Public Accounts Committee on May 16th, 2007

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

Before I run out of time, I also want to ask you if you've had an opportunity to watch the continuing investigation of the RCMP pension and contracting issue we've been working on. Fortunately, we discovered a KPMG audit had been done and in fact discovered just a couple of meetings ago that there was a KPMG 1, 2, 3, and 4. It was rather disturbing that these audits were done and weren't available, but were secret documents.

Are these kinds of things done frequently in the public service, and is it common for you not to know these audits are going on?

[Sheila Fraser]

We were aware of at least some of them, though I'm not sure all of them. I'd have to ask the team, because there was mention in the report of the audit. I should correct that and say it was a KPMG review, I believe, as I think it was not technically an audit. We did mention it in the report. So as we're doing an audit, we will try to see what other kinds of reviews have been conducted.

I guess I find it hard.... I know when we did an audit of internal audit, we did know there were some occasions where reports were not made available—or there would be verbal reports, as the audits weren't always written. That is an issue we did raise at the time.

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

Yes, particularly in this case, because these were successive audits; as they discovered more, they started to target areas where they wanted more detail. Of course, we've asked that those be tabled. It's substantive evidence as far as this circumstance is concerned.

Thank you, Mr. Chairman.

[The Chair, Liberal, Shawn Murphy]

Thank you very much, Mr. Sweet.

I just have an issue arising from that, Ms. Fraser.

Back to this KPMG audit—and Mr. Sweet raised a very important item, and I raised it with Mr. Marshall. It was not disclosed to Parliament and there was no effort made to put it into the departmental performance reports. I asked him this question and his answer was, “I gave it to the Auditor General, and she's an officer of Parliament.”

Again, I know it was referred to in your report, but is there any mechanism or procedure whereby something as serious as that should either have been disclosed to Parliament or at least have been referred to in detail in the departmental performance reports? Basically, it was hidden from Parliament.

[Sheila Fraser]

I don't know if there was, or would have been, a requirement to produce that in Parliament, but I think it's equivalent to an internal audit, so in my view—and the department may not agree—it should at least have been posted on their website, as there is a requirement for all internal audits to be posted there.

And, yes, one would expect full disclosure, and some mention should be made of it in a departmental performance report and what corrective action has been taken.

[The Chair, Liberal, Shawn Murphy]

Another issue relates to the whole purpose of this exercise, Ms. Fraser, in which Parliament approves the expenditures your office requires to administer the Office of the Auditor General, and this is set out in detail in your estimates. Do you feel, given your mandate and your responsibilities and the duties of your office, you are sufficiently resourced?

[Sheila Fraser]

We are, Chair, at the present time. As I mentioned, we do see some funding pressures coming in future years as we get into doing the audited departmental financial statements, but it is still too early for us to be able to assess how much money we will need and when. We would come back with a request at that time.

[The Chair, Liberal, Shawn Murphy]

Thank you very much.

Mr. Christopherson, for seven minutes.

[David Christopherson, NDP, Hamilton Centre, ON]

Thank you very much, Chair, and thank you again, Madam Fraser, for your presence here today.

Notwithstanding that Canadians were somewhat fearful that there might be an election, I would suspect they'd be downright terrified to hear you might be leaving. You said something about the end of your mandate. I'd like to get that clarified. Is that just a natural end of your appointment, or is this a project...?

I want to know what's going on here, because we don't want you to go anywhere!

[A voice]

Suck-up.

[Sheila Fraser]

My mandate will end May 31, 2011.

[David Christopherson, NDP, Hamilton Centre, ON]

Good. We have lots of time to work on that.

Suck-up is absolutely right, but on behalf of Canadians, not so much us, please don't go.

Congratulations on the International Labour Organization. Anybody like me, who is active in the labour movement in Canada, is proud of that and recognizes the importance of the International Labour Organization to all freely elected labour leaders. It's an important organization that makes a real difference to millions of people.

