Public Accounts Committee on April 16th, 2013

[John Williamson, Conservative, New Brunswick Southwest, NB]

Thank you, Chair.

Thanks for coming today, everyone.

I'm hesitant to drill a little too deeply, just because of the vast sums we're dealing with. One concern I have with an approach that tries to access the risk is that over time they become dull, or people just assume all is well, when in fact based on past practices things could be changing. I'm curious to ask the departments how the risk assessment process has affected monitoring and reporting requirements. What is being done to stay on top of this reporting requirement, to not rest on our laurels and assume things are well going forward?

We can start at that end or this end.

Mr. Chair, you can decide where we start.

[The Chair, NDP, David Christopherson]

Ms. Stimpson.

[Sue Stimpson, Chief Financial Officer, Canadian International Development Agency]

If I might seek a clarification, Mr. Chair, are we talking about reviewing the risk assessment itself or the reporting and audit of the recipient?

[John Williamson, Conservative, New Brunswick Southwest, NB]

The auditing of the recipient, I think to ensure that the tax dollars are being spent as we believe they should be.

[Sue Stimpson]

I'll try to give that a start.

At CIDA we have a strong mix of processing tools in our risk management tool box. We assess risks at the program level, the country level, the recipient level, the individual assessment level. We have a risk framework that helps us determine the level of administration a recipient would be bound to provide—depending on the situation in the country, the amount of the contribution, whether it's a grant, whether there is local capacity, whether there are known quantities, and depending on their financial capacity.

That would drive whether and how we do a recipient audit—for example, whether we do that at the desktop by seeking information from the recipient on details of their payments and the cost they've incurred, or whether we actually go and do an audit of the individual project.

We can't audit everyone around the world, but in terms of our audit plans, they are risk-based audit plans that are renewed every year.

[John Williamson, Conservative, New Brunswick Southwest, NB]

Thank you.

Mr. MacDonald.

[Donald MacDonald, Director General, Operations, Western Economic Diversification Canada]

We actually do a risk assessment a minimum of twice on the life of an actual project. When the project and recipient proposal first comes in, the initial risk assessment is done. It's driven by a number of factors that are built into our systems to ensure consistency of risk assessment, project to project, and across all recipients. It will then determine whether or not there's low, medium, or high risk associated with the individual project, and then the level of intervention and working with the monitoring and reporting requirements that are then projected onto the recipient to act accordingly.

At a minimum, we also review it prior to the actual processing of any claims. So before any money actually flows, we reassess. Because our average project is approximately two and half to three years in life, that risk assessment needs to be revalidated before we actually flow any funds.

The risk assessment is re-evaluated at that time, using the exact same process, to see if anything new has happened in the interim over that time period that would then require additional either beefing up or easing of the actual reporting or monitoring burden that we would then put on the recipient. In addition, if any information became available to the department in the interim that obviously required a reassessment of the risk, or that we became aware of, that would also....

So it doesn't prevent us from also reassessing during the life cycle of the project, in addition to those two steps.

[John Williamson, Conservative, New Brunswick Southwest, NB]

Do I have time for another response?

[The Chair, NDP, David Christopherson]

You have another minute.

[John Williamson, Conservative, New Brunswick Southwest, NB]

Ms. Gardiner, please.

[Nancy Gardiner, Director General, Program Operations Management and Accountability, Department of Human Resources and Skills Development]

I would say ours is very similar to Don's. At the HRSDC department we have a risk-based approach to three specific areas: financial reporting, payments, and monitoring. Similarly, we use a number of factors to determine the risk base for each of those components.

As well, as Don said, throughout the life cycle of a project, if a project is a three-year project, we can take the opportunity to look at that risk over the period of time. If anything comes up during the project that we would see as problematic, we have the opportunity to go in, review the project, and see if there's anything that needs to be monitored or changed based on those assessments.

[John Williamson, Conservative, New Brunswick Southwest, NB]

Mr. Beaudoin.

[Carlo Beaudoin, Acting Chief Financial Officer, Public Health Agency of Canada]

At the health agency, very similar to my colleagues, we have developed criteria at the portfolio level with Health Canada and the CIHR. We've developed criteria to evaluate risk on a number of factors and then essentially rank the applicants and the recipients into high, medium, and low risk, based on that assessment.

From there, that determines, or helps us guide, the level of monitoring and documentation we will receive from our recipients during the year, including informing the audit and monitoring plans at the departmental level for those recipients.

[John Williamson, Conservative, New Brunswick Southwest, NB]

Thank you all.

[The Chair, NDP, David Christopherson]

Thank you. Time has expired.

Moving along, Mr. Allen now has the floor.

[Malcolm Allen, NDP, Welland, ON]

Thank you, Chair.

I would like to go back to Mr. Ferguson and then perhaps Mr. Scrimger, and take us back to page 4 in the English version. In chapter 2, at exhibit 2.1, there's the 2006 report from the blue ribbon panel and then there's the “Government Action Plan—2008”. It's a very lovely block flowchart, if you will, with Treasury Board at the top, TBS leadership and ongoing support at the bottom, and in the middle, it says “implement changes” across organizations. The arrows flow to that, and then they flow out to the recipients. Then, in the box, it says: “Reduced administrative burden”.

Can you help me here? Shouldn't there be another arrow on this thing? It seems to me that I heard Mr. Scrimger say earlier to me something about getting something back from recipients that told the departments whether all of this did indeed help them. Did they do better? Did they save money? Did they feel the burden was reduced? Somehow we sent it out to them but we never bothered to have an arrow coming back in the other way that just simply said, “Tell us how you're making out.”

