Public Accounts Committee on Feb. 14th, 2013

[Nancy Cheng]

That is a difficult question. I'd rather not address that, because I think different provincial colleagues have their views about treating transfer payments. It is indeed a fairly complex issue that the accounting profession is struggling with.

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

Thank you. I appreciate your clarity on that.

Actually, there's an organization called GOPAC, the Global Organization of Parliamentarians Against Corruption. I'm a chair, and of course Mr. Christopherson is a member. The purpose of that is to aid and abet institutions and/or countries around the world that really don't have an acceptable set of standards when it comes to accountability and transparency.

As such, we're tremendously pleased, and we understand the enormity of the task you are doing. We've talked to countries where, quite frankly, they hadn't even looked at estimates in 25 years—and you wonder why there is a problem with accountability in that country. So a tremendous amount of work has gone into this.

I'm wondering, Mr. Ralston, when we discuss with not only our own constituents...but certainly the role of Canadians as well. This is a significant task to do what both the auditor and you have done on this, but it's critical to knowing where we're going as a nation and as a country in the long term.

I just need to have a little bit more clarity on the outline of the process, really, to remind the members of this committee what's actually involved in the assembly of all this documentation that we have here today. Obviously it isn't just a matter of going out and asking departments for some information and putting together a spreadsheet.

Can you give us a bit more of an overview of what's involved in the entire process of preparing the public accounts?

[Jim Ralston]

I'll start. I may need to call upon colleagues.

[The Chair, NDP, David Christopherson]

Just so you know, we're at the five-minute mark. This is an important question, so I don't want to shorten it, but I don't have time for a three-minute answer, either. Please respond accordingly.

[Jim Ralston]

Okay. I'll give you the Reader's Digest version.

In my office, the Office of the Comptroller General, basically we set the accounting policies. We help determine the disclosures in the final product that you see. We also guide departments in terms of the policies they must follow. They do the detailed accounting. The Receiver General for Canada basically keeps the general ledger of Canada. The Receiver General also performs the mechanics of the consolidation effort, and we oversee it.

Those are the major players and roughly their roles.

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

[Inaudible—Editor]...GOPAC.

[The Chair, NDP, David Christopherson]

If you want to pick up on it in the next round, you can.

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

Fine.

[The Chair, NDP, David Christopherson]

Thank you very much.

Sorry I had to shorten that a bit, but if the government wishes to pursue that, you can in the next round and we can pick up right where you left off. Thank you for respecting the time limitations.

Now we go to Monsieur Giguère.

You have the floor, sir.

[Alain Giguère, NDP, Marc-Aurèle-Fortin, QC]

Thank you, Mr. Chair.

I want to discuss how the financial statements are presented.

In 2002, a new basis of accounting was introduced. The problem we've been seeing in recent years has to do with the lack of a column for amounts committed, in other words, commitments made now that will affect a department's financial capacity in future years.

I'll give you a simple example. Environment Canada launched a $9.4-billion program to control greenhouse gas emissions. That money is allocated across a number of departments. When we try to find that $9.4 billion in your documentation, we can't.

There is no way to know, on a yearly basis, how a share of that $9.4 billion was spent and to what extent it limits the department's capacity in future years. If it's not obvious to you, just imagine what it's like for us. Of that $9.4 billion, we have no way of knowing how much money was spent and by which department. Was it the Department of Finance, for example?

[Jim Ralston]

It's certainly true that the summary-level financial statements of the Government of Canada don't typically get into a level of detail that might pick up an individual program. It is a consolidated statement. There is some segmented information that gives expenditures in total by departments and that sort of thing, but indeed there's a limited amount of fine detail in the audited financial statements.

Of course, the other volumes of the public accounts, and the other sections of volume I in which the summary report is embedded, do contain more detail. There are also other accountability documents prepared, departmental performance reports and that sort of thing, and quarterly financial statements.

The public accounts serve a particular purpose. It's not the only accountability document, and you would need to look at other sources for certain questions.

[Alain Giguère, NDP, Marc-Aurèle-Fortin, QC]

I am going to ask Ms. Cheng to comment.

[Nancy Cheng]

I guess I would just add to what Mr. Ralston said. The purpose of the financial statements, the public accounts, is to look at the financial results.

What the member is looking for are program results in terms of how much money is being spent there, and perhaps for what purpose and all of that. Often you find that in departmental performance reports, in DPRs. So in their own reporting they should have that information.

The difficulty that often comes about, and we see this in many of our performance audits, is that when it comes to information for Parliament on a program, that is spread between multiple entities. There isn't a logical mechanism for government to report back. Often we comment on the fact that there need to be better ways for parliamentarians and members to see what the results are, how much money is being spent, and for what purpose. But that is a little bit different from what we see here in the public accounts.

