Evidence of meeting #122 for Government Operations and Estimates in the 44th Parliament, 1st Session. (The original version is on Parliament’s site, as are the minutes.) The winning word was audit.
A recording is available from Parliament.
2:05 p.m.
Conservative
Garnett Genuis Conservative Sherwood Park—Fort Saskatchewan, AB
Okay, thank you.
Has Mélanie Joly been briefed on this audit?
2:05 p.m.
Assistant Deputy Minister and Chief Financial Officer, Corporate Planning, Finance and Information Technology, Department of Foreign Affairs, Trade and Development
I don't know if she was specifically briefed, but I do know that her office has been briefed on the results of this audit.
2:05 p.m.
Conservative
2:05 p.m.
Conservative
The Chair Conservative Kelly McCauley
I'm sorry. I have to interrupt. We are past our time.
Mr. Baines, please go ahead.
2:05 p.m.
Liberal
Parm Bains Liberal Steveston—Richmond East, BC
Thank you, Mr. Chair, and thank you to our witnesses from the department for joining us.
I requested to sit on the OGGO committee to look at improving the operations of government and finding efficiencies. The work you're doing here of reviewing procurement is ultimately to find those efficiencies.
My understanding is that this report was a routine audit conducted under the approved 2023 to 2025 risk-based audit plan of Global Affairs Canada. Can you explain how the plan was developed and approved?
2:05 p.m.
Assistant Deputy Minister and Chief Financial Officer, Corporate Planning, Finance and Information Technology, Department of Foreign Affairs, Trade and Development
I'll turn this one over to my colleague Natalie Lalonde.
2:10 p.m.
Chief Audit Executive, Office of the Chief Audit Executive, Department of Foreign Affairs, Trade and Development
Every year, we do a risk assessment of the operations of the department. With the resources we have, we determine a certain number of engagements to take on.
Internal auditing is a fairly policy-based function, and there are certain rules we need to apply. We have an independent departmental audit committee that supports operations and gives advice and guidance to the deputy heads. That committee is composed of four external members outside of the public service.
We present the report to the departmental audit committee. They review it, they ask a lot of questions and, if they agree, they recommend it for approval by the deputy minister. Ultimately, the approval is obtained by the deputy minister, and then we can go ahead with the work we have planned.
2:10 p.m.
Liberal
2:10 p.m.
Chief Audit Executive, Office of the Chief Audit Executive, Department of Foreign Affairs, Trade and Development
It takes several risk factors into consideration. What we look at—gosh, I'd like to show you the spreadsheet—is so wide and large. We try to—
2:10 p.m.
Liberal
Parm Bains Liberal Steveston—Richmond East, BC
How does the plan lead to specific audits being conducted? How many risk factors need to be hit before an audit is conducted?
2:10 p.m.
Chief Audit Executive, Office of the Chief Audit Executive, Department of Foreign Affairs, Trade and Development
Once we complete our risk assessment, we look at the potential engagements we can do during the year, and we prioritize a certain list specifically.
2:10 p.m.
Liberal
Parm Bains Liberal Steveston—Richmond East, BC
A concern I have, as we've seen, in procurement and contracting—we've discussed this in this committee before—is that in many instances, the procurement process hasn't changed for over 20 years. One issue we find is that many contractors and subcontractors know one another. They work on several different duties, and over time, relationships are built.
I'm just wondering how all of these things are mitigated.
2:10 p.m.
Chief Audit Executive, Office of the Chief Audit Executive, Department of Foreign Affairs, Trade and Development
Thank you very much for the question. I'm not sure I understand it.
As to the reason we did this audit, we do several contracting audits within a five- or six-year period. Understanding the issues that arose from other departments and other audits that were published last year, we thought it was important for us to look at our own practices and report proactively the results of the assessment. Therefore, we published the report on our website.
2:10 p.m.
Liberal
Parm Bains Liberal Steveston—Richmond East, BC
Given the significant series of world events that Global Affairs has responded to over a five-year period, there were a significant number of consulting services contracts. Can you outline the breadth of the consulting services that GAC contracts for, or the activities?