Am I oversimplifying that or am I headed down a wrong path with this? I'm certainly not an auditor, by any stretch of the imagination, but is it not quite simple to have an arrow coming back the other way that says “let us know” or “report”, whatever term you want?

[Michael Ferguson]

First of all, I need to explain that this exhibit is an exhibit that we prepared in the Office of the Auditor General, so this was not an exhibit of the government's overall process and accountability cycle. This was just us trying to explain the front end of what was happening: that there was the blue ribbon panel, and there was the action plan, and that the intention was to reduce the administrative burden on the recipient. We were just trying to explain sort of that context; this wasn't an attempt to try to describe the whole process and all of the accountability.

Again, this is our chart. This isn't a chart that belongs to the government or any department.

[Malcolm Allen, NDP, Welland, ON]

That's fair enough, but maybe Mr. Scrimger would have liked the chart. If it had been theirs, we might have had an arrow going back the other way.

Since it's actually not your chart, Mr. Scrimger, there's no point in asking you to tell us, this unless you have a chart somewhere that's close to this and you want to send it to the chair.

I've been looking at your action plan that you provided, which was not in the report. I think it's dated April 13 of this year. It talks about performance reporting.

Recommendation 2.26 says that you intend to have that piece completed by late 2013. Can you give me an update as to where you think you are? Are you on track with that? Is it delayed slightly? Are you ahead of schedule? I'm not going to hold you to it, sir, if you say you think it will be November and it turns out to be December or September. I would just like a general sense of where you are.

[Tom Scrimger]

I think we are very close to actually releasing the guidance to departments in the next couple of weeks, which is the timeline we wanted. Then, barring something unforeseen occurring in the actual data-gathering stage, we are looking to be able to aggregate the information this fall. I don't think my crystal ball can go further than that. Things are looking positive.

[Malcolm Allen, NDP, Welland, ON]

I appreciate that. I wouldn't hold you to the crystal ball. That's why I phrased it that way, sir. Crystal balls are wonderful things on a desktop with snow in them.

Again, to go to your last recommendation at point 2.46 of the Auditor General's report, it actually says that you believe the new guidance policy schedule should be issued this month. How are we making out with that one?

[Tom Scrimger]

Again, it's my expectation that the new guidance will be issued before the end of the month. It may slip into the first week of May, perhaps, but we believe we're at that stage.

[Malcolm Allen, NDP, Welland, ON]

We look forward to seeing it, because I believe the intent is to release this publicly, not immediately, obviously. It does suggest a later date. Is there any sense of when that might become a public piece? The first recommendation clearly says that. There's a sense that we'll see something, no doubt on your website. I'm not suggesting that you're going to send us a report. Is it true that we'll see that fairly soon?

[Tom Scrimger]

This is also linked to our work plan around the review of the policy on transfer payments, which we are expecting to complete before the end of the current fiscal year. If I can use that as a very broad backstop, I would say that we would expect all of this, certainly the part of the survey, to be released before the end of the fiscal year. I don't have any other date—

[The Chair, NDP, David Christopherson]

Your time has expired. Thank you.

Our last member to take the floor on our normal rotation is Mr. Dreeshen. You have the floor, sir.

[Earl Dreeshen, Conservative, Red Deer, AB]

Thank you very much, Mr. Chair, and thank you to all of our witnesses today.

One of the things we're talking about is risk assessment. We also have impact assessment and the administrative burden, so as we go through the report there are a couple of things...and some of the things that I've heard earlier.... For example, Mr. Barrett, you indicated that sometimes these departments come together to foster innovative change. You also said sometimes...from seven agreements down to one agreement, from 126 reports down to 26 reports, yet there's no measurement. I submit that there's a measurement right there, as we take a look at what is happening.

One of the other statements in the report was on Western Economic Diversification Canada, its tracking of its costs in conducting recipient audits, the reduction from $738,000 in 2008-09 to $34,000 in 2011-12. Again, the rationale was the focus on the high-risk recipients.

I saw another file here, at paragraph 2.51. We're talking about Human Resources and Skills Development Canada having begun tracking service standards. They started that in 2010. As well, Western Economic Diversification has done its tracking of service standards since January 2007. What I'm suggesting here is that maybe no one said “Let's take a look at this and say that we are assessing the risk assessments and the opportunities for people not to worry so much about the dollars.”

Actually, some amazing things happened when this money was being presented to the public. You were finding smaller organizations that needed help that were able to go to other larger municipalities and they would say “This is how you make out these kinds of application forms. These are the things you need to have in order to work within the system.”

Especially here, when we have the four different departments and five different entities, I think we saw that people were looking at this as an opportunity to move forward, and they didn't get caught up in the burdens. I understand the rationale where you say you'd like to see the step-by-step and how it is you do it in the future. Fortunately, we've kind of got together, so now we have some opportunity to breathe a little bit and we're going to be able to put it down more for everyone else's discussion.

That's part of it, especially if there are very small organizations.

Volunteer week is coming up next week, and in a lot of cases you're asking people who are volunteers to get in there and try to come up with all of the grants they have to cover, whereas if you go to a municipality, they have departments that are lined up to make that occur. I'm just hoping that when we get into the assessment side of things we don't say, “Well, this is 'the plan' that we have to have, and it has to go this way”, because I think it is important that we get those types of things put together.

The other thing I would like to comment on is the consultation process, because I believe this is another item...and again, Western Economic Diversification has gone through this. I read again in the report that there were something like 80 different consultations, meetings, that were held in all four of the provinces, where you were explaining the rationale for the revised focus and how future budget allocations would work.

So after going through all those different items, could I have, from the AG's office and perhaps from Western Diversification, just how you see this working in the future, and how we can make sure that smaller entities are able to work their way into these kinds of projects without that extra burden?