Evidence of meeting #5 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.
Liberal
The Chair Liberal Shawn Murphy
Perhaps, Mr. Williams, we'll stop your time. If this is important, we'll allow it.
Comptroller General of Canada, Treasury Board of Canada Secretariat
I'm told by the Deputy Minister of Justice that this is an important statement.
Liberal
The Chair Liberal Shawn Murphy
We'll stop your time, Mr. Williams.
Mr. St-Jean, if it is important, I'll have you put it on the record.
Comptroller General of Canada, Treasury Board of Canada Secretariat
My apologies, Members.
In all essential ways, this is the same as the privilege that applies to privileged communication in the private sector. Normally, the client does not waive this privilege. It's only done in rare instances and for good reason. Frequent waiving would erode the purpose of privilege. It ensures that the government gets candid legal advice on its most sensitive issues. The principle, which the courts have long worked out, is only feasible if the client has reason to believe that things said in confidence will be kept confidential. Only in exceptional circumstances is the privilege waived. This may be one of those situations.
In this instance, the gist of the confidential legal advice was inadvertently disclosed in the centre's departmental performance report. Technically, this constitutes a waiver. If the Pigeon opinion is to be disclosed, it would also be appropriate to disclose the related Besner opinion. So accordingly, those two opinions will be made available. Both opinions are being translated as we speak. One is about 13 pages long; the other one is about two pages long. Both will be made available very shortly to the committee.
Conservative
John Williams Conservative Edmonton—St. Albert, AB
Thank you very much, Mr. Chairman.
Mr. St-Jean, you mention in paragraph 13 that the Canada Firearms Centre was advised by your office to fully disclose the matter in its departmental performance report for 2003-04, which of course covered the transactions for that particular year. So you said to put it in the performance report, but that it was not to be in the estimates. I don't know how you square this circle.
Comptroller General of Canada, Treasury Board of Canada Secretariat
If I may, the departmental performance report has a full page that explains that transaction. So to disclose it as an unrecorded liability against appropriation may be--
Conservative
John Williams Conservative Edmonton—St. Albert, AB
Perhaps you would explain this concept of recorded and unrecorded liabilities. It seems an oxymoron to me. How can you record an unrecorded liability? By putting it in the performance reports, you're saying you've spent the money, but you didn't have it in the estimates or get the approval from Parliament.
Comptroller General of Canada, Treasury Board of Canada Secretariat
We have two sets of books. One is the appropriations book and the other one is the financial statements book. In the financial statements it was recorded. It was not recorded in the appropriations. It was disclosed in the DPR in 2004-05.
Conservative
John Williams Conservative Edmonton—St. Albert, AB
But you are an accountant, Mr. St-Jean, a professional, and you accept legal advice from someone who is not an accountant, not an accounting professional? You are where the buck stops when it comes to the accounting of the Government of Canada, and you allow your decisions to be dictated by someone who doesn't even have an accounting designation? And now you're trying to tell me that it's fine to put into financial statements an unrecorded liability that was not approved by Parliament? You know it should have been approved by Parliament. You acknowledge the fact that it should have been in the appropriations and it wasn't.
I don't know how you can sit here, as a professional, and tell us...dancing around this issue without acknowledging the fact that you know that this should have been in the estimates.
Comptroller General of Canada, Treasury Board of Canada Secretariat
If I may, sir, I take your point, but as I said, when I came on it was June 1, 2004. I was not there at the time.
When I was informed of the situation around the transaction--I was advised in mid-June of 2004--I wanted to make sure that the Office of the Auditor General was made aware of the circumstances. I gave the legal opinion at the meeting with the Auditor General. My colleagues at Justice Canada were not too happy with me, because normally we don't give this legal opinion. But I gave the information, sir.
To prevent it from happening again, I have an action plan to make sure that in future an advance audit opinion is sought. I cannot correct the past. I can just correct the future.
Conservative
John Williams Conservative Edmonton—St. Albert, AB
Mr. Wiersema said not to do it but you said it was okay. You accepted a legal opinion, and....
