Government Operations Committee on May 30th, 2006

[Louise Thibault, Bloc, Rimouski-Neigette—Témiscouata—Les Basques, QC]

Thank you, Madam Chair. Ms. Fraser, gentlemen, thank you for being here this morning.

Ms. Fraser, my first questions are for you. On page 2 of this volume, in the section on observations and recommendations, you make some very important points. In particular, you say:

Secretariat accounting officials were asked to look for an accounting treatment that would, if possible, avoid having to record all the CFIS II costs.

That was subsequently done, obviously, although the decision wasn't the right one, but was it done with the approval of Treasury Board Secretariat officials?

[Sheila Fraser]

Yes, the Treasury Board Secretariat took part in the discussions. As we stated in the report, there were different opinions. We had a lot of trouble obtaining documentation. There were no documents on certain important decisions or certain important meetings, and our audit had to be limited to internal government correspondence. We observed that different people had different opinions on the accounting treatment, but, with the accounting in the financial statements, the Treasury Board Secretariat ultimately accepted the accounting treatment.

[Louise Thibault, Bloc, Rimouski-Neigette—Témiscouata—Les Basques, QC]

Ms. Fraser, you may answer my question first, then the Comptroller General will answer in turn. I won't describe his role, but the Office of the Comptroller General is part of the Treasury Board Secretariat. I have some concerns where a government entity such as the one that handles the Canadian Firearms Program can get authorization from certain Treasury Board officials to make a decision that, if I understand correctly, constitutes a circumvention. That shouldn't have happened. How can the Comptroller, who is part of the same entity, subsequently ensure that the decisions will stand? That's why I asked my question. However, since I only have seven minutes, I'll continue with you, Ms. Fraser, with your permission.

In 2002, if my memory serves me — if it doesn't you can correct me — at the time of your audit of the Canadian Firearms Program, you said that you had not obtained access to certain documents or to all documents, and you told me the same thing in answer to my previous question. In this instance, do you feel you had access to the documents your team and you needed?

[Sheila Fraser]

Yes. In 2002, the records and files were incomplete, and it was therefore impossible for us to complete our cost audit. This time, to our knowledge, we were able to obtain all the documentation, but we noted in the report that we expected there to be documentation on certain decisions and certain meetings, but there wasn't any.

[Louise Thibault, Bloc, Rimouski-Neigette—Témiscouata—Les Basques, QC]

On page 9 of the document I cited earlier, you say that the Office of the Auditor General did not audit the records of private sector contractors. We know that the private sector plays a major role in this regard. Is this something you don't do, or something you chose not to do? In my view, the private sector's mandate in relation to an audit is very important, since public funds are involved.

[Sheila Fraser]

Our mandate is limited to the federal government. We don't have a mandate to audit the records of a private sector contractor. We meant to state very clearly that our findings applied to federal government management and practices, not to the management of a private sector contractor.

[Louise Thibault, Bloc, Rimouski-Neigette—Témiscouata—Les Basques, QC]

So you're not saying that you can't examine the relationship between the government and a private business that has obtained a contract from a government body. For example, a contract is obtained and expenses are incurred in relation to major objectives, but you can't audit that because that's not part of your mandate.

[Sheila Fraser]

We don't audit the private sector.

[Louise Thibault, Bloc, Rimouski-Neigette—Témiscouata—Les Basques, QC]

Thank you very much.

Now I'd like to ask a question concerning computer system costs. Having read the previous documents, I know that was a major concern. I can't find any analysis on the subject. Did you audit that, and are you certain that the contracts granted for all matters pertaining to computer services were granted in accordance with the rules?

[Sheila Fraser]

As Mr. Bennett mentioned, we discovered problems concerning the awarding of contracts for computer services and contract employees. Some people repeatedly obtained contracts. They seemed to be using a system that had to be open and they always managed to retain the services of the same contractor over years. We said that the system wasn't really competitive and that we had to review it.

[Louise Thibault, Bloc, Rimouski-Neigette—Témiscouata—Les Basques, QC]

Now, do you think that costs are under control?

[Sheila Fraser]

I would hesitate to give an opinion on the future, Madam.

[Louise Thibault, Bloc, Rimouski-Neigette—Témiscouata—Les Basques, QC]

I was wondering whether, at the end of your review, you could say whether you had made such and such a recommendation and whether you were satisfied. I don't want to talk to you about the future, Ms. Fraser, I know that's not part of your mandate.

[Sheila Fraser]

We believe that management has vastly improved. We observed that a lot of efforts had been made to improve the process. However, we nevertheless noted a problem with regard to the second system: costs tripled and the system still isn't working. So there's a problem in that regard. As a general rule, however, we noted significant progress.

