Public Accounts Committee on May 21st, 2013

[Michael Ferguson]

Mr. Chair, I think that's part of the question that we are trying to answer as we're doing our review of our strategic direction and our strategic planning. One of the things we are challenging ourselves with is to understand how we add value, how the work we do adds value, and whether there are any places where we should be doing something to add value and we are not. That's something that I think will come out of that exercise.

In general, as I've said, I think there's a lot of value to our financial audits, there's a lot of value in our performance audits, and there's a lot of value in what we do in the special exams. I think that's all good work, with a lot of value. If there's anything else, it would be, again, more on the margins rather than something that's significantly missing. But hopefully we'll be able to answer that question when I'm back here next year at this time and we've been through some of our strategic thinking.

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

Thanks very much, Mr. Ferguson. I appreciate it.

[The Chair, NDP, David Christopherson]

Yes, time has expired.

I just want to remind the member that we did have that piece of correspondence from the independent officers of Parliament. It came to this committee. There was a decision made by the committee not to hold a hearing on that letter.

We'll continue our rotation.

Mr. Dreeshen, you have the floor, sir.

[Earl Dreeshen, Conservative, Red Deer, AB]

Thank you very much, Mr. Chair.

Welcome to the Auditor General and Ms. Sachs. It's great to see you.

I have been thinking about this last year and the types of things you have committed to and the changes that have been made. One of the things you are talking about in the 2013-14 report on plans and priorities is the lesser number of financial audits.

To tie into that, are you looking at undertaking any different or additional financial or managerial oversight with the entities that are no longer going to be audited? You have discussed this question somewhat, saying that you might be changing the focus to some extent in that area. Will you be looking at them, or will you be depending on the internal audit functions of those particular entities?

[Michael Ferguson]

Mr. Chair, a number of those entities will still be the subject of financial audits, just not the subject of a financial audit by us. A financial audit will be performed, presented to the board of each of these organizations, and made public. I don't think there are any organizations for which our choice to be no longer involved in audits would result in any sort of significant gap in oversight. Certainly, part of our consideration was to make sure that there would not be that type of gap in oversight.

[Earl Dreeshen, Conservative, Red Deer, AB]

Thank you.

Just to look at the process, when you are doing an audit and you get into the middle of it, having budgeted more or less this amount of time or that amount of money to that particular project, how flexible are you, if you find something that you feel you have to delve into a little bit more, to do so? Do you have that flexibility? Does your audit team have that flexibility?

One thing we have talked about a lot over the years is the concept of being on time and on budget. I appreciate that we have seen outlined in more detail, rather than simply as a footnote, what being on time and on budget is all about.

Could you address both of those issues, the idea of being on time and on budget, and also the issue of flexibility, of being able to transfer resources into an area as you are moving forward in your audits?

[Michael Ferguson]

Mr. Chair, when we do our budgeting, we spend a lot of time on budgeting how much time is going to be spent on each audit. Particularly for financial audits, we will put together a budget that essentially represents how long we think it's going to take us if there are essentially no problems. Then we will also build in a 15% buffer that allows our teams to go beyond the original budget by another 15%. Then we have a second buffer, for very significant cases. So we have flexibility within our budgeting to deal with situations as they arise.

And frankly, we want to make sure, when we're budgeting audits, that we have the right incentives. When we are doing an audit, the most important thing is that the audit bring to light whatever issues need to be brought to light; this, in fact, is more important than being on time. It's making sure that we get the right issues. We want to make sure we are using those as tools to manage the audits, not as tools that will be disincentives to finding the things that need to be found. That's the balancing act we have to perform when we're doing our budgeting.

[Earl Dreeshen, Conservative, Red Deer, AB]

With just a moment left, I'd like to take you to “Indicator Table 2”, the summary of organizational performance. This is in the submission we have in front of us today. The last page of it talks about “percentage representation relative to workforce availability”, and you go through various demographics there.

