Public Accounts Committee on March 8th, 2011

[Jean-Claude D'Amours, Liberal, Madawaska—Restigouche, NB]

Mr. Chair, I am referring to the information in the Public Accounts. It’s a matter of $554.7 million, so over half a billion dollars.

If you’re there to ensure good management, it’s normal that you would be interested in a half a billion dollars in consulting fees. Is it good management or is it last-minute planning when you have no choice but to hire these people because you have waited too long to do the work?

[James Ralston]

When Parliament appropriates funds, there are no restrictions on what objects of expenditure will be used. Those decisions on what is the best mix of resources--be it personnel, services of whatever kind, goods of whatever kind--are left to the deputy heads of the departments to organize their programs in the most efficient way.

[Jean-Claude D'Amours, Liberal, Madawaska—Restigouche, NB]

Mr. Ralston, perhaps the Office of the Auditor General should be able to do departmental audits to ensure that the money was spent appropriately. This isn’t what is done.

Does it seem normal to you that over $5 billion was spent to hire people through employment agencies? What good management! Over $5 billion dollars!

How much did it cost? How much was paid to these employment agencies while the Government of Canada has a system for hiring employees? Is this also good management?

[James Ralston]

We can see in any organization's operation, including an organization such as the Government of Canada, the managers organize their resources to get results. They have to make judgments about the kinds of resources they need and the best use of their available funds. Those flexibilities are given to the senior managers.

[Jean-Claude D'Amours, Liberal, Madawaska—Restigouche, NB]

Mr. Ralston, the proof that there should be a departmental audit is still there. Right now, we are saying that the departments can spend however they please, but no one can check to see whether it was done correctly.

Now I want to move on to the Agriculture and Agri-Food Canada program. Ninety-one per cent of the money in the Agriculture Flexibility Fund has not been used. I can understand why 91% of the funds haven’t been used. I will give you a simple example, and you tell me if it constitutes good management.

Someone in my riding who keeps cattle spent thousands of dollars to submit an application to the federal government, to the Government of Canada, as part of that program. He has 225 animals. I don’t know how much it cost to assess the file, but at the end of the day, he received a cheque for $55.04. In other words, he received 26¢ per head from the Government of Canada. So we can easily understand why 91% of the funds have not been spent.

Could you explain to me how it is that very little money has been distributed to the people who need it? There are hundreds and hundreds of millions of dollars that are sitting in the coffers. Meanwhile, we are mocking people and giving them 26¢ per head of cattle to help them get through the crisis. We are talking about a crisis. Twenty-six cents a head; that’s going to be real helpful in an economic crisis!

[The Chair, Liberal, Joe Volpe]

Monsieur D'Amours, that will have to be a rhetorical question. We're up to five minutes. Maybe Mr. Ralston will want to answer it later.

Mr. Kramp.

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

Thank you, Mr. Chair.

Mr. Bains raised some questions on the cost of advertising. Of course, we can all question whether or not we have confidence that the advertising is spent in a manner that we deem to be desirable. But I might point out that at least this government actually spent their money on advertising and didn't spend those advertising dollars filling the pockets of their friends...or brown bags.

However, if I may go to the purpose of the meeting today, I would like to--

[The Chair, Liberal, Joe Volpe]

A point of order, Mr. Bains.

[Navdeep Bains, Liberal, Mississauga—Brampton South, ON]

A point of clarification.

Sorry, where were you saying that money was spent?

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

Which money do you mean?

[Navdeep Bains, Liberal, Mississauga—Brampton South, ON]

You mentioned at the end of your comment--

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

I meant the government's and/or the former government's money.

[Navdeep Bains, Liberal, Mississauga—Brampton South, ON]

The former government's money--

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

They either spent it in the sponsorship scandal or it went right into the pockets of their friends and/or brown bags.

Thank you.

[Navdeep Bains, Liberal, Mississauga—Brampton South, ON]

A point of order with regard to the language and--

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

It's just a little tit for tat.

[The Chair, Liberal, Joe Volpe]

Excuse me, Mr. Bains and Mr. Kramp.

