Public Accounts Committee on May 10th, 2016

[Michael Ferguson]

I guess we really don't have a reason for the departure. What we're doing with it, though, is identifying that we need to spend more time on our relationship with those organizations so that we can go in and get a better understanding of how they are viewing the performance audits that we're doing.

[The Chair, Conservative, Kevin Sorenson]

Thank you.

We will now move to Mr. Arya, please.

[Chandra Arya, Liberal, Nepean, ON]

Thank you, Mr. Chair.

I would like to speak on the bilingualism you mentioned in paragraph 14. Let me be very clear: I do support bilingualism. However, for millions of immigrant families, English or French is neither their first nor their second language. They come here, they study hard, they work hard, and they become proficient in one of the official languages. For them, entering the public service is a major, major problem.

Two weeks back when I went door-knocking, I met an immigrant family where the dad and his daughter were professionals. She spoke to me at length of her experience. She interned in one of the federal departments here, and she was not recruited because her manager told her that she was not bilingual. Now she works with one of the four major audit firms. Not only did we lose a good professional, but it leaves a very bad taste in the mouth of the family.

I understand that some of your recruitment ads mention something like “bilingualism is an asset”. Maybe the managers are using that to recruit only bilingual candidates. I think unilingual candidates should be recruited and then trained in the second language. With our aim to improve bilingualism, if you start recruiting only among the groups of young professionals who are already bilingual, it creates a major problem.

[Michael Ferguson]

I can speak to it, and I can ask Ms. Seally to provide some more details, but I can speak to what our approach is. Our approach is simply to make sure that we are respecting the laws and the policies of the Government of Canada as they relate to bilingualism and bilingualism requirements. That means that people in supervisory positions need to have achieved a certain level of bilingualism as identified through testing through the federal government.

[Chandra Arya, Liberal, Nepean, ON]

I understand, sir. I'm not talking of the supervisory level, or the middle management, or the senior management level. I'm talking of young professionals.

[Michael Ferguson]

I understand. In terms of other positions, we don't have requirements for most of those positions. Of course, if you're talking support positions, a number of those maybe have to be bilingual, but in terms of audit professionals starting out, we don't require people to be bilingual.

We do have a capacity within our office to train people on their second language. That's why we've put together these language plans. Perhaps I'll ask Ms. Seally to provide more detail about the hiring process.

[Susan Seally, Principal, Office of the Auditor General of Canada]

It's exactly the case of what Mr. Ferguson was saying. We hired 55 people last year, and 26 of them were at the entry level. At the entry level, we request that our candidates are proficient in either English or French. In fact, we do not require bilingualism at the entry level of the audit trainee program.

[Chandra Arya, Liberal, Nepean, ON]

Yes, but as I said, I know personally a lot of families here. I'm not talking about a middle-aged immigrant like me who may or may not have the capacity to be proficient in both official languages. I'm talking about youngsters who go to universities here. They work hard, but they can't seem to get entry. I'm very happy to note that at least you are recruiting unilingual professionals and then training them to be bilingual. That's good. Thanks.

[The Chair, Conservative, Kevin Sorenson]

Ms. Zahid, you have approximately three minutes.

[Salma Zahid, Liberal, Scarborough Centre, ON]

Thank you, Chair.

I would like to ask you how you determine which departments you are going to audit. How do you keep a balance between auditing new departments or revisiting the departments for which you have done audits before?

[Michael Ferguson]

In looking across all of our mandate and everything we are supposed to audit, first of all, we have a mandate to audit financial statements of the federal government, the government of the three territories, and crown corporations. Those financial statement audits we do every year on all of those organizations.

We have a mandate to do special examinations of the systems and practices that exist within federal crown corporations, and we have to do a special examination of each crown corporation at least once every 10 years—at least, of all those listed in the Financial Administration Act, which is most of them. We have to do that special examination once every 10 years.

There are certain things, then, that we have to do, that we are legislated to do.

