Public Accounts Committee on April 21st, 2009

[The Chair, Liberal, Shawn Murphy]

I call the meeting to order. I'd like to welcome everyone here.

First of all, I'll make a few opening comments.

I want to point out to all colleagues that this is not what I would consider an ordinary meeting of the committee. It's a meeting to hear from our senior officials who deal with expenditure management within government: the preparation of departmental, agency, and government-wide statements. As well, there is a presentation of the published statements and the audit, of course, of all these statements: the performance audit, the financial audit, and the various presentations to Parliament dealing with expenditure management.

The committee is very pleased to have with us today, from the Office of the Auditor General of Canada, Sheila Fraser, the Auditor General. She's accompanied by Mr. John Wiersema, Deputy Auditor General. We have the Secretary of the Treasury Board, Mr. Wayne Wouters. He's accompanied by Mr. Rod Monette, the Comptroller General. Also with them is Mr. Alister Smith, assistant secretary, expenditure management sector, and Mr. Frank Des Rosiers, assistant secretary, priorities and planning.

There are a few additional comments I will make before we get started.

I'm very pleased to hear from the Secretary of the Treasury Board. The Treasury Board, as all committee members are aware, is responsible for setting policies and for overseeing administration within the executive. In some respects the role of the Treasury Board, vis-à-vis the executive branch of government, has a certain amount of overlap with the role of the public accounts committee vis-à-vis the legislative branch of government, all of which is concerned with the economy, probity, and compliance in the expenditure of government money.

The Office of the Comptroller General was re-established in 2004 and focuses its attention on financial management, accountability, and key control systems, such as internal audits, especially the new regime, with which every department and agency was supposedly compliant by April 1 of this year.

The public accounts committee started its work in January of this year. We've been at this for three months now, and we thought it was a good time to pause and reflect and hear from some of the senior officials on this particular issue.

We're very pleased that you were all able to attend. I should point out, again, that the committee has waived its normal five-minute requirement for presentations. You can take more time as you so wish.

Do you want to go first, Mr. Wouters, and then we'll hear from the Auditor General.

[Wayne Wouters, Secretary, Treasury Board Secretariat]

I really should allow the Auditor General to go first, but it's whatever works.

[The Chair, Liberal, Shawn Murphy]

You spend the money first, and then she'll audit it. We'll go that way.

I shouldn't say that you spend it. You supervise the expenditures.

[Wayne Wouters]

We make sure that it's spent, I guess.

Thank you, Mr. Chair.

I would like to thank the committee for inviting us to appear before you today. My colleagues have been introduced. Thank you for doing that.

If it pleases the committee, in lieu of an opening statement we will provide you with a brief presentation on the government's management agenda and the role of the Treasury Board Secretariat.

I have provided a deck, which I'll try to refer to as we go through this. Rod Monette will also speak to part of this deck. I will focus my remarks on what we see as our management agenda within the government and the public service and on efforts to make government more effective for Canadians.

I will outline the strategic approach we are taking in the four areas that are cited on page 2 of the deck: spending on the right priorities, management performance in support of innovation, modernizing people management, and building systems to support effective operations.

Rod will then describe for you the innovations in financial management, including what the chair already referred to, which is our policy on internal audits. His office is currently leading and playing a vital role in supporting deputy heads as we move towards a more principles-based, risk-sensitive, and results-focused management culture.

I will conclude with some of the challenges we face as we move to implement this agenda.

I should also note that we have provided as annexes some additional information in three areas you had expressed a particular interest in: the estimates process, Policy Suite Renewal, and the Management Accountability Framework.

Overall, I think more effective government means a number of things: first, focusing spending on the right priorities, programs, and policies; secondly, strengthening the capacity to respond to the changes and challenges affecting Canadians, and this is a particularly difficult time for Canadians; and finally, developing a workplace equipped with the people and tools to deliver high-quality services.

