Public Accounts Committee on April 29th, 2008

[Sheila Fraser]

We'll simply indicate the largest transfer payments and see whether any conditions are attached to them. We will simply describe the payments and give the amounts. We will not be specifying how the payments are allocated to the provinces or in other ways. Nor do we ask the province to account for the way it spent the money. We are giving this information to Parliament simply because many parliamentarians, when they see the title of a transfer payment...

For example, transfers were made to the provinces for medical apparatus, but ultimately, they were not obliged to use the transfers for that purpose. We want to inform Parliament of the transfers and tell it whether or not any conditions are attached to them. This is more or less what it comes to.

[Daniel Petit, Conservative, Charlesbourg—Haute-Saint-Charles, QC]

If I understand correctly, you will explain the transfers and say whether or not any federal conditions are attached to them, but you will not go so far as to see whether the provinces really used—

[Sheila Fraser]

No.

[Daniel Petit, Conservative, Charlesbourg—Haute-Saint-Charles, QC]

The people in my riding asked me to put another question to you.

Many people see the government offering money to foreign countries through CIDA. An audit planned for November 2009 is entitled "Assistance to Targeted Countries—Canadian International Development Agency". We suppose that everything is all right and that the study will have to do with the funds.

When the people in my riding find out that $300 million are being given to a certain agency, it always raises some eyebrows. Are you going to look into this?

[Sheila Fraser]

We will study the assistance that is provided, the way in which decisions are made and the accountability process. We will make sure that the rules are being followed, and so on. We will not look at all the CIDA assistance programs, but we will target the largest ones.

[Daniel Petit, Conservative, Charlesbourg—Haute-Saint-Charles, QC]

Regarding assistance to targeted countries, are you intending to audit all the programs or only certain sectors?

[Sheila Fraser]

It is up to us to decide on the scope of the audit. CIDA has not been audited for the past four years. Of course, assistance to targeted countries is a very large file. We will certainly choose a few countries, probably the largest ones, and see how the programs are being managed.

[Daniel Petit, Conservative, Charlesbourg—Haute-Saint-Charles, QC]

I have one last question for you. Does this look anything at all like the study that you will be doing on transfer payments? You will verify to see whether the transfer was sent to the intended country. Will you also verify whether—and you can guess what my question will be—the transferred money went to the right places? Now we are talking about a third party, and not about the provinces.

[Sheila Fraser]

Transfers to the provinces are the subject of what we call a study. So it is simply to provide information. The other study, the one on CIDA, is an audit. We will be auditing whether or not CIDA respected all of its policies and how it knows whether it attained its objectives. This is an audit.

[The Chair, Liberal, Shawn Murphy]

Thank you very much, Mr. Petit.

Mr. Gaudet.

[Roger Gaudet, Bloc, Montcalm, QC]

Thank you, Mr. Chairman.

Thank you, Ms. Fraser, for your impartiality, and in particular, your lack of partisanship.

My question follows on my colleague's line of questioning. Who asked you to audit the transfers? Was this your decision or were you asked to do so by the government?

[Sheila Fraser]

It came from us. Because of some confusion that we observed regarding the conditions of certain transfers, we felt it appropriate to clarify whether or not there were any conditions tied to the transfers. The decision really came from us.

[Roger Gaudet, Bloc, Montcalm, QC]

Thank you.

Why change accounting standards? I was a mayor at the municipal level in a former life and accounting standards were changed. I have always wondered why. I am sure that you will answer this question honestly. I thought that this was done to give more work to the accountants so that they could invoice us for more. I don't know. Community organizations have accounting standards and therefore you just about need a certified accountant in order to do the calculations for a small community organization. I would like to know why you change the standards.

[Sheila Fraser]

The purpose of the big change is to harmonize our standards with international ones. It is really to accommodate capital markets so that there is international uniformity in the presentation of financial statements. At one point we wanted to harmonize our standards with those of the United States. Now people are realizing that we have to go even farther. There really are boards that set international standards. That is why we are changing our standards. Many countries in Europe are already doing so. England has done this, and most of the countries are slowly going about doing this.

[Roger Gaudet, Bloc, Montcalm, QC]

This is just an observation that I wanted to make. In Quebec, every time there's a change in government, accounting standards are changed. Everyone complains and no one understands anything any more. My question is simple. Will we experience the same thing?

[Sheila Fraser]

I hope that, in time, we will have better information. It is clear that it may be more comparable with other countries.

[Roger Gaudet, Bloc, Montcalm, QC]

When departments fail to follow up on your recommendations, do you have any authority, or can you take any action? Can you address the House of Commons and explain which department has not followed up on your recommendations? What authority do you have in this area?

[Sheila Fraser]

We have the authority to make recommendations. We are authorized to follow up on these recommendations, which we do every year. We choose to undertake a certain number of audits and then we do follow-up to determine whether or not the recommendations have been implemented. That is all.

[Roger Gaudet, Bloc, Montcalm, QC]

I know in the municipal world, when our accountant made recommendations in private, if they were not followed up by the following year, the RMC mayors were reminded about them and reminded that they should be implemented, if not they were going to have their fingers rapped by the government or another agency.

In your case, you're not able to meet the government or the committee and say that such and such a department—we won't name any names—is disregarding the recommendations. Why make recommendations if you cannot follow up on them? There's a problem there.

[Sheila Fraser]

We can do a follow-up and we submit a report every year describing the follow-up we have done for a certain number of audits. This report is naturally submitted to the committee. I would say that we have all become more rigorous in following up on the audits. We also expect that the department will prepare a detailed action plan indicating how it will implement the recommendations. As I mentioned earlier, I have every hope the departmental audit committees will also make a contribution in order to obtain better results.

[Roger Gaudet, Bloc, Montcalm, QC]

Since you are accountable to the House of Commons, and not the government, would it not be desirable to have you come back to the House of Commons in order to report on the recommendations that had not been implemented? I am not saying that they need to be implemented entirely, but there must be, from year to year, at least some improvement in the implementation of your recommendations. If you have been making the same recommendations for the past five years, or if 60% of the recommendations never change, that is indicative of a problem within the department. That is my concern.

[Sheila Fraser]

The problem we have is that we do not do an audit every year in some departments. Nor do we always study the same issue every year. It is a bit difficult to verify whether a recommendations has been implemented because we do not know what their other priorities, etc., were. We wanted the government to ensure that the follow-up would be done and be able to be accountable for the department's performance.

[Roger Gaudet, Bloc, Montcalm, QC]

Thank you, Ms. Fraser.

[The Chair, Liberal, Shawn Murphy]

Thank you.

Do you have another question?

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

Ms. Fraser, I would like to go back to the question raised by Mr. Petit earlier. He wanted to know if you would be verifying whether or not the transfer money was well spent. Without going that far, I would also like to ask you whether you will be conducting this audit. Is the money transferred for programs, or is it used in a sector where a province can spend the money under a program in which it has already invested? Sometimes that can look like a refund for money that has already been invested by a province in a program.