Public Accounts Committee on April 23rd, 2009

[Daryl Kramp, Conservative, Prince Edward—Hastings, ON]

Thank you. Comparatively, how are your staff paid relative to either other departments and/or the private sector for basically the same kind of capacity?

[Sheila Fraser]

We do a comparison. I'd be glad to show that to you. We share it with our staff. We are, I'd say, pretty much comparative with government. At lower levels we are I think comparative with the private sector. At senior levels we cannot compete with the private sector.

[Daryl Kramp, Conservative, Prince Edward—Hastings, ON]

How about comparable now with other nations? Obviously it's hard to compare. It's not apples and oranges; it's apples and apples, and we have different institutions and/or systems, etc. But whether it's Britain, Australia, New Zealand, or the U.S., how does your budget compare with the other nations--if you had a similar mandate, or is your mandate so different that you can't use a comparable?

[Sheila Fraser]

Well, we actually haven't done that comparison. I am aware of some of the budgets of other national audit offices, but the mandates are very different.

For example, the National Audit Office of the U.K., because it is a unitary government, has a very different model than we would in Canada, where there are provincial auditors general as well. In the U.S., the General Accounting Office plays a very different role from that of the Office of the Auditor General.

I'm not really sure. Australia might be the most comparable to us. We haven't done that. It's something we could certainly do.

[Daryl Kramp, Conservative, Prince Edward—Hastings, ON]

I was just curious.

[The Chair, Liberal, Shawn Murphy]

Thank you very much, Mr. Kramp.

Mr. Christopherson, five minutes.

[David Christopherson, NDP, Hamilton Centre, ON]

Thank you very much, Chair.

After watching my friend, Mr. Kramp, run out of time, I note that I have half the questions but I talk twice as much, so I'll probably have the same problem. But I'll try to get a few of them on the table.

First, on the DPRs, the departmental performance reports, we had sent a letter to you, I believe in February 2008, asking if it would be possible for you to do one or two random analyses. That came back “no”; I'm wondering if you could give us reasons why. I'm sure it's workload, but I'd like to hear it. Secondly, is there any intent to get it into future work plans? In that regard, if you're not able to do it, then it seems to me that at the very least we ought to be doing it.

I'm going to recommend, Chair, that we take this to the steering committee to talk about how we actually build it into our work plan. If we don't start doing something around those performances, the heat's going to move off and we're going to end up back in the old ways of doing it. We're just beginning to get a sense that it's changing the culture so that we get reports that are real. Anyway, I'd like you to comment on that.

Ideally what we need is a template, a template as to how we would go about it, both from the analyst point of view and in regard to the sorts of things that we would do; then it becomes a regular matter of our business. Then, when these things are being sent out by deputies, they never know whether they're being hauled in or not, and that's part of the pressure that hopefully will get these reports improved.

Second, speaking of the audit committees, it's a fairly new notion that has come in just in the last few years. They're not all up to speed. They're coming online. Most of them are hitting the target, I understand. It's going well, but it's a new notion for us.

It seems to me, as I sit here reflecting, that this could be another very useful tool for us, in the sense that if we're bringing in somebody after you've done an audit report, and it's one of those horrendous ones and we have all kinds of problems, it might be very instructive for us to find out that the internal departmental auditing committee had been making recommendations along a certain area and had been ignored. That could be good for us to know.

Conversely, if they've caught it, if they've made recommendations and they're ahead of the curve, and then our report sort of catches up, then we'd get a sense that they really do have it in hand, that the department head gets it, and that now the audit committee gets it. But again, it's new, so do you have recommendations around how we take that expertise and include it?

Then, Chair, again, if we could take this answer at some point and put it on a future steering committee agenda to talk about how we might make that part of our work....

Especially given that you're now doing one report less per year, it gives us a little breathing room both to do our reports properly and to take on some of these new tools that are there to help us do a better job.

Quickly, I wonder how we're doing in terms of finding auditors. I know you made reference to getting and keeping young professionals in particular, but there's such an incredible demand for auditors, how are we doing in finding them for all these committees?

