Public Accounts Committee on Feb. 5th, 2007

[Jean-Yves Laforest, Bloc, Saint-Maurice—Champlain, QC]

Ms Fraser, I would specifically like to deal with performance and effectiveness. You indicated that you had a total budget of approximately $85 million, which includes work done within the departments.

When you consider the government's total budget, which amounts to approximately $210 or $211 billion, is there a correlation, in terms of the difference or percentage that that represents, between your audits and the circumstances you uncover in departments where there have been useless expenditures and inadequate programs? You uncover many elements that, ultimately, are financially significant.

Is there a correlation between what you do—and therefore your budget—and savings made in the end? Is that the case? Should that not be so?

I will wait for your answer before asking another question.

[Sheila Fraser]

Indeed, other offices of auditor generals, or other such authorities, assess their performance according to the amounts of money saved or potential savings that were identified.

We have always been reluctant to do so, because I believe that that could influence our choice of audits. The office could then deal mainly with areas that are more likely to yield greater savings than sectors where there might be problems and where people do not have enough money to carry out their work. In my view, it is also important for parliamentarians to know that mandates given to agencies or departments do not correspond to their funding levels.

I think that that could lead to bias. Of course, our reports contain cases where audits have helped us uncover potential savings. Personally, I am very reluctant to have that become a performance indicator of the office.

[Jean-Yves Laforest, Bloc, Saint-Maurice—Champlain, QC]

I understand your response, but I meant that if, in fact, there was a correlation, that might allow everyone to whom you are accountable to see that audits can, among other things, help improve the management of public funds. As well, the office's total budget amounts to less than one tenth of one per cent of the government's total budget. I understand that you cannot audit every single financial data from all government operations, because that would be too great a task.

However, let us imagine—I am only saying this as an example—that your budget was twice as large. I see that amuses you, but it is not a proposal. Would that not allow you to avoid, for example, making certain choices, as you indicated earlier, or audit throughout government? Ultimately, wouldn't additional funding for audits be recovered by the government in another way?

[Sheila Fraser]

I believe that the current size of our office is just right. I would not like to see our office double its operations, and I say that for two reasons. First of all, we serve Parliament. Therefore, Parliament has to have the capacity to examine all of our reports. We produce 25 to 30 chapters a year, which is probably the limit. The true value of our work comes from the fact that we have parliamentary hearings.

Second, external auditors have a role to play, but internal auditors also play a very key role. I have often said that I would prefer seeing the government invest money in internal audit services, which help departmental managers to improve, rather than in external audit services.

I think that internal auditors have a greater role to play.

[Jean-Yves Laforest, Bloc, Saint-Maurice—Champlain, QC]

Thank you. That helps me better understand the issue.

[The Chair, Liberal, Shawn Murphy]

Thank you, Mr. Laforest.

Thank you, Ms. Fraser.

Mr. Sweet, four minutes.

[David Sweet, Conservative, Ancaster—Dundas—Flamborough—Westdale, ON]

The Canadian Comprehensive Auditing Foundation, is that strictly a group of public auditors, or are corporations involved in that? Is it just public sector or private sector as well?

[Sheila Fraser]

It is public and private sector. It was set up initially as a forum for government, legislative auditors, and the private sector, so all three contribute. The major contributors are the legislative auditors across the country. All the legislative auditors are members and support it financially, but as well, some of the large accounting firms and some governments also contribute.

[David Sweet, Conservative, Ancaster—Dundas—Flamborough—Westdale, ON]

For us, is there a fixed contribution, or is it a voluntary contribution?

[Sheila Fraser]

It has been the same amount for many years now. Technically it is voluntary, but realistically—

[David Sweet, Conservative, Ancaster—Dundas—Flamborough—Westdale, ON]

But the Office of the Auditor General of Canada is in good standing with them.

[Sheila Fraser]

Yes. We are the major contributor, so we are in very good—

[David Sweet, Conservative, Ancaster—Dundas—Flamborough—Westdale, ON]

To carry forward my colleague Mr. Christopherson's comments about the very high-quality work that we feel you do, I think one of the major contributions we can make to civil society is to make sure—and I'm certain Mr. Williams would agree with this—more people in developing countries have the same kind of expertise. I know that right now your office trains five fellows, but do you have capacity for more than that, and is this something you would investigate?

[Sheila Fraser]

We do a number of projects for developing countries within, obviously, a limited capacity. There is a proposal before CIDA right now--because CIDA obviously finances this--to bring more fellows, but to bring them into provincial audit offices, which would increase the capacity of the Quebec audit office, which receives two fellows every second year. And there are other provincial offices that are interested in doing the same thing.

We could probably increase by one or two, but we couldn't double, given the—

[David Sweet, Conservative, Ancaster—Dundas—Flamborough—Westdale, ON]

Time and investment.

[Sheila Fraser]

—time and investment. But certainly if it could be brought into provincial audit offices, often it would be very beneficial to them as well, because the provincial audit offices tend to audit systems like education and health, which we don't, and for many of them that is more relevant.

I think we may have talked about it a little bit, but we have also done work with the audit office in Russia and China, and there is a project now in Mali with CIDA to establish an auditor general's office. We work quite extensively as well within the International Organization of Supreme Audit Institutions. We chair the committee on environmental audit, and I also chair a working group on the independence of audit offices. So we do a fair bit of work internationally.

[David Sweet, Conservative, Ancaster—Dundas—Flamborough—Westdale, ON]

Thank you.

[The Chair, Liberal, Shawn Murphy]

Thank you, Mr. Sweet.

Mr. Christopherson.

[David Christopherson, NDP, Hamilton Centre, ON]

Thank you, Chair.

Madam Fraser, in 2005-06, your office let out 521 contracts where there was no bidding, for a total of $4.654 million. Why so many?

[Sheila Fraser]

The vast majority would be under $25,000. On every audit that we do, we use advisory committees, so we have people who are knowledgeable in the area, who help us establish the scope of the audit, who review the findings with us. So there are three or four advisers for every audit, be it performance audit or special examinations. We also have advisory committees for the public accounts audit, so a lot of those would be that.

I can ask my deputy if he knows what else would be in there.

[John Wiersema]

It's all small contracts of less than $25,000.

[Sheila Fraser]

Contract help as well to do audits.

[David Christopherson, NDP, Hamilton Centre, ON]

But that's a lot more as a percentage, is it not, than most departments—521, $4.5 million?

I understand your answer fully. Now, I'm questioning this, though. If something is that routine, if you're using that many people at $25,000 on some kind of a regular basis, isn't there a way to have them on a contract that they would bid on to provide those services for a year in an advisory capacity? It just seems like an awful big number to be letting out, and if you're doing it all the time—

[Sheila Fraser]

The people we use are really specialists. We try to have a bank of specialists that we go to. We encourage people who are available for contracts to work on audits to come in and register in our bank. Even on some of the smaller contracts, we will phone two or three people to see what kinds of rates they will give us. But quite frankly, a lot of times when you need to get contract help, the supply is not huge.

[David Christopherson, NDP, Hamilton Centre, ON]

Would you be good enough to provide us with something that gives us a comparison to the other ministries? It looks like a high number to me and a lot of money. When there's that much discretion, it seems to me that at some point it's in the taxpayers' best interest to regularize it and get into some bidding to provide....