[Sheila Fraser]

If I could add, we were very pleased because it was a very rigorous competition. There were probably 15 or 20 that expressed interest. There was a short list of five, and we had to go and make a presentation. It was a very professional selection process.

[David Christopherson, NDP, Hamilton Centre, ON]

I'm very pleased, and congratulations to you and your department.

[Sheila Fraser]

Thank you.

[David Christopherson, NDP, Hamilton Centre, ON]

This is a quick one I asked at an earlier meeting. We've now made provisions for this committee to make use of the comptroller's office if we have an issue like a one-off project or something comes to mind. Somebody has used the example of somebody's brother-in-law getting contracts. Another member used the example of a bridge where there are problems with the contractors. It's not really enough to bring in your department, because I think there's a dollar value level below which it's just not worth our while to send you in.

As it was given to me as an explanation of when does it go to this comptroller and when does it go to you, it came down to this: if it's a fairly small matter or an isolated project or a one-off question, not yet even an allegation but a question, then we ought to go to the comptroller as our first step. Would you agree with that? Is there any further refinement you can give us, just to save some time procedurally?

[Sheila Fraser]

We would be glad to assist the committee in any way. The only issue we have had in the past is in the interpretation of our act, in that we can't simply respond to a committee; we have to table a report in Parliament, and we are limited in the number of reports we can table. If there is a way to change the procedure and the committee asks us for something and we can simply write you a letter and say, here are the results of what we found, we would do that. At the moment we are unable to do that.

If it's basic information, the government should be furnishing that to you. You shouldn't have to rely on the external auditor. If you want any assurance around that information, then I would say you might want to come to the audit office.

[David Christopherson, NDP, Hamilton Centre, ON]

That's when we wouldn't go to you, but what would be an example, in your opinion, of what we would go to the comptroller with? I gave two examples. Do you agree those are the kinds of examples?

What happens is that people know we're on this committee and they'll tell you something, but what do you do with it? Do you send everything to the police? We can't do a full report, but we don't want to ignore it. This is why we came up with this mechanism, if you will.

[Sheila Fraser]

I think it would be appropriate if it went through the internal audit group of the Comptroller General, because they do have some independence, and they would be able to go and find the information for you.

[David Christopherson, NDP, Hamilton Centre, ON]

Thank you.

My last questions will be on the attachment 2 attached to your remarks today.

I have to say I wasn't overly impressed to see that only 77% of the audit committee chairs find your financial audits add value. Ordinarily, 77% is a nice number, it's nice to have, but what it also says is 23% don't believe it's of any value. I find that kind of high. What are your thoughts?

[Sheila Fraser]

I guess we haven't really done a lot of analysis. I don't know that it was necessarily a negative; it was just that it was not...they didn't think it was—

[John Wiersema]

It's the middle of the road.

[Sheila Fraser]

Yes, it was mediocre I guess for a lot of them. The ones that would be very positive would be the 77%. I guess a lot of the financial audits can be pretty routine in a lot of places. It could be they were already well managed.

[David Christopherson, NDP, Hamilton Centre, ON]

Moving down the chart, it says, “Our work adds value for the organizations we audit. The percentage of departmental senior managers who find that our performance audits add value is 60%.” What really threw me off was that the target was only 65%.

I accept this is all motherhood to us, but to see numbers where that percentage of managers don't feel there's value to this—

[Sheila Fraser]

I think a lot of times performance audits create a lot of grief for departments, to be very blunt. They have to spend a lot of time in parliamentary hearings. I can think of some organizations at this time that probably don't think our performance audits have been particularly helpful, as I'm sure committee members can too. It requires a lot of effort from their people as well.

We've been trying over the last few years to pick the areas we think are of highest risk, and that management agrees are of highest risk, so we can move up that percentage. I think the reality will always be that we will do audits whose conclusions departmental managers may not agree with, and they won't think they added value.