[Alain Giguère, NDP, Marc-Aurèle-Fortin, QC]

I understand your logic. Those were, in fact, the type of questions I had when I was speaking with the director of sustainable development.

There is a clear announcement of $9.4 billion. That's not pocket change. But you're not able to tell me which shares of that $9.4 billion were actually spent this year. And the reason isn't that we did not go through your documents. We went through them line by line. I asked for documentation and your own auditor told us that departments did not take that kind of expenditure into account. I am citing your own documentation.

I am asking you how, going forward, you will go about finding a solution to fix this?

[Jim Ralston]

Well, I can only repeat that for the purposes of the summary of financial statements, obviously we will continue to report in accordance with the standards that we follow, the public sector accounting standards, as established for Canada. All senior governments in Canada follow that process.

If we are to continue to enjoy our clean opinions, we will need to—

[Alain Giguère, NDP, Marc-Aurèle-Fortin, QC]

Non, non—

[The Chair, NDP, David Christopherson]

Hold on, Mr. Ralston.

[Jim Ralston]

Monsieur Giguère, you have a point of order?

[Alain Giguère, NDP, Marc-Aurèle-Fortin, QC]

Mr. Chair, point of order.

Mr. Ralston, I understood the first answer you gave. You don't have to repeat it a second time. I understood you perfectly.

As I pointed out, the current accounting standards clearly do not allow politicians to track the progress associated with a program announcement. With that in mind, I am asking you whether you intend to change the accounting rules. I know you can't give me an answer right now. I realize that and I don't hold it against you. I am simply asking you whether you are going to make any changes so that we can track programs over time.

Thank you.

[The Chair, NDP, David Christopherson]

Sorry, Mr. Ralston, but you will have to make it a very brief answer.

Monsieur Giguère, you can pick it up in the next round.

Go ahead, Mr. Ralston.

[Jim Ralston]

I'll make two comments.

First of all, as regards the standards that guide us in our preparation of this, they're not our standards. We follow the standards set by the public sector accounting standards board. If there are changes in generally accepted accounting principles for governments, they would emanate from that body.

Now, with respect to other reporting vehicles, such as estimates or departmental performance reports or any sort of ad hoc reports that a department might need to make for accountability purposes, obviously we would have flexibility there to...but that would be outside my purview. I'm afraid I can't comment on that situation. It's kind of outside my purview once we leave these financial statements.

[The Chair, NDP, David Christopherson]

Sorry, we're way over the time. I'm going to have to call it there. Thank you.

Mr. Dreeshen, you have the floor, sir.

[Earl Dreeshen, Conservative, Red Deer, AB]

Thank you, Mr. Chair.

Thank you to our witnesses today.

To come back to what we were just talking about, there is a worldwide approach for taking a look at public accounts. I know that when we've gone to various conventions with all of the different public accounts of Canada, all the different provinces and so on, we have an opportunity to look at the types of things that are being presented.

I know that what we do is well respected, not just here and within our different jurisdictions, but also at the international level. There are times when we are invited to go to different international conventions to talk about public accounts.

What types of things are we able to share? I know that in the past the auditors general have gone to different places in the world. What types of things are we able to share about the way we do things versus what is happening elsewhere?

[Nancy Cheng]

We do have an international strategy within the Office of the Auditor General. One tranche of that is really trying to help other jurisdictions, other legislative auditors, to advance their work. Within that strategy, it does call for us to be at a forum that is called INTOSAI. That is a natural forum where legislative auditors of different countries come together and share practices. We also have opportunities to receive visitors from other audit offices and have exchanges with them.

Another mechanism is what we call peer review. From time to time, an organization might choose to ask another jurisdiction to come and look at their audit practices, so we would go; Canada does participate. We have participated in peer reviews of the United States GAO, the U.K., and also the EU. We have been quite prominent in terms of helping other jurisdictions to see if they can gain from our audit methodology and our audit approach.

But independently from the government side, there are also financial management workshops that the Government of Canada is a sponsor of—Mr. Ralston can speak to that a bit as well—just to have an exchange of issues relating to financial reporting and financial management.

All of those are good exchanges where we can help one another out when there are issues that could be common between legislative organizations or the auditor side.

[Earl Dreeshen, Conservative, Red Deer, AB]

That's perhaps going to my point with Mr. Ralston. When we see these books and go through them, I understand there's so much detail that is involved, and I'm sure at times many people would like you to kind of go step by step, even if you were to take certain line items and just show us what's going on. But is this the type of thing you would see when you were discussing how you assess public accounts, the types of materials that are presented to legislators? How do you see what we are doing here in Canada versus what you expect to see or you are seeing in other areas?