Government Operations Committee on Oct. 8th, 2024

[The Chair, Conservative, Kelly McCauley]

Good morning, everyone. Happy Tuesday!

I call this meeting to order.

Welcome to meeting number 144 of the House of Commons Standing Committee on Government Operations and Estimates, widely known as the mighty OGGO, also widely known as, truly, the only committee that matters.

As a reminder, everyone, please keep your headphones away from your microphones at all times.

Also as a reminder, ladies, this committee has passed a motion that any requested documents, emails, etc., are to be returned to the committee within 21 days.

Colleagues, there will be three rounds, and then we will take a break for the next witness.

At the very end, I will have a couple of really quick housekeeping items around budget and setting a date for witnesses.

We welcome back, Ms. Boudreau, from the comptroller general's office.

Do you have an opening statement for us? The floor is yours for five minutes. Please go ahead.

[Annie Boudreau, Comptroller General of Canada, Treasury Board Secretariat]

Good morning, everyone. Thank you for this opportunity to speak to the committee about the federal grants and contributions process.

Today, I'm joined by Monia Lahaie, assistant comptroller general, financial management sector, and Nicole Thomas, director general, costing, charging and transfer payments.

As Comptroller General, I am responsible for providing functional direction and assurance in financial management, internal audit, investment planning, procurement, project management, as well as the management of real property, materiel and transfer payments throughout the federal government.

Federal grants and contributions are governed by the Treasury Board Policy on Transfer Payments, which outlines the roles, responsibilities and obligations for the management of transfer payments. Its objective is to ensure that transfer payment programs meet government priorities, deliver results for Canadians and are managed with integrity, transparency and accountability.

Control mechanisms are in place throughout the process, starting with the requirement for departments to obtain authorization-in-principle for government programs by tabling a memorandum to cabinet.

Departments must then seek the approval of the Treasury Board for new program terms and conditions through the Treasury Board submission process.

The terms and conditions set out the parameters under which transfer payments may be made for a given program, including objectives; funding; results; eligibility criteria, such as eligible recipients, activities or initiatives; and expenditures.

The role of the Treasury Board Secretariat is to ensure that the terms and conditions align with cabinet direction and the policy and directive on transfer payments as well as other applicable policies or frameworks—the policy on results, gender-based analysis plus and the policy on official languages.

The secretariat provides feedback to departments during the review process to ensure compliance with Treasury Board policy.

Once the Treasury Board approves the submission, deputy heads play a key role in the delivery and management of transfer payments. They are responsible for ensuring that grant and contribution programs are accessible, usable and understandable for applicants and recipients.

Deputy heads ensure that departmental practices and procedures are in place and look for opportunities to standardize within the department and support the administration of grants and contributions, ensuring that requirements are proportionate to the risks involved.

Deputy heads are responsible for monitoring compliance with the policy and its supporting directives, including through periodic audits and other assessments, to ensure their effective implementation. This includes ensuring that the administrative requirements on recipients are proportionate to the risk level. Monitoring, reporting and auditing should reflect the risks specific to the program, the value of funding and the risk profile of the recipient.

Departmental audits and evaluations help identify best practices, areas for improvement and whether the program is achieving its intended outcomes. The results are used to inform future program design and policy adjustments.

Once the recipients of transfer payment programs enter into a funding agreement with the federal government, this agreement outlines the requirements for the funding, including reporting requirements, payment schedules and performance expectations. This allows the government to monitor the use of funds and ensure that the program is on track to achieve its objectives.

To improve transparency, departments are required by law and policy to proactively publish grants and contributions over $25,000 that have been awarded. This means that information on who received funding, how much and for what purpose is made available to the public, including on the Open Government website. In addition, audit and evaluation reports on grant and contribution programs are posted on departmental websites. These practices help maintain public trust and ensure accountability in the management of public funds.

As Comptroller General, I support all of these processes by ensuring that these policies and sound practices are in place, by overseeing and monitoring government-wide compliance with the Treasury Board Policy on Transfer Payments, and by providing leadership in the development of the community of federal practitioners involved in the design, delivery and management of transfer payment programs.

I would be pleased to answer any questions committee members may have.

[The Chair, Conservative, Kelly McCauley]

Thank you very much.

We'll start with Mrs. Kusie for six minutes, please.

[Stephanie Kusie, Conservative, Calgary Midnapore, AB]

Thank you very much, Chair.

Thank you to our witnesses for being here today.

