Year		873,090			391,861
Cash Position, End of Year		609,998			873,090
Cash Position Represented by:
Cash and Short-Term Investments		609,998			873,090

The accompanying notes and schedules are an integral part of these Financial Statements

5

Schedules to the Consolidated Financial Statements

Schedule 1

Revenue
For the fiscal year ended March 31, 2008
($ thousands)

	2008		2007
Provincial Sources
Income Taxes		2,167,869		2,071,580
Sales Taxes		1,484,380		1,494,873
Petroleum Royalties		399,679		269,100
Other Provincial Revenue		834,748		694,033
		4,886,676		4,529,586
Federal Sources
Equalization Payments		1,464,528		1,385,539
Canada Health and Social Transfers		919,366		874,781
Crown Share		234,400		—
Other Federal Payments		417,409		338,563
		3,035,703		2,598,883
Prior Years Adjustments — Federal/Provincial Fiscal Arrangements
Provincial Sources		85,779		12,935
Federal Sources		12,277		6,722
		98,056		19,657
Other Revenue		775,114		682,711
Sinking Fund and Public Debt Retirement Fund Earnings		112,834		121,591
Total Revenue		8,908,383		7,952,428

6

Public Accounts Volume 1 — Financial Statements

Schedule 2

Expenses
For the fiscal year ended March 31, 2008
($ thousands)

	2008		2007
Agriculture
Department of Agriculture		75,971		54,552
Community Services
Department of Community Services		782,262		738,856
Nova Scotia Housing Development Corporation		110,010		97,152
		892,272		836,008
Economic Development
Department of Economic Development		83,049		—
Education
Department of Education		312,087		300,706
Annapolis Valley Regional School Board		120,772		114,739
Cape Breton Victoria Regional School Board		144,995		140,113
Chignecto-Central Regional School Board		182,108		174,312
Conseil Scolaire Acadien Provincial		45,583		40,694
Halifax Regional School Board		393,331		378,182
Nova Scotia Community College		169,137		157,157
P3 Schools Capital and Technology Refresh Fund		17		—
South Shore Regional School Board		72,698		65,642
Strait Regional School Board		81,232		78,756
Tri County Regional School Board		64,169		59,785
		1,586,129		1,510,086
Assistance to Universities		422,589		268,710
Energy
Department of Energy		34,982		17,004
Conserve Nova Scotia		8,809		—
Nova Scotia Gas Market Development Initiative Fund		907		2,804
Pengrowth Nova Scotia Energy Scholarship Fund		130		—
		44,828		19,808
Environment and Labour
Department of Environment and Labour		71,876		40,865
Resource Recovery Fund Board Incorporated		42,689		41,528
		114,565		82,393

7

Schedules to the Consolidated Financial Statements

Schedule 2

Expenses (continued)
For the fiscal year ended March 31, 2008
($ thousands)

	2008		2007
Finance
Department of Finance		28,230		19,591
Nova Scotia Government Fund Limited		506		85
Nova Scotia Pension Agency		19,036		19,653
Sydney Steel Corporation		31		229
3052155 Nova Scotia Limited		91		(117	)
		47,894		39,441
Fisheries and Aquaculture
Department of Fisheries and Aquaculture		6,934		—
Health
Department of Health		1,354,679		1,274,487
Annapolis Valley District Health Authority		106,738		100,410
Cape Breton District Health Authority		227,031		211,274
Capital District Health Authority		690,786		647,609
Colchester East Hants Health Authority		63,604		60,327
Cumberland Health Authority		52,953		49,332
Guysborough Antigonish-Strait Health Authority		66,993		60,862
Insured Prescription Drug Plan		171,498		166,959
Izaak Walton Killam Health Centre		214,044		200,258
Nova Scotia Gaming Foundation		389		354
Nova Scotia Health Research Foundation		7,496		4,829
Pictou County Health Authority		65,026		60,624
Provincial Drug Distribution Program		74,971		75,031
South Shore District Health Authority		64,856		60,650
South West Nova District Health Authority		87,161		81,861
		3,248,225		3,054,867
Health Promotion and Protection
Department of Health Promotion and Protection		48,230		49,477
Justice
Department of Justice		214,755		195,653
Nova Scotia Legal Aid Commission		21,126		18,951
		235,881		214,604
Natural Resources
Department of Natural Resources		86,889		67,675
Acadia Coal Company Limited Fund		1		2
Coal Research Agreement Fund		150		—
Crown Land Silviculture Fund		2,248		2,080
Habitat Conservation Fund		114		147
Nova Scotia E 911 Cost Recovery Fund		4,645		3,961
Off Highway Vehicle Infrastructure Fund		749		240
Species at Risk Conservation Fund		70		—
Sustainable Forestry Fund		—		549
		94,866		74,654

8

Public Accounts Volume 1 — Financial Statements

Schedule 2

Expenses (continued)
For the fiscal year ended March 31, 2008
($ thousands)

	2008			2007
Public Service
Public Service		106,684			160,028
Nova Scotia Business Incorporated		27,736			22,690
NS Film Development Corporation		3,807			3,884
NS Innovation Corporation		7,038			5,874
Nova Scotia Nominee Program		12,578			8,932
Interest only for Nova Scotia Nominee Program		47			1,872
Trade Centre Limited		16,377			15,940
Waterfront Development Corporation Ltd.		5,207			3,198
		179,474			222,418
Service Nova Scotia and Municipal Relations
Department of Service Nova Scotia and Municipal Relations		237,497			195,162
Nova Scotia Municipal Finance Corporation		424			700
		237,921			195,862
Tourism, Culture and Heritage
Department of Tourism, Culture and Heritage		55,425			52,647
Art Gallery of Nova Scotia		4,041			3,628
		59,466			56,275
Transportation and Infrastructure Renewal
Department of Transportation and Public Works		363,947			296,011
Harbourside Commercial Park Inc.		160			—
Nova Scotia Lands Inc.		535			—
		364,642			296,011
Restructuring Costs		33,643			95,539
Pension Valuation Adjustment		107,504			83,137
Loss (Gain) on Disposal of Crown Assets		(4,169	)		(1,963	)

9

Schedules to the Consolidated Financial Statements

Schedule 2

Expenses (continued)
For the fiscal year ended March 31, 2008
($ thousands)

	2008		2007
Debt Servicing Costs
Consolidated Fund		905,448		913,359
Annapolis Valley District Health Authority		327		322
Annapolis Valley Regional School Board		412		163
Cape Breton District Health Authority		981		1,138
Cape Breton Victoria Regional School Board		297		325
Capital District Health Authority		6,956		5,366
Chignecto-Central Regional School Board		694		1,043
Colchester East Hants Health Authority		208		205
Conseil Scolaire Acadien Provincial		85		43
Cumberland Health Authority		183		140
Guysborough Antigonish-Strait Health Authority		270		282
Halifax Regional School Board		1,419		1,538
Izaak Walton Killam Health Centre		792		685
Nova Scotia Community College		1,082		—
Nova Scotia Government Fund Limited		244		395
Nova Scotia Housing Development Corporation		31,699		31,160
Nova Scotia Innovation Corporation		66		—
Nova Scotia Legal Aid Commission		146		133
Nova Scotia Municipal Finance Corporation		910		963
Pictou County Health Authority		242		229
South Shore District Health Authority		255		255
South Shore Regional School Board		78		70
South West Nova District Health Authority		346		360
Strait Regional School Board		236		269
Tri-County Regional School Board		76		64
Waterfront Development Corporation Limited		246		237
		953,698		958,744
Total Expenses		8,833,612		8,110,623

10

Public Accounts Volume 1 — Financial Statements

Schedule 3

Loans and Investments
As at March 31, 2008
($ thousands)

	Loans and				Net		Net
	Investments		Provisions		2008		2007
Loans of the Consolidated Fund:
Agriculture and Rural Credit Act		187,213		17,775		169,438		181,918
Fisheries Development Act		89,165		197		88,968		83,468
Housing Development Act		82,551		24,152		58,399		41,069
Industrial Development Act		106,963		76,543		30,420		32,808
Venture Corporations Act		809		809		—		—
Loans to Municipalities Municipal Loan and Building Fund Act		300		—		300		375
Halifax-Dartmouth Bridge Commission		—		—		—		12,000
Miscellaneous		709		—		709		709
Nova Scotia Market Development Initiative Fund		5,600		—		5,600		5,600
		473,310		119,476		353,834		357,947
Loans of Governmental Units:
Nova Scotia Business Incorporated		129,137		36,573		92,564		99,052
Nova Scotia Government Fund		—		—		—		8,062
Nova Scotia Innovation Corporation		224		—		224		264
Nova Scotia Municipal Finance Corporation		690,169		—		690,169		642,234
Resource Recovery Fund Board		1,114		—		1,114		121
Waterfront Development Corporation		874		—		874		3
		821,518		36,573		784,945		749,736
Total Loans		1,294,828		156,049		1,138,779		1,107,683
Investments of the Consolidated Fund:
Housing Development Act		2,038		105		1,933		2,009
Industrial Development Act		7,409		—		7,409		7,493
		9,447		105		9,342		9,502
Investments of Governmental Units:
Art Gallery of Nova Scotia		1,921		—		1,921		1,803
Nova Scotia Business Incorporated		27,710		12,339		15,371		13,218
Nova Scotia Innovation Corporation		16,729		—		16,729		17,266
Resource Recovery Fund Board		1,000		—		1,000		2,051
		47,360		12,339		35,021		34,338
Total Investments		56,807		12,444		44,363		43,840
Total Loans and Investments		1,351,635		168,493		1,183,142		1,151,523

Notes:

The Provisions listed above include amounts for possible guarantee payouts related to the Industrial Development Act $10,200 (2007 — $5,800), the Housing Development Corporation Act $15,066 (2007 — $14,929), and Nova Scotia Business Incorporated $2,894 (2007 — $760).

