Public Accounts Committee on Oct. 26th, 2011

[The Chair, NDP, David Christopherson]

Do I have that motion? I have a motion that we will go for two more speakers and adjourn, then reconvene at a date to be determined by the steering committee and this full committee. Is that correct? That's the motion. Hearing no further debate, please indicate.

(Motion agreed to)

Madame, you may continue and finish your remarks,

Then, Mr. Byrne, you will have your time, and then we will adjourn.

[Lysane Blanchette-Lamothe, NDP, Pierrefonds—Dollard, QC]

Perhaps I could let you finish by summarizing for us what “healthy independence” means and what the government could do to contribute to this healthy independence.

[James Ralston]

Thank you.

The first structural element, as I said, is the direct reporting relationship of chief audit executives to the deputies.

Another important structural element was requiring that departmental audit committees be put in place and that the committees have a majority of members who come from outside the public service, once again the idea being that there's no possibility that the members of the committee would be anything for which they are directly responsible, so that they would be able to support the chief audit executive and, as well, give deputy heads the most frank advice possible.

Those are two very important structural elements.

You asked whether or not parliamentarians would have a role. This particular function is largely internal, as the name suggests. For parliamentarians, it becomes part and parcel of an interest in sound control, sound management, and all of the structures that need to be put in place to achieve that within the bureaucracy.

[The Chair, NDP, David Christopherson]

Please take the time, Madame, if you'd like another question.

[Lysane Blanchette-Lamothe, NDP, Pierrefonds—Dollard, QC]

Thank you.

Mr. Watters, people talk about high turnover in your office. Could you briefly tell us about the potential constraints, the reason for this turnover and the steps you have taken to address it.

[Dennis Watters]

That's a very good question.

There were a lot of employees at RCMP before, and it is true that there was a high turnover. But I can assure you that it is no longer a problem. We have 31 auditors and only four have left over the past year. Of those people, three were RCMP members. One of them went on a mission abroad and another retired.

A lot of people are also calling us to join our organization. We offer extensive training. The people seem satisfied. A year ago, we hired a lot of people and the turnover was part of the process. It happened about six months before I arrived. It was all set up. Competent people with a strong auditing background arrived. Since then, staffing has no longer been a problem.

[Lysane Blanchette-Lamothe, NDP, Pierrefonds—Dollard, QC]

Thank you.

[The Chair, NDP, David Christopherson]

Merci.

As agreed, we'll go to Mr. Byrne. At the conclusion of his remarks and time, we'll move to an adjournment.

Mr. Byrne, you have the floor, sir.

[Gerry Byrne, Liberal, Humber—St. Barbe—Baie Verte, NL]

Thank you very much, Mr. Chair.

Thank you to those appearing before us.

The audit of the audit has produced a very favourable result. I want to say, I think on behalf of all parliamentarians, that when the audit of the audit comes back in a very positive light, it increases the overall confidence and trust that parliamentarians and Canadians have in our system of government and our process of government.

I want to congratulate each and every one of you.

I want to ask Mr. Ralston this question. The report came after many months and years of hard work to get it to this level. Would it have been possible to achieve these results without the extra influx of resources provided to the internal audit function through the process of increased accountability?

[James Ralston]

The increase in resources was certainly very helpful. It amounted to something like a 20% to 25% increase. It increased our manpower, if you will.

For many of the structural elements, the focus on the use of standards and certification, and basically the idea that we were now going to fill internal audit positions with people who were professional auditors, as opposed to folks who had never been formally or extensively trained to audit, I think was an even bigger factor.

At the end of the day, the audit is about the quality of the auditors. It's not only a matter of quantity. The quality is very important.

[Gerry Byrne, Liberal, Humber—St. Barbe—Baie Verte, NL]

I'll ask this question and then pass it directly to Mr. Wiersema.

Do you have any concerns that your ability to maintain the professional quality of the internal audit function will in any way be affected by a reduction in resources?

[James Ralston]

We know that the entire government is focused on efficiency, and internal audit is no different. We believe there are ways in which we can become more efficient, and we will be working hard to do so. Our goal will be to maintain our effectiveness with the help of that kind of re-engineering.

[John Wiersema]

I have no reason to believe that internal audit will be unduly singled out for cuts. I was just trying to offer my gratuitous advice that I think it's an important management tool, and that it's important to maintain the momentum already in place.

If internal audit is able to continue to effectively carry out its role with fewer resources, better yet. The message I'm trying to convey is that it's important to protect internal audit as an essential management function.

There's something--

[Gerry Byrne, Liberal, Humber—St. Barbe—Baie Verte, NL]

Right. I'm sorry, Mr. Wiersema.

[John Wiersema]

If I may, Mr. Chair, can I take one minute?

I think I finally understood Mr. Caron's question.

There were two separate audit reports.

In our report on financial management in chapter 1 of the same report, we indicated that there still remain to be significant improvements in internal control that are required in government, so yes, that was one of our findings on internal controls. There is still a lot of work to do to strengthen internal controls.

Internal audit is different, and I would be expecting that the internal auditors in each of those departments would be looking at the internal controls in their departments, reaffirming that message to their deputy ministers, and identifying the areas of control that need strengthening.

I don't see any contradiction between the two messages, from my perspective. There's a lot of work to do in strengthening internal control

in departments, in my opinion,

and internal audit is an important source of assurance to the deputy minister on what areas need strengthening and how to go about strengthening them.

Thank you for indulging me on that, Mr. Chair.

[The Chair, NDP, David Christopherson]

Thank you for covering that ground. We appreciate it.

You still have the floor, Mr. Byrne.

[Gerry Byrne, Liberal, Humber—St. Barbe—Baie Verte, NL]

The government has suggested that for every dollar spent in program review and program efficiency evaluation, it saves over a hundred dollars.

Mr. Ralston and Mr. Wiersema, would your view be that the internal audit function is probably the best and most effective way to determine the efficiency and effectiveness of programs within the Government of Canada? And does your audit function actually help the government achieve some of those results?

I ask this in light of the fact that we're now paying an outside consultant about $90,000 a day to be able to provide that function. It would be my anticipation that the internal audit function within the Government of Canada would be a very, very sound basis on which to make those decisions instead of an external consultant at that cost.

[James Ralston]

Internal audit is fundamentally about asking whether a department is aware of its risks, whether it's aware of the extent to which its risks are controlled, and whether the verification of those controls is working. Audits can be oriented towards cost savings, but more often they're oriented towards whether risks are being mitigated. They are often preventative. They're not primarily or exclusively focused on cost savings.

That's why we recommend that audits be based on a risk-based audit plan. In other words, focus first on whether current controls are necessary and effective. There are other mechanisms that are equally suited--and in some cases better suited--to pursue other kinds of questions, but control is really a focal point for an audit.

[The Chair, NDP, David Christopherson]

Thank you. That is our time.

Thank you, Mr. Byrne and Mr. Ralston.

I thank all our guests. Please be on standby. We'll get back to you on the date for the rescheduling of this meeting.

I can't think of anything further. Therefore, the decision that this committee made earlier to adjourn upon conclusion of our discussion is now in effect. This meeting now stands adjourned.