Evidence of meeting #17 for Public Accounts in the 39th Parliament, 1st Session. (The original version is on Parliament’s site, as are the minutes.) The winning word was accounting.
A recording is available from Parliament.
Auditor General of Canada, Office of the Auditor General of Canada
It depends on the program we're auditing. When it's a smaller agency, we often audit all financial management. With a department, we believe there is a lower risk, particularly since public disclosure has become a reality. Generally speaking, departments have good controls in that regard.
There is probably a higher risk where the smaller agencies are concerned, because people may be less familiar with policies, and so on.
Liberal
Yasmin Ratansi Liberal Don Valley East, ON
I have a question for Monsieur St-Jean. If you've been asked this question, tell me that you were asked the question and that you responded, because I was late.
In paragraph 8, it says, “Currently on the horizon that will significantly impact the Government's financial statements are new standards related to segmented reporting, government transfers, and financial instruments.” What do you mean? How will it complicate your life?
Comptroller General of Canada, Office of the Comptroller General, Treasury Board of Canada Secretariat
Well, if I take the example of government transfers, there is currently an exposure draft that explains the proposed new accounting standard. It would in effect demand the expensing of the transfers under certain conditions, but it would also force provinces, as we transfer money to the provinces, to recognize the transfer as revenue in the year they receive it.
This is no doubt a controversial exposure draft. Many departments of finance across the country are struggling with it. This is a standard that's been under development for three to four years. But it will change the relationship between the federal government and the provinces and the way they interact. It might have an impact on the way programs will be designed. These are fundamental changes that are coming up.
Liberal
Yasmin Ratansi Liberal Don Valley East, ON
On how I read the financial statement, will it have an impact on the federal government?
Comptroller General of Canada, Office of the Comptroller General, Treasury Board of Canada Secretariat
For the federal government, most of our transfers are expenses at the end of the year. Under Bill C-48, this year the expenses will be $3 billion plus.
For the federal government, at the moment, it would not change that much. But in the provinces, I would suspect there will be some tension.
Liberal
The Chair Liberal Shawn Murphy
Thank you very much, Ms. Ratansi.
I have a couple of questions.
First of all, back to you, Mr. St-Jean. Mr. Williams raised a point about accrual accounting in the budgets and the appropriations. This recommendation has actually been made before by this committee to government. One of the responses was that the Treasury Board has done a consultants' report on the whole issue. Are you in a position to share that report with this committee?
Comptroller General of Canada, Office of the Comptroller General, Treasury Board of Canada Secretariat
On the study, I believe it was this Tuesday that we met the government operations committee, where we shared some of the major findings of the study. I cannot tell you when the study will be released, but the key elements of the study were released.
The study indicated that there are different ways that we can do an accrual basis of accounting, and we're presented with a matrix in which it can be done. It also made reference to the challenges we would have to deal with. It also made reference to the proposed timeline if we were to adopt it and how much time it would take.
The key elements have been released. I will have to get back to you in terms of when the actual report will be released.
Liberal
The Chair Liberal Shawn Murphy
In any event, I assume you gave a deck to the government operations committee.
Comptroller General of Canada, Office of the Comptroller General, Treasury Board of Canada Secretariat
Yes, indeed.
Liberal
Comptroller General of Canada, Office of the Comptroller General, Treasury Board of Canada Secretariat
I will do so with pleasure.
Liberal
The Chair Liberal Shawn Murphy
The last issue that I wanted to talk about goes back to you, Ms. Fraser. It is a contentious issue that this committee has dealt with over the last six or seven years, and that is the entire reporting on the employment insurance account. We've made recommendations, and changes have been made.
Looking forward, you always like to see the financial statements reflect the true economic substance of the transactions in government, but I see that we're still reporting on this $50 billion fund. It's called a fund, but I still find it misleading to the public. You try to simplify things, but we know, and you know, and everyone in the room knows there is no fund out there.
