Evidence of meeting #58 for Public Accounts in the 41st Parliament, 2nd Session. (The original version is on Parliament’s site, as are the minutes.) The winning word was audit.

A recording is available from Parliament.

On the agenda

MPs speaking

Also speaking

Michael Ferguson  Auditor General of Canada, Office of the Auditor General of Canada

4:40 p.m.

NDP

Malcolm Allen NDP Welland, ON

Thank you for the explanation. I appreciate, as I would have expected, the apples-to-apples comparison.

I still have a question in my head about this issue of the recommendations in the performance audits, where you looked at 10 and five were done. Is there any mechanism for your department to follow up with the five that aren't done?

I recognize that you don't have a mandate to insist things be done even though they've agreed as a department. I recognize you don't have that authority, but is there any way to ensure that things get done? One of the complaints we see, quite often, when reports come here, for those of us who have been here long enough, is that a report comes back from a similar department about a similar case with the same recommendation that we saw four years prior. Of course they agreed four years prior and now they're agreeing again.

Is there anything inside your organization or statute that allows you to do that, or report to Parliament, or to us in a way that says, “Okay, they've said they should do something.”

Now we get a report mechanism as well. I'm not denying that, but is there anything that you see that could be helpful in that regard?

4:45 p.m.

Auditor General of Canada, Office of the Auditor General of Canada

Michael Ferguson

In a lot of ways we, I'm going to say, tie ourselves up on that, because for us to come back and report, we have to go back and get an audit level of assurance. It means we have to go back and do an audit again.

One message that has been very helpful to us, coming from this committee, is the message to departments that you don't want to be coming back to the public accounts committee talking about recommendations you said you were going to fix. We have repeated the message to departments fairly often over the last couple of years, and reiterated from this committee, that it's expected they will follow up, they will meet their commitments, and they will bring forward action plans. Those things, being a very clear message from this committee, are very helpful to us as we go about the work on follow-ups.

4:45 p.m.

NDP

The Chair NDP David Christopherson

That's time. Thank you.

We go over now to Mr. Carmichael. My notes say that you're going to be sharing your time with Mr. Woodworth, correct?

4:45 p.m.

Conservative

John Carmichael Conservative Don Valley West, ON

That is my hope, Chair.

4:45 p.m.

NDP

The Chair NDP David Christopherson

Very well. You have the floor, and the sharing part is up to you. Go ahead.

4:45 p.m.

Conservative

John Carmichael Conservative Don Valley West, ON

Indeed, I hope to.

Auditor General, I followed your explanation on so many issues this afternoon, and I understand the downsizing of the organization as rightsizing it, which is the way I relate from my past business experience.

I'm just curious, when you talked about the lead times that are required, clearly for crown corporations, for ministries, you need to have the time to prepare and get ready for that audit, and I think you stated 18 months was the timeline you work with that makes the greatest sense.

With regard to the Senate report, the Senate work you're doing now, what was your lead time on that? Was it in the same timeframe or was it more immediate?

4:45 p.m.

Auditor General of Canada, Office of the Auditor General of Canada

Michael Ferguson

When I refer to the 18 months, I'm referring really from the point in time that we have decided we're going to do an audit and we start the actual planning of that audit, until the time we report on it. So as opposed to our planning going out where we're saying, okay, next year we're going to do an audit on this and in two years time, we'll do an audit on that. The 18 months is very much about how long it takes us to execute an audit from, okay, we have started, we're starting the planning, we go through the planning phase, we get to the execution phase, and then we get into the reporting phase.

In terms of the audit of senators' expenses that is under way right now, we originally were estimating that we would be operating under that similar timeframe. It has turned out, as I said last week, our plan is to provide that report to the Speaker of the Senate the first week of June. So that will have been about a two-year timeframe, a 24-month timeframe from the point in time we started until we deliver the report.

4:45 p.m.

