Government Operations Committee on June 13th, 2006

[Charles-Antoine St-Jean]

There might be. I've been looking at some ways--and I have not been able to discuss it with my colleagues from the Auditor General's office or my colleagues from Treasury Board Secretariat--of maybe how to record these kinds of liabilities separately on the balance sheet. Those could be liabilities that are voted appropriations, liabilities that are statutory appropriations, and liabilities that would be with no appropriation. So we would be disclosing those on the balance sheet. Then that would trigger a discussion in the estimates in terms of, “Tell us, please, ladies and gentlemen, what is this line here, what is the composition of it, and what are you going to be doing about it?” That way, you could make an informed decision in terms of discharging that liability or not.

[Chris Warkentin, Conservative, Peace River, AB]

I think we've maybe come up with a solution that would actually elevate the ability of parliamentarians to access this, to know that money hasn't yet been put forward but it is a possible liability if we do head down that road.

I can see that there are solutions to many of the problems we can identify. I realize it's going to take time and some cooperation from Parliament in order to make this work, but my sense is that it can happen and that it would happen.

As Ms. Fraser knows, I have some questions about the federal government's ownership of property and just how we allocate the liability of the work that needs to be done on it. I think this might be another method we can use to ensure that the debt is documented.

I'm just wondering whether anybody has done any figuring as to what it is costing the federal government, on a yearly basis, to move the numbers from the cash accounting to accrual-based accounting. There has to be a significant dollar value. So whether we're talking about tens of millions or maybe even $200 million, over a number of years, I can imagine that money must be spent anyway.

[Charles-Antoine St-Jean]

At the risk of error--

[Chris Warkentin, Conservative, Peace River, AB]

At the risk of error.

[Charles-Antoine St-Jean]

--because it's very complex.

[Chris Warkentin, Conservative, Peace River, AB]

And this constant year-by-year basis.

More and more, I'm convinced that we have to do this, and as soon as we possibly can. It's important. So I'll just add my voice to that of most people around the table, that we have to go into an in-depth study of this and see if we can't make some of this happen sooner rather than later.

[The Chair, Liberal, Diane Marleau]

Thank you. I happen to agree with you. I think it would be very appropriate.

Madame Thibault.

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

Mr. Moloney, could you tell me how much the PricewaterhouseCoopers study cost? Half a million dollars?

[Charles-Antoine St-Jean]

No. Approximately $350,000 or $400,000.

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

Is it finished now? Is that amount inclusive?

[Charles-Antoine St-Jean]

That's the study to March 31, which includes the report's findings.

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

I have a question for you, Mr. St-Jean.

On page 32 of her report, which you must know by heart, the Auditor General states her assessment of the progress made and whether it's satisfactory or hasn't been achieved. She refers to two unsatisfactory points in the case of your office. However, I have to admit that there are also two satisfactory points. Ultimately, that gives you a mark of 50 per cent.

Can you give us an explanation about the first two points, in view of the time that has since elapsed? Where do you stand more than one year later?

[Charles-Antoine St-Jean]

Thank you for your question, madam.

I started my term two years ago. When I arrived at the Office of the Comptroller General, I had a group of approximately 65 or 70 individuals. I put in place a plan to restore the group to the size it was in 1993, that is more than 200 persons. I started rebuilding the Office of the Comptroller General by introducing a number of initiatives, conducting an internal audit—and the discussions were quite heroic—developing models to resolve the issue of departmental comptrollers, rebalancing the organizational model and reviewing the various financial management policies.

There were various financial management instruments, which, at times, were called policies, and, at others, guidelines or directives. It was very confusing. We prepared an inventory of all those instruments and established a model.

That model, a kind of reference framework for financial management, comprises five basic policies. Four of them have already been redrafted and the fifth should be complete at the end of June. This financial management framework will be reviewed by the committee that the president has announced and it will consist of a certain number of deputy ministers and two private sector finance directors. They'll give us the directives that will enable us to determine whether that's the direction we want to take.

Is the process quick enough? No, I'd like to go much faster.

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

You've partly developed that framework. Was that because of a need to reorganize or because you didn't have the necessary staff at the Office of the Comptroller General?

Going back to the phenomenon of reluctance, you aren't acting in isolation. What are the terms of your cooperation with the various partners?