I'm sure we all want to impress our witnesses with our ability to be partisan, but I think they already understand that we're going to stay away from that.

Carry on, Mr. Kramp.

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

Thank you very much, Chair.

Actually, to respond as well, I know my colleague across the floor had asked a question with regard to the last time we did not have a clean audit. I actually have some documentation here. It was actually back in 1996-97, and it was a result of either the overstating of the liabilities and/or $800 million that was recorded as owing to an organization after the organization wasn't even in existence. So it was unfortunate. There was a bit of a pea-in-the-shell game going on, but that was then.

The fortunate thing is right now--and I'm tremendously confident here--we've had respective governments since of different stripes in here. We've had 12 consecutive years of a clean audit, and I'm tremendously encouraged by that, because Canadians have to have confidence in our system. They have to have confidence in the accountability of it, and they have to have confidence that the government financing is up to par by respected international standards. We have that clean audit, and I'm really pleased to see that.

But I would like to know if that is relative. For example, we have a clean audit. Does everybody else in the world have clean audits? How do we compare with other nations?

[Navdeep Bains, Liberal, Mississauga—Brampton South, ON]

On a point of order, again, just from my understanding and from the notes we've received here, there's a difference between being given an opinion by the Auditor General and having a clean audit. I just wanted to make that point of clarification.

[The Chair, Liberal, Joe Volpe]

Okay. I think I'll just go to Mr. Wiersema.

[John Wiersema]

Mr. Chair, there are two things to add to my earlier question on the EI financing. I am advised that there's a formula in the act for transferring the moneys to the EI financing board. It's set out in legislation.

With respect to the specific question of how Canada fares internationally in terms of its summary reporting--and I'm referring here, Mr. Chairman, to sections I and II of volume I of the Public Accounts--in my professional opinion, Canada compares very positively. It is a world leader in financial reporting. There is a good set of accounts accompanied by a good financial statement discussion and analysis analyzing those accounts.

There are very few countries that can claim to have such a complete and thorough set of summary financial statements along with an accompanying analysis and that also get a clean auditor's report. The only countries I can think of that would come close to this, Mr. Chair, would be Australia and New Zealand.

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

Thank you.

We've now adopted international standards on auditing, and to me that's pretty important. But I think we need a little bit of a clarification on that. Has Canada played a role in that, and how would that differentiate us and/or the system now from what was previously there? Is there an improvement, and how and why is there one?

[John Wiersema]

Thank you for the question, Mr. Chair.

I think this gives me an opportunity to talk about something. There are basically three sets of standards out there that are relevant to our financial audit work. There are the international standards on auditing, which Canada has now adopted and which the Office of the Auditor General is using for audits of year-ends December 31, 2010, and March 31, 2011.

So this is relatively new to Canada, and the Office of the Auditor General is beginning to conduct its audits with those new international standards for the audits that we presently have under way in the office.

There are also two sets of accounting standards out there. There are international financial reporting standards, also known as IFRS. Those are largely applied to the private sector in Canada to publicly traded companies and to many of the crown corporations. So many of our crown corporations are applying international accounting standards, also known as IFRS.

With respect to the summary financial statements of the Government of Canada, there's a third set of standards out there known as international public sector accounting standards. These are specifically for public sector organizations.

In Canada, we are still following standards set domestically by an organization called the Public Sector Accounting Board of the Canadian Institute of Chartered Accountants. Mr. Ralston and I are both members of that board.

In Canada, we follow domestically set accounting standards for the public sector. For governments, such as in this case, we're not yet in a position in Canada to adopt international standards. We track those standards. We are actively involved in inputting into those standards, but we haven't yet adopted international public sector standards in Canada.

[The Chair, Liberal, Joe Volpe]

Thank you, Mr. Wiersema.

Madam Faille.

[Meili Faille, Bloc, Vaudreuil—Soulanges, QC]

Thank you, Mr. Chair.

Mr. Ralston, I just asked you some questions about the financial officers. I hope that the comments you made about the chief financial officer also apply to the financial officers working in those departments.