Can you explain a bit of what is happening? We have talked about the staff's feeling, about working for the Office of the Auditor General, that it's one of the best places you can work in here in Canada. Can you tie those two things together: the percentage numbers we see here and what is happening in your office?

[Lyn Sachs]

I'll take that question.

Yes, the results of our surveys have shown that we are a good place to work, that people like working with us.

This is a second analysis, obviously. If you are comparing it with how we are meeting percentages of representation, it's very much a function of hiring and of people who are leaving; and if we are approaching the right people, are we outreaching in areas in which we are weak in our recruitment activities?

In areas in which our hands are tied—and you'll find that the one area in which we have a little work to do, although we are doing well in all areas, is in membership of visible minorities—at a time of low recruitment it is difficult for us to fix the numbers, because we're not going out and hiring 20 or 30 students, as we might have in the past. That is one of our current struggles, although we were told by the Human Rights Commission, when they came to do an audit—I believe it was on these numbers—that we were actually a model organization.

So it partly is that people like to stay, that people enjoy the work and the challenge, but it's also that we are trying to be a very flexible organization. I think those are two key points.

[The Chair, NDP, David Christopherson]

Thank you very much. Time has expired.

We'll move to Monsieur Giguère.

You have the floor, sir.

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

Thank you, Mr. Chair.

Earlier, you told us that 62% of the 42 recommendations had been addressed. But we have a serious problem on our hands if the recommendations that were followed were in fact the least important, meaning that the most important recommendations, in other words, the other 38%, were not followed.

Your recommendations can be easy to accept in some sectors, but in others, they require a major change in culture across a department or agency.

From that perspective, when your recommendations stem from the fact that you observed an inappropriate culture or conduct that was clearly problematic, are they generally accepted more easily? Or are recommendations that are simpler or more technical in nature accepted more easily?

[Michael Ferguson]

When we put that measure together, what we are looking at is.... Again, when we have done a follow-up on our recommendations, have they been satisfactorily implemented?

I guess almost by definition we have decided that there is a certain number of recommendations that are important for us to follow up on. We ourselves, when we are deciding to do the follow-up audit, would be focusing on the recommendations that we felt were the most important for that department to implement. When we talk about 60%, there's not really a lot of opportunity for a department to say that they will implement a few easy ones and not the harder ones, because the measure is really based on our coming in, doing the second audit, and picking the recommendations that we felt were the most important to be implemented, whether they would be easy or difficult.

So in general, I don't think there's a lot of opportunity for departments to skew the results. I think we're in control of it.

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

I have another question along the same lines.

Recently, you expressed some reservations in your evaluation of the Old Port of Montreal Corporation, and that's great. But, as we've recently seen, a minister may ask a high-ranking official—the Librarian and Archivist of Canada, in this case—to resign because of lavish and inappropriate spending.

Further to their ministerial responsibility within a British parliamentary system, a minister has the authority to tell an official that they have committed unacceptable wrongdoing. Why did you not assert your right, specifically in the matter of the Old Port of Montreal Corporation, to say that such a use of public funds by an official constitutes behaviour that is totally unacceptable?

The minister, himself, responded before you by removing those individuals. When someone is clearly to blame for mismanagement, or worse, an abuse of power, why not assert your authority to indicate that that specific individual is guilty of misconduct that should be punished?

[Michael Ferguson]

Mr. Chair, again I think our approach to any audit or to any special examination is to look at the systems that are in place to determine whether those systems are appropriate or not and then bring forward any examples where we feel there may be problems. Then we present those findings to the organization, to the people who are charged with oversight of that organization. It's then their responsibility to take that information and make sure that appropriate actions are taken, whether that involves correcting the systems and processes or whether that involves actions concerning individuals.

Again, we report on what we find as part of our audit, but then it's up to those who are charged with oversight of those organizations to take the appropriate action.

[The Chair, NDP, David Christopherson]

Very good. Thank you.

Your time has expired, Monsieur.

