Public Accounts Committee on Nov. 28th, 2011

[Malcolm Allen, NDP, Welland, ON]

That's fair enough, Mr. Ralston. I hate to cut you off, but you know I get only five minutes.

I hear what you're saying: Ask them, and maybe they can tell us.

So let me draw back to when you talked about the accrual method, and we had this lovely discussion. I won't restate the discussion, but let me just ask a question. You talked about the phasing of it. It started in 1998 as a suggestion from the AG, and we talked about the fact that this is now 2011, so it's a long process. It's a complex process, I'll give you that.

You said you were on this phasing process. So for me it's a pretty easy question now: when do you think a decision is going to be made?

[Jim Ralston]

We have indicated we're going to do an evaluation in 2012-2013, and we'll make some decisions at that point in time.

[The Chair, NDP, David Christopherson]

Your time has expired.

[Malcolm Allen, NDP, Welland, ON]

So that's about a year or a year and a half out, then?

[Jim Ralston]

Yes.

[The Chair, NDP, David Christopherson]

Mr. Hayes, you have the floor, sir.

[Bryan Hayes, Conservative, Sault Ste. Marie, ON]

Thank you, Mr. Chair.

Welcome back. It's nice to see you all again.

I want to come right back to accrual accounting for one minute.

This is directed to Ms. Cheng. I'm getting a little bit confused. Your report makes the point of accrual accounting, but in your statement earlier you said that you do not impose it. I'm trying to understand why you would not impose it. You also made a statement to the effect that if you go forward, you need to be careful in how you deal with these types of issues, and you gave some examples of accruals.

In my mind, I'm thinking either your department is imposing accrual accounting or it isn't. I think a very clear direction would certainly be beneficial to this committee and perhaps to the Comptroller General, but I'm really getting mixed messages. So I'm trying to understand why you are saying it's up to our discretion whether or not we want to use it.

Secondly, what would your response be if we determined, after our studies--we being the government or the Comptroller General--that we were not going to use accrual-based accounting? You're not forcing it upon us, so what would your response be if we chose not to go that route?

[Nancy Cheng]

Thank you, Mr. Chair.

First, I apologize if I confused the committee about our position. Our position is very clear: we're solidly behind accrual-based budgeting as well as accrual-based appropriations. What I was explaining was that it is not for the auditors to say that this has to be the government's position. In my view, it is the government's call which method they choose to put forward parliamentary votes.

I hope that clarifies things with regard to your first question. All along we have been solidly proposing the position of accrual-based appropriation.

I think I've also indirectly answered the second part. In my view, it is not our call. So if the government decides not to pursue that, we can only put the question on the table. Much as the case with any other recommendations, we can highlight an issue we think is relevant for parliamentarians to consider, and then we would leave it at that. We have neither the mandate nor the role to impose a position on the government or on Parliament as a whole.

I hope that's clear, Mr. Chair.

[Bryan Hayes, Conservative, Sault Ste. Marie, ON]

That's clear. Thank you.

Next is a question for Mr. Ralston.

I was a senior financial analyst at Ontario Lottery Corporation for 12 years, and I'm a certified general accountant by trade. While I was there, I would always look through various departments to take that next level up, and there were always positions available for CGAs and certified management accountants and chartered accountants. That being said, when people left a position, all of a sudden there was a hole that might not be so easily filled.

Could you speak to your succession strategies?

[Jim Ralston]

The phenomenon that you just described is something we see in the federal government as well. There is a lot of movement. A lot of people think that what with the baby-boomers retiring there will be an increased risk of turnover.

What we're trying to do for the leaders is get an assessment of who's capable of taking the next step. We're trying to get some sense of what the supply is like. We have a sense of what the demand is going to be like. We are also trying to get a better understanding of what the supply is like. In addition, we're trying to get a better understanding of the areas in which individuals might need further development, and whether we are providing the correct development opportunities.

So we're trying to look at this as a systems flow, and we plan to manage it better. To some extent, it was okay in the past to let nature take its course, but we see now that this might be a risky strategy for the future, so we would like to be a little more active in monitoring the supply situation.

[Bryan Hayes, Conservative, Sault Ste. Marie, ON]

Do you have a philosophy of promoting from within, and training staff accordingly? Do you ask them to consider getting their designation, and offer to pay for the training towards that designation?

