Public Accounts Committee on Feb. 10th, 2009

[Sheila Fraser]

We wouldn't have gone into all those kinds of analysis; in fact, we would have expected them to have that in place. We note in the report, I think, that they calculated a cost per day. That was simply the cost of the food, not all the preparation costs. I don't think we go into a lot of detail, but I would suspect the information management systems are certainly not as sophisticated--

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

Right, but they have one real advantage. It's not like what I would call the retail world or the wholesale world; they have literally a “captive market” and so their food costs should be rather predictable. I have a little concern over that. But I'll just go to another point within the same department.

Did you do a breakdown of the security matters between what percentage of their cost is involved in keeping inmates out versus what percentage of the cost is keeping out the undesirable products such as drugs? Is there any breakdown between those?

[Sheila Fraser]

We don't have that information.

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

Okay, thank you.

You might make a recommendation on this, and I don't know if it would be apropos. Of course, we took a look at the staffing. You've intimated serious concerns with staffing and particularly a significant amount of money put forward by the government for new staffing, for training, to cut overtime, not implemented whatsoever. Obviously the staffing circumstance has been very poorly handled. Would you have another agency under another department that we could possibly take a look at as a model to follow that you have every confidence in?

[The Chair, Liberal, Shawn Murphy]

The Office of the Auditor General.

[Sheila Fraser]

One does not come to mind, no.

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

Okay, I have one other question, and this one is bothering me.

On pages 2 and 3 of the report, at the bottom, it says: “Further, the requirement to manage economically and efficiently is not included in senior management performance agreements, so there is little incentive for them to do so”. I find that almost offensive. Does that mean that management will only do their job if they're considered to be in bonus territory? Do they not have a job description and a responsibility to do their job normally every day, day to day, without having a special requirement of over, above, and beyond to do their job?

[Sheila Fraser]

I agree with you. That should be part of their normal, everyday responsibilities, though we have found in past audits that when it is part of the performance agreement perhaps more attention is paid to it.

I think one of the main conclusions in this report is, given the statements they have in their reports on plans and priorities where they're indicating they are stretched and they're having difficulty reallocating funds and meeting their program objectives, we would have expected much more attention within the agency on economy and efficiency. We saw very little evidence at senior management meetings of any discussion around economy and efficiency, just the way they operate, very little national statistics management of this issue. I certainly think it's something they should be looking at.

[The Chair, Liberal, Shawn Murphy]

Thank you, Mr. Kramp, and thank you, Ms. Fraser.

Mr. Desnoyers, for five minutes.

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

Thank you.

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

Thank you, Mr. Chair.

Madam Auditor General, in chapter 3, you are critical of the government's lack of transparency when it comes to the proactive disclosure of its contracting policy. More than half of the contracts that you examined were not disclosed to the public. All of which brings me to the same question that I asked you during our in camera meeting. The government has concluded military contracts valued at close to $27 billion and no contract reports have ever been produced. You told me that your office would be looking into contracts for the purchase of trucks.

My question is also directed to you, Mr. Chair, because I want some assurances that the Standing Committee on Public Accounts will also receive a report on the purchase of military aircraft and buses, as well as on the economic impact and spinoffs in Canada of these large-scale contracts.

[The Chair, Liberal, Shawn Murphy]

Is that question to me?

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

I want to be certain that Madam Auditor General will come back to this topic. This shouldn't count as part of the five minutes allotted to me.

[Sheila Fraser]

I can confirm that we are currently auditing the truck purchasing contract. However, we are not assessing the economic impact of this purchase. That is a job for the department or for the government. We do not have a mandate to evaluate such things. If the member wants information of that nature, he would need to ask the government or the department affected.

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

At the outset, I mentioned that you had been critical in your report of the serious lack of transparency. With respect to contracts, I think the government is guilty of the same lack of transparency. I believe it is important for the Auditor to conduct an audit, since the government has made some commitments and there have been significant spinoffs. We are a little in the dark when it comes to the billions of dollars that have been committed.

[The Chair, Liberal, Shawn Murphy]

Let me interrupt, Mr. Desnoyers.

I just want to point out that you're making some good points and some very valid points, but it's not within our mandate. Normally we're dealing with the expenditure of taxpayers' funds and follow closely the Auditor General. Whether there is or isn't economic benefit probably wouldn't be strictly within our mandate.

I'll go back to you in a minute.

[Sheila Fraser]

I'd also like to point out that our questions concerning information disclosed to the public pertains to all contracts valued at more than $10,000. One of the problems observed had to do with one type of contract in particular, namely task authorizations. The disclosure rules were unclear. A contract was awarded, but several bids were received for the same contract and each one was not disclosed. The department has clarified the requirements since the audit and we hope that the problem will be resolved.

Moreover, contract changes were not disclosed either. A new directive came into effect in September and as of January, departments must now disclose any changes to contracts. So then, the problem has already been corrected.