[The Chair, Liberal, Diane Marleau]

Thank you.

Mr. Wallace.

[Mike Wallace, Conservative, Burlington, ON]

Thank you, Madam Chair, and thank you, everyone, for coming this morning and providing us with an opportunity to ask you some questions.

I have two questions for the Auditor General to start with.

It was indicated just this morning in your report...and I think Mr. Baker also commented on the legislative delays that have occurred in getting the system ready for whatever regulations ended up coming. In your report to us this morning, you talked about the costs tripling to about $90 million, and you actually used the words “avoidable delay costs”. Could you respond to me as to whether the legislation piece was part of those avoidable delay costs, and what other avoidable delay costs there were, or what avoidable delays there were?

[Sheila Fraser]

Madam Chair, the delay costs were essentially due to the delays in having a final legislative base for it. We raised the issue that there were similar problems in developing the first system. One would have hoped that lessons would have been learned from that, and that before this development of the second system there would have perhaps been more certainty around it. About $30 million of the $90 million were delay costs.

[Mike Wallace, Conservative, Burlington, ON]

I'm not a gun owner and will never be one. In terms of this new legislation that came in 1995 on the long gun registry, we had a system, I'm assuming, to deal with pistols and stuff that were registered. Was this system built on top of that, or was it a completely new approach?

[William Baker]

Thank you, Madam Chair.

The previous regime is commonly referred to as the FAC, the firearms acquisition certificate system. That system had been in place for many years. It operated off a different system, the restricted weapons registration system, the RWRS.

The passage of the Firearms Act required the putting together of an entirely different system platform to support the new requirements of the Firearms Act, which of course moved from several hundred thousand handguns to what is now today over 7 million firearms of all types, plus universal licensing of everybody. Essentially the old system handled people coming in the door for the first time. There would be a check on their background and then it was issued. With the Firearms Act, everyone who wishes to acquire or use a firearm has to have a valid licence, which expires roughly every five years. It's a new system dealing with considerably greater volumes of transactions.

[Mike Wallace, Conservative, Burlington, ON]

You amalgamated the previous information into this new system. Is that correct?

[William Baker]

As people's firearms acquisition certificates expired, they had to acquire a firearms licence under the new act. As they acquired a licence, the data was migrated. The old data is available for investigative purposes, but it was not integrated with the new data.

[Mike Wallace, Conservative, Burlington, ON]

I have another question for the auditor. You have strong language around the part of the accounting procedures that you felt were inappropriate. You call them accounting errors. My question is this. I may make an adding error. That's human error. Would you say that, the way the accounting of this was done, it was in a more deliberate manner, that is, that it was a conscious decision to do this and not just an error?

[Sheila Fraser]

Thank you, Madam Chair.

We use the term “error” because the treatment was wrong, in our opinion. But there was a conscious decision not to record the $21.8 million, the second error. We do not see any documentation around the first error of the $39 million, which has been recognized, by the way, by government as an error.

So yes, for the second accounting error there was a conscious decision not to record those amounts.

[Mike Wallace, Conservative, Burlington, ON]

I think you're very clear on the accounting side. As somebody new here and new to the system, I was really taken aback by the verification aspects of the program we have.

Mr. Baker, I would like your comments. Do you think it's adequate that we have no performance standards, that verifiers can verify their own weapons?

In this book on page 115, the auditor goes through it quite heavily. I'd like to hear your comments on the verification aspects of the registry.

[William Baker]

Certainly, Madam Chair.

The system is by no means perfect to verify firearms, but I wouldn't qualify it as completely inadequate either. To understand how this works, if I may take a moment, first of all there's a central registry where all of the firearms registration information is contained. For any entry to make it into that registry--for instance, if you acquired a firearm and someone verified it for you and said it's “this type” of firearm--that information has to be communicated to the central registry. It is not taken at face value at all.

We have something called the firearms reference table, which is developed by the RCMP with the cooperation of the Firearms Centre and is a comprehensive listing of every make, model, and variation of firearm in the country. So when you come in and say, I've got a Cooey machine gun, there's no way in the world that this firearms reference table is going to say there is a Cooey machine gun. Well, we wouldn't let you keep a machine gun anyway, probably.

So there are checks in the system. Also, we do have expert verifiers at the registry who are able, particularly for obscure firearms, to make those distinctions.

We do rely on what is called a volunteer network of verifiers. This means when you acquire a firearm, you have to take it to an approved verifier on a voluntary basis--i.e., the person is not compensated--who will look at it and attest that this is the firearm you say it is.