Making government more effective for Canadians will require a renewed management regime based on the following concepts. First, the regime should be based on principles, not characterized by excessive and ineffective rules that emphasize process over performance. Secondly, we need to be more risk sensitive, to make sure that rules or regulations that we've put in place are proportional to the risks they are intended to address and do not stifle innovation and creativity. Finally, we need a management regime that is more results focused.

We need to build on this Canadian advantage. We believe, from the point of view of public sector management, that we are a world leader using results-based information systematically in resource allocation decisions to align resources with high-performing or priority programming.

What is our overall strategic approach? At its core, management is about aligning people and resources to a common purpose and delivering the best results for Canadians effectively and efficiently.

Our management agenda is built on four components that align our resources to the goal of increasing the effectiveness of government for Canadians.

More specifically, there are four key areas.

First, we must spend on the right priorities. Here there is a need for a more disciplined and broad-based approach, which we feel we are now implementing.

Second, we need to improve management performance in support of innovation. Here the concern is that oversight and control are currently overly centralized and somewhat burdensome, inhibiting judgment, discretion, and innovation.

Third, on the people management side, efforts to position the public service as a workplace of choice are somewhat constrained by our ability to attract and retain talent and to enable and motivate workers to perform.

Finally, we need operating systems to support effective operations. Our internal and external delivery is supported by somewhat complex and outdated processes and IT systems.

As you can see, these challenges cover all three of the Treasury Board's central roles as government and management office, budget office, and employer.

We have taken actions to strengthen the government's ability to identify and address priorities and spending plans within the fiscal limits established by the budget each year. We have in fact renewed our expenditure management system. We have a new expenditure management system that's been in place for a couple of years. It has three key areas.

First, there is the whole question of managing to results for all spending. Here, in order to achieve better results for Canadians, all programs and spending must have clear performance indicators that demonstrate how results should be achieved and success measured. Sometimes it is more difficult to establish those results or outcomes as part of governing programming, but I think we have made huge strides in this area. We are continuing to work with departments to mature our capacity to define and measure program results. This results-based information is the key to unlocking departmental capacity to align resources so as to clearly define results.

The second area is what we call upfront discipline for new spending.

We are working to ensure greater rigour for new spending proposals. New spending proposals will be linked to the government's priorities and be assessed against existing programs and results.

Work in this area is benefiting from the wealth of financial and non-financial information now available through various tools we've been working on on performance management: increasing our whole evaluation capacity, our audit capacity; assessment of overall management capacity, which we do through our tool called the management accountability framework; and strategic reviews.

That brings me to the third area of how we're improving expenditure management: strategic reviews of existing spending. How do you bring better discipline to new spending? How do you bring better discipline to existing spending? Each year we are reviewing, through the Treasury Board, between 20% and 25% of program spending to ensure alignment with government priorities and assessing effectiveness, efficiency, and value for money. Every department that's required to do this must review every program they have--it's part of the comprehensiveness test--looking at programs that are perhaps no longer relevant and where funding could be reallocated to meet other priorities. As noted in budget 2009, savings identified in the latest round of our review for that year, for 2008, will total about $586 million by 2011-12, allowing for reallocation of funds to meet other government priorities.

The next area is slide 6, managing performance in support of innovation. This is the second pillar of our management agenda. Let me discuss some of the actions we have taken to create room, we think, for public servants and government to develop innovative solutions to address the needs of Canadians.

The so-called web of rules is a case of government, we would say, overregulating itself. The web of rules initiative aims to eliminate what we see as ineffective and unnecessary rules; streamline our reporting burden, which we talked about somewhat the last time I was here; and modernize our administrative processes and systems.

The box highlights some initiatives being carried out by TBS and departments in what is truly a government-wide effort. I think it's fair to say that we will always need rules. Government is run by a set of rules. It's a question of having the right rules to deal with the right issues and the right risks.

A key element of the web of rules initiative is what we call the Treasury Board's policy suite renewal. What we have done here is look at all the policies departments must comply with, all the policy instruments to ensure clarity of roles and the streamlining of requirements. We are in the process of simplifying and strengthening the rules, reducing the number of policies from about 180 to 44, 90% of which will be completed by the end of this fiscal year.