[Charles-Antoine St-Jean]

The study on budget allocations, which was conducted mainly with my colleague from the Treasury Board Secretariat, David Moloney, and his predecessor, isn't easy. There are various quite fixed view points. We have to inform people and see what the potential solutions are.

We decided to conduct that study jointly with my colleagues from the Expenditure Management Sector and the Office of the Comptroller General in order to get an idea of the situation and to determine potential solutions. We received the findings two months ago.

We're cooperating and we're making headway, not fast enough, but we're making headway.

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

I'm going to quote the third recommendation that appears in the recommendations table to make sure we're talking about the same thing.

The Office of the Comptroller General, in cooperation with departmental and agency management, internal audit groups, and audit committees, should ensure that departments and agencies identify and address the internal control weaknesses...

Why wasn't that done within a reasonable period, since the workload has resumed? You have to ensure that departments and agencies identify their weaknesses, but it's not up to your office to do so, is it? I hope you're not a sprawling organization.

How can we ensure that the departments and agencies have done this work, as they are required to do? It's up to you to ensure that they have. I'm not much in favour of coercion, but can you verify whether the work has been done for employment contracts or performance bonuses, for example? If work should be done and isn't, someone must be responsible for that lack of action. Perhaps I'm oversimplifying, but I don't understand how this kind of thing can be implemented within the allotted time, in view of the various stakeholders involved.

[Charles-Antoine St-Jean]

That's quite a complex question. We can receive directives from the centre to do this or that. I can apply them to 125 government organizations, but there aren't enough hours in a day to do that.

Instead I'm trying to put in place a form of governance in each of the departments that will make it possible to monitor them. That's why we want to put departmental comptrollers in place. It will be up to them to establish internal controls within the department and to report to the deputy minister. There will also be audit officials. Their work will be to give the deputy minister assurances that the internal controls that the departmental comptrollers must put in place have indeed been put in place. I'm introducing a system of governance, in addition to establishing audit committees—

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

Pardon me for interrupting, Mr. St-Jean.

What I don't understand is that the people who are in place, be they finance directors, managers, and so on, have duties and responsibilities. These are intelligent people, who have a certain discipline.

You referred to governance. I understand you have a role to play and that you want to inspire the departments and so on. But the departments must also have governance responsibilities and objectives. That has to fit together at some point, or there will be a lack of understanding. But I don't believe the lack of understanding is total. How is it that this isn't being implemented?

[Charles-Antoine St-Jean]

There is a question of lack of understanding.

When I speak with my deputy minister and other colleagues, I tell them that, within a few years, they will be signing an internal control statement. They don't jump for joy. However, that's what is asked of private sector executives. Senior managers and finance directors sign internal control statements. That's going to come. It will be a reality. That's what that means.

Go and see what the English record on their statements on internal control. Go and see what accounting officers declare every year about their weaknesses. They report their own weaknesses. They're told what they have to confirm each year. So the answer isn't always clear in terms of internal control.

Even the Auditor General and I are used to that. We've always been around it. However, some of my colleagues who work in other departments may not understand things in the same way. My work is to try to educate them, to put instruments in place so that things are clearer and more visible, and to push them to do things. That's what the Auditor General and I are trying to do.

[The Chair, Liberal, Diane Marleau]

Thank you.

I think this committee will be moving forward on some kind of a study of this. I'm seeing all the scurrying going around.

[Mike Wallace, Conservative, Burlington, ON]

There is a notice of motion.

[The Chair, Liberal, Diane Marleau]

That's fine.

I think we'll also call a subcommittee meeting to discuss a plan so we're ready for it.

Before we go ahead into this, I'd like to make sure that we will have access to the report on the study that was commissioned. So might I suggest that the people from the Treasury Board Secretariat try to move that forward to the minister, so we can then have access to this kind of information before we go into a full study of the issue? I think that would be important. It's just my guess at this point that we're going in that direction, but I think it's a pretty good guess.

Yes, Madam Fraser.

[Sheila Fraser]

Madam Chair, I'm was wondering, too, if the committee would want to have briefings on accrual accounting. I realize not everyone knows this stuff.

[Mike Wallace, Conservative, Burlington, ON]

I'm so excited.

[Sheila Fraser]

We could have briefings on accrual appropriations.