Evidence of meeting #14 for Public Accounts in the 40th Parliament, 3rd Session. (The original version is on Parliament’s site, as are the minutes.) The winning word was audits.

A recording is available from Parliament.

On the agenda

MPs speaking

Also speaking

Sheila Fraser  Auditor General of Canada
Lyn Sachs  Assistant Auditor General, Office of the Auditor General of Canada

9:50 a.m.

Auditor General of Canada

Sheila Fraser

No. An act was passed in 2009 that limits salary increases to 1.5%. You are correct that we have to find that increase of 1.5% within our budget. It represents for us $860,000 a year. That will of course compound over time.

So we have the challenge of finding the funds to fund the salary increases, but I think the greater challenge for us will be our compensation scales being limited to 1.5%. We were at the point of trying to negotiate a new salary structure with our staff, because most of our professionals are unionized. This was two years ago, and even then we were starting to see that we were becoming uncompetitive, not as competitive as we should be with the marketplace, and we wanted to adjust our scales. That didn't come to pass because of the act that came in.

I think our challenge over time will be to try to remain competitive with a market where clearly the salary increases are going to be more than 1.5%.

9:50 a.m.

Liberal

John McCallum Liberal Markham—Unionville, ON

Okay. Thank you very much.

9:50 a.m.

Liberal

The Chair Liberal Shawn Murphy

Thank you, Mr. McCallum.

Mr. Young, five minutes.

9:50 a.m.

Conservative

Terence Young Conservative Oakville, ON

Thank you, Chair.

You said you were experiencing a narrow interpretation of an order in council that was issued in 2006 and was delaying or restricting some information. Those issues you were experiencing, were they at the departmental or political level?

9:50 a.m.

Auditor General of Canada

Sheila Fraser

Clearly they were at the departmental level.

9:50 a.m.

Conservative

Terence Young Conservative Oakville, ON

Thank you.

Can you please explain to the committee how progress was made to resolve the issues that you brought forward? Perhaps you could give a bit of detail.

9:50 a.m.

Auditor General of Canada

Sheila Fraser

We had meetings with senior officials, including the clerk, the Secretary of the Treasury Board, and chief legal counsel to the clerk. We had two meetings, and they agreed that the interpretation that had been given by officials was inappropriate and far too restrictive. We agreed that we needed to clarify our access rights and ensure that the possibility for misinterpretation or very narrow interpretation going forward would be eliminated, we hoped. We worked on guidance that will be coming out this week to deputy heads and to legal counsel as to our right to cabinet confidence.

There are certain cabinet confidences, obviously, which we do not have a right to, and we respect that, but many documents are considered cabinet confidence to which we do have a right. It was trying to clarify that even more.

9:50 a.m.

Conservative

Terence Young Conservative Oakville, ON

I'm trying to fully understand your concern about retaining auditors and accountants in a recession. I would think that a government job would be more highly prized in a recession and that you might be less likely to have people quit or leave for another job, although I understand you still have to deal with retirements.

Is your concern in hiring auditors and accountants just your normal turnover to replace retirements, or is there growth in that hiring plan?

9:55 a.m.

Auditor General of Canada

Sheila Fraser

There is no growth in our hiring plan. We plan to maintain our staff level at about the current level. We expect to have a turnover every year of about 10%, which means 60 to 65 people that we have to replace every year.

9:55 a.m.

Conservative

Terence Young Conservative Oakville, ON

That would be the same even during a recession or coming out of a recession?

9:55 a.m.

Auditor General of Canada

Sheila Fraser

Yes. It would be due in part to retirements.

With government trying to improve financial management, internal audit, our people are very attractive to government departments. We have a number of staff who may not leave us to go to the private sector, but they leave us to go to government departments. So we have a turnover that has been actually a little higher than 10% the last few years. We lose people to government departments and we have to replace them.

Most of the replacement will come through.... We hire entry-level, and then people will rise up. But every once in a while, we need to hire people at the mid-level range, as well.

9:55 a.m.

Conservative

Terence Young Conservative Oakville, ON

So you've had some success with your recruitment and retention strategy. Could you describe how that worked?

9:55 a.m.

Auditor General of Canada

Sheila Fraser

Sure. I'll ask Ms. Sachs to elaborate.

9:55 a.m.

Assistant Auditor General, Office of the Auditor General of Canada

Lyn Sachs

The recruitment and retention is focusing on the environment.

So you've got the retention. We're dealing with a large number of younger audit professionals who are very attractive to government. We are fighting against the same benefits that exist outside of government. We've focused on the flexibility in the work we do. That is the retention side. And we do surveys every two years. We've just gotten the results, and satisfaction still seems to be strong.

The recruitment is a combination of issues, the biggest one being the students coming in. We are still hiring. And in Ottawa we are still doing a significant hiring of the accounting graduates. So it's absorbing them in and establishing them, and integrating them to develop that employee engagement. And it has been successful. Our turnover rates at the young level, which is the crucial one.... In public firms, it could be close to 18% to 20%. We have a turnover rate of between 10% and 13%, and they are going to government. Actually, when you think about it, it's for the greater good. We are recruiting, training, and contributing, as opposed to losing. So the success has been there, and we've got to keep an eye on it.

