Public Accounts Committee on March 8th, 2011

[John Wiersema]

Mr. Chairman, I'm not sure exactly where in the public accounts the member is getting those numbers, but there are hundreds of programs listed in the public accounts, some of which the Auditor General has audited, most of which we haven't done any recent audit work on.

I came today mostly prepared to focus on the summary financial statements of the Government of Canada, so I'm not in a position to shed any light on the member's question.

[Navdeep Bains, Liberal, Mississauga—Brampton South, ON]

The other question I have is a very quick question on contracts, outsourcing, and contracting.

We raised this issue in the House of Commons, and maybe you can shed some light as well when you do your audits. One of the issues we raised is we saw that the government, for example, outsourced press releases that cost $3,400 for VIA Rail, for example. We asked the minister to find out why they outsourced it and if they got value for money, because obviously the costs entailed were exceptionally high for the press release. When you do your audits and when you look at the public accounts, do you look at value-for-money examples like that, where they outsource at such a high rate and the return on that is very minimal?

[The Chair, Liberal, Joe Volpe]

I'm not sure you're going to be able to answer that, Mr. Wiersema. We're already at seven minutes, so I'll give you an opportunity to do that afterwards.

Madame Faille.

[Meili Faille, Bloc, Vaudreuil—Soulanges, QC]

Thank you, Mr. Chair.

Today I would like to bring up a few major concerns. My colleague just spoke about the allocation of funds once the government has made announcements. In Quebec, we have had many complaints from agencies that were promised funding as part of the economic stimulus plan and that have still not been paid. So, I am eagerly awaiting the next report of the Auditor General who, I hope, will address this issue. Right now, fairly significant amounts, announced two years ago now, have not been paid.

I would first like to deal with a matter that involves the financial statements submitted by three agencies: the Office of the Public Sector Integrity Commissioner, the Human Rights Tribunal and the Office of the Commissioner of Lobbying. If you can’t give me an answer today, perhaps you could give the committee a more detailed analysis later.

You have been receiving these financial statements for a number of years now. I would like to hear what you, as comptroller, have to say about these things that need to be raised and to have you talk about the spending trends of these agencies.

I don’t know if you have analysed the various budgetary items and made observations. If not, could you please do so and perhaps give us an answer in writing? I would like to know whether you have been in contact with these agencies and offered an opinion about the financial statements they have submitted.

[The Chair, Liberal, Joe Volpe]

Mr. Ralston.

[James Ralston]

I'll ask Mr. Matthews.

[Bill Matthews]

Thank you for the question.

With regard to the departmental financial statements, we usually try to make sure that accounting standards are respected.

So our role is not to actually look at trends in expenditure. It's actually up to the head of those organizations, the deputy heads, to make determinations on where their spending is. Our efforts are focused on ensuring, through a review of the draft statements, that they've respected the accounting standards used by the Government of Canada.

That's an important task for us because it's those components from the departments that actually make up the public accounts of Canada. We want to ensure that there's some consistency in how our accounting policies are applied and also ensure that the disclosure in the notes to those financial statements meets the standards that have been established by the Office of the Comptroller General.

We're not involved in reviewing budgets. That's not the role—

[Meili Faille, Bloc, Vaudreuil—Soulanges, QC]

So, with regard to the financial problems raised within these three agencies, you haven’t been able to detect any problems related to expenditure trends.

[Bill Matthews]

Not related to spending trends.

Again, the review was around the accounting standards used and the note of disclosure of their financial statements.

[Meili Faille, Bloc, Vaudreuil—Soulanges, QC]

Okay.

[The Chair, Liberal, Joe Volpe]

Mr. Wiersema.

[John Wiersema]

Mr. Chairman, this gives me an opportunity to explain a little bit how we approach the audit of the government summary financial statements and what we look at in the context of that audit versus what we look at in the context of a performance audit, a value-for-money audit of a government program.

I would just remind members that the government summary financial statements include total revenues approaching $225 billion, with total expenses of $260 billion and total liabilities of $883 billion. Those are some very big numbers. They reflect the total operations of the Government of Canada.

When we audit those accounts, we're focused on whether the systems and the controls and the transactions are properly recorded, properly approved, and captured in those summary financial reports. We express our opinion that for 12 years--and yes, it's a clean opinion--the government has properly recorded all those transactions and captured them in the financial statements.

As a specific example, would we look at the value for money of a decision to contract out certain expenditures? That wouldn't be the focus of our financial audit. That would be considered more in a performance audit or in something such as the case of the special examination of VIA Rail, as it's a crown corporation.

With respect to the member's questions on the economic action plan, as you know, we did a report on the economic action plan and tabled it last fall. Overall, as you are aware, Mr. Chair, it indicated that the government's initial stages of launching that economic action plan were well managed. In the second phase of that audit, we're looking at individual projects and how they are managed and delivered in the field. The report on that will be delivered later this fall.