On page 7, addressing the rules themselves is necessary, but not sufficient to generate a management regime conducive to innovation.

Rethinking oversight and ensuring that risk management is in place to support intelligent risk-taking and innovation is critical.

In a dynamic and complex environment, intelligent risk-taking plays a significant role in strengthening government capacity to recognize, accommodate, and capitalize on new challenges and opportunities. If you have an organization that's governed too much by rules, you really are not managing to any risk; you're trying to avoid all risk. And we think that has been a bridge too far.

We are changing how TB does business with departments to enable it to target oversight primarily to the highest risk areas.

Departments will have increased capacity and autonomy to innovate and take risks, which is crucial to providing Canadians with effective government in a challenging and rapidly changing economic environment. If they can determine or indicate to us they have the management capacity in certain areas, such as procurement for example, then they'll be given more authorities and there will be fewer requirements to come to the Treasury Board to seek approvals.

Articulating management expectations and standards and assessing capacity is also required to promote a culture of intelligent risk-taking.

And on a related note, our management accountability framework, or MAF, allows the government to identify areas that are generating high or low levels of management performance. We've been doing this assessment now for six years. We think we have a very sophisticated tool that can assess trends in management performance across government over time and within individual departments and agencies.

We think this helps to create a management agenda more attuned and responsive to different needs and capacities. I would also say that many countries around the world are now coming to assess and look at our tool here as to how we assess performance overall.

Slide 8 looks at people management.

The third pillar of our management agenda is the modernization of people management.

I understand that today the committee did not want to specifically address human resources matters at this session, and so in the interests of optimizing our time today, I will not address this subject in detail. As you may know, Michelle d'Auray has just been appointed to the new position of chief human resources officer within the secretariat. Perhaps she would be prepared to come and talk about human resource management at a future meeting.

Slide 9 is on building systems to support effective operations. Again, effective government requires an operating environment that helps rather than hinders public servants in realizing their potential and ensures that attention and resources are achieving results for Canadians.

Currently we are plagued--I'd say that would be the best word--with a patchwork of disparate and outdated processes, systems, and technology. It was all built up department by department. I know this committee has talked a lot about shared services, and we do feel that is the way to go. Instead of modernizing and investing in IT systems department by department, how can we bring some of these together to do that?

We are currently developing a government-wide service strategy and options to modernize service delivery across areas of management. We are looking at innovative approaches such as bringing departments together into clusters or more centrally shared services, as I've already noted, with various degrees of outsourcing—I think that's another option that many provinces are using, and we feel we could do more in that area--and opportunities for greater public-private partnership in this area.

We're also working on some early deliverables, one being to look at the whole question of pay modernization--which I believe this committee has had some discussions on--and modernizing that legacy system. We're looking at desktop services. We have so many desktops; how can we perhaps look at managing those more collectively across government?

Those would be some of the comments in that area.

Let me turn to the Comptroller General on the financial management side.

[Rod Monette, Comptroller General of Canada, Treasury Board Secretariat]

Thank you, Wayne.

I'm on page 10 now of the presentation.

The Office of the Comptroller General really has two main interests, one being the financial management and the other being the internal audit function. One of the things we do is try to make sure departments and agencies have the right oversight mechanisms in place in these two areas.

The committee has asked me to focus more specifically on internal audits, so I'll do that. If there are any questions on the finance side, I'd be happy to answer those later on this afternoon.

Basically the internal audit function provides an objective look at all of management. We don't hold back from anything. We'll have a look at all the issues that management has to deal with. Every year there are in the neighbourhood of about 250 audits done through the internal audit function across government. Basically the way this is intended to work is that my office will identify risks across the government, and then we will identify those for departments. We will guide those 250 audits into those main risk areas. They'll also do their own assessment of risk. They marry their own assessment of risk up with ours. That's the way we influence that overall audit function.

We'll move on to page 11.

Internal Audit Policy has instituted several key features, including: clear assignment of accountabilities and roles and responsibilities; enhancement of perceived and real independence of internal audit through changes to reporting relationships; inclusion of a majority of external members on audit committees; and adoption of professional auditing standards and practices.