Also included in Provisions for the Housing Development Corporation Act is $3,200 (2006 — $3,200) for interest fluctuations.

11

Schedules to the Consolidated Financial Statements

Schedule 4

Unmatured Debt
As at March 31, 2008
($ thousands)

			Sinking
			Funds and		Net		Net
	Gross		Defeasance		Debt		Debt
	Debt		Assets		2008		2007
Governmental Units
Consolidated Fund		11,030,038		2,011,863		9,018,175		9,806,745
Nova Scotia Government Fund Limited		—		—		—		10,050
Nova Scotia Housing Development Corporation		263,662		—		263,662		273,128
Nova Scotia Municipal Finance Corporation		7,799		—		7,799		12,008
Nova Scotia Power Finance Corporation		1,008,370		1,008,370		—		—
Waterfront Development Corporation Limited		930		—		930		2,885
Other		1,768		—		1,768		2,370
Unmatured Debt of Governmental Units		12,312,567		3,020,233		9,292,334		10,107,186
Government Business Enterprises
Halifax-Dartmouth Bridge Commission		60,000		—		60,000		61,760
Highway 104 Western Alignment Corporation		73,874		—		73,874		78,600
Nova Scotia Gaming Corporation		19,037		—		19,037		35,132
Nova Scotia Liquor Corporation		4,465		—		4,465		5,313
Unmatured Debt of Government Business Enterprises		157,376		—		157,376		180,805
Total Unmatured Debt		12,469,943		3,020,233		9,449,710		10,287,991

Notes:

All debt is presented in Canadian dollar equivalents and after giving effect to currency swap contracts itemized in Note 5.

The current and long-term portions of unmatured debt of Governmental Units are shown on the Consolidated Statement of Financial Position with reference to this schedule. Debt of Government Business Enterprises is reflected in the Deficiency in Government Business Enterprises and in further detail in Schedule 6.

All foreign debt is hedged to Canadian dollars. A one cent change in the CDN/US$ foreign exchange rate as of March 31, 2008 would result in no change in long-term debt, and no foreign exchange gain or loss.

Sinking fund assets, with a net book value of US$208.0 million, continue to be denominated in US dollars. As of March 31, 2008, a one cent change in the CDN/US$ foreign exchange rate would result in a $2.1 million foreign exchange gain or loss.

As of March 31, 2008, the Consolidated Fund held Sinking Funds and Public Debt Retirement Funds of $2,011.9 million. These funds were comprised of $1,793.9 million in Canadian assets and $218.0 million in US assets (US $212.0 million converted to CDN$ based on the underlying securities’ effective foreign exchange rates). Total market value of both funds is $2,166.2 million at year-end. During the year, contributions were $55.9 million, total earnings were $112.8 million and there were no redemptions.

12

Public Accounts Volume 1 — Financial Statements

Schedule 4

Unmatured Debt (continued)
As at March 31, 2008
($ thousands)

Notes:

Sinking fund assets are recorded at cost, which includes premiums and discounts associated with the purchase of these investments. These premiums and discounts are amortized on a straight-line basis over the term of the related investment. The unamortized portion of the premiums and discounts is included as part of the value of the sinking funds. As at March 31, 2008, the unamortized net premium was $58.6 million.

Assets consist primarily of debentures of the provinces and Government of Canada with fixed interest rates ranging from 4.3% to 10% for Canadian funds and 4.45% to 9.50% for US funds. For designated sinking funds, payments normally commence on the first anniversary date of the issue of the debenture and are designed to retire the debt over the term of the issue. At year-end, the province held $1,177.7 million carrying value worth of its own debentures (par value of $1,064.8 million) in Sinking Funds and Public Debt Retirement Funds as active investments. These were comprised of $505.7 million in Canadian assets and $672.0 million in US assets.

As per the Nova Scotia Power Corporation Privatization Agreement, Nova Scotia Power Finance Corporation provides for defeasance of its debt. The portfolio of defeasance assets consists of Nova Scotia Power Corporation, other provincial governments and utilities, federal US bonds, coupons or residuals. This debt is shown net of defeasance assets on the Statement of Financial Position.

Projected Payments
($ thousands)

	Governmental Units						Government
	Net Principal		Sinking Fund		Total		Business
	Repayments		Requirements		Payments		Enterprises		Total
2009		310,375		61,546		371,921		15,677		387,598
2010		698,244		61,546		759,790		9,127		768,917
2011		689,432		61,546		750,978		6,432		757,410
2012		1,617,575		61,546		1,679,121		6,155		1,685,276
2013		94,989		61,546		156,535		5,287		161,822
2014 & thereafter		5,152,086		421,903		5,573,989		114,698		5,688,687
		8,562,701		729,633		9,292,334		157,376		9,449,710

Net principal repayments are comprised of the principal amount due less available designated sinking funds to retire the debenture.

In addition, the province has approximately $874.4 million in unrestricted sinking funds that can be used towards the retirement of any unmatured debt. The use of these funds is evaluated each year based on a detailed analysis of cash requirements and market conditions.

13

Schedules to the Consolidated Financial Statements

Schedule 5

Gross Long-Term Debt
As at March 31, 2008
($ thousands)

	Foreign
	Exchange		CDN $		Maturity
	Rate		Amount		Dates		Interest Rates
Governmental Units:
			Debentures
Consolidated Fund
Consolidated Fund (CDN$)				10,653,379		2008 to 2038	4.45% to 15.998%
Consolidated Fund (US$)		1.0279		—		2012 to 2022	5.125% to 9.5%
Consolidated Fund (UK)		2.0407		—		2011 to 2019	11.75% to 16.75%
Consolidated Fund (Euro)		1.6244		—		2010		4.475	%
Nova Scotia Municipal Finance Corporation				7,799		2008 to 2017	1.0% to 5.5%
Nova Scotia Power Finance Corporation
Nova Scotia Power Finance Corporation (CDN$)				700,000		2012 to 2031	10.25% to 11.875%
Nova Scotia Power Finance Corporation (US$300,000)		1.0279		308,370		2021		9.4	%
Total — Debentures				11,669,548
			Loans
Consolidated Fund — Other Debt				1,500		2010 to 2013	4.06% to 8.375%
Nova Scotia Housing Development Corporation				263,662		2008 to 2034	4.0% to 21.5%
Waterfront Development Corporation				930	Demand Loan		bank prime less 1.125%
Total — Loans				266,092
			Capital Leases
Consolidated Fund				375,159		2008 to 2027	4.25% to 11%
Other				1,768		2010 to 2011	5.0% to 8.0%
Total — Capital Leases				376,927
Total — Long-term Debt of Governmental Units				12,312,567

14

Public Accounts Volume 1 — Financial Statements

Schedule 5

Gross Long-Term Debt (continued)
As at March 31, 2008
($ thousands)

	CDN $		Maturity
	Amount		Dates		Interest Rates
Government Business Enterprises:
	Debentures
Highway 104 Western Alignment Corporation		73,874		2026		10.13	%
	Loans
Halifax-Dartmouth Bridge Commission		60,000		2019		5.13	%
Nova Scotia Gaming Corporation		12,179		2013	variable
	Capital Leases
Nova Scotia Gaming Corporation		6,858		2009		12	%
Nova Scotia Liquor Corporation		4,465		2012		13.8	%
Total Long-term Debt of Government Business Enterprises		157,376
Total Gross Long-term Debt		12,469,943

Call, Redemption and Other Features:
Consolidated Fund

Canadian debentures include the following redeemable issues:

-$1,079.4 million in CPP debentures, which are redeemable in whole or in part before maturity, on six months notice, at the option of the Minister of Finance of Canada;

-$35 million in medium-term promissory notes, redeemable in whole but not in part, on the initial redemption date and on each redemption date thereafter, on 15 days notice, at the option of the province.

The interest rates shown for the Canadian and US debentures reflect the fixed rates only. There are debentures that have floating and step-up rates. Floating interest rates are adjusted on either a monthly or quarterly basis. Step-up rates are adjusted per the individual promissory note step-up schedules.

Housing Development Corporation

Mortgages and notes payable are secured by investments in social housing.

Highway 104 Western Alignment Corporation

The Corporation has provided an assignment of all the present and future property and assets, including rights to operate the facility, and a security interest in the Debt Service Reserve Account and the Major Maintenance Reserve Account.

