Public Accounts Committee on Feb. 5th, 2007

[The Chair, Liberal, Shawn Murphy]

Thank you very much, Mrs. Fraser, for your appearance here today and your report.

As we do not have the full two hours that we normally have, colleagues, I'm going to limit the first round to six minutes and the second round to four minutes, and that should work.

I want to point out again to colleagues that the purpose of this meeting is fundamentally different from that of our normal meetings. Normally we're here to hold another department to account, with the assistance and help of the Office of the Auditor General. At this meeting, we're here to hold the Auditor General and her office to account for the expenditure of public funds.

That said, we will start the first round. Mr. Wrzesnewskyj, you have six minutes.

[Borys Wrzesnewskyj, Liberal, Etobicoke Centre, ON]

Thank you. I won't be requiring the full six minutes.

At one of the previous discussions we had here, I believe what we decided was to have foundations looked at. As we look forward, what sort of costs are projected? Would there be any difference in terms of the costs of auditing foundations as opposed to crown corporations, for instance? What sorts of projections can we expect on that component?

[Sheila Fraser]

Our mandate was changed in 1995 to allow us to conduct performance audit work on foundations. We are not the auditors of the financial statements of foundations. Those are done by the private sector. The approach we have decided to take is to include foundations in broader-scoped audits.

I'll give you a few examples. When the Commissioner of the Environment did work on climate change, we included the Canada Foundation for Sustainable Development Technology. We have an audit under way of research and development initiatives, and the Canada Foundation for Innovation is included in that. We have another one on aid, support for students, and the Canada Millennium Scholarship Foundation is included in that.

So we are including the foundations in performance audits of issues or topics where they play a significant role, and I would hope that by the end of my term, say within the next three to four years, we will have covered all the major foundations in that way.

[Borys Wrzesnewskyj, Liberal, Etobicoke Centre, ON]

Have you actually, dollar-wise, projected costs?

[Sheila Fraser]

We have not. In fact, we've included them in other performance work, so there has been no additional cost to the office to do that. If anything, they're included in the scope of an audit that we would have done. We haven't identified any particular costs for including them in that, and we did not ask Parliament for any additional funds in order to carry out that mandate.

[Borys Wrzesnewskyj, Liberal, Etobicoke Centre, ON]

Talking about the scope of audits, you mentioned performance audits as opposed to just accounting audits. Is it correct to assume that these days more and more often performance audits, as opposed to strictly accounting audits, are required?

Looking at the number of structures, we have now gone beyond governments and crown corporations and into foundations. Has that in any way limited the amount of work being done looking into government departments themselves?

[Sheila Fraser]

On the first part of that question, I would say that the financial audits are very critical to do. Be it for the government crown corporations, the financial statements of the government itself, or the private sector, it is really critical that there be an audit and an opinion on financial statements that give those statements credibility and use in many.... That is a very important part of our practice. The performance audits tend to get more attention because of the way they are tabled in the hearings here, but I wouldn't want to think that one practice is more important than the other. They are both really important.

The work hasn't changed. Each year we go through a planning exercise where we determine the number of audits that we think we can do with our staff resources. We do quite a detailed planning exercise in all the large departments to determine a plan of audits over three to five years, and then we sit down and we map out which audits we are going to be doing. The plan is done essentially about three years out. The next year coming is obviously quite fixed. Beyond that it can change.

The level of activity in departments has not been affected by our ability, our expanded mandate, to do work in foundations, or the more recent addition to our mandate in the Federal Accountability Act, which now allows us to audit recipients of grants and contributions, because we would expect to use that authority only very rarely.

[Borys Wrzesnewskyj, Liberal, Etobicoke Centre, ON]

One of the things that astounded me when I first came to this committee was that typically an audit would not occur unless the amount that had been improperly spent or used, etc., was $1 billion or more. That was the benchmark, unless there was a special request coming from this particular committee.

At any point, did you take a look at seeing whether or not there would be a use for a smaller group within your department that perhaps, on a rotating basis, would go into departments with smaller budgets and look at situations that would be $20 million, or $50 million, or something of that sort, without that directive initially coming from this particular committee?

[Sheila Fraser]

I would just clarify about the $1 billion.

The $1 billion is what we call a materiality level. When we do any audit, any auditor will set what they call a materiality level, so it's the amount of error. If you had an error of that magnitude, you would qualify the opinion on the financial statements. It doesn't mean that we only audit organizations that spend more than $1 billion. It's the cumulative errors that we will accept. That is for the Public Accounts of Canada. If the cumulative errors that we find in doing our audit is $50 million, we will not qualify our opinion on the financial statements. If the cumulative error is $1 billion or more, then we will require government to make the necessary changes, or it will be reflected in the opinion.