The last point is on the national professional practices group. I was very impressed to see that. One of the benefits of a parliamentary or governance model like ours, with strong provinces, is that there are benefits from the synergies, because each of them has strong auditors general and strong infrastructure. It's not a story of a strong federal government and very weak provincial or state governments; they're very strong in their own right. I'd just like to hear you expand on that a little. Are they actually going to meet? Has this been done before in the Commonwealth?

I'm very impressed and I want to end on that note. I'm always impressed with how you're seeking to find new ways of doing things, staying in touch with the world scene, and keeping Canada front and centre on the things that we're known for. We're known for being decent, honest people who try to help. When we do our public books right, it reflects that, so this sort of thing is a part of us, that being this gold standard of public accounting. I'd like to hear any further thoughts on where you see that going.

Thanks, Chair.

[Sheila Fraser]

Thank you, Chair.

To the first question on DPRs, it was a question simply of resources and being able to do it right now. I would like our team that deals with this to take a look at the kind of work we could do in this area. They're doing some initial thinking about it.

For example, I wonder if we shouldn't look at this whole reporting to Parliament initiative, which has seemingly been going on for a quite a while--that is, trying to get better information to parliamentarians. It would be interesting for us to find out where that's at. Have they thought about how they could make DPRs and RPPs more relevant and easier to understand for people? I think we need to take a broader look rather than simply assessing individual DPRs. If the committee wants, we'd certainly be glad to share with you the methodology we've used to rate them. It may even be on our website, but we can certainly discuss with the researchers and the clerk how to go about that.

I think audit committees will be very useful. I would perhaps urge some caution about how the audit committees would appear before committee because they are advisory to the deputy minister. I think some thought has to be given to that. I know regular meetings are held by the Comptroller General with the various departmental audit committee members. It might be useful at some point for this committee, or certain members of this committee, to meet with this group and have a discussion on how you could work together on some of these issues. We can certainly suggest to the Comptroller General that he should start thinking about some of this stuff.

In finding auditors, we have been successful in meeting our recruiting targets. As I mentioned earlier, we can't compete with the private sector on salary, but we certainly try to compete on work-life balance. We are able to attract a number of very competent, very bright young people into the office because of that. We have to be very careful that we maintain that advantage as compared to the private sector.

Finally, to the national professional practices group, we have an association of legislative auditors in Canada, the Canadian Council of Legislative Auditors. It has been in existence for probably 10 years or more, and we meet formally twice a year. We have a number of working groups and we do concurrent or collaborative audit work together. On the list of audits that's coming, electronic health records, we have worked as a group. I believe six provincial auditors general will be auditing electronic health records, and we are going to try to produce a summary report for all of us.

This national professional practices group came out of a recognized need from all of us that with the changing standards and professional requirements we could not do it individually. It was impossible. We have agreed to provide those services for a fee to the provincial auditors.

For example, when exposure drafts come out of new standards, our group does an analysis of it and we will share the position with them. They have expertise in certain areas that we don't have, such as education and health. We hope that over time we will be able to use and tap into those resources. It's really a sharing of resources of all of the legislative audit community across the country. With that, we hope to all be better professionals.

[The Chair, Liberal, Shawn Murphy]

Thank you, Mr. Christopherson.

Thank you, Ms. Fraser.

Mr. Shipley for five minutes.

[Bev Shipley, Conservative, Lambton—Kent—Middlesex, ON]

Thank you, Auditor General and your colleagues, for being here again today.

I want to emphasize one part. You mentioned the recognition of your office. I want to tell you that an office with strong morale where people are happy to come to work often trumps the wage. With that usually comes good performance. I do commend you for working hard through your public relations and human resources to make that happen.

In your opening statement, Ms. Fraser, in paragraph 12, we talked about decreasing the number of performance audits for the next two years. I don't know if that means you're doing a pilot project for two years, but you're going to do those once in the spring and once in the fall, rather than three times a year. You say:

We believe this will give Parliament more time between reports to hold hearings, while still providing members of Parliament with the information they require....

