Public Accounts Committee on Oct. 28th, 2009

[Cassie Doyle]

As I mentioned in my opening statement, we did put in place a much higher level of oversight, both through our financial management branch and, independently from the program area, through the establishment of a transfer review committee. Through that, I believe we've had a much higher level of external review and scrutiny and have improved the overall management of our contribution agreements.

[David Christopherson, NDP, Hamilton Centre, ON]

Help me, Deputy. I think I was pretty clear. I was trying to understand why you were so impressed with your 2006 audit and what you did after that, and when our AG went in afterwards, she found that the improvements you had made were still not sufficient, even in an area of conflict of interest.

I'm just trying to understand how you could miss the things that were still broken after you went in and fixed it once already.

[Cassie Doyle]

Mr. Chair, what this chapter that the Auditor General brought forward focuses on is one isolated case within a department that develops and administers thousands of contracts. The person who is responsible for this no longer works for our department. We have addressed this from a labour relations perspective and we have put in place two very strong oversight mechanisms as well as developing very detailed checklists. I believe that since 2006, and as a learning from that internal audit, we have made a step change in the overall management of our contribution agreements.

Can I go back and reverse an isolated situation? That's actually not possible historically. We've learned from the report, we've made further enhancements, but I stand by my opening statement that we have a very strong stewardship of contribution agreements.

Thank you.

[The Chair, Liberal, Shawn Murphy]

Thank you, Mr. Christopherson.

Mr. Saxton, you have seven minutes.

[Andrew Saxton, Conservative, North Vancouver, BC]

Thank you, Mr. Chair.

My first question is to the Auditor General.

Mrs. Fraser, can you remind us what dates your audit covered specifically?

[Sheila Fraser]

Our audit took place between June and November 2008, but the period under audit was probably up to about 2005, I guess—roughly from 2003 to 2005.

[John Wiersema]

The work was done between June and November. We focused most of our activity on looking at the contribution agreements at the time they were being managed. The contribution agreements, I believe, were first issued in 2005. Then we looked at the internal audit and the subsequent management actions that had been put in place. But the period covered by the audit focused on the contribution agreements and the actions that management took subsequent to that, up until November 2008, to prevent recurrence of those situations.

[Andrew Saxton, Conservative, North Vancouver, BC]

And the contribution agreements were signed in what year?

[Sheila Fraser]

They were signed in 2003.

[Andrew Saxton, Conservative, North Vancouver, BC]

Starting in 2003?

[Sheila Fraser]

I believe it was in 2003.

It was between April 2003 and March 2005.

[Andrew Saxton, Conservative, North Vancouver, BC]

So it was roughly that two-year period between 2003 and 2005.

Do you happen to know who the minister was at the time at Natural Resources?

[Sheila Fraser]

I do not.

[Andrew Saxton, Conservative, North Vancouver, BC]

Thank you.

My next question is for Ms. Doyle.

You mentioned in earlier testimony today that there is a difference in culture now at NRCan. Can you explain what that difference is?

[Cassie Doyle]

As a consequence of the events that happened between 2003 and 2005, there was a much elevated level of focus on contribution agreements. As I mentioned, we not only have put in place the oversight mechanisms and specific tools, such as checklists; we have also strengthened the language in the agreements themselves, and we ensure that we have engagement of our legal services in the review of all contribution agreements.

Even more importantly, we've had much more engagement with the individual officials who are responsible for administering programs that can include contribution agreements. There are many more training sessions. There's certainly more required training, but there's also been engagement particularly around case studies, such as the one that happened that was reported through the Auditor General's report.

[Andrew Saxton, Conservative, North Vancouver, BC]

So as a result of the audit, and perhaps as a result of new Accountability Act standards, that's what has precipitated the change in culture. Is that correct?

[Cassie Doyle]

Yes. That, as well as our management accountability framework that is administered through the Treasury Board, has a number of management indicators that we report on, on an annual basis. I think it's clear that there has been a very strong improvement in the overall financial management across government. I certainly have seen that in my department.

[Andrew Saxton, Conservative, North Vancouver, BC]

Can you describe the increased training for program officials that has taken place?

[Cassie Doyle]

It has been developed, actually, through our centre of excellence in the transfer review.

I wonder if I could ask my ADM to comment on the training that has been developed.

[Andrew Saxton, Conservative, North Vancouver, BC]

Sure.

[Bill Merklinger, Assistant Deputy Minister and Chief Financial Officer, Department of Natural Resources]

Thank you.

I'll mention a couple of highlights of the training.

First of all, the centre of expertise fosters best practices in the effective management of grant or contribution programs. So we have the centre that guides managers who are administering grants and contribution. Also, as was mentioned in the opening comments, we run case studies and engagement sessions with managers of grant and contribution programs, where we actually walk them through concrete values and ethics, conflict of interest situations, and the appropriate way to deal with them.

Those would be two examples.

[Andrew Saxton, Conservative, North Vancouver, BC]

Thank you.

My next question is for the Auditor General.

Ms. Fraser, are you pleased with the actions that have been taken since the audit was concluded?

[Sheila Fraser]

We have not audited any of the actions that have been taken by the department since then, so I really can't comment on that.

[Andrew Saxton, Conservative, North Vancouver, BC]

Okay.

Deputy, can you comment on the internal audit that was completed in 2006?

[Cassie Doyle]

The internal audit, which is actually posted on our website, as I mentioned, focused on the overall management, the control framework on contribution agreements. That was the primary focus of the internal audit.

There were a number of recommendations made by our internal auditors, and management responses. As I mentioned in my opening statement, all of the recommended actions have been implemented from the September 2006 internal audit. That includes the establishment of the centre of expertise; a policy on grants and contributions was formalized and distributed; a framework for the monitoring of grants and contributions was issued; an electronic management system was put in place to capture information and monitor programs; increased training, as I mentioned, was conducted, including courses within all of our regions; file checklists were promulgated to help managers select recipients for audits and manage agreements; and as of May 2006, all departments disclosed contributions of over $25,000 on their website to ensure transparency.

Thank you.