We do many audits of organizations that are much smaller than $1 billion. For example, we issue audit opinions on the financial statements of all the other officers of Parliament, the Public Service Commission, OSFI, and the list goes on. On a rotating basis, we will go into organizations as part of our audit. As well, we have a group that looks after what we call the small entities. There are about 90 small entities—a number of tribunals, quasi-judicial bodies, and some of them are very small. We will be doing audits of those, more the performance kind of audit looking at contracting, human resource practices, and those sorts of things, on an ongoing basis, and then issue a report to Parliament. You'll see that we have one planned for next year on some of the management practices in those organizations.

[The Chair, Liberal, Shawn Murphy]

Thank you, Mr. Wrzesnewskyj.

Thank you, Mrs. Fraser.

Madame Brunelle, vous aurez six minutes.

[Paule Brunelle, Bloc, Trois-Rivières, QC]

Good afternoon, ladies and gentlemen.

I would like to discuss human resources. How many employees does the Auditor General's Office have?

[Sheila Fraser]

Currently, we have a little more than 600 employees, I believe we have 611.

[Paule Brunelle, Bloc, Trois-Rivières, QC]

You spoke of a future need for new recruits. Have you some idea of the average age of the personnel?

[Sheila Fraser]

I am sure that my colleague has those figures somewhere.

[John Wiersema, Deputy Auditor General, Office of the Auditor General of Canada]

I need a few minutes to find them.

[Paule Brunelle, Bloc, Trois-Rivières, QC]

While he is looking for them, let me ask you another question.

In the report, we see that the turnover has reached 14.7%, which is a rather large figure. In your opinion, what is this due to?

On the other hand, your report states that 82% of the people that were surveyed are satisfied with their work and that 92% of them are really proud of working for your office. How can we explain these two phenomena? If the average age is very low, perhaps people are leaving to continue their careers somewhere else. This might be part of the answer.

[Sheila Fraser]

I have here a profile of the employees according to their age. Unfortunately, it does not state the average age. However, I can confirm the following facts regarding the employees: 93 of them, or 17%, are between 20 and 29 years old; 155 are between 30 and 39 years old; 189 are between 40 and 49 years old; 171 are between 50 and 59 years old and 22 are over 60. The average age is probably somewhere in the 40s. I could give you the figures or table them before the committee.

[Paule Brunelle, Bloc, Trois-Rivières, QC]

Could the average age have an impact on turnover?

[Sheila Fraser]

There are two main causes for the turnover. Obviously, there is retirement. At the office, as in most departments and agencies, quite a few people are going into retirement. Moreover, during the past years, the government decided to expand its internal auditing and financial services in the departments. Thus, several people left the office because the departments and agencies really want to have them.

This is not necessarily bad. We can contribute to the government in different ways. We hope that this is, in fact, a contribution.

[Paule Brunelle, Bloc, Trois-Rivières, QC]

On the other hand, it causes over-budgeting, and in some cases, deadlines might not be met.

[Sheila Fraser]

Certainly, this can create problems in project management. Moreover, the current labour market is very competitive. Consequently, we must be very active in recruiting. In addition, we have been successful. I think that during the past year the office recruited more than 100 persons. In any case, the current market conditions are very difficult.

[Paule Brunelle, Bloc, Trois-Rivières, QC]

I was surprised to see that the Treasury Board of Canada Secretariat rejected the part of the collective agreement, especially the articles regarding the salaries of your professionals. I believe that it is rare to go back on a collective agreement after it has been reached. Would this be one of the reasons why your professionals are leaving the office?

[Sheila Fraser]

No, I do not think so. This is a very frustrating situation for us. I even think that it could affect the office's independence. The Treasury Board of Canada Secretariat gave us the mandate to negotiate with our employees. At the office, there are two unionized groups. We negotiated with them in good faith and we reached an agreement. Now the secretariat refused to approve it, and frankly, I find this unacceptable.

We want to solve this problem with the secretariat and to reach a clear understanding of future procedures. They could give us a general mandate or envelope, but they should then honour the agreement.

[Paule Brunelle, Bloc, Trois-Rivières, QC]

You talked about unknown factors regarding amendments to the Federal Accountability Act. Can you give us an idea of how much additional work is involved?

[Sheila Fraser]

The way it will affect us the most is that our office will be subject to the Access to Information Act, which was not the case previously. We have always shared information voluntarily. However, I would like to point out that our audit files are excluded. Rather, it is the administrative aspect of our office which will be covered. We do not know if there will be many requests. This is one aspect.

Another aspect is, of course, the new mandate we have been given, which gives us the power to audit those who receive grants and contributions, and how they spend them. We do not intend to use this power very frequently, but if there was a lot of pressure from parliamentary committees, that might also affect us.