Public Accounts Committee on March 31st, 2014

[Dan Albas, Conservative, Okanagan—Coquihalla, BC]

I just want to say that I appreciate your perspective as the leader of your organization. It's difficult to be both the leader and a part of an organization. It seems that your process is working.

[The Chair, NDP, David Christopherson]

Very good. Thank you.

We'll move along,

Madam Jones, you have the floor, ma'am.

[Yvonne Jones, Liberal, Labrador, NL]

Thank you, Mr. Chair, and thank you to Mr. Ferguson and Madam Sachs for coming in today and making your presentation.

I have just a couple of questions to follow up on what my colleagues have already raised.

First of all, when I look at the fact in your report that you have 37 fewer staff in your office and have been able to cut by $6.5 million and that you are doing 25 fewer audits than you would normally be doing, for me it begs the question: do you feel that you are able to maintain the level of oversight that the Office of the Auditor General did in the past and that you feel it should be maintaining in overseeing the business of Canadians?

[Michael Ferguson]

We have two lines of business, the first line being financial statement audits. Very few people understand the work we do on financial statement audits. It takes up about half of the resources of the office. The first thing we did during our review was consider whether any of those financial statement audits that essentially we are doing were not adding much value. That's how we identified the 25 audits that were eliminated.

What this meant was that on the performance audit side of what we do, we've been able to maintain the amount of work that we were doing.

Of course, there's no shortage of what you could do performance audits on, when you look at an organization as large as the federal government. We are able to continue with somewhere around 27 to 30 performance audits without a significant reduction in that area. Given that this is the number we've been doing for the last number of years, I think we're able to maintain it.

[Yvonne Jones, Liberal, Labrador, NL]

You talked about the fact that you had been requested by the Senate to do an audit of the Senate.

Do you want to tell us a little bit about the particular aspects you will be looking at in that audit and what timeframe it will cover?

[Michael Ferguson]

We're looking at the spending of each and every senator, at every dollar that was spent by each and every senator over a two-year time period. I'd be going by memory to give the exact start and end date. I don't want to get it wrong. But it's a two-year time period for all of the spending of each and every senator that we're going through.

[Yvonne Jones, Liberal, Labrador, NL]

Do you feel that, even taking on this additional piece of work, you still have the resources in-house to continue to complete that piece of work as well?

[Michael Ferguson]

As I said, what we did in that exercise was delay one performance audit. Then there was some work by an internal group we have that deals with a number of our financial audits, which we were able to say we don't need to do over the course of this time period in which we're doing the Senate audit, and so we had those individuals. Then, just with our normal budgeting, we have certain people unassigned in case there are jobs that come up.

By the time we put all of those things together, we felt that we were able to handle the work involving the Senate.

[Yvonne Jones, Liberal, Labrador, NL]

One of the things you outlined in your report that was disappointing for me to learn is that only 30% of the cases you review are actually looked at by the committee. I believe that the work done by the Auditor General's office is done with the sole purpose of keeping everybody to a higher standard or implementing best practices that could always work better for the public and for governments. So seeing that figure is somewhat disappointing.

When you do these performance audits and the particular pieces that are reviewed by committees as opposed to those that aren't, have you ever measured what the success rate is from one to the other; whether there is more implementation of practices and recommendations once they are reviewed by committee or not?

[Michael Ferguson]

We haven't broken it down that way. I want to comment that the number of hearings we have had with this committee has stayed stable for the last three years at about.... The number I have here is 13 or 14. The area in which we have noted a particular drop-off has been with some of the other committees.

Now, if you go back further, even for this committee the number of hearings was higher. Over the last three years it has been more stable, but if you go back to 2010-11, it was significantly higher.

As to departments appearing before the committee, departments take all of our recommendations seriously, and they put together what their action plans are going to be. But I think there's no question that nothing focuses the mind of departments like having to come in front of a committee to explain what they are going to do about some of the things we noted.

[The Chair, NDP, David Christopherson]

I'm sorry. That was getting to be a long time. We are about a minute and a half over your time.

[Yvonne Jones, Liberal, Labrador, NL]

Thank you very much.

[The Chair, NDP, David Christopherson]

You're welcome. I allowed as much latitude as I could.

Just on that subject, I have to say, and you have heard me say this many times, that John Williams, my guru in public accounts, always said that when a deputy minister learns about being called in front of the public accounts committee for a public hearing, it should ruin their entire week. I think that's a good standard by which to assess whether we are doing our job properly or not.

We'll move along.

Mr. Carmichael, you have the floor, sir.

[John Carmichael, Conservative, Don Valley West, ON]

Thank you, Chair, and thank you to our witnesses today.

