Procedure and House Affairs Committee on Nov. 19th, 2013

[Michael Ferguson]

Again, all I can say is we certainly understand that for those types of meetings it's important that the committee have all three avenues open, to have meetings in public, private, or in camera, depending on the nature of the discussion.

[Dave MacKenzie, Conservative, Oxford, ON]

Thank you.

[The Chair, Conservative, Joe Preston]

Thank you, Mr. MacKenzie.

Thank you all for staying on time today.

Madam Turmel, keep our record going.

[Nycole Turmel, NDP, Hull—Aylmer, QC]

Thank you, Mr. Chair.

With some restrictions, we feel it is very clear that committees should be open to everyone in order to demonstrate transparency.

Thank you for your presentation. You raised several questions. I would like to go back to a point which concerns the procedure that affects the 98%. You talked about guidelines and criteria. Do the documents provided respect those criteria, or should our guidelines be reviewed so as to demonstrate that the activities we take part in really correspond with receipts? I am referring to what is going on in the Senate currently. Senators provide receipts, but are they really related to their mandate?

[Clyde MacLellan]

I will answer briefly.

In my observations in the 2012 report, when I talked about compliance, this referred to examining documents, including receipts tabled by parliamentarians for a certain activity, in order to ensure that rules were being respected. That is exactly the matter we examined. We gave a 94% compliance rating for the Senate. We found that the expenses related to activities were justified and in compliance with the rules. However, in certain cases, it was difficult to come to a conclusion, either because the documents were not provided, or because some information was not in the receipts, such as the description of the purpose of a meeting, or because a reply was recorded, etc.

[Nycole Turmel, NDP, Hull—Aylmer, QC]

I have a minute and a half left.

I will try to be brief.

In your document, in point 9, you discuss the role of the Auditor General. If there were an independent committee, should it play the same role, or, rather, have a different mandate in that regard?

[Michael Ferguson]

In terms of the role of the Auditor General, that would be the role of an independent committee, which would be advisory or would assess certain situations and make decisions. That would be a very different role from the audit role. The audit role would be to come in after the fact to see if everything had been processed properly.

If you sort of drew a line, the independent committee would be on one side of the line and the auditors would be on the other side of the line, so the roles would be very different.

[The Chair, Conservative, Joe Preston]

You have 30 seconds.

[Nycole Turmel, NDP, Hull—Aylmer, QC]

I have 30 seconds.

To your knowledge, are there any models, in the provinces or elsewhere, of what you submit as being the role of the Auditor General?

[Michael Ferguson]

In the paper we presented, we identified a number of different jurisdictions that have undergone these types of changes. Some of them have put in place boards. Some of them have given authority to their auditor general. There are a lot of different models, and in the paper, we tried to identify the significant ones that should be considered.

[The Chair, Conservative, Joe Preston]

Thank you very much.

Mr. Lukiwski, you have four more minutes.

[Tom Lukiwski, Conservative, Regina—Lumsden—Lake Centre, SK]

Thank you very much, Chair.

The real reason the committee is undertaking this study, frankly, is to see whether the current system works, whether it can be improved, or whether it should just be replaced.

Based on what you saw during your audit in 2012, were there any of what we and the general public would consider to be egregious examples of misspending by members of Parliament? We all know what happened in the U.K. with their expenses scandals there, with some members claiming money to build a moat around their castle. We've seen examples, in the U.K. and in Atlantic Canada, where members were using expense money, taxpayers' dollars, to furnish their own homes with electronics or television sets or computers, that type of thing.

In your audit, with the 1.5% non-compliance, did you find any example that you would consider to be as egregious as the examples I've just given you, or would they have been of a more minor nature? By that I mean, would they be mistakes made either inadvertently or administratively that could be corrected?

Were there any specific examples you could point to that would demonstrate that members of Parliament are misusing or abusing their expense money?

[Michael Ferguson]

The direct answer to your question is no, we didn't see anything egregious.

Remember, though, what we did was select a sample, and within that sample, even though it was a low percentage, we did find a certain percentage where the documentation was not sufficient to support a particular expenditure item.

[Tom Lukiwski, Conservative, Regina—Lumsden—Lake Centre, SK]

Had the documentation been sufficient, would you have had any problem with the claims that were made?