15

Schedules to the Consolidated Financial Statements

Schedule 6

Government Business Enterprises
As at March 31, 2008
($ thousands)

	2008										2007
	Halifax —		Highway 104
	Dartmouth		Western		Nova Scotia		Nova Scotia
	Bridge		Alignment		Gaming		Liquor
	Commission		Corporation		Corporation		Corporation		Total		Total
Cash		7,835		609		10,508		8,281		27,233		33,456
Accounts Receivable		520		816		—		3,359		4,695		2,584
Inventory		—		8		1,490		35,547		37,045		38,504
Tangible Capital Assets		69,927		97,703		91,204		42,522		301,356		295,464
Other Assets		4,682		33,996		2,046		1,006		41,730		86,181
Total Assets		82,964		133,132		105,248		90,715		412,059		456,189
Accounts Payable		3,135		1,471		2,810		68,081		75,497		79,197
Long-term Debt		60,000		73,874		19,037		4,465		157,376		225,424
Other Liabilities		6,419		44,371		83,401		18,169		152,360		135,953
Total Liabilities		69,554		119,716		105,248		90,715		385,233		440,574
Equity		13,410		13,416		—		—		26,826		15,615
Total Liabilities and Equity		82,964		133,132		105,248		90,715		412,059		456,189
Revenue		27,037		21,515		436,045		536,182		1,020,779		1,017,550
Expenses		12,731		8,551		300,802		335,916		658,000		656,551
Debt Servicing		7,801		8,180		1,045		1,595		18,621		20,358
Total Expenses		20,532		16,731		301,847		337,511		676,621		676,909
Net Income		6,505		4,784		134,198		198,671		344,158		340,641

Notes:

The year-end for Halifax-Dartmouth Bridge Commission is December 31. The year-end of the other three corporations is March 31.

16

Public Accounts Volume 1 — Financial Statements

Schedule 6

Government Business Enterprises (continued)
As at March 31, 2008

Halifax-Dartmouth Bridge Commission

The Commission is incorporated by Special Statute of the Province of Nova Scotia. The purpose of the Commission is to construct, maintain and operate bridges and their necessary approaches across the Halifax Harbour, between the communities of Halifax and Dartmouth, and across the North West Arm. Bridge tolls are regulated by the Nova Scotia Utility and Review Board, a provincially controlled public sector entity. The Commission records amortization on bridge structures, buildings, some bridge components, and electronic transponders using the straight-line method and uses the declining balance method for all other assets. The Commission’s fiscal year end is December 31. During the year the Toll Revenue Bonds Series 1, in the amount of $94.4 million and the Line of Credit with the province in the amount of $12.0 million, matured and were repaid in full. On July 25, 2007 the Commission entered into a long term loan agreement with the province for $60.0 million with a final maturity date of December 4, 2019. The loan is held as an investment of the province’s Canadian sinking fund. This agreement requires that two reserve funds, the OM Fund and Debt Service Fund, be maintained.

Highway 104 Western Alignment Corporation

The Corporation has been established to finance, design, construct, operate and maintain a 45 kilometre stretch of highway between Masstown and Thompson Station in the counties of Colchester and Cumberland, Nova Scotia. The Province of Nova Scotia retains ownership of the highway. The Corporation is granted the right to operate the highway and collect tolls for a 30-year period, pursuant to an agreement dated April 1, 1996, after which time the right will revert to the province. In addition, the Corporation has entered into an operating agreement with Atlantic Highways Management Corporation whereby compensation is based on the annual operating budget plus a variable fee. The Corporation’s fiscal year end is March 31. The Corporation records amortization using the sinking fund method. Restricted assets, consisting of short-term investments in the amount of $33.6 million (2007 — $32.4 million), are included in other assets. These reserve accounts were established in accordance with trust indenture agreements between the Corporation and bondholders.

The Province of Nova Scotia contributed $55.0 million toward the construction of the highway, one-half of which was recovered from the federal government under the Canada-Nova Scotia Strategic Highway Improvement Program. There were no contributions in the current or previous year.

Nova Scotia Gaming Corporation

The Corporation was incorporated on February 15, 1995 by Chapter 4 of the Acts of 1994-95, the Gaming Control Act. The purpose of the Corporation is to develop, undertake, conduct and manage casinos and other lottery business on behalf of the province. The Corporation’s fiscal year end is March 31.

The revenues of the Corporation are derived from two casinos, located in Halifax and Sydney, and ticket and video lottery sales. The net balance owing to the province at March 31, 2008 was $66.4 million (2007 — $53.9 million).

The Corporation is required to reimburse the operator of the casinos for approved development costs of the Halifax and Sydney casinos. The net present value of the remaining obligations for the casinos is approximately $6.9 million (2007 — $22.6 million).

Unclaimed prizes are retained by the Corporation in a prize fund for one year from the announced beginning date of the draw. At March 31, 2008, this amounted to $2.7 million (2007 — $1.8 million). Restricted cash in the amount of $2.7 million (2007 — $1.8 million) is included in cash.

17

Schedules to the Consolidated Financial Statements

Schedule 6

Government Business Enterprises (continued)
As at March 31, 2008

Video Lottery Terminal (VLT) retailers in Nova Scotia have agreed, under the terms of their agreements with Atlantic Lottery Corporation Inc., to contribute 1 per cent of their VLT commission to the Nova Scotia Gaming Foundation. The Corporation has agreed to contribute an amount equal to all contributions made by the VLT retailers.

In July 2006, as part of its Gaming Strategy, government approved a contribution of $3.0 million to Nova Scotia Health Promotion and Protection in 2008 (2007 — $3.0 million) to fund problem gambling treatment. In July 2007, government approved a contribution of $1.0 million in 2008 to support the harness racing industry in Nova Scotia. The 2009 budget includes $1.0 million to support the harness racing industry in Nova Scotia.

Nova Scotia Liquor Corporation

The Corporation derives its mandate from the Liquor Control Act, Chapter 260 of the Revised Statutes of Nova Scotia, 1989. The Corporation operates retail sales locations across the province. Its fiscal year end is March 31. The net balance owing to the province at March 31, 2008 was $31.7 million (2007 — $38.2 million).

18

Public Accounts Volume 1 — Financial Statements

Schedule 7

Tangible Capital Assets
As at March 31, 2008
($ thousands)

	2008																		2007
				Buildings			Machinery						Roads,
				and Land			Computers			Vehicles			Bridges
				Improve-			and			and			and
	Land			ments			Equipment			Ferries			Highways			Total			Total
Costs
Opening Costs		588,120			3,412,903			983,008			103,744			994,903			6,082,678			5,553,485
Additions		17,513			171,729			88,686			15,209			143,966			437,103			548,239
Disposals		(2	)		(7,508	)		(20,424	)		(3,106	)		(1,543	)		(32,583	)		(19,046	)
Closing Costs		605,631			3,577,124			1,051,270			115,847			1,137,326			6,487,198			6,082,678
Accumulated Amortization
Opening Accumulated Amortization		—			(1,257,661	)		(689,305	)		(64,476	)		(383,119	)		(2,394,561	)		(2,166,167	)
Disposals		—			5,846			16,033			2,609			622			25,110			13,480
Amortization Expense		—			(108,838	)		(72,809	)		(9,268	)		(76,445	)		(267,360	)		(241,874	)
Closing Accumulated Amortization		—			(1,360,653	)		(746,081	)		(71,135	)		(458,942	)		(2,636,811	)		(2,394,561	)
Net Book Value		605,631			2,216,471			305,189			44,712			678,384			3,850,387			3,688,117
Opening Balance		588,120			2,155,242			293,703			39,268			611,784			3,688,117			3,387,318
Closing Balance		605,631			2,216,471			305,189			44,712			678,384			3,850,387			3,688,117
Increase (Decrease) in Net Book Value		17,511			61,229			11,486			5,444			66,600			162,270			300,799

19

Schedules to the Consolidated Financial Statements

Schedule 7

Notes to Schedule 7
($ thousands)

Amortization is calculated on a declining balance basis for assets of the Consolidated Fund. The amortization percentages of the more common tangible capital assets are: buildings and land improvements (5 per cent); machinery, computers and equipment (15-50 per cent); vehicles and ferries (15-35 per cent); and roads, bridges and highways (5-15 per cent). Capital leases are amortized on a straight-line basis over the length of each lease (3-25 years).

Amortization is generally calculated on a straight-line basis for assets of other governmental units. The estimated useful lives of the more common tangible capital assets are: buildings (including leasehold improvements) and land improvements (3-50 years); machinery, computers and equipment (3-50 years); and vehicles and ferries (3-7 years). Capital leases are amortized on a straight-line basis (generally 3-20 years).

Social Housing assets are included in Buildings and Land Improvements and relate to the Housing Development Corporation. These assets are amortized using the straight-line method. The net book value of these assets is $320,688 (2007 — $325,030).

Included in the closing costs totals of the various classes as of March 31, 2008, are costs for assets under construction, which have not yet been amortized. These costs are buildings and land improvements- $97,201; machinery, computers and equipment — $35,001; vehicles and ferries — $10,539; and roads, bridges and highways — $38,075.

