Public Accounts Committee on May 30th, 2006

[Charles-Antoine St-Jean]

No, it wasn't the Department of Justice. At the time, it was the Department of Public Safety and Emergency Preparedness. The Department of Justice prepares all the court opinions of the Canadian government. So it provided a legal opinion analyzing the circumstances of that transaction, with a conclusion based on the various elements of the transaction.

Four conditions had to be met in order to obtain a parliamentary appropriation: first, Treasury Board approval was needed; second, a proper contract had to be made; third, the effective date of implementation had to be in December 2003; and fourth, a price comparison was needed.

The first condition was not met, nor were the second or third. I can continue...

[Benoît Sauvageau, Bloc, Repentigny, QC]

If I understand correctly, you're saying you disagree with the Auditor General's comment that there were fundamental and obvious accounting errors. You also seem to disagree with Mr. Wiersema, who told the Treasury Board Secretariat that this made no sense.

[Charles-Antoine St-Jean]

I think this is a matter that must be properly discussed among all the parties.

When my predecessor left his position, there was also some question as to whether or not the legal opinion would be accepted. At that point, the question within the Office of the Comptroller General was whether the legal opinion should be accepted or rejected. I arrived shortly afterwards, and the question is still being asked.

[Benoît Sauvageau, Bloc, Repentigny, QC]

As far as you can remember, was that roughly around the time of the sponsorship scandal?

[Charles-Antoine St-Jean]

It was in February and March 2004.

[Benoît Sauvageau, Bloc, Repentigny, QC]

Let's suppose it was at the time of the sponsorship scandal. It appears that the Treasury Board Secretariat did not trouble itself to pull up its socks. Why did it not comply with the first opinions it received?

I'm not an accountant, and some things I don't understand. It's been said that the centre first recommended that supplementary estimates be requested from Parliament, which the Financial Administration Act also provided for. It was also said that senior officials at the Treasury Board Secretariat and Public Safety tried to find an accounting treatment that would avoid having to account for these costs as expenditures charged to the annual appropriation for that fiscal year. Why did they do that?

[Charles-Antoine St-Jean]

As I told you earlier, I wasn't at the Treasury Board at that time. I got there on June 1. I saw the document that talked about accounting solutions. As a professional accountant and former auditor, it goes without saying that this kind of question startled me. I discussed it with the document's authors, and I was told that a number of different opinions had been issued by lawyers and accountants on this matter. The following comment was directed at me: “I'm not a accounting or legal post-graduate. You're submitting a number of different opinions to me, and I'd like to know exactly where we stand from an accounting point of view.”

The choice of words wasn't very appropriate, but that's the answer I was given. I'm not here to analyze intentions; I deal in facts.

[Benoît Sauvageau, Bloc, Repentigny, QC]

The Library of Parliament people have prepared a lot of good questions for us. I'm going to try to select a few. How much time do I have left? Only 30 seconds?

In that case, I'd like to know whether the Auditor General agrees with the last comments by Mr. St-Jean.

[Sheila Fraser]

I prefer not to make any comments on that subject. We definitely think an error was made. We believe the amounts should have been accounted for and that, in that respect, government policies were not complied with.

I know that the committee is supposed to receive a legal opinion. You will note, when you receive it, that it doesn't even take the government's policy on accounting for liabilities into consideration.

[Benoît Sauvageau, Bloc, Repentigny, QC]

The Secretary of the Treasury Board, not the other departments, is theoretically the custodian of those amounts, isn't he?

[Sheila Fraser]

We normally expect the Secretariat and Comptroller General to be very well informed on all policies and their application and to give the departments concerned appropriate opinions.

[Benoît Sauvageau, Bloc, Repentigny, QC]

Thank you.

[The Chair, Liberal, Shawn Murphy]

Merci beaucoup, Mr. Sauvageau.

Mr. Williams, for eight minutes.

[John Williams, Conservative, Edmonton—St. Albert, AB]

Thank you, Mr. Chairman.

My first questions are to Mr. St-Jean.

Mr. St-Jean, you're the Comptroller General of Canada. You are a chartered accountant. Is that correct?

[Charles-Antoine St-Jean]

Yes, indeed.

[John Williams, Conservative, Edmonton—St. Albert, AB]

Mr. Morgan, are you a chartered accountant too?

[John Morgan, Acting Assistant Comptroller General, Financial Management and Analysis Sector, Office of the Comptroller General, Treasury Board of Canada Secretariat]

Yes, I am.

[John Williams, Conservative, Edmonton—St. Albert, AB]

You're a chartered accountant too.

Mr. St-Jean, you stated in paragraph 11 of your opening statement that the Office of the Comptroller General accepted the legal advice. What is your professional opinion? Did you accept the legal advice?

[Charles-Antoine St-Jean]

Mr. Member, it would be looking two years after the fact.

[John Williams, Conservative, Edmonton—St. Albert, AB]

I asked you a question. As a professional chartered accountant, do you accept the legal advice that was given to you in an accounting matter on this particular issue?

[Charles-Antoine St-Jean]

I would have to qualify the answer, sir, on two sides.

As a professional accountant, I can say that this transaction is a liability, it should be recognized as a liability, and it should be recorded as a liability. My first reaction is that it should—

[John Williams, Conservative, Edmonton—St. Albert, AB]

I asked you if you accepted the legal advice.

[Charles-Antoine St-Jean]

The legal advice tells me to say that this is not a charge against the....

[John Williams, Conservative, Edmonton—St. Albert, AB]

Mr. Morgan, do you agree with this? Do you agree with this statement? As a professional accountant, do you agree with the legal advice that was given to your office that this was an appropriate way to record this transaction?

[John Morgan]

If I could, Mr. Chair, we certainly respect legislation and the statutory requirements.