Over to Mr. Saxton, for our last round of questioning.

You have the floor, sir.

[Andrew Saxton, Conservative, North Vancouver, BC]

Thank you, Mr. Chair.

I just want to follow up on my colleague Mr. Dreeshen's points regarding the OAG as being a popular place to work. We all know that the Office of the Auditor General does great work, and it's reassuring to know that it's also a good place to work.

For example, for the fifth consecutive year the Office of the Auditor General was ranked as one of Canada's top 100 employers, one of the national capital region's top 20 employers, and one of Canada's top 10 family friendly employers. It was also selected as one of the top employers for Canadians over 40 years of age. An employee satisfaction survey indicated that 95% of employees feel proud to work at the OAG.

This is very positive feedback from people working in the OAG. Do you have opportunities for entry-level audit staff as well?

The only thing I saw missing here was the top employer for employees under 40 years of age.

[Lyn Sachs]

I can answer.

I don't think there's an award for best youth employer. There might be, but we haven't applied for it. Would we win or not? I have no idea. I do believe that a lot of the satisfaction for those who are over 40 is caused by our benefits and flexibility. What we do is important; that's why our youth tend to like us. Our average age is 40, so that means half the office is younger than 40 and happy to be there.

I don't know if I can add to the reasons behind it, other than that flexibility.

Did I miss part of your question?

[Andrew Saxton, Conservative, North Vancouver, BC]

I was just wondering about opportunities for—

[Lyn Sachs]

Oh, for hiring and for youth. Sorry, yes.

The one difficulty we have with the strategic operational review is we have decreased our hiring of recent graduates. To be honest, that is one of the by-products of trying to adjust to a smaller budget. We hope that once we establish the work in our new budget, the turnover will once again allow us to hire twenty a year, as we would like. But for this year, I believe we've gone down to about eight.

We know they're an important feed to all of our other levels, and we know it's important for us to continue that recruitment. So we won't cut it out, but it's going to be a challenge.

[Andrew Saxton, Conservative, North Vancouver, BC]

Okay.

Well, congratulations on your success, in any case.

In the report, under the title “Strategic outcome and expected results”, it says:

The long-term strategic outcome of the Office of the Auditor General is to contribute to better managed government programs and better accountability to Parliament through legislative auditing.

You have identified a number of results you expect to achieve with your audits in the short, medium, and long terms. In the short term, you say you want to “engage Parliament, territorial legislatures, and federal and territorial organizations in the audit process”.

I just want to ask you how you intend to do that.

[Michael Ferguson]

Mr. Chair, in terms of engaging Parliament, there are certainly a couple of aspects to that. One is, as I say, to have conversations as we do our review of our strategy, particularly with members of this committee. That would be one way of doing that.

Overall, though, I think it speaks to the importance of making sure that our performance audits do get in front of committees and that parliamentarians are engaged with our output, again whether that be at the federal or territorial level, because we are the auditors of the three northern territories as well.

The functioning of the public accounts committee here versus the functioning of the public accounts committees in the territories is different, and making sure that we are able to engage the committees in the work we do in all of those levels is probably what we're referring to there.

[Andrew Saxton, Conservative, North Vancouver, BC]

Thank you.

Finally, you mentioned that, “In the long term, we want our work to lead to more effective, efficient, and economical government programs and operations and to programs that foster sustainable development.”

Could you just expand a little bit more on that?

[Michael Ferguson]

On the sustainable development piece?

[Andrew Saxton, Conservative, North Vancouver, BC]

Sure.

[Michael Ferguson]

I believe the sustainable development piece may even be legislated. I think it's the mandate, really, of the Commissioner of the Environment and Sustainable Development. So that's how we do that piece.

Everything we do, of course, is around trying to find ways to identify opportunities for government programs to be more efficient and more economical, that type of thing. Everything we do is always geared around that. But then we do also have this specific mandate around sustainable development, which is mostly covered off by the group under the Commissioner of the Environment.