The question has just gone out of my mind because I'm boggled by what is going on here, that as Comptroller General you would accept a legal opinion on this basis from a non-accounting person.
The Treasury Board, I understand, according to their notes in the Auditor General's report, provides advice to the department.
Mr. Baker, you were the senior person in the firearms place. You asked for this to be in the supplementary estimates. Is that correct? You asked for additional supplementary approval?
Former Commissioner, Canada Firearms Centre, As an Individual
When we first identified the issue, the advice I received as commissioner from my chief financial officer was that this should be booked in 2003-04. Of course, since we didn't have the budget for 2003-04, naturally we had to pursue some solution. To my knowledge, there are two solutions: either obtain supplementary estimates or blow the vote, which is something that none of us ever wishes to do.
We raised the issue for discussion, trying to drive down through that issue for people in the centre and the Department of Public Safety and Emergency Preparedness to understand the essence of this problem. Further, many meetings were held to try to understand the contract, liability, debt, and all the different variations around this. That, of course, was what brought on the legal opinion.
So we certainly went from a position where we assumed that money would have to be obtained through supplementary estimates, if indeed the government wished to have sufficient funds in the vote. The conclusion coming out of all that deliberation, including the legal opinion and everything else, was that this was not required.
I should point out a couple of things, Mr. Williams. Number one, on the DPR, we were all concerned that we had to at least flag the $21.8 million--that's why the page is in there--as an unrecorded liability so that Parliament would be apprised of the existence of this amount, notwithstanding the fact that the conclusion received was that this didn't have to be charged to the vote.
The second thing I'd like to point out is that when the DPR was prepared, or the accounts of Canada were prepared and tabled, at no point did anyone ever tell us that this was the wrong thing to do. So we assumed that we were acting properly and fulfilling our duty to inform Parliament correctly.
Liberal
The Chair Liberal Shawn Murphy
Thank you very much, Mr. Baker.
We're now going to go to Mr. Comartin for eight minutes.
Joe Comartin NDP Windsor—Tecumseh, ON
This reminds me so much of the ongoing friction between the legal profession and the accounting profession.
In that regard, Ms. Fraser, in your experience, have you run across this kind of conflict between a legal opinion that it can be done this way and auditors' and accountants' opinions that it's not the proper way to do it? Have you run across that experience historically at any time, before you ran into it in these circumstances?
Auditor General, Office of the Auditor General of Canada
Certainly in my five years as Auditor General I have not had this difficulty before.
Comptroller General of Canada, Treasury Board of Canada Secretariat
I have been here for only two years; I would say the same.
NDP
Joe Comartin NDP Windsor—Tecumseh, ON
Mr. Wiersema, when you were having the conflict in that meeting in particular in--was it February?--were you aware of the legal opinion at that time?
Former Comptroller General of Canada, As an Individual
There is some confusion, Mr. Chairman, around the exact date of that meeting. I don't think the exact date of that meeting is known yet, but, yes, I believe at that meeting we did have the legal opinion--definitely, yes.
NDP
Joe Comartin NDP Windsor—Tecumseh, ON
You said earlier, in response to a question, that.... I'm not clear. I don't want to put words in your mouth, but I had the sense that you were disregarding the letter in the sense of its being a controlling document. Would you have taken it into account? That is, you have this legal opinion that says it's proper to do it this way, that the interpretation of subsection 37.1(1) of the FAA allows us to do it this way; if you were making the final decision, would you have taken it into account or would you have ignored it completely?
Former Comptroller General of Canada, As an Individual
If I were making the final decision, I would take it into account, but I don't think it should be the determining factor in determining the proper accounting for the matter of reporting to Parliament. I did take it into account in formulating my position on the matter, but I don't think it should be the determining factor.
NDP
Joe Comartin NDP Windsor—Tecumseh, ON
Can I conclude that in terms of general accounting practices, that would be the standard for the profession--that is, you would consider it, but it would not be a controlling document?