9:55 a.m.

Conservative

Terence Young Conservative Oakville, ON

What would be the main reason a young person would choose to work in your department, as opposed to the private sector?

9:55 a.m.

Assistant Auditor General, Office of the Auditor General of Canada

Lyn Sachs

Flexibility is what we really sell. And I'm not going to say easier work. We have challenging work. We make a difference. In Ottawa especially, we are very visible, so we have students who are interested in us. We are on campuses across Canada, so we do sell. We sell our boss. And that certainly shows. That's one of the reasons they come to us. Some of them, as well, are sold at the beginning by the sense of joining the government, with all the benefits that go with that. But the key is really flexibility. We allow people to do some interesting travel within Canada, and we allow people to work flexible hours. There are a lot of benefits that they appreciate in their younger years.

9:55 a.m.

Liberal

The Chair Liberal Shawn Murphy

Thank you very much, Mr. Young.

Madame Faille, you have five minutes.

9:55 a.m.

Bloc

Meili Faille Bloc Vaudreuil—Soulanges, QC

Thank you Mr. Chairman.

I was looking at your figures with regard to the percentage of audits done on-budget. In appendix I we can see that the percentage of financial audits completed on-budget has decreased in the case of your audits of federal Crown corporations as well as other federal organizations with statutory deadlines. However, we see that there is some progress regarding federal organizations without statutory deadlines, as well as a net improvement regarding your audits of the statements of territorial organizations.

Earlier in your reply, you mentioned territorial organizations. Is that an indication that there has been progress?

9:55 a.m.

Auditor General of Canada

Sheila Fraser

To be perfectly honest, I must say that there are two parts to my reply. Indeed, there has been a certain progress in some territories. However, the teams prepared budgets at the outset in a more realistic way.

9:55 a.m.

Bloc

Meili Faille Bloc Vaudreuil—Soulanges, QC

With regard to performance audits you really have good results: 90% of your audits are completed on-budget.

This leads me to a question on the amounts you attribute. In 2009-2009 you had attributed $43.7 million to this activity. In 2010-2011 you allocated $41.6 million which does not seem to be a decrease that corresponds to the decline in the number of audits you performed. What explains the higher costs of the performance audits?

10 a.m.

Auditor General of Canada

Sheila Fraser

The costs of an audit vary a great deal according to the nature of the audit. If we do an audit, for instance, such as our recent audit of the evaluation function, the team doesn't have to travel, of course, since the work is done mostly here, in Ottawa. However, when we perform audits such as the one we did of CIDA or of Citizenship and Immigration Canada, obviously the auditors have to travel outside of the area. These audits are quite costly especially because of travel expenses, but also because they may require more time.

If we also perform so called horizontal audits, involving several departments, these may require 20% to 30% more hours of work, as compared to a more conventional audit within a given department. The costs are higher because of the complexity of the task.

10 a.m.

Bloc

Meili Faille Bloc Vaudreuil—Soulanges, QC

Appendix II mentions your projected audits and work concerning performance audits. For 2010 a first group of files have already been submitted to us, recently. An issue such as the aging of information technology systems would cost much more to redress than others such as sustainable development in the Northwest Territories.

10 a.m.

Auditor General of Canada

Sheila Fraser

It must also be acknowledged that these are audits where the related report will be tabled later. An audit takes approximately 18 months to complete. So the costs are not necessarily directly related to the audits for which the report has been submitted. For instance, this year's costs will be related to audits we may report on only next year. It is sometimes difficult to make a direct link between the reports tabled during the given year and the costs.

10 a.m.

Bloc

Meili Faille Bloc Vaudreuil—Soulanges, QC

I have two brief questions with regard to your autumn 2010 plan. I don't know if it is the practice here in committee, but can you give us an overview of the mandate you would like to fulfil concerning conflicts of interest? What exercise would be involved in that? My other question concerns the registered charities and Canada's economic action plan.

10 a.m.

Auditor General of Canada

Sheila Fraser

The members of the committee will remember that there were a few cases in the course of our audits where we noted that conflicts of interest were not well managed by the departments either with regard to the wording of contracts or within certain programs. Pursuant to that we stated that existing policies needed to be reviewed in order to determine whether policies and guidelines within the departments were sufficiently clear for employees to be able to recognize such situations and know how to manage them. So that is in short the objective there.

With regard to charities the Canada Revenue Agency has a very important role to play in registering charity organizations in Canada to have them recognized as such. We audit the procedure involved, how the CRA people do the monitoring, how they process those cases that are submitted to them.

As to the economic action plan, this involves its monitoring framework that is in existence. It's a little early to see the program results because we are about at the halfway point of the achievement of the plan. That said, we can review, for instance, program definitions, monitoring processes, if internal audits are involved. So it's really a matter of studying the control framework of the economic action plan.