This has led to, I think, better accountability in the departments. The audit committees are functioning, I think, in a more effective way with these external members and getting in a better bang for the buck.

In terms of the audit capacity, maybe I can just mention a few statistics here. Three years ago there were about 325 internal auditors in government. We're up to about 560 now. So we've had an increase of about 70%, which is getting pretty close to where I think we need to be. As I mentioned, there are the 250 audits happening through the function. As well, my office has started in the last year to do horizontal audits. We've done a couple of those, and we're continuing on with those as well. All of this is designed to, based on where we see the risks, improve the management practices in government.

Merci.

Back to you, Wayne.

[Wayne Wouters]

Thank you.

I believe we're on page 12.

I think we have to be realistic about some of the challenges we still face. Sustainability is key, as is the need to address not only the processes and systems that compromise the web of rules in a more immediate sense, but also the public service culture that feeds and sustains the infamous web of rules.

I would argue that the current fiscal and economic situation makes progress in this area even more critical, because as we move forward with budget implementation, clearly we need to ensure that we are taking more risk but doing it with good risk management frameworks in place in departments.

We know we cannot drive this change alone or force this unilaterally from the centre. We will look to departments and functional communities to resist rebuilding their own webs of rules and instead encourage intelligent risk-taking to innovation.

As well, I would say that parliamentarians have a key role to play in this area. The Prime Minister's Advisory Committee on the Public Service recently issued the Mazankowski-Tellier report, from which I quote:

...elected officials must accept that there will always be some degree of risk and uncertainty at play in managing complex issues. ... This will require tolerance for potential mistakes, and an ability to learn from them, which will be far outweighed by increases in efficiency, innovation and employee engagement.

Mr. Chair, this concludes our presentation. Of course we will be pleased to stay here to respond to any questions that may be asked.

Thank you. Merci.

[The Chair, Liberal, Shawn Murphy]

Thank you very much, Mr. Wouters and Mr. Monette, for the excellent presentation. It certainly will assist all members of the committee greatly.

Now I'm going to turn the matter over to our Auditor General. We've heard from the executive, dealing with expenditure management and the presentation in preparation of the financial statements. Now we'll go to the officer of Parliament dealing with the audit, both performance and financial.

The floor is yours, Ms. Fraser.

[Sheila Fraser, Auditor General of Canada, Office of the Auditor General of Canada]

Thank you, Mr. Chair.

We very much appreciate this opportunity to brief the committee on the work of the Office of the Auditor General. As you mentioned, I'm accompanied by John Wiersema, who is the Deputy Auditor General.

I believe you have all received a deck. Slide 2 gives an overview of the presentation that I'd like to go through today. Slide 3 indicates our mandate and the legislative framework.

Just as a little history about the office and how the mandate has evolved over time, the first independent Auditor General was established in 1878, so we've been around for a very long time. What I think is interesting to note is that there was an Auditor General at the time of Confederation, but the Auditor General at that time was also the Deputy Minister of Finance. So there was a little problem with independence and objectivity, though I have heard some deputy ministers of finance rue the day that those two positions were separated.

In 1878 the office of the first independent Auditor General was established. In 1977 the office received a specific mandate to conduct performance audits. In 1995 there was the creation of the position of the Commissioner of the Environment and Sustainable Development within the Office of the Auditor General. And then in 2005 our mandate was expanded again, giving us the right to audit the use of funds that had been transferred, lent, or granted to certain organizations. This was largely to address concerns that we had raised over the years over the accountability of foundations, so initially it was any recipient that had received more than $100 million. That has subsequently been changed to $1 million over five years. We were also, in that amendment, named auditor or co-auditor of all crown corporations except for two, the Bank of Canada and the Canada Pension Plan Investment Board.

Slide 4 schematically shows where we fit in. Our role is, of course, to provide parliamentarians with the information and the insurance they need to hold the government to account.

