Public Accounts Committee on April 29th, 2008

[Sheila Fraser]

The office. Obviously certain elements of that are related to the policies of the government. When we decide to bid on an audit of an agency of the United Nations, for example, that is clearly done in agreement with, and actually often at the suggestion of, Foreign Affairs. We do not go off and do this on our own.

So we have different components to our international strategy. One is to assist Canada's efforts in building governance structures abroad, and on a very limited basis we will do that. For example, we are helping in a project that CIDA is undertaking to establish an auditor general in Mali. I actually had some of our communications people there just a week ago to help them. But those tend to be fairly small, limited activities.

The other big activities would be the UN audits. We are down now to one, whereas we have had two in the past.

And then we have as a strategic objective to be involved in standard-setting, given the importance of international standards to us. So that is why I went onto that board and why we have people involved in standard-setting within Canada.

That's pretty much it, except, for example, INTOSAI, which has a congress every three years, or the Commonwealth auditors general, who have a congress every three years. Other than those, that's pretty much it.

It has to be directly related to the work. I cannot accept to be on boards or organizations outside Canada without going through the Ethics Commissioner, and I can tell you, quite frankly, I don't have the time to do it. So it's very strictly limited to that.

[David Christopherson, NDP, Hamilton Centre, ON]

Great. Thank you.

Thank you, Chair.

[The Chair, Liberal, Shawn Murphy]

Thank you, Mr. Christopherson, and thank you, Ms. Fraser.

I want to deal with Mr. Christopherson's request before I forget it. It's a motion from Mr. Christopherson requesting from the Treasury Board Secretariat their review report of departmental implementation of the Auditor General's recommendations.

This was moved by Mr. Christopherson. I assume everyone is in agreement with it. I'll put it to a vote.

(Motion agreed to)

[The Chair, Liberal, Shawn Murphy]

Thank you very much.

Mr. Holland is next, for seven minutes.

[Mark Holland, Liberal, Ajax—Pickering, ON]

Thank you, Mr. Chair.

Thank you, Madam Fraser, for appearing before the committee again.

I want to start with this notion that there's a failing grade. I want to go into those numbers. You have 26% that were significantly implemented, which is a decrease and a concern, and you had 46% of the recommendations that were fully implemented, so 72% of the recommendations were either fully implemented or implemented to a significant degree.

You had mentioned through questioning, and I think rightly, that departments don't always agree with your recommendations. I know that in previous appearances at committee you have acknowledged that you have recommendations that may or may not be agreed with, and that there may be ways of explaining why they disagree with your recommendations that are legitimate.

I think what gets this committee upset are agencies or departments that come before us having agreed with your recommendations, but not having done anything when they come back. Those are the ones I'm concerned with.

If we take a look at that number to see more specifically those that say the auditor is completely right and they have to do these things and they have to engage it, how many are we dealing with that aren't following even their own agreement with your recommendation that change needs to occur? How do we go after those? They are the ones that frustrate us, to be really honest about it.

[Sheila Fraser]

Could I clarify? The statistics are for recommendations with which departments agreed.

[Mark Holland, Liberal, Ajax—Pickering, ON]

I'm sorry...?

[Sheila Fraser]

They are recommendations with which departments agreed. We would not expect a department to implement a recommendation with which they didn't agree. The basis of this is to say how many have been implemented or substantially implemented four years after the recommendation was made.

Over the past four years we have all become much more rigorous in asking departments, when they agree, to produce an action plan, to be specific about how they're going to deal with the recommendations, and to say who is responsible for it and what the timeline is. With some of those changes and with the committee also doing the follow-up and tracking, I am hopeful we will see an improvement over time.

I think we have to recognize that we'll never be 100%. It's impossible for it to be 100%, but I would like to see the percentage actually implemented go up. I find that 46% is too low.

[Mark Holland, Liberal, Ajax—Pickering, ON]

Of that 72%, you can understand the 26%. Although a decrease of 9% is a concern, some of them have significantly implemented them.

How many have not implemented anything at all? I didn't see that statistic. Are there any? Over that four-year period, what percentage of those that agreed with your recommendations didn't do anything?

[Sheila Fraser]

I don't know if we actually know about “didn't do anything”. We say “neither fully nor substantially”.

[Mark Holland, Liberal, Ajax—Pickering, ON]

Let's say it's nearly nothing.

[Sheila Fraser]

It's about 25%.

[Mark Holland, Liberal, Ajax—Pickering, ON]

About 25% may have done something, but it may have been cosmetic or small.

[Sheila Fraser]

Yes.

[Mark Holland, Liberal, Ajax—Pickering, ON]

You're right in saying we can't expect 100%, but I certainly think we should be able to expect all the agencies or departments that agree with your recommendations to be on the path to meeting their own commitments. To have 25% of them not doing so is deeply concerning.

Aside from bringing them back and asking them tough questions and presumably and hopefully embarrassing them by their lack of action, what do you think needs to be done by committee, by yourself, or by Parliament to hold people to a different standard? While we can't expect 100% to have fully implemented recommendations, we should expect 100% to be well on the path to implementing what they accepted as your recommendations.

