Thank you.
I think the member is correct that the pendulum seems to swing back and forth between decentralization and centralization. If we looked at this over time, we would probably have seen several swings in that area.
I don't think there's any one right response. It depends very much on the subject matter and on the particular circumstances. Given the complexity and the size of the federal government, I personally think it would be very difficult to centralize things. We're talking about enterprises that spend some $200 billion a year. Departments are very large and complex, in and of themselves, so departments have to have responsibility for financial management.
Where I think there needs to be more clarity, though, and we see it very often in our audits, is with regard to the responsibility of the departments and the responsibility of the Treasury Board Secretariat. Quite often when we see a situation where improvements are needed, you will see the departments indicating that Treasury Board Secretariat guidance isn't sufficient, or they haven't been told what to do, and the Treasury Board will say, well, it's the departments that should have been managing that, and there's a bit of finger pointing that goes on.
So I think there needs to be better clarity on what the deputy ministers' responsibilities are. The Treasury Board has given itself or defined its role as being a management board: setting policy. We would have an expectation that it would also know if that policy is working well, and if it is not working well, then what has to be done to correct it. So there should be some monitoring.
At one point, the Treasury Board had an activity or an agenda that they were calling “active monitoring” in departments of the various financial management policies and others. I'm not quite sure where that is at any more. That might be something to discuss with them. How do they ensure that the policies they are setting out are in fact being respected and followed by the departments? So I think there does need to be clarity, and that might be something the committee would wish to look at.
On the issue of internal audits specifically, I know we have had some disagreements with committee recommendations in the past, as the former chair will know, where we believe that the internal audit is really a management tool and that the internal audit should report to the deputy minister of departments. That said, we do support the initiative by the Comptroller General to set up a centre of excellence for internal audit, which would ensure that there be proper standards, that they have some say in the recruitment of the people, and that they would also carry out internal audit for the smaller organizations, where it is not economically viable for them to have their own internal audit function.
There is a bit of a mix between centralized and decentralized, but for the larger departments, we believe the deputy ministers of those departments should have an internal audit function and that should be part of their management of that department.