To fulfill our mandate effectively, it is absolutely essential that we be perceived as an agency that is independent of the government. In fact, our credibility is based on our independence. Several measures have been put in place to this end, and they appear in slide 5. Among other things, the Auditor General is appointed for a non-renewable term of 10 years. We submit our reports directly to Parliament through the Speaker of the House, and not a minister of the Crown. We are an independent employer and we thus have the freedom to recruit our own staff. We have our own classification systems and we also have the right to obtain any information required to do our job.

In slide 6, we mention that we have a budget of roughly $88 million. Most of our staff work here in Ottawa, but we also have regional offices located in Vancouver, which is responsible for the work we do in the Yukon. Edmonton is primarily responsible for the work that we do in the Northwest Territories. The Montreal office oversees the audits of Crown corporations. As for our Halifax office, they carry out a variety of tasks, whether it be auditing Crown corporations or the Department of Veterans Affairs, for example.

We have a total of 625 employees, just over 400 of whom are auditing professionals. Auditing professionals must have an auditing degree or a master's, and some 200 of these people are accountants. Our staff come from several backgrounds, including environmental science, engineering, sociology or public administration.

We basically have four products, which I will describe briefly.

Financial auditing, which appears in slide 8, closely resembles audits carried out in the private sector. However, we pay closer attention to compliance with acts and regulations. In many cases, we are even required to give opinions on this compliance. We conduct roughly 130 financial audits each year, the largest of which is the audit of the public accounts. With revenues and expenditures of over $200 billion, this audit requires some 50,000 hours of work. I am sure that it is the largest one in the country.

As I mentioned, we audit or co-audit almost all Crown corporations. For example, we audit Canada Post, CDC, VIA Rail, the Business Development Bank of Canada, and so forth. In the three territories, we audit about 30 territorial agencies.

We are also the auditors of a United Nations agency, namely, the International Labour Organization. For this audit, we invoice fees that allow us to recover our costs.

While financial auditing is very much like what is done in the private sector, performance auditing is quite unique to legislative auditors. We cover a wide variety of subjects in our performance audits, as the committee will be well aware, covering anything the federal government is involved in doing. We cover everything from child and family services in Indian and Northern Affairs to protection of salmon, to defence acquisitions, and the list goes on and on.

We have a very rigorous process. When we do our performance audits, there is a guide that we use. It is available on our website, if anyone is interested in figuring out what these audits actually are. Essentially, at the beginning, we establish criteria or expectations of performance. These are largely based on the government's own rules and administrative policies. We agree on those criteria or expectations of performance with the departments before we begin the audit. Then, of course, we do the audit to see if those are actually being put into practice.

We will then report the findings of our audit. It is essential to us that we have really good communication with the departments, and there is a lot of effort that goes back and forth to confirm that the facts are correct. At the end of an audit, we ask the departmental head, or the head of the agency, to confirm to us that they agree with the facts. They, of course, may disagree with our conclusions, but the conclusions are ours, and we will note in our reports if there is any disagreement with the department or agency we are auditing, either on facts or conclusions, if significant.

Another of our products is special examinations of crown corporations. This, too, is unique to the federal government. We have to give an opinion essentially on the management of the corporation as a whole to indicate whether systems and practices are in place to ensure that assets are safeguarded and operations are conducted economically and efficiently. The reports go to the boards of directors of the corporation. Up until very recently, crown corporations were required to have a special examination once every five years. That has been changed recently to 10 years, and it is a change that we support. We think that many of the crowns—some very small crowns, in fact—were being audited far more frequently than some of the major departments.

Now, as well, the boards of directors are required to submit these reports to the minister, to the President of the Treasury Board, and to make them public within 60 days of receiving them.

And we have begun, as well, in the last couple of years, to report the summaries of these special examinations. Our next reports on May 12 will present the summaries of eight special examinations that we conducted last year.

The final product line is, of course, environmental auditing. I'm very proud to say that our office is a world leader in this regard. The Commissioner of the Environment has a team of about 40 to 45 people who work specifically on environmental and sustainable development issues. There are two statutory responsibilities for the commissioner. One is to assess the government's sustainable development strategies, and another is to administer an environmental petitions process. If anyone is interested, we can certainly provide you with more information on that.

