Evidence of meeting #159 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 audits.
A video is available from Parliament.
Senior Compliance Auditor, As an Individual
There's a whole list of things that we look at.
Liberal
Jenica Atwin Liberal Fredericton, NB
Sure. If you provide that to us, that would be fantastic. I'll look into that.
I have about 30 seconds, Mr. Hartle.
What is your response to the minister's announcement yesterday that she's pursuing an external audit of the indigenous business directory?
Senior Compliance Auditor, As an Individual
That was being done. She fired the person doing it. It seems to be a rather hypocritical response to a problem that they created themselves.
Conservative
Bloc
Julie Vignola Bloc Beauport—Limoilou, QC
Thank you, Mr. Chair.
Mr. Hartle, thank you for being with us today.
You talked earlier about the letter of December 5 and the fact that you were blaming the Canadian Health Care Agency.
Was that the company you were blaming?
Senior Compliance Auditor, As an Individual
Yes, that company was the problem.
Bloc
Julie Vignola Bloc Beauport—Limoilou, QC
What evidence is there of fraud?
You briefly mentioned earlier that the other company had people who were supposedly employees but, in fact, were not. The company had to pay GST, but it had never seen the money.
Can you briefly provide the committee with any further details or evidence about that?
Senior Compliance Auditor, As an Individual
The evidence is substantial, and all the evidence is in my report. I don't have the evidence, but I have the evidence catalogue. If you look at my audit report's page on exhibits, I had appendices A, A1, B, C, D, E, F, G, and H. Each has substantial documents in them.
Bloc
Julie Vignola Bloc Beauport—Limoilou, QC
That report has been submitted to the committee. Is that correct?
Bloc
Julie Vignola Bloc Beauport—Limoilou, QC
Are there any gaps in the contracting process that open the door to frauds such as the one you've reported today?
Senior Compliance Auditor, As an Individual
If you followed the procedure, there would be no gaps. I think that there was also a copy of the procedures in the document package.
We also had standards. Each audit that was performed had to follow these standards. I think I give you a copy of the standards that we use for the audits in the package.
Bloc
Julie Vignola Bloc Beauport—Limoilou, QC
That's great.
You're telling us that, if the procedures are followed, there should be no problems or gaps. However, there are.
In that case, should the government do a follow-up during the term of the contract, rather than waiting until the end to do an audit?
Senior Compliance Auditor, As an Individual
The process has two stages. In the large contracts, you have to have a pre-award audit completed in order to be awarded the contract, and on the large contracts, there's always a post-award audit. If you follow the procedures for the post-award audit, you will uncover when the criterion of indigenous content was not being met.
As you can see, if you don't perform the audit, you won't know whether or not they adhered to the criterion of indigenous content. There are no real gaps. The audits were in place to ensure that the program was being used properly.
Bloc
Julie Vignola Bloc Beauport—Limoilou, QC
Okay, but the audits are done at the end of the contract. I asked you whether audits should be performed during the contract as well, rather than only before or after it is carried out, to verify that the indigenous business is actually receiving the share it is owed.
Senior Compliance Auditor, As an Individual
The post-award audit is not really a post-award audit. It's conducted when about 70% of the work is completed.
You have to be able to complete some of the work to see if they're following what they said they were going to follow. You can't presume that a company will or will not meet the criterion before the actual contract is completed.
Bloc
Julie Vignola Bloc Beauport—Limoilou, QC
Is simply striking a company from the indigenous business directory a sufficient penalty to impose on a company that did not comply with the terms of indigenous procurement or one that claimed to be indigenous when it was not?
Senior Compliance Auditor, As an Individual
I think this was a discussion. It was brought to the department's attention and also to the PSPC's attention that this was going on.
PSPC defaulted the contract but took no other action on the fraud part of it. That's a government initiative. That part you have to address with Procurement Canada, because ISC doesn't have anything to do with the contract other than to recommend that the company meets the criteria for an indigenous business.
Conservative
NDP
Rachel Blaney NDP North Island—Powell River, BC
Thank you, Chair
Thank you, Mr. Hartle, for being here with us today. I appreciated your testimony, and I also read the article very carefully this morning.
In your testimony, I think you said—and I just want to clarify this—that there is no governing act around this component. We've definitely heard that from other sources as well. I guess I just want a little bit of clarity. You said during your interview that the auditors could not contact the businesses but had to give questions to the government, and there was a whole.... It sounds like quite a complex process. I'm wondering if there is any connection between that process and the fact that there is no governing act.
Senior Compliance Auditor, As an Individual
No, there's no governing act. However, there is a cabinet-issued policy that was mandated to be followed, and they have published guidelines on that policy.
Between the various audits that I did and whenever Ms. Sultan became in charge of the program, the previous senior program managers knew the program inside out. They were empathetic to indigenous business and they did a very good job. They respected what was written in the contract, which was that the external auditor would do an independent audit and give them the results of the audit.
When Ms. Sultan took over, she decided that she was going to not only dictate the process but also change the policy—unilaterally, I guess, because nobody has taken possession of the fact that the policy was changed and that they no longer do what they were supposed to do under the policy guidelines.
Rachel Blaney NDP North Island—Powell River, BC
What was the added complexity that was there because you had such a long process to go through, since you couldn't talk to the business directly?
