Public Accounts Committee on Dec. 5th, 2011

[Nancy Cheng]

Should I continue, Mr. Chair?

[The Chair, NDP, David Christopherson]

Please try.

[Nancy Cheng]

Basically, Parliament gets to oversee and set a limit for each of these votes. So if you set a limit on the capital vote, then presumably that is a budget you want to oversee to make sure it isn't exceeded. If the practice is such that some expenditures can go either way, then it makes it difficult for you to oversee whether that particular limit is being observed.

The framework was set in place back in about 1992. It is about time to take a look at it.

In the first instance, this $5 million mark was set some time ago. Some departments we notice actually have major expenditures that are over $5 million, but because they don't have a capital vote they can't charge to a separate vote. That oversight mechanism isn't there when in fact they would have a lot of expenditures that might be over the $5 million mark.

The other thing is that this concept of minor capital, which allows departments to charge capital-type expenditures to an operating vote, is basically allowing each department to set their own limit. What we saw was that in one case, for example, the limit was pretty high, so expenditure of over $1 million is when it needs to be charged to the capital vote. But some expenditures under $1 million are still capital in nature, arguably, but they would not necessarily go in the direction of the capital vote.

In another department we noticed that there is no limit set whatsoever, so it's almost like a case-by-case basis. That means there is inconsistent application between departments and agencies. It was something we discussed last year with the Office of the Comptroller General, and the Comptroller General's office is in agreement with us that that inconsistency needs to be looked at as well.

Those are the kinds of issues we're trying to underscore to make the vote structure and Parliament's vote authority oversight work better.

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

Thank you. My question is about proactive disclosure. Regarding information on the Department of Foreign Affairs and International Trade, there is no information under the tab "proactive disclosure" under the heading "travel and hospitality expenses". What does that mean? Am I to understand that no money was spent?

[Nancy Cheng]

I believe that's a question for the government to answer. It's not part of section 2 in volume I, so it's not something that we actually have specifically audited. We audit the summary financial statements of the Government of Canada.

[The Chair, NDP, David Christopherson]

Is there someone you need to call upon now to attempt an answer?

[Jim Ralston]

There is some information on ministerial travel in one of the volumes. The comment was actually about proactive disclosure, which is posted on websites. Was the question about the public accounts, or was it about information on a departmental website? I just ask because of the reference to proactive disclosure.

[The Chair, NDP, David Christopherson]

It's all going to have to be determined in a future round, because we are over the five minutes, so that will give you time to think about it.

Let's move along. Mr. Kramp, you have the floor now.

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

Thank you so much, Chair.

I have three quick questions that I hope I can have three quick answers to; then I'm going to just slip into another closing one.

This is for the Auditor General. Obviously it's a clean report, which is great to hear. But I just have a little question: the term “unqualified opinion” has been changed to “unmodified opinion”—why?

[Nancy Cheng]

That's along the line of the change to the Canadian auditing standards. Earlier on, a member asked about the differences. One of the differences is that we call it unmodified, because you could have other information being put into that auditor's report that does not change the opinion on the fair presentation. It's not qualifying, but you can modify the report; I can modify the report and still give you a clean opinion.

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

Okay, thank you very much.

Obviously the Auditor General's word is taken with quite a level of confidence. But how can you assure Canadians the figures are absolutely accurate and correct? What assurance can you give us?

[Nancy Cheng]

We give you the assurance that the accounts are fairly stated within limits of materiality; we do not give absolute assurance. Absolute assurance is impossible to strive for. Financial statements encompass a lot of significant estimates, so they cannot be exact and precise. Often it's as complete and accurate as it can be, within limits of materiality.

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

Fine, thank you.

Mr. Ralston, with these public accounts, do you go to print before or after you have an approval from the Auditor General?

[Jim Ralston]

I'll ask my colleagues to help me out if I lose some details in the process.

Essentially, the whole process of putting together and auditing the public accounts is the intersection of two lengthy projects, one parallel to the other—the Auditor General and ourselves. It starts with agreement on plans, and it ends with agreements on what the government has to declare to the Auditor General. This is our view of what the final numbers are, so the Auditor General then knows what he or she is expressing the opinion on. We have a meeting to come to those agreements and understandings, we sign the proofs, and it goes to print only after all of those agreements are in place.