Many people ask us how we choose the subjects of our performance audits. This is a process based on risk analysis. We also take into account the interest parliamentarians have in the various subjects. We spend several hours in discussion with department administrators or other people interested in the subjects, including parliamentarians, in order to decide which ones are the most important and the most appropriate to be audited.

Sometimes, policy questions may arise, but we do not comment on policy. It would thus be inappropriate for us to conduct an audit on such a topic. We also need to have the skills required to address different subjects, such as human resource management or information technology. We establish an audio plan over three to five years. This plan is updated as developments occur.

We pay particular attention to requests made by parliamentary committees, but we are not obliged to conduct the audits requested. We do not respond to requests made by the public or by individual parliamentarians.

It is essential that we ensure the quality of all our audits. We have adopted several measures to this end. We comply with professional audit standards established by the Canadian Institute of Chartered Accountants. As I mentioned, our professionals are highly qualified and our quality control system is internally or externally reviewed.

During each of our audits, steering committees composed of three or four experts, such as retired public servants or specialists from abroad, help us ensure that the audit subjects are relevant and that our conclusions are accurate.

Other external committees advise me as well. One of the most important ones is the group of senior advisors whom we meet with twice a year, especially to discuss strategic issues or problems that we are confronted with. We are extremely privileged to be able to rely on these people, including the Right Honourable Joe Clark, Mr. Broadbent, Mr. Gordon Ritchie, Mr. David Brown, and Mr. George Erasmus, all of whom sit on this committee.

There is also a committee on first nations issues, which helps us understand the realities and the problems these nations must deal with. The independent advisory committee deals primarily with technical issues. It is chiefly composed of representatives of large chartered accounting firms who assist us in interpreting accountability standards.

Turning to slide 16, several people always ask who audits the Auditor General and who are we accountable to. Our accountability is, of course, with this committee. We will be appearing before you this Thursday, actually, to discuss our report of plans and priorities for this year and our performance report for the year ending in March 2008. So we appear before the committee to discuss our spending estimates.

There has also been created the Advisory Panel on the Funding and Oversight of Officers of Parliament. That panel was established, I guess, to bring more independence to the question of funding of officers of Parliament. Like any department, we have to go through the Treasury Board Secretariat and the process of analysis of our budgets, and we thought that might be a little inappropriate, given that we are often auditing the Treasury Board Secretariat. So the panel was established, and we appear before the panel with the Treasury Board Secretariat to discuss funding requests. I think that has actually gone very well. There was an evaluation that was quite favourable to the panel.

We have an external auditor that's appointed by the Treasury Board each year to audit our financial statements. But perhaps the most important part of our accountability, on page 18, is the independent external reviews that are done by peers. The first one was done in 1999, and one of the major accounting firms examined our annual financial audit quality management system. In 2003 there was an international group of colleagues who reviewed our performance audit practices. That team were representatives of the national audit offices of France, Norway, the Netherlands, led by Great Britain. That was actually the first time this had ever been done internationally.

Since then, many of our colleagues have adopted this process, and we, for example, have led the review of the GAO in the United States twice now under this process. We've been involved in reviews. We also led the review of the European Court of Auditors and we've participated in reviews of Denmark, Mexico, and New Zealand. And there are several other countries that have done this as well, so this is becoming a trend within the international audit community. Up until now we have focused our reviews on individual product lines. We have now asked for a review of all of the office products and services. That review will be beginning a little later this year and it will be led by the Auditor General of Australia.

As for our impact, you will note in our discussions on Thursday that we give statistics on the implementation of recommendations, which is, I would say, positive. To us, too, one of the most meaningful reports is the status report, where we do follow-up and see if government has taken action on recommendations we have made in the past. Since we launched that report in 2002, the majority of our follow-up audits have been positive. In fact, you will probably recall the last one that we tabled on March 31, in which five out of seven of the audits indicated there was satisfactory progress.