Why is this good now, and why is the change just coming now? Is it strictly because we're in an economic time where we need to tighten our belts on the budget? Is it about the balance between budget and efficiency? Is it because we have technology that's helping? Is it that you now have a stronger dependence on the internal audits of departments?

[Sheila Fraser]

Thank you, Chair. This was really provoked because of the economic situation. If it had not been for the economic crisis, we would have come to Parliament to ask for additional funds. When we did our initial budget, if we had kept the level of work that had been initially planned and given new mandates and new responsibilities, we would have come back to Parliament to ask for somewhere between $3 million and $4 million extra. We made the decision not to do that. Because so much of our work is statutory, the only way we could manage that was to reduce the number of performance audits. We had very long discussions about whether we should do that or not, and we believe that the level of activity is still appropriate, that we're not at the point where we are not fulfilling our mandate. At 25 audits in two reports...because then to go to three, we aren't getting all the savings we could get, because to do tablings is an expensive process as well. To be quite honest, given elections and prorogations and disruptions that occurred in the parliamentary calendar, I'm sure the chair will tell you, and other members know, that there has been a period of time when we've had a backlog of reports that have not had hearings. So we're hopeful that this will kind of resolve a few issues going forward.

The planning is for two years. We are planning now the audits out. We're starting to look at November 2011. My mandate ends May 2011, so I really can't commit. We'll plan, but the next auditor general will have to decide whether this is the model that he or she wishes to maintain or whether he or she wishes to augment the number of reports. It will depend as well on the reaction from this committee: does this committee want more audits, which would then require us to go to more tablings, back to the three tablings a year?

[Bev Shipley, Conservative, Lambton—Kent—Middlesex, ON]

Thank you. I want to stay with that just for a minute. I think you had mentioned that being more accountable and relying more on the strength of internal department audits is the way to go. How are you going to market that through us to Parliament, to government, to the other people who are out there? Or do you think they will deem this to be sort of an inappropriate process by Parliament, to be reducing what they may call service and relying on some internal departmental people who are looking after their own interests, and not making sure that Canadians are actually going to have the security of the Auditor General's office that they have come to know and to appreciate and respect?

[Sheila Fraser]

This office will always continue to do performance audits, and we will always do audits in areas of importance. But certainly we have a follow-up audit that's planned in 2011 on the internal audit function. I'm very hopeful that it will show that significant progress has been made in strengthening internal audit across government, and if that is the case, we have to recognize that in our work. We shouldn't be duplicating the work that is being done with internal audits. Quite frankly, where we have, if you will, an advantage or kind of a niche is being able to do cross-governmental audits, rather than audits within a specific department.

So if we look at something...for example, an issue would be food safety, where you have the Department of Health and the Food Inspection Agency; the internal audits could look at the processes within each one of those, but they don't do that kind of broader question. Many of our audits will bring in two or three departments on an issue. I think that's where we can really add value.

We're not there yet, and it might take quite a while before we get there. But if the internal audit function can really be strengthened across government, I would think that we would move more to those kinds of broader issues that involve more departments. We'd continue to look at what internal audit is doing and look at certain issues—like in National Defence. We will always be doing specific audits within National Defence, but maybe with some of the other departments we won't be quite as present within the transactions within that specific department.

[The Chair, Liberal, Shawn Murphy]

Thank you, Mr. Shipley.

Thank you, Ms. Fraser.

Before we go to Ms. Ratansi, there's one issue I want to explore with you, Ms. Fraser. You raised it in your answer to Mr. Shipley. You indicated that your mandate expires in approximately two years, and in politics around this institution two years is an eternity. But in planning for the succession of a job as important as yours, it's not that long. I expect that the process will begin within six or nine months, if it hasn't started already.

Can you take us through that process? You're probably not involved directly yourself, but you know the process. Is there a role for Parliament? I believe the position has to be approved by Parliament, at the end of the day.

[Sheila Fraser]

I'll be glad to tell you how the process worked when I was named.