[Meili Faille, Bloc, Vaudreuil—Soulanges, QC]

I have another question about the importance of the financial officer’s role in the various departments. These people from the finance committees and these financial officers play an essential role, which is to ensure that expenditures or invoices are processed appropriately and comply with the rules. There are over 4,500 financial officers working for the government. We are talking about program cuts, pressure to reduce the number of human resource employees. Do you think their involvement in the various programs should be protected and even stepped up to ensure a proactive approach in financial management and to fully support the whole accountability process?

[James Ralston]

I certainly agree with you with respect to the importance of the role of the chief financial officers. That has been underlined in some of our recent policy changes and reforms. We now expect that chief financial officers will report directly to the deputy heads and the chief executive officers. We expect them to be present at the senior management table along with other key department heads or branch heads. We do expect that their advice will be sought and that their advice will be listened to by deputies.

[Meili Faille, Bloc, Vaudreuil—Soulanges, QC]

I am happy to hear that answer. It's the one I wanted.

The environment issue is equally important. Could you give us a detailed analysis of the amounts invested in a strategy identified in the government documents? Among other committees, there is an interdepartmental committee working on it. It’s a strategy called the "oil sands advocacy strategy". We’re talking about...

long-term research trust for the oil sands.

I was wondering whether these activities are clearly identified in the Public Accounts.

[The Chair, Liberal, Joe Volpe]

Ms. Faille, perhaps Mr. Ralston or Mr. Wiersema will be able to answer your question later or provide an answer in writing to the committee clerk.

Okay?

Mr. Christopherson.

[David Christopherson, NDP, Hamilton Centre, ON]

Thank you very much, Chair.

Thank you all for your attendance today, and I offer my personal apologies, along with those of the committee, for the last time when we wasted your valuable time.

Mr. Wiersema, in your opening remarks you mention that it's been a clean opinion for 12 years. Since I've been here a little less than seven, I've never seen one that isn't clean. Prior to the 12 years, what were the issues when it didn't get a clean bill of health? I'm just looking for anything off the top of your head. It's not a die-hard question.

[John Wiersema]

It's a very good question, Mr. Chair, and I should have the answer at my fingertips, but I don't. I do recall that throughout the 1980s and 2000, the then Auditor General had issues with how the government valued certain of its assets and liabilities. There were issues related to how it accounted for transactions with foundations, like the Canada Foundation for Innovation. You will recall we had quite a number of issues about accountability and accounting for those transactions. A few years ago the government amended its accounting for the foundations to include many of the larger foundations in the public accounts of Canada, and to account for them properly.

There were issues in the past related to the valuation of what's called “sovereign debt”. That's the debt held by other countries. We had disagreements with the government on the proper book value of those amounts—

[David Christopherson, NDP, Hamilton Centre, ON]

I was curious.

[John Wiersema]

We're quite pleased and proud of the fact that Canadians and parliamentarians can receive the benefit of a good set of accounts, with the Auditor General's assurance that the numbers are reliable and they can be used as a basis for decision-making and accountability.

[David Christopherson, NDP, Hamilton Centre, ON]

Great. Thank you.

If I might turn to volume III, page 2.21, at the bottom of the page is “Public Works and Government Services”, and third down, under “Sponsorship Program”, $6,988,140 was the amount of the loss. Last year the amount recovered was $233,180, and then there's “amount not expected to be recovered”. I'm assuming this may be the last time this will appear here, and that's why I'm asking the question.

Is the balance $6,754,960? Can you help me understand, at least from an accounting point of view, what's going on there?

[Bill Matthews]

If you look at the disclosure around losses of public money, it's divided into a couple of chunks. We've got issues when we take losses that end up being heard by the courts. We don't actually disclose a loss until we can make a credible estimate as to how much was lost. If you're dealing with a process that's before the courts, such as many of these files on sponsorship, you'll see a delay of a few years in terms of when it's actually disclosed.

What you're seeing here is disclosure as a result of decisions made by the courts this year that confirmed there was a loss. The individuals or companies in question are now bankrupt, and they don't have resources to fund the recovery. Therefore, you're seeing that the amount expected to be recovered is minimal compared to the amount not expected to be recovered.

You may still see additional disclosure related to these as the courts continue to hear cases on sponsorship.

[David Christopherson, NDP, Hamilton Centre, ON]

Thank you. If I'm understanding correctly, the courts have said the people who owe this money don't have it and therefore you're not going to get it. Do you feel that's the end of the line on this amount of money?

[Bill Matthews]

We're making our best estimates as to the recoverability. If the corporations or individuals involved have now declared bankruptcy and there are no assets there, that is informing our disclosure here. The courts make a decision as to whether there's a loss. There's a separate process as to how much we think we'll actually get back. The individuals in question here are bankrupt, as I said, and there's not much in the way of assets to be recovered.

[David Christopherson, NDP, Hamilton Centre, ON]

Is that our judgment, or is that the court's judgment?