Capital leases are included in the various categories as follows: buildings and land improvements — cost $470,522, accumulated amortization ($190,659); machinery, computers and equipment — cost $39,784, accumulated amortization ($32,503); and vehicles and ferries — cost $17,955, accumulated amortization ($7,938).

20

Public Accounts Volume 1 – Financial Statements

Schedule 8

Direct Guarantees
As at March 31, 2008
($ thousands)

	Authorized		Utilized			Utilized
	2008		2008			2007
Bank Loans:
Nova Scotia Business Incorporated		5,008		5,008			4,004
Industrial Development Act		91,061		77,152			83,706
Nova Scotia Fisheries and Aquaculture Loan Board		100		100			100
Department of Education — Student Loan Program		157,004		157,004			157,928
Total — Bank Loan Guarantees		253,173		239,264			245,738
Promissory Notes:
3052155 NS Limited to Canada-Nova Scotia Offshore Petroleum Board		2,500		2,500			2,500
Total — Promissory Note Guarantees		2,500		2,500			2,500
Mortgages:
Housing Development Corporation Act		11,096		11,096			11,725
Housing Development Corporation Act - CMHC Indemnities		126,248		126,248			137,217
Provincial Finance Act		127		127			240
Total — Mortgage Guarantees		137,471		137,471			149,182
Other Guarantees:
Aliant Telecom MASH Sector		116		116			424
Equity Tax Credit Act — Community Economic Development Investment Funds		1,365		1,365			1,931
Nova Scotia Government Fund		—		—			9,840
Total — Other Guarantees		1,481		1,481			12,195
Total — Direct Guarantees		394,625		380,716			409,615
Less Provision for Guarantee Payout:
Industrial Development Act				(10,200	)		(5,800	)
Nova Scotia Business Incorporated				(2,894	)		(760	)
Department of Education — Student Loan Program				(32,248	)		(32,839	)
Housing Development Corporation Act				(15,066	)		(14,929	)
3052155 Nova Scotia Limited				(500	)		(500	)
				(60,908	)		(54,828	)
Less Provision for Student Debt Reduction Program:
Department of Education — Student Loan Program				(15,771	)		(15,085	)
Net Direct Guarantees not provided for in these statements				304,037			339,702

21

Schedules to the Consolidated Financial Statements

Schedule 9

Segment Reporting
As at March 31, 2008

For 2007-08, the province prepared this new schedule to comply with the requirements of a new section of the Public Sector Accounting Handbook, PS2700 Segment Reporting. Segment reporting is designed to assist users to identify the resources allocated to support the major activities of government and to better understand the performance of segments.

The following schedules provide segment information for the 2007-08 and 2006-07 fiscal years. The province has determined that the following segments represent the major activities for the government.

Health — The provision of such services and institutions to the public that will lead to a higher state of personal health.

Education — The provision of all aspects and phases of training to equip people with necessary skills to pursue productive lives.

Infrastructure & Public Works — The provision of the means to facilitate the effective and efficient movement of persons and property. This includes the net results of the Halifax-Dartmouth Bridge Commission and the Highway 104 Western Alignment Corporation.

Social Services — The provision of services and assistance to economically and/or socially disadvantaged persons requiring aid.

Natural Resources & Economic Development — The provision for the maintenance and upkeep, efficient extraction and processing of the natural attributes of the province with the aim of creating employment and contributing to the material well-being of residents.

Other — The provision of all other essential services which are necessary for the efficient and effective operation of government. This also includes items which assure a benefit to the whole of government and cannot be identified with any other function.

Unallocated — Revenues and expenses that cannot be directly allocated on a reasonable basis to individual segments because they support a wide range of service delivery activities or relate to general administration activities that are not identified as a separate segment. This includes items like tax revenues, income from government business enterprises and pension valuation adjustment.

22

Public Accounts Volume 1 — Financial Statements

Schedule 9

Segment Reporting
For the fiscal year ended March 31, 2008
($ thousands)

							Infrastructure						Natural
							and Public			Social			Resources Economic
	Health			Education			Works			Services			Development			Other			Unallocated			Eliminations			Total
Revenue
Provincial Sources		52,303			11,817			11,289			23,902			50,580			215,799			4,678,027			(114,055	)		4,929,562
Federal Sources		56,229			73,006			30,526			66,463			7,490			64,808			2,784,701			—			3,083,223
Other Revenue		309,423			336,416			10,200			70,946			137,889			225,535			54,232			(17,719	)		1,126,922
Sinking Fund Earnings		—			—			—			—			—			—			112,844			—			112,834
Total Revenue		417,855			421,239			52,015			161,311			195,959			506,142			7,629,794			(131,774	)		9,252,541
Expenses
Giants, and Subsidies		1,153,704			585,774			5,964			675,195			200,887			229,862			—			(29,832	)		2,821,554
Salaries and Employee Benefits		1,392,835			981/455			121,175			107,231			139,953			354,855			—			(68,567	)		2,928,937
Opearting Goods and Services		768,071			321,531			130,399			118,007			124,833			110,581			—			(5,818	)		1,567,604
Professional Services		65,851			12,184			14,660			5,462			13,569			125,255			—			—			236,981
Amortization		80,337			60,136			96,031			13,932			4,938			11,986			—			—			267,360
Debt Servicing Costs		—			—			—			—			—			—			978,047			(24,349	)		953,698
Other		—			44,320			—			—			20,351			184			(4,169	)		(3,208	)		57,478
Total Expenses		3,360,789			2,005,400			368,229			919,827			504,531			832,723			973,878			(131,774	)		8,833,612
Segment Results		(2,942,943	)		(1,584.161	)		(316,214	)		(758.516	)		(308,572	)		(326,581	)		6,655,916			—			4l8,929

23

Schedules to the Consolidated Financial Statements

Schedule 9

Segment Reporting
for the fiscal year ended March 31,2007
($ thousands)

													Natural
							Infrastructure						Resources
							and Public			Social			Economic
	Health			Education			Works			Services			Development			Other			Unallocated			Eliminations			Total
Revenue
Provincial Sources		25,070			6,554			10,683			20,335			42,850			18,912			4,275,204			(78,745	)		4,320,863
Federal Sources		64,762			62,964			17,613			57,323			6,293			233,341			2,363,915						2,811,211
Other Revenue		245,077			325,457			10,885			64,947			141,454			222,506			49,341			(21,265	)		1,039,404
Sinking Fund Earnings		—			—			—			—			—			—			121,591			—			121,591
Total Revenue		335,909			394,975			39,181			142,605			190,597			479,761			6,810,051			(100,010	)		8,293,069
Expenses
Grants and Subsidies		1,087,068			422,143			347			649,339			93,961			188,703						(27,155	)		2,414,426
Salaries and Employee Benefits		1,210,312			963,681			110,422			90,974			128,656			303,182			—			(38,889	)		2,768,338
Operating Goods and Services		737,303			299702			103,176			99,972			121,784			83,190			—			(10,155	)		1,434,972
Professional Services		53,638			12,321			12,141			6,731			12,532			140,548			—			(98	)		237,813
Amortization		82,537			55,220			79,542			12,925			4,978			6,672			—			—			241,874
Debt Servicing Costs		—			—			—			—			—			—			980,241			(21,497	)		958,744
Other		313			39,854			—			—			16,596			1,875			(1,966	)		(2,216	)		54,456
Total Expenses		3,171,171			1,792,941			305,628			859,941			378,507			724,170			978,275			(100,010	)		8,110,623
Segment Results		(2,835,262	)		(1,397,966	)		(266,447	)		(717,116	)		(187,910	)		(244,409	)		5,831,776			—			182,446

24

Public Accounts Volume 1 – Financial Statements

Schedule 10

Government Reporting Entity
As at March 31, 2008

Listed below are the governmental units, government business enterprises and government partnership arrangements that comprise the government reporting entity.

