Thank you, Mr. Chair.
We thank you for this opportunity to discuss the results of our last special examination of the Canadian Broadcasting Corporation, CBC.
The examination was carried out between April 2004 and April 2005, and we presented our report to the board of directors on November 29, 2005. The report was subsequently made public by the corporation on December 7, 2005.
As you mentioned, I am accompanied today by Richard Flageole, Assistant Auditor General, and Julie Charron, principal, who were responsible for this examination.
I would like to begin by explaining that special examinations are a key component of the control and accountability framework for federal crown corporations. Our mandate for such examinations is outlined in legislation and consists of expressing an opinion on whether the corporation has systems and practices in place to provide reasonable assurance that its assets are safeguarded and controlled, that its financial, human, and physical resources are managed economically and efficiently, and that its operations are carried out effectively. A special examination must be conducted at least once every five years, and the results are provided to the board of directors.
Since your committee is currently conducting a full investigation of the role of a public broadcaster in the 21st century, it is important to note that we do not comment on the appropriateness of the CBC's mandate in our examination. In fact, the legislation expressly prohibits us from expressing any opinion on the merits of the mandate given to the CBC by Parliament.
However, we did examine how the CBC measures its performance and reports the results achieved under its current mandate. We found that in order to demonstrate its level of efficiency and the extent to which it is meeting its corporate objectives, the CBC had to develop and implement a corporate-wide performance management framework; provide better costing information for programming and activities; and make improvements in internal and external reporting practices.
Weaknesses in these areas led us to conclude that the systems and practices we examined had a significant deficiency in terms of the CBC's internal and external accountability.
Specifically, we found that although the CBC had developed a certain number of performance indicators that included both quantitative and qualitative indicators to reflect its role as a public broadcaster, these indicators were incomplete. These indicators addressed primarily programming and not the other five strategic areas and priorities identified in the CBC's corporate plan—efficiency, creative human resources, strategic partnerships, collaboration, and strong stakeholders relationships. Moreover, we noted that the development and use of targets to set performance expectations varied among the media lines and other corporate functions; some had clear and measurable targets, while others did not. The lack of such targets makes it difficult to assess how well the corporation is fulfilling its mandate.
In addition, we noted that senior managers did not have relevant costing information for programming and activities to assess the efficiency of CBC's operations. More specifically, management reports did not break down the costs of activities by major categories, such as staff costs, operating costs, and facilities costs. Having these would allow for comparisons over time as well as with similar activities within the corporation and with those of external organizations. Further, the format and contents of the reports were not consistent within and between media lines and other components. As a result, it is difficult, and in some cases not feasible, to compare performance and costs between networks.
We also found a number of weaknesses in external reporting practices, including a lack of performance measures and targets in the corporate plan, inconsistencies between the performance indicators presented in the annual report and those developed internally, and a lack of alignment between the financial information in the corporate plan and that in the annual report.
Other than annual expenses for media and other corporate functions, the financial information provided in the annual report does not demonstrate the resources targeted and used to achieve the corporation's objectives. In our view, significant improvements in external reporting practices, including reporting to Parliament, are needed to meet public accountability expectations of a corporation with the size and importance of the CBC.
Finally, Mr. Chair, I would like to note that we did note many areas of strength in the corporation's systems and practices, as well as other opportunities for improvement, and these are described in more detail in our report.
Mr. Chair, we discussed all these observations with senior management and the board when we presented our report in 2005. They agreed with our observations and assured us that our recommendations would be acted on. We understand that the CBC has undertaken several initiatives to address our recommendations, but we have not conducted any follow-up work on these initiatives and cannot comment on their effectiveness. The committee may wish to ask the CBC about the actions taken and the progress made in this regard.
Thank you, Mr. Chair. We would be pleased to answer any questions the committee might have.
