Evidence of meeting #8 for Public Accounts in the 41st Parliament, 2nd Session. (The original version is on Parliament’s site, as are the minutes.) The winning word was departments.
A video is available from Parliament.
5:05 p.m.
Principal, Office of the Auditor General of Canada
Well, the manual was developed in 2004, but it didn't really begin to be used until 2008.
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Conservative
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NDP
The Chair NDP David Christopherson
Mr. Woodworth, sorry, sir, but once again time has worked against you.
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NDP
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NDP
Dan Harris NDP Scarborough Southwest, ON
Thank you very much.
I'll jump right into it so we can get in a little bit more questioning.
Mr. Ferguson, in recent times you've expressed a concern.... We know how important the work of your office is. The public accounts committee is an important part of reviewing the work so that we can write reports that go back to Parliament and get responses from government to see some action moving forward.
Recently you've expressed some concerns that the committee is not studying as much of your reports as it used to. Your fall report has just come out. The spring report came out in late April and to date, this committee has studied only one chapter of it. To date there is no plan to go back and study more chapters of it, and some important chapters like those on search and rescue.
Because we have five or six months before your next report comes out, do you believe this committee should, over the next few months, go back and study more chapters from the spring report?
5:05 p.m.
Auditor General of Canada, Office of the Auditor General of Canada
Mr. Chair, the work schedule of the committee is up to the committee. We do the audits, and we present the audits to the committee. I think there were a number of important audits in the spring report. There are a number of important audits here as well.
Certainly, we feel it helps to get our message through to the departments as well if there are hearings on the audits. Our preference is that there be hearings on as many chapters as possible, but again, it's up to the committee to decide its work schedule.
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NDP
Dan Harris NDP Scarborough Southwest, ON
Absolutely, and certainly that's a very good point about how the committee having hearings actually helps to get the information out and to get messages to departments about improvements that should be made. It's part of the very important oversight that we provide in support of the exceptional and world-renowned work that your office does.
I certainly would look across to my colleagues in the hope that we can find a way to study some more chapters in the previous report.
5:05 p.m.
An hon. member
Focus on this one.
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NDP
Dan Harris NDP Scarborough Southwest, ON
Focus on this one? We haven't even focused on the last one yet, and moving forward we certainly need to have a look at more chapters so that we can actually get some improvements in, for instance, on search and rescue before the next report comes out in the spring.
We have six months. We have lots of time to get that work done on this report and the last one.
Now following up on Mr. Albas' comments about the changes at the border, previously, Mr. Ferguson, you stated, “I am very concerned that our audit found too many examples of controls not working.” You further stated:
Though it is not the first time we have raised these issues, border controls are still not working as they should. With better analysis of existing information and better monitoring, many of these issues can be fixed.
When was it that you first raised these issues?
5:10 p.m.
Auditor General of Canada, Office of the Auditor General of Canada
I believe we raised some of these issues in the 2007 October report. Since then we've seen that the agency made some progress in terms of how they managed targets, but in terms of how they managed lookouts we found that they really hadn't made progress since 2007.
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NDP
Dan Harris NDP Scarborough Southwest, ON
That's six years ago, and there has still been no progress from CBSA on lookouts.
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Auditor General of Canada, Office of the Auditor General of Canada
That was our assessment. Again, they've made progress since then on how they manage the targets, but not the lookouts.
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NDP
Dan Harris NDP Scarborough Southwest, ON
Thank you very much. That proves my point about why we need to continue to be vigilant about previous AG reports and what's in them, so that we can actually see action that is going to make Canadians safer.
Now, on to shipbuilding. We're very early in the process and you state that you're optimistic that the process can go well. However, you stated that with the current money and caps that have been allocated there's no way for the government to actually be able to meet its commitment to build 15 ships. Is that correct?
5:10 p.m.
Auditor General of Canada, Office of the Auditor General of Canada
What we've said is based on the evidence we've seen right now that exists, the departments themselves are indicating that on the surface combatants for the $26 billion they will only be able to acquire a lesser number of ships, lesser than 15. We don't know what the exact number would be.
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NDP
The Chair NDP David Christopherson
Thank you, Mr. Harris.
Over to Mr. Carmichael, vice-chair of the committee.
You have the floor, sir.
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Conservative
John Carmichael Conservative Don Valley West, ON
Thank you, Mr. Chair.
Mr. Ferguson, I'd like to move to chapter 9, on offshore banking, if we could. I have two areas I'd like to address.
The audit looked at how the Canada Revenue Agency has followed up on a list it received in 2007 of possible Canadian residents with accounts in Liechtenstein banks. The audit examined whether the agency adequately conducted compliance actions for those named on the Liechtenstein banks list and used the intelligence gained to confirm its detection and audit procedures for offshore banking. This seems to be a very positive objective and something that was well achieved.
My first question is about how your report sheds light on the use of non-prosecution agreements by the CRA as a means of gathering information and intelligence. You concluded that this was a proper approach.
I wonder if you could comment on the approach and on why this particular approach was necessary and why we're better served today because of the intelligence gathered.
5:10 p.m.
Auditor General of Canada, Office of the Auditor General of Canada
What we found was the agency decided to use those agreements as part of the process for managing the list. They felt that by doing that they would be able to gather information about how some offshore tax avoidance schemes are put in place.
They were able to gather information about how some of those schemes are put in place. From that they were able to identify that they already have some sources of information themselves that would help them identify where there are some of these schemes. I think, though, it's also important to note, and I just want to make sure it's clear, that at the end when they were doing their list there were 46 family groups that they could follow up on, and for 23 of those they ended up assessing more tax as penalties and interest, but for another 23 there was nothing else that needed to be assessed.
I think it's important to remember that just because people have offshore bank accounts, it doesn't mean they're not declaring income.
5:10 p.m.
Conservative
John Carmichael Conservative Don Valley West, ON
I understand the concept, and I agree with you.
Was it 23 who didn't require follow-up because they were in compliance with our tax laws?
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Auditor General of Canada, Office of the Auditor General of Canada
There was nothing there, certainly, that CRA had to assess in terms of additional taxes.
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Conservative
John Carmichael Conservative Don Valley West, ON
Thank you.
I don't want to put words in your mouth, so you can stop me at any point. You concluded that the CRA was diligent in its approach with the Liechtenstein lists and bank procedures. In your conclusion, paragraph 9.46, you state:
We concluded that overall, the Canada Revenue Agency adequately conducted compliance actions for those named on the Liechtenstein list. It followed its own procedures to determine which files to audit and how to conduct those audits. Agreements allowed the Agency to learn about the structure of these investments, which was in line with the project goals.
Previously, in paragraph 9.36, you go on.... This is what I wanted to ask you. Based on your review of the Liechtenstein project, do you feel the measures that were introduced in economic action plan 2013 will meet the objective of ensuring that we have greater scrutiny in the future of these types of situations?
5:15 p.m.
Auditor General of Canada, Office of the Auditor General of Canada
What we've identified—and we refer to the legislative changes in paragraph 9.36—is that the agency will now have access to more information so that they can identify some of these schemes more quickly. That will give them more information. They also have more lists.
The concern we've raised about that is they'll have all of this information. How are they going to manage the increased workload that will come along with more lists, more information, and now more knowledge about how these schemes are put into place? How are they going to manage that moving forward?
