Public Accounts Committee on Nov. 20th, 2007

[Brian Fitzpatrick, Conservative, Prince Albert, SK]

I appreciate those comments, Madam Fraser.

There's a real skill shortage developing in the economy. I'm from out west, and I can vouch for the fact that right down the line there are major shortages. Employers are doing extraordinary things to try to fill employment gaps. I know there's a sub-prime mortgage fallout and a lot of fiscal unbalances, so that the chickens are coming home to roost in the private sector, and there may be lots of accountants unemployed before this is all sorted out.

I'm just curious, Mr. Monette, is your department having difficulty recruiting the kind of people you need in the accounting areas to do your job?

[Rodney Monette]

Thank you for that question.

It has been a big challenge for us to make sure we get the right folks. My predecessor, Mr. St-Jean, put a huge focus on that over the last two or three years. We have a program to bring in new finance officers and audit officers. In the last five years, if my memory is correct, we brought in almost 650 individuals. I think the majority of them either have or are working on accounting designations. So it is a challenge. From my own perspective, I think one of the things we need to do is just to communicate a little bit better how interesting a job in the public service can be, because you can work in a lot of different organizations and see a lot of different things. But it has been a challenge.

[Brian Fitzpatrick, Conservative, Prince Albert, SK]

Thank you.

[The Chair, Liberal, Shawn Murphy]

Thank you, Mr. Monette.

Mr. Lussier, quatre minutes.

[Marcel Lussier, Bloc, Brossard—La Prairie, QC]

Thank you, Mr. Chairman.

Ms. Fraser, sometimes, occasionally you have identified misstatements and inaccuracies in your audits of the Government of Canada's financial statements and consolidated accounts.

How significant is a variance? Are we talking about 0.25%, 0.5%, 1%, or 2%?

[Sheila Fraser]

Like any auditor, we establish a materiality threshold. If the errors, be they individual or total, exceed this threshold, we give the financial statements a qualified opinion. Of course, we inform the government of all errors that we find and ask the government to correct them. Our materiality threshold is $1 billion.

[Marcel Lussier, Bloc, Brossard—La Prairie, QC]

That is more or less 0.5%.

[Sheila Fraser]

That is correct, yes.

[Marcel Lussier, Bloc, Brossard—La Prairie, QC]

Back on page 6 of the deck presented by Mr. Monette, the budget shows a surplus of $3.6 billion.

Are these Treasury Board or Department of Finance projections?

[Paul Rochon]

Department of Finance projections.

[Marcel Lussier, Bloc, Brossard—La Prairie, QC]

So you are the one, then, Mr. Rochon, who must take the blame for having estimated the surplus at $3.6 billion, whereas the actual surplus is $13.8 billion. I'm trying to understand here, because the Bloc estimated or projected a surplus of between $11 billion and $12 billion.

Are you being a bit conservative in this case? As Ms. Fraser mentioned earlier, there are adjustments to be made and it is difficult to estimate revenues. What adjustments do you plan to make?

[Paul Rochon]

First of all, I think that once again, we need to start by making a distinction. The type of errors and adjustments Ms. Fraser was referring to are really adjustments that are highlighted when the current year is finalized. These are not errors linked to forecasts as such.

Secondly, you must bear in mind that here we are making a comparison between the 2006 budget and the final outcome. Between the two, the 2007 budget revised this $3.6 billion upward $9.2 billion. You drew a comparison with $11 billion, but I do not know at what point the Bloc did its estimate. It does not matter.

The increase in the projections is mainly a reflection of the economy's strong growth. As far as I know, that is the kind of revision that all private sector forecasters have done. The projected increase is more or less the same. Even when we examine the situation at the provincial and international levels, we see the same trends over the past two years, in other words, generally speaking, revenues have been higher than projected.

[Marcel Lussier, Bloc, Brossard—La Prairie, QC]

Okay.

So it is a coincidence if, on page 7 of the deck, it says that the variance in revenue is $13.8 billion and that the surplus is also $13.8 billion. It is quite exceptional for the two figures to be identical.

[Paul Rochon]

I believe so.

[Marcel Lussier, Bloc, Brossard—La Prairie, QC]

Is it a coincidence?

[Paul Rochon]

Yes.

[Marcel Lussier, Bloc, Brossard—La Prairie, QC]

Thank you.

Ms. Fraser...

[The Chair, Liberal, Shawn Murphy]

Are they right, Rod?

[Rodney Monette]

This is on the revenue estimation process. You are right, the methodology must be revised so that revenue estimations are better. We are currently revising the process, in conjunction with the Canada Revenue Agency.

[Marcel Lussier, Bloc, Brossard—La Prairie, QC]

Thank you very much.

[The Chair, Liberal, Shawn Murphy]

Thank you, Mr. Lussier.

Mr. Sweet, you have four minutes.

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

Thank you, Mr. Chair.

I have a couple of quick questions. In the first volume on page 1.13, it shows that since 2004, prepaid expenses have risen by 70% to $1.6 billion today. Just give me an idea of what prepaid expenses are, what we have to pay for in advance in the government.

[Rodney Monette]

Thank you, Mr. Sweet.

John.

[John Morgan]

Prepaid expenses typically include where the government has paid out in advance for goods and services yet to be received. The other element is for contributions. So where the government makes a transfer payment to a not-for-profit recipient and it's a contribution arrangement as opposed to a grant, we treat that contribution as a prepaid expense until such time as the recipient actually uses the money. So you might have some of that money left outstanding at year-end, and that's considered a prepaid expense.

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

Are there some inventories for market-based decisions on fuels and that kind of thing as well?