Tomorrow in question period the Minister of Human Resources will be asked a question: what is she going to do with this $50 billion fund that she's sitting on?
I honestly think that the employment insurance premiums should reflect the benefits paid. I know there are economic cycles that you have to take into account, but is it not a little misleading to report on this $50 billion fund every year? Could I get your comments on that?
Auditor General of Canada, Office of the Auditor General of Canada
Well, certainly, the fund is only a notional account. There is no money in a bank account. All of the premiums collected and paid by employers and employees go into the consolidated revenue fund and the benefits are paid out of that. There is a requirement under legislation to do it this way, or the legislation has to change.
It was simply to become a program like any other program in government and not have a separate fund. I mean, that is a possibility, but it is, of course, up to parliamentarians to do that.
Liberal
The Chair Liberal Shawn Murphy
Because we want the published statements of the government to reflect reality, do you, as auditor, have any opinion as to whether or not this committee should be recommending a change to legislation to do away with this so-called reporting on a fund, which I think is somewhat misleading to the public? A lot of people out there think there is a $50 billion fund at the Toronto-Dominion Bank on Sparks Street, just sitting there unspent.
September 28th, 2006 / 4:45 p.m.
Auditor General of Canada, Office of the Auditor General of Canada
Certainly, Mr. Chair, I think it's an issue worth looking at. I don't know if government may have already looked at it in the past.
I would suspect there are probably legal issues around this. For example, I've been told in the past that the government can't tax other governments, so it has to be called “insurance”. I don't know if that's true or not—I'm not a lawyer—but I have a feeling there are legal issues that have resulted in the program being set up in the way it has.
If you want to explore this further, I think it would be up to government. I'm sure the government can come and explain whether or not there are any constraints like that.
Liberal
The Chair Liberal Shawn Murphy
Do any of the other witnesses have views or comments to add to this issue?
Comptroller General of Canada, Office of the Comptroller General, Treasury Board of Canada Secretariat
We could come back to you, Mr. Chair, and explain some of the issues.
Conservative
David Sweet Conservative Ancaster—Dundas—Flamborough—Westdale, ON
If I may, I have a point on the last question.
You were charged with the responsibility for the oversight of public accounts, and I'm wondering why there's some resistance from Treasury Board to tabling the consultant's report with this committee?
Comptroller General of Canada, Office of the Comptroller General, Treasury Board of Canada Secretariat
I will ask what the protocol is for tabling that kind of information. I know there's some protocol to be followed regarding the advice of ministers, and so on. So I'll get back to you.
I tabled the major conclusion on this at the government office. I might review that with my minister, if it's okay with the members.
Liberal
The Chair Liberal Shawn Murphy
Members, that concludes both rounds.
What I propose to do now is ask the witnesses for any concluding remarks they may have. At that point, I'm going to adjourn this portion of the meeting to go in camera to talk about the firearms report, which has been circulated.
Again, I want to thank all the witnesses for appearing here today.
Sometimes we take partisan jibes against each other in this meeting, but certainly we have a lot to congratulate each other on. This is an excellent report; it's a clean report. From the comments I received, this country seems to be a world leader in financial reporting, accounting, and auditing.
A lot of credit goes to your office, Mrs. Fraser, and to your office, Mr. St-Jean, and the tremendous staff who work with you, the minister, and the Department of Finance.
At this point, I ask for concluding remarks.
Mrs. Fraser, is there anything you want to say?
Auditor General of Canada, Office of the Auditor General of Canada
Thank you, Mr. Chair. I'd like to thank your committee for the interest in this.
As I said in my opening remarks, I think it's encouraging to see the committee holding a hearing on the day that the accounts are actually tabled. There were many very good questions for what I know was a very short period of time to prepare.
As you said, I think the government has a lot to be congratulated for; there is an unqualified opinion.
As well, I'd like to thank the Comptroller General and his staff again, and all the staff in the departments. It takes an awful lot of work on everybody's part to be able to produce this. So thank you.
