Evidence of meeting #14 for Public Accounts in the 40th Parliament, 3rd Session. (The original version is on Parliament’s site, as are the minutes.) The winning word was audits.

A recording is available from Parliament.

On the agenda

MPs speaking

Also speaking

Sheila Fraser  Auditor General of Canada
Lyn Sachs  Assistant Auditor General, Office of the Auditor General of Canada

10 a.m.

Liberal

The Chair Liberal Shawn Murphy

Merci, Madame Faille.

Mr. Kramp, for five minutes.

10 a.m.

Conservative

Daryl Kramp Conservative Prince Edward—Hastings, ON

Thank you.

Welcome to our guests again.

I would certainly hope I would speak on behalf of all of the committee, but I know I would speak certainly on behalf of a large portion of it when I say just how much of an honour and a privilege it is to sit on this committee. For the most part, many of us have a non-partisan bone in our body, in contrast to some of the antics that take place on this Hill.

One of the reasons we're so privileged to have you before us is that basically the essence of our committee is your evaluations. You do not deal with things in a partisan way. You do not deal with the court of public opinion. You deal with fact.

We, as parliamentarians, are subject to the ultimate decision-makers when the voters decide whether or not we do a job. But we of course cannot do our job effectively unless we have information we can depend on and that we know will help provide guidance and will certainly give us an indication if we're going down the wrong path—because nobody's perfect. And at that particular point, we need that hand on the rudder to say “I suggest you try this”.

When I take a look at the honesty with which you approach your own evaluations, to me that's crucial. If we can't have faith in your own effective evaluations of your own department, how can we have faith in what you are doing with Parliament itself? That's why, of course, the peer reviews are so important. The fact that your reviews parallel the peer reviews in most cases is highly encouraging.

The one thing I am very comfortable with as a member of the government party, but regardless of who's in government, is the fact that Parliament does respond to your concerns. When I take a look at the percentage of reservations that are addressed from one financial audit to the other, you have a goal of 100%. Let's not accept anything less. And Parliament's been able to run along those measures. I take a look at the percentage of significant deficiencies that are addressed from one special examination to another. We're rolling along.

I was particularly pleased when you identified the one area—the lack of information due to, I suppose, the assessment by judicial officials--as to what would be deemed to be pertinent. You took your concerns directly to both administrative and legislative ends, and you appear to have a satisfactory response, at least in activities. We're pleased to see that from the government. As that moves down the road, this committee will certainly be looking to follow up on that and ensure you've been assured, both tangibly as well as verbally, that you have the results you're looking for.

In spite of all these glowing accolades that you and your office deserve, I would certainly hope you would never be satisfied. I still think there's always room for improvement anywhere. I see you're looking at a renewal of your audit methodology, and an updating of all the manuals. I'm hoping that is maybe one of the areas that you're suggesting you're looking at for improvement. But if you had to pick three areas of improvement you want to move on, distinctly and effectively, right now, that would help you do a better job to advise us, what would your thoughts be?

10:05 a.m.

Auditor General of Canada

Sheila Fraser

Thank you, Chair.

I would just like to echo the member's comments that while we may make improvements, we can never rest on our laurels. Expectations change, and expectations always seem to become more onerous. We have to be in a cycle of continuous improvement. That's what we hope audits lead to: making things better.

As for the office, I would say one of the major challenges we have over the next two years is the methodology project. It is very significant for us. The staff will have to learn new standards in audit and new standards in accounting. There is a certain stress for the office right now.

10:05 a.m.

Conservative

Daryl Kramp Conservative Prince Edward—Hastings, ON

Are you developing this internally, or are you copying this from other nations? Are you paralleling? Where are you coming up with this?

10:05 a.m.

Auditor General of Canada

Sheila Fraser

For our financial audit, we have a strategic alliance with one of the major accounting firms, and we are taking over all of their methodology. We will obviously have to adapt some of it, because legislative audit is a little different from the private sector. But for the financial statements, most of it is the same. Where we are quite different is in the performance audit and the special examinations. Those are unique to legislative audit, and I would say special examinations are actually unique to the federal government. No other government, to our knowledge, has anything like a special examination. So we have to develop that ourselves. There obviously is methodology that has existed, so we will be building on that. But it's also changing all of our.... We have banks of electronic tools, electronic working papers, all of that, so this is a significant challenge to us. That is clearly our priority going forward for the next year.