A search committee was established, and I believe it has always been chaired by the president of the Canadian Institute of Chartered Accountants. I'm not sure who else was on that search committee, but they contacted the major accounting firms and various professional organizations to bring forward names of people who might qualify for the position. An ad was placed in the newspaper for people who wanted to apply. Then there was a selection committee, chaired by the President of the Treasury Board, who then conducted interviews of a short list of probably five candidates. Then that committee made a recommendation to the Prime Minister. In my case, it was an appointment by the Prime Minister. I understand there was also some consultation with the chair of the public accounts committee at the time.

That process will have to be modified now because of the Federal Accountability Act, which requires some involvement of the parliamentary committee. I don't think it's an actual approval, but there is some hearing before a committee--I presume it's this committee--on the candidate who is being proposed.

[The Chair, Liberal, Shawn Murphy]

Under existing legislation your term cannot be renewed or extended.

[Sheila Fraser]

That's correct. It's a 10-year non-renewable term and it cannot be extended.

[The Chair, Liberal, Shawn Murphy]

Ms. Ratansi.

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

Thank you.

The line of questioning has been around your indicators and whether 97% is good, 55% is bad, or whatever. But people don't understand audits. When I used to tell people I was an auditor and an accountant they said, “You have too much joie de vivre, so you cannot be an auditor or an accountant. They're boring.” So I sat there and said, “Okay....”

I think the general thrust is that they're afraid of the fact that you're coming to check on them. I looked at the indicators and saw that 55% of departments found performance audits added value. How does the Office of the Auditor General of Canada compare to that of Australia or Great Britain? Do we have benchmarks or best practices, or do we know that this is a standard we probably face? Honestly, people don't understand accounting and auditing. I used to have financial officers who didn't know anything about debits and credits.

As an internal auditor, I used to raid the professional companies because we gave work-life balance. Do you find that you are in a similar position?

I'll stop here because Ms. Crombie wants a question as well.

[Sheila Fraser]

Thank you for the question on indicators. I should have the information with me, but we have a group--I mentioned the legislative auditors in Canada. There are some common indicators that we use. I'm just not sure...I can certainly provide that to you.

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

How does it compare to Australia? Is the 55% in the same ballpark?

[Sheila Fraser]

The most common indicators that are used internationally are the implementation of recommendations. Another one that many audit offices use is the savings that come from their recommendations. We have been reluctant about that and have had a long discussion with our colleagues around it. I'm worried it can encourage you to go to certain departments rather than others. I think I can tell you where you might be able to find some money, but that may not be the most important area in terms of management practices. As well, one issue that we see a lot is actually in fact that there's a difference between the level of activity the departments are trying to do and the funding they have. So if they are not getting enough funding for that activity, do you do that kind of audit? A lot of them, the GAO in the U.S., for instance, use that. The National Audit Office in the U.K. uses that. I'm very reluctant to use that indicator.

On the last question, on work-life balance, absolutely, that is our competitive advantage. What was really surprising through all of this is that women, especially young women or women with young families, in particular, and men too with young families, are very much attracted to the office. On our professional staff, we are now at 64% female, which I think was a shock to the men accompanying me.

[Bonnie Crombie, Liberal, Mississauga—Streetsville, ON]

I'm just going to jump in for a quick 30 seconds.

I have a question on your opening statement, on point number 17, where you say that:

Last year we informed you that officers of Parliament had encountered particular problems with the application of Treasury Board policies to their operations. Many of these policies, which apply to ail government departments and agencies, had an inappropriate impact on our independence.

What exactly does this mean? Can you explain this to us?

[Sheila Fraser]

I'd be glad to.

Whenever the Treasury Board issues an administrative policy, it applies to us as it would to any department. Within those policies there are, on occasion, roles for ministers or central agencies that are inappropriate for an officer of Parliament. One example we use is that any hospitality expense over $5,000 a minister has to approve. The largest hospitality expense we have is for our lock-ups for journalists during our tabling. It would be inappropriate for a minister to say yes or no to us having a lock-up.

There were other conditions. The communications policy was one that we raised last year. Under that policy I would have to provide all of our communications strategies, all of our press releases, all of my statements to the Privy Council Office before delivering them.

[Bonnie Crombie, Liberal, Mississauga—Streetsville, ON]

Has this issue been resolved?