Mr. Ferguson, I'd like to address two areas, the second being financial and performance audits. I'll come back to that, though, if I have time.

I'd like to talk about some of the international implications of reduced budget, greater efficiency, and all of the good things you have addressed today, which I have to tell you I find very impressive in terms of the way the organization is being driven to create better results with reduced resources.

I want to ask you, though, about international involvement from your perspective in areas in which you are called upon to assist in peer audits with some of your colleagues globally. You have also been audited by other auditors general.

Do you have any of those planned in the next year, and how do these affect some of the numbers in the budgets we're hearing about today?

[Michael Ferguson]

In terms of having peer reviews done of our organization, we have set a target of having a complete peer review of the organization done once a mandate of an auditor general. The last one was led by the Australian National Audit Office and was done, I believe, in 2009-10. It resulted in us undertaking a project to look at our audit methodology and we put considerable resources into that project.

Right now we are involved in—as part of the team, we are not leading it, but we're part of the team—doing a peer review of the Government Accountability Office in the United States. In addition to that, we spend a lot of time with various international audit institutes looking at some of their practices. We've been involved quite significantly in the past, for example, with Mali and with a number of other countries as well.

[John Carmichael, Conservative, Don Valley West, ON]

I guess that really comes back to clause 12 of your report today where you talk about your four priorities, the third being that, having completed the updating of your audit methodology, you're looking at opportunities to implement your audit methodology as efficiently and economically as possible.

Sharing some of those learnings internationally is of benefit not only to us as Canadians but also to those with whom you share. I wonder if you could review in brief your office's international activities to date and discuss more specifically the development of professional standards and the promotion of better managed and accountable international institutions.

Specifically, where is the focus of your office internationally and do you focus on key countries, unions, geographic zones? You've mentioned some of the work you're doing with the U.S., but I wonder if there is anything else that we could be brought up to date on.

[Michael Ferguson]

One of the very long-standing and successful international programs we have is what we refer to as our fellows program. What we will do is we will bring in primarily performance auditors from other countries to work in our office in our performance audit practice for nine months over the course of a year. It's not just done through us, it also involves the provincial auditor general offices as well.

Right now, for example, there are two fellows from the auditor general's office of Vietnam who are stationed with the Auditor General of Alberta. There are two from Cameroon with the Auditor General of Quebec. We have one from Ghana and one from Tanzania with us. They stay in Canada with those audit offices for nine months, get training, work on actual audits, and then take their learning back to their home countries. We've been doing that for a number of years. We also have a number of other international activities as well.

[John Carmichael, Conservative, Don Valley West, ON]

Great, thank you.

Coming back to financial and performance audits, I wonder if you could address some of the overlap issues. It strikes me that there must be significant overlap between the two audits as you measure a financial audit and a performance audit. In other words, I think it would be hard to truly assess a performance audit without consideration of the financial metrics. I wonder if you could just address that.

[Michael Ferguson]

When we're doing a financial statement audit, our goal, our objective, is to determine whether the financial statements have been presented fairly in accordance with generally accepted accounting principles. That mandate is very specific, looking at a set of financial statements and whether the accounting has been done according to standards.

When we're looking at a performance audit, we establish an objective for a certain program. We might look at some financial aspects of that, but generally we're asking the question of whether this program is meeting its objectives.

[The Chair, NDP, David Christopherson]

Sorry, time has expired. Thank you.

[John Carmichael, Conservative, Don Valley West, ON]

Thank you.

[The Chair, NDP, David Christopherson]

Just to correct the record, I understand I said a different name earlier. I meant to say that John Williams was the previous chair of this committee.

Mr. Giguère, you have the floor, sir.

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

My colleague Ms. Jones opened the debate on your audit of the Senate. Of course, you verified all the expenses to determine whether they were made properly and were actually authorized.

Do you also have the power to examine the relevance of those expenses? Senators have a salary envelope equivalent to that of MPs. However, senators do not do the same work as MPs and don't have the same obligation of keeping a constituency office.

Are you going to verify the schedule of those employees to determine whether they are really doing the work they are paid for, whether they work 2,000 hours a year, or whether they use the time for partisan political activities? Does your budget allow you to conduct that kind of investigation, or is it too expensive?

[Michael Ferguson]

The audit that we are doing of the Senate, I would characterize essentially as an audit that's focusing on compliance. So for spending by senators out of Senate offices, were they complying with the rules? Of course, when you get into that type of audit there are sometimes some rules that you have to pass some judgment on, but I would essentially call it a compliance audit. It's not a value-for-money or a performance audit, but we would be looking to make sure that the spending that was happening was for Senate business and wasn't for other business.

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

So if human resources were used for partisan activities, you would investigate. An analysis would be done of the performance of Senate staff. Is that right?