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

Okay, thank you, Mr. Ralston.

I know my colleagues have heard me ad nauseam in this committee, and I apologize if I repeat myself again.

We are the Standing Committee on Public Accounts, and we have a role of oversight and accountability. I thank Mr. Michaud for running us through the quick template of the actual elements involved in the process. But for new members in the committee, and quite frankly the general public too, it's an extremely complex document and/or sets of documents, with literally hundreds and hundreds of lines on either expenditures or income that quite frankly deserve a great deal of scrutiny. I've often felt one of the weaknesses in our parliamentary process has been the lack of accountability and process with members of Parliament and their opportunity to inspect, to offer critique, and to have assurance in the evaluation--that what we see is what we get. We either agree with it or we don't.

I would—maybe more for the benefit of my colleagues—certainly hope we recognize.... As an example, we could just take one—it can be revenues. We could say, just for taxation alone, whether it's personal or corporate: where does it come from? What are the demographics involved? What are the regional strengths? There are so many areas. I'm concerned that we—as a committee and as a parliamentary process—don't give justice to the committee. We get caught up in partisan issues rather than considering a full study of this.

Would you like to see Parliament spend more time on the actual study of estimates and the public accounts? I'd like a quick yes or no response, from both the Auditor General and from Mr. Ralston.

[Nancy Cheng]

I'll answer with a yes, Mr. Chair.

[Jim Ralston]

I would agree.

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

That's fine.

Thank you very much, Chair. I'm done.

[The Chair, NDP, David Christopherson]

Thank you.

Next is Mr. Byrne. You have the floor, sir.

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

Thank you very much, Mr. Chair.

Perhaps we could begin with a fair representation costing of the justice proposals. That would be a fair way to get an analysis of what Parliament is reviewing in terms of legislation and policy and expenditures, but I don't think we're going to see that any time soon, Mr. Chair. That's perhaps a good idea already thrown out.

I want to zero in on what the public accounts of Canada do and what they do not do. I want to zero in specifically on the recording of the G-8 legacy fund. An analysis by the Office of the Auditor General found that spending occurred for the G-8 legacy fund in an unlawful fashion. The purposes for which it was intended were not approved by Parliament, which is contrary to the Financial Administration Act. The interim Auditor General submitted a report to that effect. There was a mea culpa by the government, but I'm having trouble finding anything in the public accounts of Canada, which were published after the Auditor General's report, that would indicate this type of expenditure, done outside of parliamentary authority.

Is there anything anyone can point me to, in volume I, volume II, or volume III--there are literally hundreds of pages here--that actually refers to the fact that unlawful spending occurred, spending that was outside of the Financial Administration Act, and that describes it in fairness for Parliament?

Mr. Ralston, would you be able to take that one on?

[Jim Ralston]

I can simply refer the member to section 10 of volume III of the public accounts, which contains some details on spending by ministry. That would be a starting point to identify different expenditures. It would of course be up to the analysts to make inquiries about the meanings behind the numbers and about how they were derived, but I would suggest that as a starting point.

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

Mr. Ralston, I think you just nailed some of it. That is the trouble. As parliamentarians, as members scrutinizing the estimates documents, unless we had some sort of notion within the estimates that the border infrastructure fund was going to be used falsely to promote the G-8 legacy fund or to convey payments or contributions agreements under the G-8 legacy fund.... If it weren't for the Office of the Auditor General we wouldn't have been able to uncover that, because it's just too buried.

So there's nothing in this document, which was tabled and published after the Auditor General's report, that clearly defines that this $50 million in expenditure, along with a specific amount during fiscal year 2010-2011, was done outside of the normal envelope. It's not detailed in the public accounts, is it?

[Jim Ralston]

As I say, I could refer you to section 10 of volume III. I guess it would be up to you to judge whether the information you seek is there, but that is what's available in the public accounts.

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

Thank you, Mr. Ralston.

I'll go now to Madam Cheng, if I could.

One of the things that caused a little bit of a stir and excitement here is that I've tabled a motion before the committee to ask the Auditor General to appear before this committee on the G-8 legacy fund--

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

Point of order.