[Sheila Fraser]

I agree. As I mentioned, I would hope that these departmental audit committees would help to focus attention on it.

The government as well, I think, or perhaps central agencies, will have to assume more responsibility on doing the tracking and why some are.... There actually are probably a few areas that are more problematic than others. Honestly, I think in some cases it's a question of senior management attention. It's also a question of resources. I don't think we can completely ignore that. That comes back to government policy decisions about which departments are going to get funding and which aren't, which issues are going to get attention and which aren't. Those decisions and priorities change over time.

Perhaps we can try to give more analysis to the committee when we do our departmental performance report this year on which areas are perhaps more problematic. I would rather do it in broader strokes, because I hesitate to point to specific departments. At times there's maybe only one audit, and that's maybe not representative of the progress they're making in a number of areas. But I think there are a couple of areas we can see where progress is not as good as we would like.

[Mark Holland, Liberal, Ajax—Pickering, ON]

I would agree with your assessment that, generally speaking, the issue would be with the management team within a department not paying adequate or sufficient attention to the recommendations you made and they accepted, and they promised to fix. You didn't mention anything in there about maybe what we would do with that management team.

If somebody makes a commitment to undertake to make the changes that obviously you deemed important enough to write a report about and they deemed important enough to say, yes, it's a problem and we're going to fix it, and they don't do anything, should there not be a consequence to that? Do you feel there should be some consequence to that if the problem rests with the management team and with their lack of will to move forward?

[Sheila Fraser]

Often the question is more complex than simply that. Obviously it's the attention the management team gives, but we have to understand that they may have been given other priorities. Have they been given sufficient resources to be able to resolve the issue that is before them? That's perhaps a question, when we do our follow-up audits and we come before the committee, the members might want to ask them: did you have enough resources to fix this issue, and what other priorities did you have?

I mean, we have seen it in some cases that there were other priorities that came—

[Mark Holland, Liberal, Ajax—Pickering, ON]

That's fair. I guess the point I'm getting at is that certainly, if there are legitimate reasons, one wouldn't hold that against the management team. It's just that there are those occasions—admittedly rare, not the rule but the exception—when it's just extremely frustrating, I'm sure as much for you as for the committee, to see individuals come in who've completely ignored it. They haven't taken any action. If you don't have a cause-and-effect relationship, it's hard to see how it's going to change.

My last question—I realize that time is running short—has to do with something within the supplementary information of the performance report. It lists the performance audits that were completed in 2006 and 2007. It notes that five performance audits were cancelled. I didn't immediately see why those audits were cancelled.

More generally, what would be some of the reasons why a performance audit, once undertaken, would be cancelled?

[Sheila Fraser]

You have to recognize that even in the list we gave you today, these are, in some cases, broad areas that we want to look at. We haven't gone down into the actual scoping of the audit. At times we decide, when we actually do more detailed work, that it's not an area we should look at; we should perhaps be looking at another area. We will change the focus of the audit. It may be the same department or it could actually be another department. Or the timing may not be right; there may be legislative changes coming, or regulations that are going to change, or changes within the department. Any of these could make the timing of the audit not appropriate.

Quite honestly, at times there can be issues with resourcing. We have the skills to do it at a point in time, when initially we planned it, but those people may have left the office, or we may be rebuilding a team. Or we may decide that we are going to shift resources from one area to another area given that something has happened.

Obviously we try to stay as close to these plans as we can, but at times two committee requests will come up. We'll say, yes, we should be doing more work in this area, and we'll move a team from one area to another. The plans will change. Even the list of audits that we are presenting here today--I'm not guaranteeing that those will all be done within the timeframe we've put forward.

[The Chair, Liberal, Shawn Murphy]

Thank you, Mr. Holland.

Thank you, Ms. Fraser.

Mr. Fitzpatrick, for seven minutes.

[Brian Fitzpatrick, Conservative, Prince Albert, SK]

Good morning.

I'm going to try to get into how you pick your special projects. I was looking through some of the special projects, and one that I was looking for but it wasn't there was the CMHC and the mortgage insurance side of things in Canada. I think we're all quite aware that when the train wrecks happen in the economy, we find out whether or not systems work. The U.S. has no end of problems right now with their equivalents, their Fanny Maes, and so on.

I know that even though the housing market has been fairly stable in central and eastern Canada, out west I can vouch for the fact that housing has gone up dramatically, almost on a scale equivalent to some markets in the U.S., with 50% increases in one year, and so on.

Maybe you could comment on why something like this wasn't included as a special project, and maybe you could comment on the process you employ to determine what projects you will study.

[Sheila Fraser]

I'd be glad to.

We would cover the specific issue you raised with regard to the Canada Mortgage and Housing Corporation in the special examination of that crown corporation. You will see in the list that we gave you that a special examination is now under way, and we will be reporting on that within the next year. So we will certainly look at that issue in the context of the special examination of that crown corporation.

[Brian Fitzpatrick, Conservative, Prince Albert, SK]

Do you have any idea when that will come out?

[Sheila Fraser]

I believe we have to table that one by.... I can find out and give it to you.