I think the other challenge we have to continue to manage—and we've been successful so far—is the staffing of the office to make sure that our people are happy working with us, that they get challenging, interesting work, and I will be pleased when we get the final staff survey that we are just in the process of finalizing to share the results with the committee. We've had excellent results in the past, and I hope that we can continue to do that. Ms. Sachs mentioned recruitment. Our best recruitment is our own staff, who bring in their colleagues from the private sector. We have to make sure that our people stay with us and are pleased with what they're doing and have challenging, interesting work to do. I think the training goes with that, to make sure that our people continue to keep abreast of new developments, of standards.

Then I would add that the last thing that we have to manage during the coming year is the transition to a new Auditor General. I am pleased we have had some indications that the search process will be beginning soon, and I am hopeful that there will be someone who will be identified so that we can do a transition over a few months, and I think that will help, as well, to reassure staff that things will continue on.

10:10 a.m.

Liberal

The Chair Liberal Shawn Murphy

Thank you, Mr. Kramp.

Just before we go to Mr. Christopherson, I'm going to ask you to elaborate on that last statement a little bit, Ms. Fraser, because it is important. Your term is up on May 31 next year. Under our legislation there's no mechanism for you to be renewed or extended, so there will be a transition. I echo everything Mr. Kramp said about you and your office.

The pool of qualified candidates would not be large. I would have thought that this process would have been well under way by now, and you're saying it's just going to start soon. There's a role for Parliament; there's a role for the opposition parties, the opposition leaders. And I know when you were appointed, there was a very seamless transition from Monsieur Desautels to you. Can you elaborate any further on that? You did say that you expect the process will start soon, but are there any more details to that? I think it would be problematic if there was nothing done when your term was up and they appointed an interim auditor, and I don't think that would be good for Canada and it wouldn't be good for your office. Are there any other details you can elaborate on?

10:10 a.m.

Auditor General of Canada

Sheila Fraser

I'm a little hesitant, Chair, to talk too much about it. I have met with the Privy Council Office, who are, of course, responsible for senior personnel and senior appointments. The plan would be to establish a committee that would do the selection and to use the resources of a headhunter to help them to identify candidates. Where that is exactly, I think it's still at very early stages, but the committee may want to ask Privy Council Office at some point to give them an update on what the process will be. I presume this committee will obviously have to be involved in that process. My hope would be that there would be somebody identified as sort of an AG designate or something and that we could work together for a few months before the end of my term.

10:10 a.m.

Liberal

The Chair Liberal Shawn Murphy

Thank you very much.

Mr. Christopherson, five minutes.

10:10 a.m.

NDP

David Christopherson NDP Hamilton Centre, ON

Thank you, Chair.

As I think about the search for your replacement, I think maybe we should have started a while ago and done like the Tibetans, find somebody very young and just isolate them and train them and make sure they're not tainted by the world around them, and then when they're old enough they can assume and begin to fill the shoes that you're going to leave.

10:10 a.m.

Auditor General of Canada

Sheila Fraser

I think you have to be tainted by the world to have this job.

10:10 a.m.

NDP

David Christopherson NDP Hamilton Centre, ON

If I can, Chair, I'll just leave you with the notion that it might be worthwhile for us to identify just what role the committee is going to play in this, so that we're not playing catch-up down the road, and that whatever part that is, we're satisfied it is the appropriate one and that it's thought out ahead of time.

One of the charts on your appendix 1, just for my reference point, the “percentage of performance audits reviewed by parliamentary committees”.... I was disappointed, if my information is correct, that the environment commissioner's audits are not dealt with the same way that we do it. We're not perfect, but they are laid out the same way, they're done the same way. I would have expected that the environment committee would receive the reports and do what we do, which is to hold some hearings on them in as much time as is available and given the importance. They don't do that. They do what we do, which is the one meeting where you present the whole thing, I believe, and they participate in ours and do one of their own, but that's it. They don't do an in-depth follow-up.

So I'd be interested to know the policy for what you do with chapters that affect certain ministries. Do you send those directly to those committees? Do you send them to the departments, and there is an expectation? How do they move around? In particular, given that the environment commissioner is under your shop, I'd like to know your thoughts specifically on what we can do about that to try to change and get the proper attention to those reports.

10:15 a.m.

Auditor General of Canada

Sheila Fraser

Thank you.

When the Commissioner of the Environment was established in 1995, the procedure at that point was that his or her reports would go to the environment committee. I would say quite honestly that the public accounts committee is the only committee that works the way you do, in having us appear with officials from the departments and asking them and holding them accountable for what they are doing to address the recommendations.

The environment committee has had hearings on the environment commissioner's reports over the years, but only with the environment commissioner, and has never had, for example, the Department of Environment there to answer the questions.

10:15 a.m.

NDP

David Christopherson NDP Hamilton Centre, ON

We had them all at the last meeting. We brought them all in and had a regular kind of meeting.

10:15 a.m.