Governmental Units
(Consolidation Method)
Acadia Coal Company Limited Fund	Nova Scotia E911 Cost Recovery Fund
AgraPoint International Inc.	Nova Scotia Environmental Trust
AgriTECH Park Inc.	Nova Scotia Farm Loan Board
Annapolis Valley District Health Authority	Nova Scotia Film Development Corporation
Annapolis Valley Regional School Board	Nova Scotia Fisheries and Aquaculture Loan Board
	Nova Scotia Gaming Foundation
Art Gallery of Nova Scotia	Nova Scotia Government Acadian Bursary Program Fund
Bioscience Enterprise Centre Incorporated	Nova Scotia Government Fund Limited
	Nova Scotia Harness Racing Incorporated
Cape Breton District Health Authority	Nova Scotia Health Research Foundation
Cape Breton Victoria Regional School Board	Nova Scotia Housing Development Corporation
Capital District Health Authority	Annapolis Valley Housing Authority
Check Inns Limited (inactive)	Cape Breton Island Housing Authority
Chignecto-Central Regional School Board	Cobequid Housing Authority
Coal Research Agreement Fund	Eastern Mainland Housing Authority
Colchester East Hants Health Authority	Metropolitan Regional Housing Authority
Conserve Nova Scotia	South Shore Housing Authority
Conseil Scolaire Acadien Provincial	Tri-County Housing Authority
CorFor Capital Repairs & Replacements Fund	Nova Scotia Innovation Corporation
Consolidated Fund (1)	1402998 Nova Scotia Limited
Crown Land Mine Remediation Fund	3039255 Nova Scotia Limited
Crown Land Silvaculture Fund	3087532 Nova Scotia Limited
Cumberland Health Authority	Nova Scotia Lands Inc.
Democracy 250	Nova Scotia Legal Aid Commission
Gaming Addiction Treatment Trust Fund
Guysborough Antigonish-Strait Health Authority	Nova Scotia Market Development Initiative Fund
Habitat Conservation Fund	Nova Scotia Municipal Finance Corporation
	Nova Scotia Nominee Program Fund
Halifax Regional School Board	Nova Scotia Pension Agency
Harbourside Commercial Park Inc.	Nova Scotia Power Finance Corporation
Industrial Expansion Fund	Nova Scotia Primary Forest Products Marketing Board
Izaak Walton Killam Health Centre	Nova Scotia School Boards Association (2)
Law Reform Commission	Nova Scotia School Insurance Exchange (3)
	Nova Scotia School Insurance Program Association (3)
Mainstream 1992 Fund	Nova Scotia Sportfish Habitat Fund
Muggah Creek Remediation Fund	Nova Scotia Strategic Opportunities Fund Incorporated
Nova Scotia Arts Council (inactive)	Nova Scotia Utility and Review Board
	Off-Highway Vehicle Infrastructure Fund
Nova Scotia Blueberry Institute Fund
Nova Scotia Business Incorporated	P3 Schools Capital & Technology Refresh Fund (4)
Nova Scotia Community College
Nova Scotia Community College Foundation
Nova Scotia Coordinate Referencing System Trust Fund
Nova Scotia Crop and Livestock Insurance Commission

(1)	— Includes all departments and public service units of the Nova Scotia Provincial Government
(2)	— Entity is a partnership controlled by the eight school boards.
(3)	— Entity is a partnership controlled by the eight school boards and the Community College
(4)	— This includes all refresh funds related to P3 schools.

25

Schedules to the Consolidated Financial Statements

Schedule 10

Government Reporting Entity (continued)
As at March 31, 2008

Governmental Units (continued)	Government Business Enterprises
(Consolidation Method)	(Modified Equity Method)
Pengrowth Nova Scotia Energy Scholarship	Halifax-Dartmouth Bridge Commission
Pictou County Health Authority	Highway 104 Western Alignment Corporation
Provincial Drug Distribution Program	Nova Scotia Gaming Corporation
Public Archives of Nova Scotia	Atlantic Lottery Corporation (25% ownership)
	Interprovincial Lottery Corporation (10% ownership)
Public Debt Management Fund	Nova Scotia Liquor Corporation
Resource Recovery Fund Board Incorporated
Rockingham Terminal Incorporated (inactive)	Government Partnership Arrangements
Scotia Benefit Fund	(Proportionate Consolidation Method)
Scotia Learning Technology Refresh Fund
Sherbrooke Restoration Commission	Atlantic Provinces Special Education Authority
South Shore District Health Authority	(approximately 55% share)
South Shore Regional School Board	Canada-Nova Scotia Offshore Petroleum Board (50% share)
South West Nova District Health Authority	Canadian Sports Centre Atlantic (approximately 8% share)
Species-at-risk Conservation Fund	Council of Atlantic Premiers (approximately 45% share)
Strait Regional School Board
Sustainable Forestry Fund
Sydney Environmental Resources Limited
Sydney Steel Corporation
Sydney Tar Ponds Agency
Sydney Utilities Limited
Sysco Decommissioning Fund
Trade Centre Limited
Maritime Fall Fair Association
Tri-County Regional School Board
Upper Clements Family Theme Park Limited
Waterfront Development Corporation Limited
3052155 Nova Scotia Limited
3104102 Nova Scotia Limited

26

Public Accounts Volume 1 – Financial Statements

Province of Nova Scotia
Notes to the Consolidated Financial Statements
As at March 31, 2008

1. Financial Reporting and Accounting Policies

These financial statements are prepared in accordance with Canadian generally accepted accounting principles for the public sector, that for purposes of the province’s financial statements are represented by accounting recommendations of the Public Sector Accounting Board (PSAB) of the Canadian Institute of Chartered Accountants (CICA), supplemented where appropriate by other CICA and International Federation of Accountants accounting standards or pronouncements.

These consolidated financial statements have been prepared using the following significant accounting policies:

a)	The Government Reporting Entity
	The Government Reporting Entity is comprised of the Consolidated Fund, other Governmental Units, Government Business Enterprises and Government Partnership Arrangements. Governmental Units and Government Business Enterprises represent the entities that are controlled by the government. Control is defined as the power to govern the financial and operating policies of another organization with expected benefits or the risk of loss to the government from the other organization’s activities. Control exists regardless of whether the government chooses not to exercise its power to govern so long as it has the ability to govern. Control must exist at the financial statement date, without the need to amend legislation or agreements. Government Partnership Arrangements represent entities for which decision making and significant risks and benefits are shared with other parties outside of the Government Reporting Entity.
	Trusts administered by the province are excluded from the reporting entity and are disclosed separately on the Statement of Financial Position for information purposes only.
b)	Principles of Consolidation
	A Governmental Unit is a government organization that is not a Government Business Enterprise. Governmental Units include government departments, public service units, funds, agencies, service organizations, boards, government not-for-profit organizations and government business-type organizations. The accounts of Governmental Units are consolidated on a line-by-line basis after adjusting the accounting policies to be consistent with those described in Note 1 (c), with the exception of Tangible Capital Assets. Significant inter-organization accounts and transactions are eliminated.
	A Government Business Enterprise is a self-sustaining organization that has the financial and operating authority to sell goods and services to individuals and non-government organizations as its principal activity and source of revenue. Government Business Enterprises have been accounted for on the modified equity basis which does not require any accounting policy adjustments. The total net equity of all Government Business Enterprises is included in the Statement of Financial Position. The total net income is shown as a separate item in the Statement of Operations.

27

Notes to the Consolidated Financial Statements

Province of Nova Scotia
Notes to the Consolidated Financial Statements
As at March 31, 2008

	A Government Partnership is a contractual arrangement between the government and a party or parties outside the reporting entity. The partners have significant clearly defined common goals, make a financial investment in the partnership, share control of decision making, and share, on an equitable basis, the significant risks and benefits associated with the operations of the government partnership. Where significant, the government’s interest in partnerships is accounted for on the proportionate consolidation method.
	A complete listing of the organizations within the Government Reporting Entity is provided in Schedule 9.
	Financial results from fiscal year end to March 31, 2008, for Government Business Enterprises whose fiscal year ends are not March 31, were not significant to these consolidated financial statements so they have not been adjusted.
c)	Significant Accounting Policies
	Revenues
	Revenues are recorded on the accrual basis. The main components of revenue are interest, various taxes and legislated levies. Revenues from Personal and Corporate Income Taxes, as well as Harmonized Sales Taxes are accrued in the year earned based upon estimates using statistical models. These revenues are recorded at the net amount estimated, after considering adjustments for tax credits and administrative costs related to the collection and processing performed by the federal government.
	Government transfers are recognized as revenue in the period during which the transfer is authorized and any eligibility criteria are met. Transfers are recorded as deferred revenue if they are restricted for a stated purpose, such as a specific program or the purchase of tangible capital assets.
	Expenses
	Expenses are recorded on the accrual basis and are reported in more detail in Note 9 — Expenses By Object. Grants are recognized in the period during which the grant is authorized and any eligibility criteria are met. Provisions are made for probable losses on certain loans, investments, loan guarantees, accounts receivable, advances, forgivable loans and for contingent liabilities when it is likely that a liability exists and the amount can be reasonably determined. These provisions are updated as estimates are revised, at least annually.
	Financial Assets
	Cash and Short-term Investments are recorded at cost, which approximates market value. Investments are R-1 (low, mid, high) rated federal and provincial government bills or promissory notes, bankers’ acceptances, term deposits and commercial paper. Terms of investments are generally 1 to 90 days. The average interest rate is 2.54 per cent at year-end.
	Accounts Receivable and Advances are recorded at the principal amount less valuation allowances.
	Inventories for Resale are held for sale in the ordinary course of operations and are recorded at the lower of cost and net realizable value.
	Loans are recorded at cost less adjustments for concessionary assistance and any prolonged impairment in value. Concessionary assistance consists of subsidies provided by the province and is recognized as an expense at the date of issuance of the loan. Any loan write offs must be approved by the Governor-in-Council. Loans usually bear interest at approximate market rates and normally have fixed repayment schedules.

28

Public Accounts Volume 1 – Financial Statements

Province of Nova Scotia
Notes to the Consolidated Financial Statements
As at March 31, 2008

Investments are recorded at cost less adjustments for concessionary assistance and any prolonged impairment in value. Concessionary assistance consists of subsidies provided by the province and is recognized as an expense at the date of issuance of the investment. Any write-down of an investment to reflect a loss in value is not reversed if there is a subsequent increase in value.

