Public Accounts Committee on Nov. 2nd, 2010

[James Ralston]

I must confess that I haven't done a survey, but just based on my experiences with the financial audits, typically in the course of an audit the Auditor General folks will issue management letters. Often they will come across transactions or situations that had escaped the attention of management. There are millions of transactions at play sometimes, at least where I was. We appreciated getting those kinds of heads-up on things that had not previously come to our attention.

[Malcolm Allen, NDP, Welland, ON]

I appreciate, Mr. Ralston, that you didn't necessarily have the material or haven't done it before, but really what I was looking for from your area concerns the managers who were questioned, or at least who responded. I'm not sure who they were, but obviously the AG's department would have that information.

The headline is, “Our work adds value for the organizations we audit”, which is the AG. The response back from the managers was the “Percentage of departmental senior managers who find”—that is, the senior managers find—“our performance audits add value”; that is, the performance audits of our AG.

The target they set for themselves was 65%. Your managers said, or at least 61% of the managers in those departments that were audited said, that they added value. So the target they set—and I think it's low, because for the crown corporations they actually set a value of 75%—was lowered to 65% for the departments, and yet the departments' senior managers said they didn't even hit that score, didn't get the score that the AG expected.

For me, the suggestion is that six out of ten departmental senior managers said it added value, but four out of ten said they didn't think so.

I'll leave it to you to get back to us on that, because I understand you need to take a look at it. It's not to put you on the hot seat, because that's not necessarily fair.

I have one other sort of quasi-statement, part question, to ask. I understand the systems both of you are talking about in the global sense—who's better, who's not better—and the reality for me is that I don't really care what they do in the U.K. or in New Zealand or Australia. I don't live there anymore. I used to live in the U.K. as a kid, but I don't live there anymore. I live here; I pay my taxes here; my government is here, so I'm looking at how we manage our cents.

I commend both of you, both groups, for wanting to ensure that, as my colleagues have said, we get value for the dollar, the money we collect from our citizens. That's extremely important. The issue becomes one not so much of trust as of how we are being perceived by those folks who entrust their money to us. At the moment, the trust level, if you put it on a score, is such that you'd be much higher on the score level than I would be.

So the issue becomes for us, and I'll take a general comment from both groups, is how do we re-engage folks so that when we make a departmental audit and show it to them, they go, “Bang on, two thumbs up, I believe everything that's been said”? Because, quite frankly, at the moment, if I were to take it to my constituents, a lot of them would have a lot of questions, asking me, “Are you sure?”

[The Chair, Liberal, Joe Volpe]

I don't know how they're going to answer that question. I think it's more of a statement.

I appreciate your having made that statement, and since we are again well over time, I'll go to Mr. Young.

[Terence Young, Conservative, Oakville, ON]

Thank you, Chair.

With regard to the new disclosures that you have--I'm not sure who I should ask, but maybe Mr. Wiersema--how many other countries do these new disclosures that are happening quarterly?

[John Wiersema]

Sorry, Mr. Young, I'm not sure I followed that question.

[Terence Young, Conservative, Oakville, ON]

You have new disclosures happening--for instance, tomorrow you're putting the results from 22 departments on the web, and then you have other quarterly reports that are disclosed. How many other countries have that standard of transparency?

[John Wiersema]

I haven't done research in this area, Mr. Chairman, but I expect many other countries present financial information publicly, on their websites. Some countries may or may not present quarterly information. I do not have that information.

[Terence Young, Conservative, Oakville, ON]

Is it a relatively new thing? It's just that I think the transparency is absolutely critical to people's trust in our institutions and in government. It's a great thing. I'm just wondering, how new is it and how common is it?

[John Wiersema]

Mr. Chairman, I doubt that increased financial disclosure at departmental level is a new thing. I think that's probably been happening around the world for some time now.

[Terence Young, Conservative, Oakville, ON]

I meant making it so accessible on the Internet and that sort of thing.

[John Wiersema]

I believe some of that may have been happening for some time as well.

[Terence Young, Conservative, Oakville, ON]

Thank you.

Did you want to comment? Please do.

[Bill Matthews]

If I may, Mr. Chair, regarding the quarterly disclosure, I'm not aware of any countries that are requiring all departments and all crowns to do quarterly disclosure of their financial situation.

In terms of our new disclosure that you will see tomorrow under the policy of internal control, the only other country that I'm aware of that does such disclosure is the United Kingdom.

[Terence Young, Conservative, Oakville, ON]

Are there any other best practices in the U.K. or Australia, or elsewhere, that we should be emulating but we're not?

[Bill Matthews]

Mr. Chair, when we do our policy development, we do consult with colleagues in Australia, U.K., New Zealand, and the United States to make sure we're capturing the relevant best practices. I would say that our policies reflect consultation with those countries, to make sure they reflect developments.

[Terence Young, Conservative, Oakville, ON]

Are they moving towards consolidated financial statements?

[Bill Matthews]

Mr. Chair, the Government of Australia already produces consolidated financial statements, as Mr. Wiersema mentioned, with a clean opinion, as does New Zealand. The U.K. does not yet produce consolidated financial statements.

The U.S. does produce a consolidated financial statement, but it is unable to obtain a clean audit opinion on that statement. It is a goal; they're just unable to get there right now.

[Terence Young, Conservative, Oakville, ON]

Thank you.

Mr. Matthews, you commented before that the cost estimate associated with having the 22 largest departments undergo audits of their financial statements was around $300 million. That goes to improving documentation; it goes to improving accounting information systems. Then later the Comptroller General said that part of the cost would also be improving internal controls.

But how much of that has to be done anyway?

[James Ralston]

In a perfect world, it would have always been done. We had the belief that improvements were required, so we put in place these policies to try to cause those improvements to happen, but more importantly to allow us to monitor that they were happening.

But on your basic point, yes, that's good housekeeping. We hope that through these policies we'll get to where we probably should have been in the past.

[Terence Young, Conservative, Oakville, ON]

A lot of those things have to be done for ordinary financial management, day-to-day, so the $300 million might in fact not be new money in overall operations costs.

[James Ralston]

You're right; I mean, we've asked departments to direct their effort to improving those controls, and the cost that is cited is the value of that effort.

[The Chair, Liberal, Joe Volpe]

You have ten seconds left.

[Terence Young, Conservative, Oakville, ON]

I'm going to give that time to my colleague.

[The Chair, Liberal, Joe Volpe]

Oh, no, you just used it up.

[Voices]

Oh, oh!