2:10 p.m.
Assistant Deputy Minister and Chief Financial Officer, Corporate Planning, Finance and Information Technology, Department of Foreign Affairs, Trade and Development
There are a couple of figures that I can give you. Over the last five years, the department has entered into contracts worth over $3 billion. These contracts span a number of areas, including our security guards in missions abroad, construction and various services. There's a vast array of procurement and contracting that the department does.
2:10 p.m.
Liberal
Parm Bains Liberal Steveston—Richmond East, BC
Do you mean for security at consular services, or maybe for international development and international trade? Can you give me some examples there?
2:10 p.m.
Assistant Deputy Minister and Chief Financial Officer, Corporate Planning, Finance and Information Technology, Department of Foreign Affairs, Trade and Development
Our department has some funding reserved specifically to address issues at our embassies relating to security. It's called our duty of care. Certainly, we enter into some contracts using that source of funds. Those contracts are predominantly for hiring security guards, for example, at our missions abroad. They're also for hiring different vendors to help with maintenance and the like in our vast missions portfolio.
2:15 p.m.
Liberal
Parm Bains Liberal Steveston—Richmond East, BC
Can you explain how the volume historically compares to the longer-term trends?
2:15 p.m.
Assistant Deputy Minister and Chief Financial Officer, Corporate Planning, Finance and Information Technology, Department of Foreign Affairs, Trade and Development
If I go back to 2017-18 and the number of contracts that the department entered into, we're looking at about 1,500 contracts. In comparison, in 2023-24, the volume of contracts has decreased significantly. It's almost by half, so 7,676. I think these numbers reflect and are in line with the direction of the government, if you think about the recent refocusing government spending exercise. All government departments were asked to reduce professional services.
I think this number really demonstrates what we've done within the department to reduce our spending on consulting services. However, as I mentioned, a lot of consulting services are unavoidable given our contracting for security guards at missions abroad.
2:15 p.m.
Conservative
2:15 p.m.
Conservative
Kelly Block Conservative Carlton Trail—Eagle Creek, SK
Thank you very much, Chair.
We now know that there is a widespread problem of government officials working as contractors and getting contracts from the Government of Canada. The most infamous case, of course, is the arrive scam app contractor. Dalian's founder was paid $9 million for the app and was also working at DND. In fact, he signed a contract with the government on the very first day he started working at DND.
Treasury Board submitted documents to this committee on all conflicts of interest from government officials working as contractors. It included information from Global Affairs. They claim that one official signed a contract and that there was no conflict, but in the audit, it was clearly stated that one contract was approved by an individual who benefited from that contract.
Is this not a direct conflict of interest?
2:15 p.m.
Assistant Deputy Minister and Chief Financial Officer, Corporate Planning, Finance and Information Technology, Department of Foreign Affairs, Trade and Development
I welcome the opportunity to clarify that particular situation.
Concerning the one instance in the audit where an individual benefited from the transaction, it was a contract put in place for coaching services for one of our managers within the department. The contract was for a value of under $5,000, and it was split over two fiscal years.
In this instance—
2:15 p.m.
Conservative
Kelly Block Conservative Carlton Trail—Eagle Creek, SK
I'm just going to stop you there, because I don't think the dollar amount matters and I don't think it was extended over two years.
Do you not consider it a direct conflict of interest if someone who works in a department is getting a contract from that same department?
2:15 p.m.
Assistant Deputy Minister and Chief Financial Officer, Corporate Planning, Finance and Information Technology, Department of Foreign Affairs, Trade and Development
In this particular instance, what happened was the employee put in place a contract for coaching services. When the invoice came in, the invoice was scheduled to be paid by her manager from her manager's fund centre. In this instance, that manager was actually acting on behalf of her manager when the invoice came in, and she signed for that contract.
By regulations, that employee was in the wrong and they should not have signed that payment because they did benefit from the transaction. What I can say is that there was no mal-intent. I think it was just an administrative oversight. We have—