Liabilities

Bank Advances and Short-term Borrowings have initial maturities of one year or less and are recorded at cost that approximates market value. Short-term Borrowings had a weighted average interest rate of 3.28 per cent at year-end on Canadian dollar borrowings.

Unmatured Debt consists of debentures and various loans in Canadian and foreign currencies and capital leases. Debt is recorded at par, net of sinking funds (including public debt management funds).

Hedge accounting is used when financial instruments form a hedging relationship, the relationship is highly effective and it is considered to be consistent with the province’s financial risk management goals.

Sinking Fund and Public Debt Retirement Fund investments are recorded at cost and consist primarily of debentures of the Province of Nova Scotia, other provincial governments and the Government of Canada. Premiums and discounts on sinking funds are deferred and amortized over the life of the investment. Amortization and realized gains and losses for premiums and discounts relating to sinking fund balances and installments are netted against sinking fund earnings.

Unamortized Foreign Exchange Translation Gains and Losses result when debentures payable in foreign currencies, and sinking funds invested in foreign currencies are translated into Canadian dollars at the rate of exchange in effect at March 31 and upon entering into derivative contracts. Foreign exchange gains and losses on the translation of foreign currency are amortized on a straight-line basis over the remaining term of the related monetary issue.

Premiums and discounts, as well as underwriting commissions relating to the issuance of debentures, are deferred and amortized over the term of the related debt. Amortization and realized foreign exchange gains and losses, premiums and discounts relating to debt balances, serial retirements, sinking fund balances and installments are charged to debt servicing costs except as noted above.

Pension, Retirement and Other Obligations include various employee future benefit plans. Pension liabilities for defined benefit plans are calculated using the projected benefit actuarial method using accounting assumptions that reflect the province’s best estimates of performance over the long-term. The projected benefit actuarial method attributes the estimated cost of retirement benefits to the periods of employee service. The net pension liability represents accrued pension benefits less the market related value of pension assets (if applicable) and the balance of unamortized experience gains and losses. The market related values are determined in a rational and systematic manner so as to recognize asset market value gains and losses over a five-year period. The pension benefit plan for the majority of health sector employees is offered by a multi-employer plan administrator and is not sponsored by the province. Employer contributions to this plan are expensed in the period paid. The accrued benefit asset (liability) of this plan is not recognized in these financial statements.

29

Notes to the Consolidated Financial Statements

Province of Nova Scotia
Notes to the Consolidated Financial Statements
As at March 31, 2008

	Net Direct Debt
	Net Direct Debt represents the direct liabilities of the province less financial assets and unamortized foreign exchange translation gains and losses and premiums and discounts on outstanding debenture issues.
	Non-Financial Assets
	Tangible Capital Assets have useful lives extending beyond the accounting period, are held for use in the production and supply of goods and services and are not intended for sale in the ordinary course of operations. Tangible capital assets are recorded at gross historical cost (or estimated cost when the actual cost is unknown) and include all costs directly attributable to the acquisition, construction, development and installation of the tangible capital asset, except interest. Tangible Capital Assets include land, buildings, major equipment and software, vehicles, ferries, roads, highways, and bridges. Tangible capital assets do not include intangibles or assets acquired by right, such as forests, water and mineral resources or works of art and historical treasures. Tangible capital assets are amortized to expense over the useful lives of the assets. The amortization methods and rates selected by entities other than the Consolidated Fund are not adjusted to the methods and rates used by the Consolidated Fund.
	Inventories of Supplies are held for consumption or use by the province in the course of its operations. All entities record inventory at the lower of cost and net realizable value.
	Prepaid Expenses are cash disbursements for goods or services, other than Tangible Capital Assets and Inventories of Supplies, of which some or all will provide economic benefits in one or more future periods. The prepaid amount is recognized as an expense in the year the good or service is used or consumed.
	Accumulated Deficits
	Accumulated Deficits represent the direct liabilities of the province less financial assets, non-financial assets and unamortized foreign exchange translation gains and losses and premiums and discounts on outstanding debenture issues. This represents the accumulated balance of net surpluses/deficits arising from the operations of the province.
d)	Measurement Uncertainty
	Uncertainty in the determination of the amount at which an item is recorded in the financial statements is known as measurement uncertainty. Uncertainty exists whenever estimates are used because it is reasonably possible that there could be a material difference between the recognized amount and another reasonably possible amount.
	Measurement uncertainty exists in these financial statements in the accruals for such items as pension, retirement and other obligations, environmental remediation obligations, federal, and provincial source revenues. The nature of the uncertainty in the accruals for pension, retirement and other obligations arises because actual results may differ significantly from the province’s various assumptions about plan members and economic conditions in the marketplace. Uncertainty exists for environmental remediation obligations because the actual extent of remediation activities required may differ significantly based on the actual extent of site contamination and the chosen remediation process. Uncertainty related to Sales and Income Taxes, petroleum royalties, CHT and CST arises because of the possible differences between the estimated and actual economic growth and other assumptions used in statistical models to accrue these revenues.

30

Public Accounts Volume 1 – Financial Statements

Province of Nova Scotia
Notes to the Consolidated Financial Statements
As at March 31, 2008

2. Accounting Changes

There were no significant accounting changes made during the 2007-08 fiscal year.

3. Restricted Cash and Short-Term Investments

As at March 31, 2008 restricted cash and short-term investments of $95.3 million (2007 — $84.4 million) have been designated for restricted purposes by parties external to the province. Restricted cash includes $51.8 million for future housing expenditures from the Nova Scotia Housing Development Corporation; $25.6 million from Capital District Health Authority for the Centre for Clinical Research and other purposes; $9.6 million for gas market development from the Nova Scotia Market Development Initiative; and $8.3 million for various other purposes.

4. Deferred Revenue

Receipts are recorded as deferred revenue if they are restricted by external parties for a stated purpose, such as a specific program or the purchase of tangible capital assets. Deferred revenue is recognized into revenue over time as the recognition criteria are achieved or is drawn down to reimburse third parties as conditions are met. The balance includes the following components:

     ($ thousands)

	2008		2007
Offshore Accord		647,241		715,479
C-52 Federal Trusts Agreement		71,115		—
Office of Immigration’s — Nova Scotia Nominee Program (funds held in segregated account)		64,831		72,092
C-48 Federal Trust Agreements		39,867		82,957
Nova Scotia Housing Development Corporation’s Social Housing Agreement		51,516		44,038
Early Learning Child Care funds		38,772		42,176
Capital District Health Authority’s Capital and Research Funds		37,161		43,197
Nova Scotia Gas Tax Agreement on Municipal Funding		19,156		21,416
Wait Times Reduction Fund		17,056		51,445
Other		67,567		72,481
Total Deferred Revenue		1,054,282		1,145,281

31

Notes to the Consolidated Financial Statements

Province of Nova Scotia
Notes to the Consolidated Financial Statements
As at March 31, 2008

5. Derivative Financial Instruments

The province is a party to financial instruments with off-balance sheet risk, either to hedge against the risks associated with fluctuations in foreign currency exchange rates or to manage risks associated with interest rate fluctuations. Foreign currency contracts are used to convert the liability for foreign currency borrowing and associated costs into Canadian dollars. Interest rate contracts are used to vary the amounts and periods for which interest rates on financial instruments are fixed or floating. Foreign exchange contracts include forward and swap agreements. Interest rate contracts include swap agreements and options on swaps.

The province’s credit policy is that it only executes derivative transactions with counter parties with an A rating or better.

The province had the following interest and currency swap contracts outstanding at March 31, 2008:

		Notional		Term		Mark to
# of Swaps	Currency	Principal		Remaining		Market*
		($thousands)		(years)		($millions)
151	CDN$		1,899,994	51 days to 23			(10.7	)
25	US$		3,294,000		4 to 14		(480.1	)
2	UK		83,250	3 and 11			(9.8	)
1	Euro		50,000		2		5.4

* Mark to Market is an indication of the swap’s market value as at March 31, 2008. This represents the estimated realizable gain (loss), and is equivalent to the present value of future savings (losses) based on market conditions as at March 31, 2008.

