Thank you, Mr. Chair.
We welcome this opportunity to discuss chapter 1 of our spring 2011 status report, “Financial Management and Control and Risk Management”.
Canadians expect their government to be managed well and to be accountable for the safeguarding of public assets. The government is responsible for stewardship--that is, the efficient, effective, and economical use of public funds.
Financial control and risk management are central to managing any organization effectively, including government entities. These activities contribute to an organization's ability to safeguard its assets, use its resources economically and efficiently, and produce accurate and reliable financial information. Reliable information is key to developing a complete and accurate picture of financial performance.
In this follow-up audit, we examined the government's progress on commitments it made in response to our previous observations and recommendations. We audited the Treasury Board of Canada Secretariat, including the Office of the Comptroller General, and seven large federal departments.
Overall, we found that the Treasury Board of Canada Secretariat and the departments have made satisfactory progress in acting on their previous commitments, in particular, in developing policies, frameworks and relevance guidance on internal controls, and in implementing risk management measures.
Through the Office of the Comptroller General, the Treasury Board of Canada Secretariat has demonstrated leadership by developing a new and strengthened financial management policy suite, clarifying roles and responsibilities, and supporting deputy heads in their role as accounting officers, as set out in the Financial Administration Act. Most of the selected departments told us that they found the secretariat's initiatives and approach to be helpful.
As well, financial human resource capacity has improved significantly since our last report. In 2010, we found that 82% of chief financial officers in the 22 large government departments held a professional accounting designation. In 2002, this number was only 33%. We noted that the Office of the Comptroller General has put in place various measures to enhance its capacity.
All seven audited departments have developed a corporate risk profile that summarizes an assessment of the department's key risks, with processes in place to update these profiles regularly. The integration of risks into planning, reporting and decision making has improved.
We also noted a number of matters that need attention. In particular, we would like to you to focus on the following.
Departments have still not fully assessed their internal control systems to identify and address weaknesses. According to their action plans, this work will take years to complete. Mr. Chair, our audit work was completed in fall of 2010. The committee may wish to ask the Comptroller General for an update, including information on when he expects all large departments to have their internal control systems fully assessed and on how the OCG intends to monitor the government's actions in doing so.
Another issue is accrual-based budgeting and appropriations; it dates back as far as 1998. The former Auditor General, Sheila Fraser, raised this issue previously, as did this committee.
The government has not completed its evaluation of accrual-based budgeting and accrual-based appropriations and has not yet decided whether it intends to fully adopt either or both of these approaches. Accrual-based appropriations would provide Parliament with the same basis for control and approval over voted spending as over the government's overall financial plan and the summary financial statements.
The committee may wish to discuss this matter with the Comptroller General to obtain his current views. The secretariat and the audited departments have agreed with our recommendations. They have also made commitments for action related to their responses.
Mr. Chair, this concludes my opening remarks. We'd be pleased to answer the committee's questions.