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

Mr. Chair, I'd like to speak to you later about contract disclosure. I don't want to get into a debate, because I don't want to use all of my allotted five minutes discussing this subject. I hope that I won't be cut off, because I do have another question.

[The Chair, Liberal, Shawn Murphy]

You have another two minutes.

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

Like my different opposition party colleagues, Madam Auditor General has used some disturbing terms in her report. It contains references to plant and plant products. The Auditor General refers to serious problems—those are her words—in terms of controlling species, harmful organisms and diseases that threaten ecosystems in Quebec and Canada. The situation is very serious. She also points in her report to a lack of resources, a situation that threatens the livelihood of Canada's forestry workers and farmers. She notes that the Agency did not conduct analyses, even in the case of high risk plants and plant products. This situation has existed since 1996. This is cause for concern, because we're talking about the health of Canadians. I would simply like some confirmation that the government is in fact not particularly interested in this Agency, and that as a result, the health of Canadians is greatly at risk, judging from what you have said.

[Sheila Fraser]

Mr. Chair, I would like to emphasize that this is an important consideration that affects ecosystems, biodiversity and the country's economy. Our report highlights seven urgent situations that the Agency is currently trying to get a handle on, as well as the impact this is having on farming and other sectors.

I would also point out that these urgent situations are not affecting the health of Canadians in any way, because they involve plants, not food products. Food products are managed under another system. I wouldn't want anyone to take our findings and extrapolate on them. Our findings were limited to plant products.

[The Chair, Liberal, Shawn Murphy]

Thank you very much, Mr. Desnoyers.

I want to clarify some remarks I made. I may have left the wrong impression.

Certainly when transparency is pursued, proper procedures followed, and the principles of prudence and propriety observed, we all benefit economically. There really is a spinoff. I just wanted to clarify that.

Mr. Weston, you'll have five minutes.

[John Weston, Conservative, West Vancouver—Sunshine Coast—Sea to Sky Country, BC]

Thank you, Mr. Chair.

Thank you for coming, Ms. Fraser, Mr. Vaughan, and Mr. Maxwell.

Ms. Fraser, you've contributed significantly to Canadian governance. It's a great honour to be here. And I have to say, given the relentless way you pursue facts, I'm glad to be on this end of the questioning

I'd like to refer in my question to something the chairman just said. I'm going to get to an area Ms. Crombie was pursuing a minute ago on chapter 2.

He said that when transparency is pursued, there's a benefit for all Canadians. You reached the conclusion, for the tenth straight year that an Auditor General has reached this conclusion, that Canada's governance deserved an unqualified opinion concerning the government's consolidated financial statements. When the Comptroller General was questioned on that last Thursday concerning foreign investment, he said that's probably a good thing because it means that foreign investors and business people can depend on what they see, and he knew of no other country in the world that had ten straight unqualified opinions. This strikes me as a great thing that we as Canadians can celebrate. You have verified it, and so we thank you for your role.

Concerning chapter 2, as somebody who has set up and run non-profit enterprises and has run small businesses here and in Asia, I sympathize with those small entities that you reviewed. You concluded that they don't “have the systems and resources of large departments and may have only a few key people responsible for several functions. Sometimes this can lead to problems”. I can see that, and certainly a government that is committed to accountability, as this government is, wants to know how we can improve. The flip side of having the unqualified opinion is that we must always be accountable and must always be improving in our accountability.

So here's the first of my questions.

You identified the new policy on internal audit that came into force on April 1, 2006, as a positive development. Ms. Fraser, can you briefly explain this policy and expand on how it will increase accountability and oversight?

[Sheila Fraser]

Thank you very much.

We are very pleased to have seen this policy introduced. I think internal audit is a really critical function in any organization. Management should do their own monitoring and assessment and assure themselves that systems are working as intended and take corrective action. It shouldn't be the external auditor who is always playing that role.

Government has, over the years, put a fair bit of money into this. It has increased the requirements around the qualifications of people who lead internal audit departments and has required internal audit to be conducted. And without having done a follow-up, we have certainly seen evidence that the internal audit function in government has become more professional and is doing good work in government and that the departments are taking corrective action.

Frankly, as departments do more internal audit and we as external auditors can rely on it, we gain assurance and can perhaps reduce our work or work in tandem with them. I think it is of benefit to all Canadians.

One of the major things, too, that this policy instituted was to have departmental audit committees, so that external people who sit on committees advisory to the deputy ministers and review internal audit and external audit plans will be and are responsible for ensuring that there is follow-up on recommendations and action plans. This has brought, I think, much better accountability and rigour to the whole process of audit as well.

[John Weston, Conservative, West Vancouver—Sunshine Coast—Sea to Sky Country, BC]

That's good news.

Ms. Fraser, the second question is also related to chapter 2. You mentioned the management accountability framework in your report and some of the problems associated with these small entities that you were reviewing. Have you heard back from Treasury Board indicating whether new measures have been implemented to gather additional information that will help these small entities in the future?