[Michael Ferguson]

It would have depended on what the documentation said, what the documentation was. That is why we indicated we had a concern with that. In a situation where we don't have all the documentation, it is difficult for us to say whether the rules were entirely complied with.

Clyde, do you have a comment?

[Clyde MacLellan]

I think you are asking if there were any seriously egregious types of situations, for which you used examples from other jurisdictions. As the Auditor General indicated, we didn't find any of those. If we had, we would have reported them.

If documentation is sufficient to support a claim when we performed the work, we would be satisfied generally that it constitutes a valid expense, subject to it being reasonable, of course. If something were put forward that isn't for the purpose intended, we would not accept that type of transaction regardless of the kind of documentation behind it.

[Tom Lukiwski, Conservative, Regina—Lumsden—Lake Centre, SK]

Thank you for that.

You've done “random” audits. I guess that would be the best term, if I'm following you. In other words, you have not done a forensic audit at any time, whether of members’ expenses or in the Senate.

Are you recommending that if your audit capabilities were enhanced, you would like to see forensic audits of both the members’ and Senators' expenses?

[Michael Ferguson]

The normal audit practice would be to do financial audits, compliance audits, performance audits, those types of audits. If those audits indicate there is a particular problem, then you have to look at whether a forensic audit is required, but a forensic audit wouldn't be the first type of audit you would go to. You would go to performance audits, financial audits, and compliance audits.

[The Chair, Conservative, Joe Preston]

Thank you.

Mr. Bellavance, you have four minutes.

[André Bellavance, Bloc, Richmond—Arthabaska, QC]

Thank you, Mr. Chair.

Auditor General, your suggestions and observations are very relevant. Not that long ago, MPs and political parties wanted to make all decisions regarding the administration of their expenses behind closed door. Indeed, in 2010, when your predecessor, Ms. Fraser, asked to do an audit, the Bloc Québécois was the only party that accepted right away to divulge all of its expenses and be as transparent as possible. We can see that things evolved because I think that the population, as you said so well, no longer accepts that expenses be kept secret, since we are talking about taxpayers' money, their money. We are headed in the right direction.

However, I have questions on how the transparent governance you allude to would function. Is it really necessary to create another organization? We are already sending of all our invoices and supporting documents to the controller's office. Would it be possible to be totally transparent and divulge as much of this information as possible, while allowing the Office of the Auditor General to have the legal right to perform audits, either once a year or twice a year, with the necessary means? I am wondering about this hybrid system to provide greater transparency. Currently, we are divulging information by work station and this is on the Internet. That is already an improvement compared to what used to be done, but it seems to me that we can still improve this by providing more details and by allowing you to perform audits. A statutory report would really allow for recommendations and modifications, if need be, on certain practices that may still need to be improved.

[Michael Ferguson]

Thank you, Mr. Chair.

The model we are suggesting incorporates two aspects on the governance side. One is the aspect of independent audit. The other is the aspect of having some sort of independent body as well to help oversee the process.

I would say that model is very much the same type you would see in a large crown corporation or in any other large corporation where, for example, you would have an audit committee. That would be a committee that we as auditors could interact with to make sure we're sending messages and they understand the messages, and they could help whatever board is responsible to figure out how to manage these types of expenses.

The role of the independent body would be to help make sure that when we came in, our audit wouldn't find anything. That's where you want to be. You don't want to be in a situation where things are being processed and then you are relying on the audit to find things. You want to be in a position where the audit is really confirming that things are operating properly. That's why we think the system would be better if there were an independent advisory body on the side, processing things before the audit happened. So the two would be integral parts of improving governance.

[The Chair, Conservative, Joe Preston]

You have twenty seconds.

[André Bellavance, Bloc, Richmond—Arthabaska, QC]

I am going to use them, Mr. Chair.

According to you, this independent organization should be made up of representatives from the public, people who, of course, would have particular expertise. It is clear to all of us that in the current situation, with the Board of Internal Economy, it is difficult for parliamentarians to remove their partisan hats when they are discussing things together.

[Michael Ferguson]

We have indicated that we believe they need to be independent and they need to be appointed independently. I think you will find a couple other provinces where they have independent members sitting on a board. I believe in a couple of provinces the Chief Justice of the province appoints those people. So there should be a way to have independent people appointed.

[The Chair, Conservative, Joe Preston]

Thank you very much.

Mr. Scott, go ahead for four minutes, please.