Auditor General of Canada

Sheila Fraser

Absolutely.

So this has been a bit of a concern to us.

The commissioner and I recently met with the chair of the environment committee, who seemed quite agreeable to holding these kinds of hearings. I think for most committees this procedure is quite unknown. They tend to deal with legislation or policy issues, so the accountability hearing is not something they typically do.

I know the environment committee is planning to have a hearing that would follow this model. I am hopeful, but if I could, I would certainly encourage the public accounts committee to continue having hearings on the commissioner's work, because I think the environment committee, just by the nature of the committee, is going to be more interested in the environmental issue, whereas here in many of these cases we really have to get into the management issues and how these things are being managed by departments.

You have mentioned other reports, and I would also mention that we advise all of the chairs of standing committees, both in the House and the Senate, when we have audits that are related to their areas of responsibility. We will often have hearings before other committees.

10:15 a.m.

NDP

David Christopherson NDP Hamilton Centre, ON

Is it a formal transmission?

10:15 a.m.

Auditor General of Canada

Sheila Fraser

It is formal and there is a formal letter--

10:15 a.m.

NDP

David Christopherson NDP Hamilton Centre, ON

So all the committee is aware that it has been sent?

10:15 a.m.

Auditor General of Canada

Sheila Fraser

--after every tabling, and the issue we give them is a synopsis of the report. In most years we will have as many hearings with other committees as we do with the public accounts committee.

10:15 a.m.

NDP

David Christopherson NDP Hamilton Centre, ON

Are you satisfied with the level of follow-up?

10:15 a.m.

Auditor General of Canada

Sheila Fraser

They are quite different. It is more information to the committee that will inform them perhaps in studies they are doing. We rarely have the department appear at the same time as us. So we really value the hearings before the public accounts committee, because they really are the accountability hearing and produce the actions from the departments and address the recommendations that have come up in the reports.

10:15 a.m.

NDP

David Christopherson NDP Hamilton Centre, ON

Thank you very much.

Thank you, Mr. Chair.

10:15 a.m.

Liberal

The Chair Liberal Shawn Murphy

Thank you, Mr. Christopherson.

Mr. Dreeshen, five minutes.

May 11th, 2010 / 10:15 a.m.

Conservative

Earl Dreeshen Conservative Red Deer, AB

Thank you very much, Mr. Chair.

Thank you, Madam Fraser and your colleagues, for being here today.

I know that when you spoke about your recruitment and your retention strategy, there has to be more than only money, since you are recognized as one of Canada's top 100 employers and one of Canada's top 20 family-friendly employers. Again, I think a lot of that has to do with your leadership. Certainly that's been well documented.

I'd like to expand on some of the comments you made before when you discussed measures of organizational performance. In exhibit 9 on page 15 and 16 there's a table that includes objective indicators and targets for delivering your work on time and on budget. I note that your target for on budget has been set at 80% for financial audits in various corporations and organizations. What was the rationale used for determining your 80% goal?

My second question relates to the second footnote that defines what “on budget” means to your department. Simply to quote, it says, “On budget means that the actual hours to complete an audit did not exceed the budgeted hours by more than 15%.” On that point, why did you use the cost overrun figure of 15%? And when you're looking at renewal of methodology, would that be something you might want to consider changing? If other departments that you audited had a built-in cost overrun provision, would you consider that adequate? And again, if “on budget” meant what I consider to be on budget, what number would you use instead of that 80%?

10:20 a.m.

Auditor General of Canada

Sheila Fraser

Thank you, Chair. They are excellent questions, which I often ask in the office myself.

The reality is, it's often very difficult for us to accurately estimate the time it will take to do an audit, because there are very often surprises, unusual transactions that occur in a year. I'll give you an example of one last year that I think everybody's aware of. The Royal Canadian Mint is a very standard kind of audit year to year, and a very large issue came up that required significant additional work that no one could have ever foreseen.

We recognize, initially, that estimating the time to do these audits is not a science and that some leeway has to be given. I think we could have a discussion and I would probably agree with you, 15% might be a little generous. There will always be cases where there are transactions that are quite unusual and require more time, or difficulties in doing the audits. That is why it is at 80%.

10:20 a.m.

Conservative

Earl Dreeshen Conservative Red Deer, AB

My second question refers to page 20, your international activities and the four goals that make up the international strategy.

As you know, on May 24 or May 25 we'll be discussing CIDA from the perspective of your fall 2009 eight-year report, and apparently your audit team joins with representatives from other national audit offices to provide training and performance auditing, accountability in governments. This program is funded by CIDA. I was wondering if you could comment specifically on this component of the CIDA program and then more generally on the overall effectiveness of your international strategy.