In conclusion, Mr. Chair, I wish to say that we are very honoured to assist Parliament in its oversight responsibilities and very much appreciate the excellent relationship that we have with this committee. Without your review of our audit reports, I'm convinced we would not have the impact that we have with our work, so my thanks to you.

[The Chair, Liberal, Shawn Murphy]

Thank you very much, Ms. Fraser, and thank you, Mr. Wiersema.

We'll now go to the first round of seven minutes.

Ms. Ratansi.

[Yasmin Ratansi, Liberal, Don Valley East, ON]

Thank you, Mr. Chair.

Thank you all for being here, and for your excellent presentation.

As an external auditor in my previous life and then an internal auditor, I'm very concerned with risks. People don't realize that the Government of Canada is probably six times the size of IBM when the company was in its glory days. I take your point that you can't make people so risk-averse that innovation is curtailed. However, I am concerned about a few things ,and I wonder whether you can help me there.

As part of the Comptroller General's role of stewardship, accountability, transparency, and creating a risk management framework, could you advise this committee on what systems have been put in place, or are going to be put in place, to ensure that the Treasury Board vote 35, that $3 billion, is going to be properly used? Specifically, what governance structure will you put in place or has been put in place to ensure fairness in distribution across the regions? Since this vote item was urgent and was to fight recession, what measurements will be in place to ensure the current jobs we're trying to protect will be protected? What internal audit mechanism is in place to ensure that the money that is legally votable, that will end in June 2009, can be traceable?

People ask us those questions, and we who have supported the budget need to know these things. Please go with that, and if I have time, then I'll ask another question.

Thank you.

[Wayne Wouters]

Mr. Chair, that question has many aspects to it. We'll probably share in answering the question. I think the first point I would make is that when it comes to vote 35, which was a separate vote in the main estimates to assist in moving the budget elements forward as quickly as we could after April 1, the role of the Treasury Board was to determine what programs that were identified in chapter 3 of the budget needed to be funded out of vote 35.

The board does not fund specific projects. They fund programs--for example, the community adjustment fund, which is a program. Once the board has approved the program and has authorized the funding, then that program and the associated funding is the responsibility of the minister and the department to determine how the money will be allocated regionally and what projects will be funded and which ones will not be. Essentially, that is the role of the department once they have the authority and the funding allocated out of vote 35 or supplementary estimates (A) and every other source of funds we have.

[Yasmin Ratansi, Liberal, Don Valley East, ON]

Do you have a list of programs that are matched to the $3 billion? Is there a list available to you or to anyone? Which departments are probably doing it? I'm sorry to interject, but I don't want to forget my question.

[Alister Smith, Assistant Secretary, Expenditure Management Sector, Treasury Board Secretariat]

When supplementary estimates (A) are tabled in mid-May, an account will be given there of the allocations to budget initiatives through TB vote 35.

[Wayne Wouters]

The set of programs that are potentially eligible for vote 35 are specified in chapter 3 of the budget. What the board has been doing now is going through the various submissions by departments who are making an argument—or may make an argument—that given this program, we need to have this program up and running by such and such date, and therefore we need to access vote 35.

We've been going through this systematically at the Treasury Board for the past number of weeks. The first report on that, as Alister has indicated, is when we table supplementary estimates (A); we will provide the details as to which programs and the amount of funding that has been allocated out of vote 35. Supplementary estimates are normally tabled in mid-May.

Do you want to comment on the audit?

[Rod Monette]

Thank you for the question, Madam Ratansi.

The audit and finance communities have been quite involved with the budget stimulus package. From the audit side, it was one of the things we had focused on right from the get-go after discussions with the Auditor General's office, and I also had discussions with the Auditor General's counterparts in the United States as well as the Comptroller General down there. You have to be really clear about the eligibility criteria and the planning for these particular programs.

We developed a program whereby our chief audit executives would become very involved with going through all these criteria in departments to try to provide assurance that they were being done clearly and appropriately. Also, just from a risk point of view, the audit function had been quite involved as well with looking at whether or not the key risk areas were being covered off.

