Public Accounts Committee on May 14th, 2009

[Andrew Saxton, Conservative, North Vancouver, BC]

Again, you don't know why, in 2005, the central agencies woke up all of a sudden--10 years after the fact--to implement these procedures?

[Sheila Fraser]

I'm sorry?

[Andrew Saxton, Conservative, North Vancouver, BC]

You don't know why all of a sudden, in 2005, the central agencies decided to start implementing GBA?

[Sheila Fraser]

No, I do not know.

[Andrew Saxton, Conservative, North Vancouver, BC]

Thank you very much.

No further questions.

[The Chair, Liberal, Shawn Murphy]

Thank you very much, Mr. Saxton.

Before we go to the second round, I just have an area...and I did put the question of the day, Ms. Fraser. That is the contribution agreements from NRCan. I did find them quite troubling. We have seen conflict of interest, mismanagement, not following the terms of the contract, payments that should have been made, just a whole litany of problems.

I'm a little taken aback by the timing. This is 2003-04. Now we're getting the report to Parliament. Your evidence is that it arose first as the result of an internal audit?

[Sheila Fraser]

Yes, the issues arose. An internal audit was done and published in about 2004-05, probably, or 2006. We were informed of this in August of 2006. We were comfortable that the internal audit was dealing with it. We certainly were aware of it. We don't go and review all of the internal audits, but we were made aware of this, and were under the understanding that they were doing this.

What happened subsequent to that was we received complaints in probably late 2007 that things had not been dealt with as a result of this internal audit. That was why we went in to see what was happening. In fact we found that while the internal audit had made several recommendations and the department had responded to that, they had not identified nor dealt with the conflict of interest.

[The Chair, Liberal, Shawn Murphy]

Ms. Fraser, would that internal audit have been published on the departmental website?

[Sheila Fraser]

That was published on the departmental website.

[The Chair, Liberal, Shawn Murphy]

Let me ask you this: if a member of Parliament read the internal audit, would he or she have been able to grasp the seriousness of the situation, or was it more or less glossed over?

[Sheila Fraser]

The conflict of interest was not identified by the internal auditors, so the question of conflict of interest was not there. It was more the management of the agreement. So the question of conflict of interest--that's why we really focused on that here--was not identified by the internal auditors, nor the department.

[The Chair, Liberal, Shawn Murphy]

Let me rephrase it. If I or any other member of Parliament read it, would there be red flags or red lights going on, or was it kind of a benign document?

[Sheila Fraser]

I'll let Mr. Wiersema respond, Chair.

[John Wiersema, Deputy Auditor General, Office of the Auditor General of Canada]

Mr. Chairman, I think that a member of Parliament reading the reports would reasonably conclude that there were problems with those contribution agreements. But as the Auditor General has repeated a couple of times, our big concern is that it's quite possible that many of those problems arose as a result of, potentially, the conflict of interest, and that had not been identified either in the audit or by management.

As the Auditor General has indicated previously, we are concerned that senior public servants perhaps aren't as sensitive to potential conflicts of interest as one might expect them to be, which is why the Auditor General has also asked that we look at the issue more broadly across government: what training, guidance, methodology is out there to help public servants identify and address these situations.

[The Chair, Liberal, Shawn Murphy]

I'm sure we'll be coming back to that chapter.

I'll actually ask the clerk to get a copy of the internal audit. I think it is important that there be a considerable amount of transparency to the whole process, and we do have a much more robust system of internal audit now going on.

Second round, four minutes--Mr. Kania.

[Andrew Kania, Liberal, Brampton West, ON]

Thank you, Mr. Chair.

Ms. Fraser, I'll turn you, please, to chapter 5 in terms of National Defence. I'm going to spend some time here, because I believe, in my view, there's been some serious mismanagement under this Conservative government. I'd like to go through this in some detail.

Specifically, I'll start with this concept. This is one of the largest government departments, with a budget of approximately $33 billion, correct? Well, it's $19 billion, but it's $33 billion in assets that they actually manage.

[Sheila Fraser]

That's right.

[Andrew Kania, Liberal, Brampton West, ON]

In terms of the moneys, there's a comment here, in paragraph 5.39, that “This is a serious consequence for a department that has stated a need for additional funds to fulfill its mandate.”

In terms of that, what have they stated, in terms of what they need more, that you're aware of? Specifically, is there anything relating to the conflict that's going on in Afghanistan?

[Sheila Fraser]

I'll ask Ms. Loschiuk to respond to that, Chair.

[Wendy Loschiuk, Assistant Auditor General, Office of the Auditor General of Canada]

Thank you for the question, Mr. Chair.

The department's budget, as you know, is increasing over time. I think we have a graph here in the chapter that indicates--it's 5.3, on page 6--where the budget is going.

A lot of that is there to help the department with its acquisitions. It is going to go through quite a lot of acquisitions over time and needs to re-equip the Canadian Forces. It also says that it needs to grow the Canadian Forces, so there will be personnel costs that will be increasing over time. And naturally, with its operations, there are also a lot of factors that go into flying, sailing, and driving all the vehicles that over time will also continue to increase.

[Andrew Kania, Liberal, Brampton West, ON]

Would it be fair to state, once again with reference to the conflict in Afghanistan, that this department is in need of funds in order to properly conduct that war?

[Sheila Fraser]

Mr. Chair, I don't think we can really answer that, because we have not done that kind of assessment. Obviously, the department needs money to operate. Depending upon the operations that they put out, Parliament votes them certain sums of money.

So we really can't comment on that.

[Andrew Kania, Liberal, Brampton West, ON]

I'm picking up specifically on the comment that they “stated a need for additional funds to fulfill its mandate”. I took from that, given the comments in your report for additional funds, that the budget that was allocated to them of $19 billion...they still wanted more than the $19 billion, if they need additional funds.

Is that not the logical conclusion from this comment?

[Sheila Fraser]

I believe, Chair, this is a reference to comments the department has made in either its report on plans and priorities or its departmental performance report.

[Andrew Kania, Liberal, Brampton West, ON]

So in essence, they want more or need more than the amount they were given, namely the $19 billion.