32

Public Accounts Volume 1 – Financial Statements

Province of Nova Scotia
Notes to the Consolidated Financial Statements
As at March 31, 2008

The province has executed several currency swap contracts/forward agreements to convert foreign denominated debt into Canadian denominated debt. The mark to market of these swap/contracts are included in the previous table, and the currency swap contracts are as follows:

Termination	Original		Original		Current	Current
Date	Currency		Principal		Currency	Principal
			($ thousands)			($ thousands)
SWAPS:
October 28, 2011	UK			23,250	CDN$		56,283
April 16, 2019	UK			60,000	CDN$		114,387
February 27, 2012	US$			500,000	CDN$		795,000
July 27, 2013	US$			300,000	CDN$		299,850
March 15, 2016	US$			150,000	CDN$		205,725
January 26, 2017	US$			500,000	CDN$		586,500
February 1, 2019	US$			200,000	CDN$		198,000
July 1, 2019	US$			200,000	CDN$		199,900
November 15, 2019	US$			244,000	CDN$		246,318
March 1, 2020	US$			300,000	CDN$		409,200
May1, 2021	US$	��		300,000	CDN$		312,002
April 1, 2022	US$			300,000	CDN$		379,517
July 30, 2022	US$			300,000	CDN$		329,310
February 24, 2010	Euro			50,000	CDN$		72,235

At March 31, 2008 the province had entered 5 forward agreements to convert future interest payments on foreign debt into Canadian dollars as follows:

Termination	Original	Original		Current	Current
Date	Currency	Principal		Currency	Principal
		($ thousands)			($ thousands)
May 15, 2008 to November 14, 2008	US$		49,380	CDN$		50,391

6. Federal Equalization Repayable Loan

     The province received an equalization repayable loan from the federal government in March 2005 in the amount of $120.3 million. The loan bears no interest and is being repaid over 10 years, with bi-monthly deductions of $501,342 to commence in April 2006. As of March 31, 2008 the balance of the loan is $96,257,584.

33

Notes to the Consolidated Financial Statements

Province of Nova Scotia
Notes to the Consolidated Financial Statements
As at March 31, 2008

7. Pension, Retirement and Other Obligations

a)	Description of Obligations
	The province offers a variety of pension, other retirement, post-employment and special termination benefits. The province is responsible for adequately funding most of the plans. Except as otherwise noted, the cost of benefits are recognized in the periods the employee provides service. For benefits that do not vest or accumulate, a liability is recognized when an event that obligates the province to pay benefits occurs. The significant plans are detailed as follows:
	i) Pension Benefit Plans
	The province sponsors two funded pension plans, the Public Service Superannuation Plan (PSSP) and the Nova Scotia Teachers’ Pension Plan (TPP). Both plans are defined benefit plans with plan assets primarily composed of Canadian and foreign equities, government and corporate bonds, debentures, secured mortgages and real estate. The plans are jointly funded with contributions from employees being matched by the province. Benefits paid upon retirement are based on an employee’s length of service, rate of pay and inflation adjustments.
	On April 1, 2006, the Minister of Finance transferred responsibility for the governance of the Nova Scotia Teachers’ Pension Fund to the Teachers’ Pension Plan Trustee Inc., (TPPTI). The TPPTI is a body corporate comprised of nine board members — four nominated by the Nova Scotia Teachers’ Union, four nominated by the province and one Chair agreed to by both parties. As a result of this transfer, the province and Union agreed to share all surpluses and deficits of the plan equally. The province accounts for one-half of all components of the accrued benefit liability associated with the plan in its financial statements. In addition, the province recognizes one-half of components associated with the net benefit expense (recovery) associated with this plan. As of March 31, 2008, the total accrued benefit liability associated with the plan was $77.3 million.
	The province has several unfunded defined pension plans. The majority of these plans do not require contributions from employees. Benefits paid upon retirement are based on an employee’s length of service, rate of pay and inflation adjustments.
	Employees in the health sector are members of a multi-employer defined benefit pension plan. As the province does not sponsor this plan, the annual net benefit plan expense is the amount of required contributions provided for employees’ services rendered during the year. The accrued benefit asset (liability) of this plan is not recognized in these financial statements. The most recent actuarial valuation was performed on December 31, 2005 and showed a funding excess for the entire plan of $44 million. An extrapolation to December 31, 2007, was performed, which indicated a funding surplus of $38.9 million.
	ii) Other Retirement Benefit Plans
	The province sponsors two other retirement benefit plans: retirement allowances and retirement health plan benefits. These plans are not funded. Benefits paid upon retirement for retirement allowances are based on an employee’s length of service and rate of pay. Retirement health plan benefits vary depending on the collective agreements negotiated with each group. The province pays 65% and 100% of the cost of retirement health plan benefits for the PSSP and TPP retirees respectively.
	iii) Post-Employment Benefits
	The province offers two significant post-employment benefit plans: Self Insured Workers’ Compensation and Long-Term Disability. The amount recorded in these financial statements represents the actual amount of benefits paid during the year plus the actuarial estimate of future payments, based on claims ongoing at year-end. For the Long-Term Disability plan, the obligation is offset by the market related value of plan assets.

34

Public Accounts Volume 1 – Financial Statements

Province of Nova Scotia
Notes to the Consolidated Financial Statements
As at March 31, 2008

iv) Special Termination Benefits

The province has offered early retirement incentive programs to members of the PSSP and TPP at various times commencing in 1986 and 1994 respectively. Qualified members were offered additional years of pensionable service if they elected to retire. The cost of these benefits was accrued in the year the employee accepted the early retirement option.

b) Summary of Activity in Defined Benefit Plans

Accrued Benefit Liability
($ thousands)

	2008		2007
Pension Benefit Plans		328,029		215,741
Other Benefit Plans		1,292,676		1,220,640
Total Accrued Benefit Liability		1,620,705		1,436,381

Activity During the Year
($ thousands)

	Pension Benefit Plans						Other Benefit Plans
	2008			2007			2008			2007
Projected benefit obligation, beginning of year		6,902,796			8,627,438			1,195,923			1,206,972
Reduction of obligation on move to joint trusteeship (see a i)		—			(2,286,529	)		—			—
Current benefit cost		179,383			179,557			60,145			54,189
Interest cost		476,633			449,916			66,138			68,411
Actuarial (gains) losses		107,178			308,291			117,769			(72,857	)
Benefit payments		(402,337	)		(379,543	)		(79,251	)		(92,885	)
Other		8,794			3,666			324			2,089
Plan amendments		—			—			32,056			30,004
Projected benefit obligation, end of year		7,272,447			6,902,796			1,393,104			1,195,923
Market related value of plan assets, beginning of year		5,791,909			7,708,044			67,788			54,711
Reduction of assets on move to joint trusteeship (see a i)		—			(2,152,887	)		—			—
Expected return on plan assets		405,227			388,077			4,754			3,916
Actuarial gains (losses)		78,846			26,843			(18	)		(208	)
Benefit payments		(402,337	)		(379,543	)		(79,251	)		(92,885	)
Other		7,933			4,588			(713	)		(403	)
Employer contributions		121,714			109,367			77,640			92,152
Employee contributions		100,997			87,420			10,383			10,505
Market related value of plan assets, end of year		6,104,289			5,791,909			80,583			67,788
Funded status, end of year		(1,168,158	)		(1,110,887	)		(1,312,521	)		(1,128,135	)
Unamortized net actuarial (gains) losses		840,129			895,146			20,283			(92,505	)
Valuation Allowance		—			—			(438	)		—
Accrued benefit liability, end of year		(328,029	)		(215,741	)		(1,292,676	)		(1,220,640	)

35

Notes to the Consolidated Financial Statements

Province of Nova Scotia
Notes to the Consolidated Financial Statements
As at March 31, 2008

c)	Actuarial Assumptions
	The table below shows significant weighted-average assumptions used to measure pension and other benefit plan obligations.

	Pension Benefits						Other Benefits
	2008			2007			2008			2007
Long-term inflation rates		2.5	%		2.5	%		2.5	%		2.5	%
Expected real rate of return on plan assets		4.5	%		4.5	%		—			—
Rate of compensation increase	2.75% to 5.5% + merit			2.75% to 5.5% + merit			2.75% to 4.95% + merit			2.75% to 5.5% + merit
Discount Rate — Main plans		7.11	%		7.11	%		4.95	%		5.7	%
Other		—			—		4.95% to 6.7%			5.7% to 6.7%

Other assumptions used were:

6.5 per cent annual rate increase in the cost per person of covered healthcare benefits for 2006-07, decreasing at 0.25 per cent per annum to an ultimate rate of 4.5 per cent per annum. 11% annual rate increase in the cost per person of covered prescription drugs for 2006-07, decreasing at 1 per cent per annum to an ultimate rate of 4.5% per annum.

Actuarial assumptions are reviewed and assessed on a regular basis to ensure that the accounting assumptions take into account various changing conditions and reflect the province’s best estimate of performance over the long-term.

36

Public Accounts Volume 1 – Financial Statements

Province of Nova Scotia
Notes to the Consolidated Financial Statements
As at March 31, 2008

d)	Other Disclosure
	The net unamortized actuarial gains (losses) are amortized on a straight-line basis over the expected average remaining service life (EARSL) of the related employee groups ranging from 6 years to 16 years (weighted-average EARSL is 14 years).
	During the year, the weighted average actual rate of return on plan assets was (3.5 per cent) (2007 — 10.4 per cent). The total market value of plan assets is $8.1 billion (2007 — $8.7 billion) at March 31, 2008.
	The most recent actuarial valuations performed for most of the benefit plans was at December 31, 2006 with the exception of certain other retirement benefit plans that were performed on December 31, 2005 and the post-employment benefit plans that are performed annually at March 31.
e)	Net Benefit Plans Expense (Recovery)

     The table below shows the components of the net benefit plans expense (recovery).