[Jim Ralston]

We have a number of programs that support individuals. Part of it is the individual's choice and initiative, how one might want to manage one's career and aspirations. We try to be supportive of development, regardless of where an individual might want to go with his career. We give attention to recruiting throughout. We have some excellent recruiting programs. The FORD and the IARD programs are great successes. So I think the support is there.

[Bryan Hayes, Conservative, Sault Ste. Marie, ON]

Thank you.

[The Chair, NDP, David Christopherson]

Over to Mr. Byrne. You have the floor, sir.

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

Thank you, Mr. Chair.

On the issue of professionalization of the senior accounting function, of recruiting and retaining individuals with a professional designation in accounting, does that add an additional burden of cost to the department? In the past, have those functions been staffed? You mentioned that in the past only 32% or 33% held a professional designation in the senior accounting function, but now it's upwards of 80%. Is there a consequence on the overall resourcing of the function?

[Jim Ralston]

I can give only a general answer to that. To the best of my knowledge, there's always been an understanding that in a profession such as finance most of the professional associations have expectations of continuing professional development. So we've long understood that if we want to have top-quality individuals, there is a necessary element of constant refreshment and training, and we've always had programs in place to support that. It would take some effort to try to extract what the level of investment might have been across the government, but I know it took place. It was there, and it continues to be there.

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

The Assistant Auditor General said that one of the most significant achievements here is professionalization. That's actually the best part of the report, according to the Assistant Auditor General. The professionalization is the grail that has been secured. But you wouldn't be able to tell me whether or not that has come with additional costs in recruitment, ongoing professional development, and retention? It would seem to me that if someone did not hold a professional designation his employment costs would be significantly lower.

[Jim Ralston]

Just to reiterate, Mr. Chair, I don't think I could answer that question today. I think it would require some analysis to obtain an answer with respect to the costs.

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

Mr. Ralston, when you conduct your reviews, in particular the overall impacts of the program review exercise or the cost-cutting exercise, do you actually engage in an analysis of potential consequences for the President of the Treasury Board or others to be able to determine whether or not there are either foreseen or unforeseen consequences to those functions?

[Jim Ralston]

Again, I think the process has to be completed. I think it's not my role to really say at this time what I think the outcome would be. Our concern is always systemically that we have sufficient capacity. It's partly people; it's systems; it's business processes. There are many aspects, taken together—a sound policy framework. There are many elements to building sound and sustainable financial management capacity. Frankly, I think the member's focus on one element of that is maybe not doing justice to the whole complexity of it.

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

The Auditor General said not long ago, Mr. Ralston, that one of the key criteria to successful programs was consistency in funding. That was a principal tenet of the Office of the Auditor General in a summation of his term as interim Auditor General: consistency in sustained funding for an initiative. That's one of the things I'm exploring here, which you can appreciate, I'm sure.

We've had a certain amount of progress and success in the comptrollership function in terms of controlling financial management and risk management. I was probing to find out whether or not part of that success was related to increased resources. I received information from the table that it had a very inconsequential impact on it and that it was more related to professionalization. Now I'm trying to find out whether we'll be able to sustain that success with the professional bodies we have in place, and the professional people we have in place, with fewer resources.

[The Chair, NDP, David Christopherson]

Be very brief, please.

[Jim Ralston]

Looking at some of the initiatives, some of the values we're promoting through our various policies, we don't believe that the financial management today is necessarily as efficient as it could be. If you look at what our policies promote, you'll see we promote improvement of business processes, standardization, better use of systems. All of those elements we're promoting could have the effect of improving the delivery of financial management at potentially a lower cost than today. I think you have to look at the success of all those things and whether, for example, we do achieve greater efficiency through standardization of business process before you could jump to the conclusion that fewer resources was somehow an inferior outcome.

[The Chair, NDP, David Christopherson]

Thank you.

Now we'll go over to Mr. Aspin. You have the floor, sir.

[Jay Aspin, Conservative, Nipissing—Timiskaming, ON]

Thank you, Chair.

Good afternoon, everyone.

My question is directed to Ms. Cheng. Accountability in government departments is critical, and this report seems to support the government's commitment to reinforce accountability throughout all departments. Could you perhaps summarize for us some of the findings in the report that confirm the commitment to accountability, strong internal control, and governance?