Government Operations Committee on March 28th, 2012

[Mathieu Ravignat, NDP, Pontiac, QC]

Your predecessor, Sheila Fraser, mentioned the following in a statement to our committee in September 2006:

... We concluded that Parliament would be better served if it also received information in the estimates and appropriations that was based on accrual accounting. Such an approach would make the process more consistent with the one used in the government's financial reporting of results.

The government has been studying this issue since 1998 without establishing a clear position on the direction it will take. I believe it is time, after eight years of study, that the government decide.

It is 2012. I have asked a few public servants about their preference regarding the use of a cash basis of accounting or accrual accounting, and they all said they prefer a cash basis of accounting. Do you agree with them?

[Michael Ferguson]

Certainly, yes, when it comes to financial statements, it needs to be accrual accounting, and we are definitely on record as having recommended that the government also follow an accrual approach in preparing the estimates.

[The Chair, NDP, Pat Martin]

You have one and a half minutes, Mathieu.

[Mathieu Ravignat, NDP, Pontiac, QC]

Some people suggest that we move the budget to the fall. That way, the financial cycle would be more efficient. We heard that during a meeting earlier this week. I was wondering what you thought of that suggestion, of changing the date of the fiscal year.

[Michael Ferguson]

Again, it's not something we have done an audit of. As I responded to the earlier questioner, it was a normal practice in New Brunswick on the capital budget side, and we did it once on the operating budget side.

On the operating budget side, the advantage, of course, was to certain organizations. Again, I'm thinking at the provincial level, but it was always a benefit to organizations like hospitals to have some lead time, before the year actually started, to know what their budget was going to be. On the other hand, when you try to do a budget that you are going to table in December, there are certain things like pension expense, where you are trying to foresee what the rate of return is going to be at the end of March, so it becomes more difficult to budget some items.

So there are some good parts to it, and then there are some things that would have to be worked out.

[The Chair, NDP, Pat Martin]

Thank you, Mathieu.

Thank you, Mr. Ferguson.

Next, for the Conservatives, Ron Cannan.

[Ron Cannan, Conservative, Kelowna—Lake Country, BC]

Thanks, Chair.

Thanks to you and your colleagues for being here, Mr. Ferguson.

This is officially a bilingual country, so I want to commend you on your English skills as well, on your very good English grammar.

[Voices]

Oh, oh!

[Ron Cannan, Conservative, Kelowna—Lake Country, BC]

But seriously, it's great to have you here. Your predecessor came to the committee several times, and we appreciate the work of the Auditor General in helping us, as parliamentarians, to oversee the public finances. It's sometimes a very daunting task when you see the volume of information we receive, especially when it comes to the estimates. On the other hand, we also want as much information as possible.

In your experience in New Brunswick, in trying to use that information as efficiently and effectively as possible, did you have any implementation of technologies using hyperlinks, for example?

[Michael Ferguson]

My recollection in terms of the budget information that was made public was that for the most part it was simply documents available on the Internet and that sort of thing.

[Ron Cannan, Conservative, Kelowna—Lake Country, BC]

Okay.

Just picking up on the comments of my colleague Mr. Ravignat about timing, how far in advance before the beginning of the fiscal year do you feel a budget should be presented to Parliament for consideration ?

[Michael Ferguson]

Again, it's not something we have done significant work on—or done any work on—as to what the right timing is. Anything I would say in response to that would be purely personal. Again, I think the only thing I can really say is that I have seen a budget prepared well in advance of the fiscal year and it had both advantages and disadvantages.

[Ron Cannan, Conservative, Kelowna—Lake Country, BC]

We've had several witnesses—and there's been some discussion even from the Treasury Board—saying that they have the availability to post monthly program spending. One of the suggestions from a number of witnesses was about moving from approval of votes to approval of programs. They feel that's giving Parliament more control over the estimates process. I'm just wondering what your thoughts are and whether you'd recommend that change moving forward.

[Michael Ferguson]

Again, because we just haven't done the work on that, it's not something I can comment on.

[Ron Cannan, Conservative, Kelowna—Lake Country, BC]

So in New Brunswick it was strictly on.... It wasn't on programs. It was on votes...?

[Michael Ferguson]

Well, I can describe to you how it worked in New Brunswick.

For the most part, there would have been a vote for a department on ordinary account; there would have been a number of programs within that ordinary account. Each one would have been described in the main estimates. But for that department, the amount that was actually appropriated would have been the total of all of those programs for that department.

So the programs were listed, but the vote would have been on the accumulation of all of those programs.

[Ron Cannan, Conservative, Kelowna—Lake Country, BC]

I guess we have some time yet to wrap this up. I'm just wondering when you think you will have your first complete cycle and be able to come back to report, with a better handle on recommendations, more fulsome recommendations, to the committee.

[Michael Ferguson]

The work we do in the Office of the Auditor General is that we conduct audits. We set an objective and a set of criteria, and then we audit to those. We haven't done an audit of the estimates process and we don't have an audit of the estimates process under way right now. It's not something we have planned to do. That's why it's difficult for me to make recommendations on these topics: because we just haven't put it through our process of audit.

[Ron Cannan, Conservative, Kelowna—Lake Country, BC]

I appreciate the limited amount of time in looking at the federal perspective, but from your time here, are there any specific nuggets you could recommend that we could include in our report in trying to learn from your experience and wisdom?

[Michael Ferguson]

You know, I think we are on record in the office as recommending accrual budgeting: that the main estimates be done on an accrual basis. I understand that there are some complexities to this and that you have to also consider the cash side of the appropriations. We are on record as recommending that the government move to accrual budgeting.

[Ron Cannan, Conservative, Kelowna—Lake Country, BC]

Thank you very much.

[The Chair, NDP, Pat Martin]

Thank you, Ron.

Thank you, Mr. Ferguson.

That segues nicely into one of John's favourite subjects.

John McCallum, for the Liberals.

[John McCallum, Liberal, Markham—Unionville, ON]

Thank you, Mr. Chair.

Welcome to Ottawa, Mr. Ferguson.

I would like to start with a question on the G8 Legacy Fund.

I'm sure you're aware of this issue over the G-8 legacy fund, which was supposed to be for border infrastructure but ended up being used in Muskoka. So I guess my question to you is whether there are.... I mean, we're not saying that transfers should never be made, but we are suggesting that parliamentarians should at least be informed when such transfers are made.

My question is whether there's a mechanism that would require the government to inform us of such changes and what that mechanism might be.

[Michael Ferguson]

Again, in terms of the details of the mechanisms and the internal workings, it's not something we have done an audit of, so I think it would be the government officials who would have to tell you what those actual processes are. It's not something we've looked at or made a recommendation on.

[John McCallum, Liberal, Markham—Unionville, ON]

I thought you did do an audit of the G-8 legacy fund.