     ($ thousands)

	Pension Benefits						Other Benefits
	2008			2007			2008			2007
Current benefit cost		179,383			179,557			60,145			54,189
Employee contributions		(101,522	)		(87,915	)		(10,387	)		(10,529	)
Employer contributions*		30,454			29,658			—			—
Plan amendments		—			—			32,056			30,004
Amortization of net actuarial (gains) losses		83,368			59,776			4,944			(8,087	)
Recognition of actuarial losses on plan amendment		—			—			—			(12,709	)
Other		81			(35	)		1,227			2,003
Increase in valuation allowance		—			—			438			—
Interest cost		476,633			449,916			66,138			68,411
Expected return on plan assets		(405,227	)		(388,077	)		(4,754	)		(3,916	)
Employer contributions to multi-employer plan		67,425			55,439			—			—
Net benefit plans expense (recovery)		330,595			298,319			149,807			119,366

* This represents one-half of the employer contributions made by PNS to the TPP. Included in the figures above for 2008 and 2007, are one-half of all transactions associated with TPP to reflect the province’s share of this plan.

37

Notes to the Consolidated Financial Statements

Province of Nova Scotia
Notes to the Consolidated Financial Statements
As at March 31, 2008

8. Trust Funds Under Administration

Trust fund assets administered by the province (before giving consideration to actuarial adjustments) are:

($ thousands)

	2008			2007
				(as restated)
Public Service Superannuation Fund (1)		3,583,387			3,817,047
Nova Scotia Teachers’ Pension Fund (4)		4,610,008			4,758,444
Sydney Steel Corporation Superannuation Plan (1), (2)		(692	)		2,835
Nova Scotia Public Service Long Term Disability Plan (1), (4)		77,558			68,611
Nova Scotia Credit Union Deposit Insurance Corporation (1), (4)		16,973			15,354
Public Trustee (1)		40,557			34,178
Miscellaneous Trusts (3)		29,806			26,339
Total Trust Funds Under Administration		8,357,597			8,722,808

(1)	See Public Accounts Volume II for full financial statements of these funds.
(2)	Administration of the assets of Sydney Steel Corporation Superannuation Fund was assumed during fiscal 2001.
(3)	Miscellaneous trusts include a large number of relatively small funds.
(4)	These represent trusts with December 31 year ends. Trust asset balances at March 31 did not differ significantly.

9. Expenses by Object

($ thousands)

	2008		2007
Grant and Subsidies		2,821,554		2,414,426
Salaries and Employee Benefits		2,928,937		2,768,338
Operating Goods and Services		1,567,604		1,434,972
Professional Services		236,981		237,813
Amortization		267,360		241,874
Debt Servicing Costs		953,698		958,744
Other		57,478		54,456
Total Expenses		8,833,612		8,110,623

38

Public Accounts Volume 1 – Financial Statements

Province of Nova Scotia
Notes to the Consolidated Financial Statements
As at March 31, 2008

10. Debt Servicing Costs

($ thousands)

	2008			2007
CDN$ Denominated Debt		706,181			683,310
US$ Denominated Debt		74,810			100,029
Pension, Retirement and Other Obligations		132,790			126,337
Capital Leases		25,061			26,482
Other Debt		23,917			27,877
Premium / Discount Amortization		2,289			2,129
Foreign Exchange		(12,213	)		(8,312	)
Miscellaneous		863			892
Total Debt Servicing Costs		953,698			958,744

Debt servicing costs for Government Business Enterprises was $18.6 million for the year ended March 31, 2008 ($20.4 million for the year ended March 31, 2007).

11. Cash-Flow — Net Change in Other Items

($ thousands)

	2008			2007
				(as restated)
Change in Receivables from Government Business Enterprises		4,638			(39,150	)
Change in Receivables and Advances		(320,127	)		47,889
Change in Accounts Payable and Other Short-term Borrowings		515,543			(108,543	)
Change in Inventory for Resale		(504	)		86
Change in Inventory of Supplies		(5,204	)		866
Change in Prepaid Expenses		(9,013	)		(548	)
Change in Deferred Revenue		(90,999	)		113,463
Change in Accrued Interest		(11,949	)		(4,177	)
Change in Pension, Retirement and Other Obligations		184,324			132,052
Total Net Change in Other Items		266,709			141,938

39

Notes to the Consolidated Financial Statements

Province of Nova Scotia
Notes to the Consolidated Financial Statements
As at March 31, 2008

12. Contingencies and Contractual Obligations

a)		Contingent Liabilities
		i) Environmental Sites Various provincially owned sites throughout the province are considered environmental or contaminated sites. Studies are ongoing to assess the nature and extent of damage to develop remediation plans. Provisions for these costs are recorded in these financial statements when it is determined a liability exists and a reasonable estimate of the remediation costs can be made. With the exception of remediation costs noted in the following paragraphs, no further provisions have been recognized in these financial statements.
		Engineering and environmental studies have generated estimates for the cost of remediation of the Sydney Steel Corporation (Sysco) and adjacent sites as well as the Sydney Tar Ponds site. As a result, the province recorded liabilities totaling $318.5 million in 2000 for environmental site clean up. At March 31, 2008, $257.6 million (2007 — $276.3 million) remains unspent. The provision will continue to be utilized for future decommissioning, demolition and remediation of Sysco’s and adjacent sites, including the Sydney Tar Ponds site. Based on currently available information, the provision, in aggregate, appears to be sufficient to cover the estimated costs to remediate these sites.
		Other remediation liabilities amounting to $12.5 million (2007 — $12.5 million) have been recognized in these financial statements.
		ii) Lawsuits The province’s losses for any lawsuits pending cannot be determined due to uncertainty of the trial outcomes.
	��	iii) Other Contingent Liabilities
		The province also has contingent liabilities in the form of indemnities. The province’s potential liability, if any, cannot be determined at this time.
b)		Contingent Gains
		The Province of Nova Scotia may receive funds in the future from recoveries of various types of claims paid out and other agreements pending the occurrence of certain events. Recoveries are recorded in the year the contingent events occur.

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Public Accounts Volume 1 – Financial Statements

Province of Nova Scotia
Notes to the Consolidated Financial Statements
As at March 31, 2008

c)	Contractual Obligations
	i) Contractual Obligations
	As at March 31, 2008, the province had contractual obligations as follows:

($ thousands)

			Government		Total
	Governmental		Business		Contractual
Fiscal Year	Units		Enterprises		Obligations
2009		612,068		4,500		616,568
2010		452,025		2,803		454,828
2011		468,277		2,128		470,405
2012		99,681		2,028		101,709
2013		82,433		1,703		84,136
2014-2018		228,546		—		228,546
2019-2023		86,355		—		86,355
2024-2028		5,788		—		5,788
		2,035,173		13,162		2,048,335

These contractual obligations are comprised of $1,793.0 million for the Consolidated Fund, $242.2 million for other Government Units and $13.2 million for Government Business Enterprises. Included are contractual obligations of $131.9 million by Nova Scotia Business Incorporated for projects approved under its various programs, $883.8 million by the Department of Education for university assistance, $344.8 million by the Department of Education for P3 School maintenance agreements, and $84.0 million by the Department of Health for the management of the ground ambulance fleet.

In addition to the contractual obligations noted above, in 1992 the Department of Justice entered into a 20-year contract with the RCMP for policing services, including services paid by the municipalities under the Service Exchange Agreement. Costs are negotiated each year based on required policing services. The net estimated expense for the province for 2009 is $29.1 million.

ii) Leases

As at March 31, 2008, the province was contractually obligated under various operating leases. Future minimum annual lease payments are as follows:

($ thousands)

			Government		Total
	Governmental		Business		Lease
Fiscal Year	Units		Enterprises		Payments
2009		47,362		7,634		54,996
2010		38,868		6,878		45,746
2011		30,404		6,210		36,614
2012		23,336		6,035		29,371
2013		14,964		6,035		20,999
2014-2018		22,827		—		22,827
2019-2023		6,222		—		6,222
2024-2028		506		—		506
2029 & thereafter		321		—		321
		184,810		32,792		217,602

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Notes to the Consolidated Financial Statements

Province of Nova Scotia
Notes to the Consolidated Financial Statement
As at March 31, 2008

13. Subsequent Events

Under the 1986 Canada-Nova Scotia Offshore Petroleum Resources Accord (1986 Accord), the province acquired the right to share a portion of the federal Crown Share revenues for projects in the Nova Scotia offshore. An Agreement was signed on July 13, 2008 between the Government of Canada and the province, whereby Nova Scotia’s portion of the Crown Share was estimated to be $867.9 million for years ending 2023. Revenue of $234.4 million has been earned up to March 31, 2008 and is recognized as revenue in the 2007-08 fiscal year.

14. Comparative Figures

Certain of the prior year’s numbers have been restated to conform to the presentation format adopted in the current year.

15. Related Party Transactions

Included in these consolidated financial statements are immaterial transactions with various provincial crown corporations, agencies, boards and commissions. Significant related party transactions have been offset and eliminated for purposes of consolidated reporting. Parties are deemed to be related to the Consolidated Fund due to common control or ownership by the Province of Nova Scotia.

The most significant unadjusted related party transactions are described in Schedule 6 — Government Business Enterprises.

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