Conservative

John Carmichael Conservative Don Valley West, ON

I have a question for you. When I look at the budget of $78.3 million for 2015-16, when do you actually bill the cost of an audit? It is billed on delivery of a report or is it amortized over the course of the life that you put into that exercise?

4:45 p.m.

Auditor General of Canada, Office of the Auditor General of Canada

Michael Ferguson

Of course, for the audits that we do, our funding comes from the main estimates. Whenever we're reporting on how much it costs in terms of how much we spend on financial audits or how much we spend on performance audits, it's a cost accounting exercise as opposed to an invoicing exercise.

What we do is we determine the number of hours we spend on a given audit and we multiply that by a rate. When you're doing that type of exercise, you can look at it from a number of points of view. You can look at it as the direct cost in terms of how much it costs us just in the time of the people who actually worked on that audit, or you can look at it from a fully loaded cost point of view, which is how much it cost for us to do that audit in terms of the people who actually worked on it but also in terms of the support staff we would allocate out to all of the audits.

What we do is we don't bill out for the audits. We track from a cost accounting exercise so that we can report in the financial statements essentially how much of our efforts go into doing performance audits versus financial audits using an allocation of budget methodology.

4:50 p.m.

Conservative

John Carmichael Conservative Don Valley West, ON

Thank you.

Looking at the 2015-16 budget, that budget of $78.3 million, is it going to give you the budget you need to get the job done and to continue to deliver it at the level you expect to deliver it?

4:50 p.m.

Auditor General of Canada, Office of the Auditor General of Canada

Michael Ferguson

I think as I've said a couple of times, it puts us at a level where I think we can still continue to produce a number of performance audits that are within that historical range, albeit at the low end of that historical range. But as I think I've said again a number of times, our ability to absorb any other reductions or any other budget adjustments would put us below that historical range.

4:50 p.m.

Conservative

John Carmichael Conservative Don Valley West, ON

Now can I share?

4:50 p.m.

NDP

The Chair NDP David Christopherson

Yes, but you have to explain to him why it's only 20 seconds.

4:50 p.m.

Conservative

Stephen Woodworth Conservative Kitchener Centre, ON

I have a quick question. Is the Senate audit coming out of financial audits on your line budget here or out of performance audits?

4:50 p.m.

Auditor General of Canada, Office of the Auditor General of Canada

Michael Ferguson

Essentially, I believe it comes out of both, because we are using both performance auditors and financial auditors on that exercise.

4:50 p.m.

Conservative

Stephen Woodworth Conservative Kitchener Centre, ON

I'll have to stop there. I assume my 20 seconds are up, but if they're not—

4:50 p.m.

Voices

Oh, oh!

4:50 p.m.

Conservative

Stephen Woodworth Conservative Kitchener Centre, ON

—how much is the Senate audit taking out of your 2015-16 budget?

4:50 p.m.

NDP

The Chair NDP David Christopherson

There are no flies on you, are there?

Go ahead, Auditor General.

4:50 p.m.

Auditor General of Canada, Office of the Auditor General of Canada

Michael Ferguson

As I've said a number of times, once we have presented that report we will put together the full cost estimate in terms of how much we spent on contractors, how much we put towards the direct cost of staff, fully loaded, and all of that. We'll make all of that information available on our website the moment we present that report.

4:50 p.m.

Conservative

Stephen Woodworth Conservative Kitchener Centre, ON

Thank you.

4:50 p.m.

NDP

The Chair NDP David Christopherson

That's probably natural justice, if you will. The funny thing is that I was talking to Mr. Albas trying to save us a few minutes later on, and I blew it by not monitoring the time.

Colleagues, that now completes our usual rotation. I've done some quiet consultation and my sense is that the committee is satisfied that we have thoroughly drilled down here on what we need to do today. If I might, I have just a couple of closing remarks, then we will thank the Auditor General, and as agreed to previously, we will move into a business meeting to plan future work.

First, the Senate has been mentioned a couple of times. I don't want to get into it except to say that I would hope Canadians would reflect on the fact that your budget costs us almost $80 million a year and the Senate costs us almost $100 million. They should ask themselves which one is giving them real value for money.