[Yasmin Ratansi, Liberal, Don Valley East, ON]

Do you have the eligibility criteria? Do we know what the eligibility criteria is?

[Rod Monette]

Each of the departments would develop their eligibility criteria for those programs. Those go through the Treasury Board and were approved. But before they came to us, the auditors in the departments would look at them and ask: Have you thought about this? Is this clear enough here? How is this reporting going to work? And then from the finance side, one of the big jobs of the chief financial officers is to make sure that if you have an agreement with somebody you have hooks in the money, so that if it goes some place where you don't want it to go, you can get it back.

I can give you more details on that, but those were two pretty important roles, and we tried to engage them very early in making sure that is in fact in place.

[Yasmin Ratansi, Liberal, Don Valley East, ON]

If I were to ask what the difference is between accessing the $250 billion the government budget had and why they had to have a special $3 billion extra, what would your response be? Where are the risks, and what was the necessity of it?

Are seven minutes up already? Wow!

[Alister Smith]

Would you like me to address the question, sir?

[The Chair, Liberal, Shawn Murphy]

Yes, go ahead, sir.

[Alister Smith]

The difficulty we have is that main estimates have to be tabled by March 1. Budgets are typically delivered in February—in this case it was late January—but main estimates cannot reflect what's in the budget.

Last year we brought in spring supplementary estimates because departments otherwise have to cash manage all those budget items until December, when the first supplementary estimates normally are provided.

This year we will have supplementary estimates again to pick up budget items, but in addition, we felt it was necessary to have some bridge funding to both supplementary estimates (A) and (B) to allow for the delivery of what is really a massive amount of stimulus. It's a $20 billion program in this year. So that's really the rationale for Treasury Board vote 35.

[The Chair, Liberal, Shawn Murphy]

Thank you very much.

Ms. Ratansi, thank you very much.

Madame Faille, sept minutes, s'il vous plaît.

[Meili Faille, Bloc, Vaudreuil—Soulanges, QC]

Thank you, Mr. Chair.

My colleague will ask the first questions.

[Luc Desnoyers, Bloc, Rivière-des-Mille-Îles, QC]

My question goes to the Auditor General. As a new member of Parliament, I must tell you that we sometimes ask questions to which we do not receive an answer. I am thinking of certain questions on health care that I asked you. You conducted a study in 2003 if I'm not mistaken, or perhaps it was in 2002 or 2001, to determine whether the various provinces complied with the criteria in order to avoid privatizing health care systems.

Earlier, you said that it was up to us to decide on the audit subjects, but if a parliamentary committee raises questions and does not receive answers, or if no study has been done since 2003, 2002 or 2001, it seems to me that something should be done in that regard, because we know that a great deal is being done in the provinces. I'm not concerned just with health care, I am also thinking of military spending contracts that have been granted without calls for tender. That is something that is fairly major and far-reaching. It's a question of billions of dollars, and it would seem that your office does not attach any importance to these contracts.

As a new member of Parliament, I would like to know to whom I should speak. Should I address you or someone else? What do I have to do to obtain information or to move ahead on issues that are important for Canadians?

[Sheila Fraser]

Thank you, Mr. Chair.

We try to take into account the interest of parliamentarians when choosing our audit topics, but we especially consider requests that come from committees rather than individual members of Parliament because often—and I'm going to say this fairly directly—requests may have certain political objectives. As a rule, requests issued by committees are less political.

For example, let's look at the procurement of military equipment. The Standing Committee on National Defence asked us to do some work, and we are currently performing an audit. There is even an audit program planned for the next four or five years concerning different purchases. An audit takes about 18 months so if we choose an audit topic today, it has to still be relevant in two years' time. Currently, we are studying the procurement of trucks and other military purchases.

We have not audited compliance with the Canada Health Act because we are focusing on other topics. For example, the team working on health issues is currently auditing electronic registry systems. We are even working with legislative auditors from six provinces on this topic.

We conduct between 25 and 30 audits each year. We could address a multitude of subjects and it is sometimes difficult to make a decision.