Out of the hundreds of millions spent in the environment department's grants and contributions program, how much has Treasury Board approved, please?

[Annie Boudreau]

Every time there is a new program, the department must come to Treasury Board for review and approval. Every time there are new program terms and conditions, they have to come. I would say it depends which fiscal year you're referring to, but, again, that's the principle, and that's the process we are applying every time, not only for ECCC but for all organizations across the Government of Canada.

[Stephanie Kusie, Conservative, Calgary Midnapore, AB]

Okay, so Treasury Board would have approved the funds for this program on a fiscal year-by-year basis. Is that correct?

[Annie Boudreau]

It depends. If it is funding for an ongoing program, it will have been approved once at Treasury Board. After that—as you know, because this committee is quite involved with the estimates—every time, they will have to come and present their new funding via an estimate.

[Stephanie Kusie, Conservative, Calgary Midnapore, AB]

Has your department ever reviewed the program to ensure that funds were going to recipients who had clear plans to improve environmental protections?

[Annie Boudreau]

This responsibility, as I stated in my opening remarks, belongs to the deputy heads. The deputy heads will have the opportunity to request an internal audit to look into that, and that's exactly what the deputy minister of ECCC requested. He had some concerns, so he wanted to have a third party review or an independent assessment from his internal audit function.

[Stephanie Kusie, Conservative, Calgary Midnapore, AB]

The report states that the top ADM committee evaluates proposals deemed to be medium to high risk that exceed $100,000. However, 94% of the reviewed files in this audit did not have the right documentation to support the risk rating. Are you concerned at all about departments not doing their due diligence to ensure that funds are spent appropriately?

[Annie Boudreau]

I am always concerned by a lack of documentation. That's why, under my group, we have what we call a centre of expertise, which Nicole leads. We always remind departments that every time there is money going out the door—as per the Financial Administration Act, sections 32, 33 and 34—due diligence should be done at all levels.

[Stephanie Kusie, Conservative, Calgary Midnapore, AB]

Since 2016, there have been 3,103 grants and contributions awarded of over $100,000. How many of these have been reviewed by the Treasury Board?

[Annie Boudreau]

Is your question specific to ECCC?

[Stephanie Kusie, Conservative, Calgary Midnapore, AB]

Yes, because it would be the 3,103 grants and contributions awarded over $100K within the program.

[Annie Boudreau]

Okay. We do not review those programs. As I was saying, deputy heads are responsible for their own programs. If they feel there is a concern or they want to make sure everything is effective, they will be asking the internal audit function to look into this according to the risk of the grants and contributions or the program itself.

[Stephanie Kusie, Conservative, Calgary Midnapore, AB]

The problems in the ECCC grants and contributions have been ongoing since 2016, when the then minister moved from small to large-scale program delivery. The centralized structure and limited resources were strained, which has led to potential legal and reputational damage. Has the Treasury Board done any follow-up to ensure the funds provided to this program were allocated correctly?

[Annie Boudreau]

We have not done any specific audit regarding what you just mentioned. Again, it will be at the deputy minister level to look at those instances.

[Stephanie Kusie, Conservative, Calgary Midnapore, AB]

Are you concerned about the lack of accountability and oversight in this program?

[Annie Boudreau]

We are all concerned. That's why an audit was requested by the deputy minister to look into that.

As well, maybe I should have mentioned my role in terms of the risk-based audit plan that all departments put together every year. Those audit plans are shared with my office for review and to make sure we are comfortable with the risks identified and the way forward in terms of auditing and evaluating.

[Stephanie Kusie, Conservative, Calgary Midnapore, AB]

Do you believe that the environment department has ever wasted taxpayers' money?

[Annie Boudreau]

That's not a question I can answer.

[Stephanie Kusie, Conservative, Calgary Midnapore, AB]

Okay. Do you believe the environment department has always delivered value for money to taxpayers?

[Annie Boudreau]

The policy on transfer payments is clear in terms of value for money. As I said, I expect all deputy ministers to play their role in terms of ensuring they are following the policy as well as the directive and the guidelines.

[Stephanie Kusie, Conservative, Calgary Midnapore, AB]

In your opinion, should all departments be auditing all grants and contributions?

[Annie Boudreau]

It would depend. It would depend on which organization. It would depend on the value of the grants and contributions.

It will depend also on other risks that departments may have. Obviously, we cannot audit everything, so again, it will be a question of considering all the potential risks, the risk mitigation strategies that departments have in place, and what's left that we feel should be looked at.