Next, you mentioned the unsatisfactory implementation, and I'm glad you did. As the longest-serving member on this committee, that's the one that has always personally driven me the craziest to see in Auditor General reports, and in some cases multiple Auditor General reports, where there were previous audits done, the same thing said, “Yes, we agree with the Auditor General; wonderful recommendations, of course we're going to do it.” But then it's not done, time after time after time.

If they aren't being treated as a priority by this committee, then quite frankly most of the work we're doing doesn't mean anything. That's where the real issue is. We're trying to change people's behaviour and what they consider to be priorities in the course of their work. If we're not standing on that....

I hearken back to former PC member John Williams, one of my predecessors and possibly one of the longest-serving chairs of this committee in the House of Commons. John Williams always said, and I adopted it when I became chair, that the second a deputy minister realizes they've been called in front of the public accounts committee to have a public hearing, it should ruin their entire week. To me, that speaks very clearly to the kind of work that's being done, to the issues that you deal with, and to how effective we can be, or not be, in assisting in making sure that we're getting the right kind of government we want. That's non-partisan. Whomever the government of the day is, that's the way we function.

On a serious matter now, for a number of years you've been mentioning that the targets for public hearings are not being met. While that isn't everything, it's a crucial part. I was glad to hear you explain the added benefit of having a public hearing on top of your reports. There is a figure of a 65% target in terms of the number of public hearings that we would hear on chapters. We met 24%. Either the 65% is unreasonable and there is something wrong with that, in which case, fine, let's look at it, or there is something wrong with the 24% part. But the fact that there is so much disparity points to a problem. Given the importance of the work of this committee, as the premier oversight committee of Parliament, I would just urge all colleagues and this committee to take this seriously and to do something about it so that a year from now we can have a different result.

The last thing I want to say is that from my experience in doing quite a number now of international election observation missions, in a parliamentary democracy the first thing that people need and see in terms of democracy is a free and fair election that reflects the political will of the people who are voting. That is the absolute priority. I've been in countries when there were elections where that wasn't the case. If you don't have that, you have nothing.

Once you achieve that in new and emerging democracies, my experience, Mr. Ferguson, is that the second thing that's needed, as a country is trying to become a fully modern, developed, accountable democracy, is the implementation and the institution of the office of the auditor general, with its independence absolutely ensured and vital funds provided for that work to be done.

The first thing they ask when these countries are trying to emerge into a democracy is whether they can get a fair election to elect the people who they want to give the power to. Once that's in place, the second most important thing, to make sure the money that taxpayers are paying isn't stolen, is to get an independent auditor general system in place matched up with a public accounts committee that works and makes sure there's enough money there.

I say that by way of underscoring the importance of the work you and your staff do. All of us say this because we hear it. It's so important. You do amazing work. In terms of your predecessor, there ought to be a monument built to her. You're well on your way to getting a monument right beside her. We do look to you and your office to provide that purity of democracy that we're so proud of and makes us one of the leading democracies. We can never thank you enough and support you enough. We'll hold you to account as we're all held to account. The work that your office does—and you personally, sir, as a relatively new Auditor General—is impeccable. I want to tell you how proud we are as members of this committee in working with you and your staff. We want to reflect to you how much Canadian people appreciate and respect the work that your office does and its importance to our democracy.

Thank you so much for all that you do.

With that we we will wrap up and we will move into a business meeting.

I have to do a couple of quick votes to make us all legal.

AUDITOR GENERAL

Vote 1—Program expenditures..........$68,269,099

(Vote 1 agreed to)

Shall the chair report the main estimates, 2015-16, to the House?

4:55 p.m.

Some hon. members

Agreed.

4:55 p.m.

NDP

The Chair NDP David Christopherson

That business is done.

Mr. Ferguson, you and your colleagues are free to go. Thank you, again, sir.

5 p.m.

Auditor General of Canada, Office of the Auditor General of Canada