In terms of our performance audits, we look across the federal government. We've divided the federal government, I suppose, into a number of envelopes, whether international affairs, the environment, aboriginal affairs—those types of things—and then we will do what we call a strategic audit plan to try to identify the risks in those areas. It's not so much about looking really at a particular department as about looking at an area and doing a strategic audit plan that looks at all of the departments within that area, looking at the types of programs they offer and the risks associated with them. Then, the ones in which we feel there is the most risk that something needs to be improved will be the ones we select for a performance audit.

[Salma Zahid, Liberal, Scarborough Centre, ON]

Do you go back to the departments that you have audited before? What is the process of making sure that the recommendations you made when you audited a particular department are being implemented?

[Michael Ferguson]

We do follow-up audits. The process for the departments is that when we make the recommendations, they will agree with our recommendations and they will prepare an action plan. From time to time we will do a follow-up audit, but remembering the time frames involved, by the time we finish an audit we probably have to give the department about three years or so to implement those recommendations.

Then we would need to come back to do an audit, and the work we do in that world is to make sure that we still have an audit level of assurance. That means that we go in and do another full audit, which will include at least some follow-up of the recommendations we made previously. To complete that second audit from the time we choose it until the time we report it could easily take 18 months.

Counting from the point in time that we present the first audit report until we can present a follow-up audit report, we may be five years out from when we made the original recommendations.

It's certainly why the role of this committee is particularly important. The follow-up audits are important, but they can't be the only way of making sure that departments are implementing the recommendations. The fact that departments have to come here and have to tell you what they're going to do, or maybe you bring them back in after a year or a year and a half and they explain to you the progress they've made—all of those types of things—are I think a fundamental aspect of making sure that departments are in fact implementing the recommendations.

[The Chair, Conservative, Kevin Sorenson]

Thank you very much. We're well over.

We'll now move over to the official opposition one more time and go to Mr. Doherty, please.

[Todd Doherty, Conservative, Cariboo—Prince George, BC]

Thank you to our guests.

Mr. Ferguson, you've been the Auditor General since 2011. Is that correct?

[Michael Ferguson]

That's correct.

[Todd Doherty, Conservative, Cariboo—Prince George, BC]

My questions are going to touch more on organizational behaviour and performance, similar to the line of questioning we had earlier. I'll be the first to say that it looks as though you have been taking some steps to streamline the process and make your organization more effective; however, your key indicators in your performance reports or your performance audits are almost failing, I would say, in terms of the measures you are putting forward. You're far below your targets.

Could you say that perhaps the process you use in determining the audits may be flawed and may need to be revisited to make the work more relevant and perhaps mitigate the apathetic responses you're getting from some of the organizations you are reporting on?

[Michael Ferguson]

In terms of the particular indicator, which is that the people we have done a performance audit on believe that the audit has added value, when we do fall below our target on that, I think it is very much an indication that we need to spend more time understanding, with the organizations that we've done the audit of, why they felt the audit didn't provide value, remembering that this is always a difficult measure because people don't like to be audited. Our audits in particular are not just audits; they are also publicly available and there's public discussion about them. That can make some people uncomfortable.

It's not always a surprise that some people didn't like being audited and could therefore say that they didn't feel as though the audit process added value. For us, it's a matter of understanding with them, having the relationship with them to understand why they felt perhaps that value wasn't there.

[Todd Doherty, Conservative, Cariboo—Prince George, BC]

That leads me to my next point. Going back to strictly business and customer service, ultimately you have customers. If we were to look at just the customer side of it, you are falling below in the customer service side of it in terms of the relevance or the importance that your customers are placing on your reports. I think that a better understanding of what your customers are looking for is very important, as is spending the time organizationally to be able to develop that. It is also important to develop that skill set internally, to be able to go in and actually extrapolate that information and build that relationship with your customers.

Is there a penalty for non-compliance by your customers? You provide a report, you audit an organization or department and, in your own words, you follow up from time to time. Having one to three years gives any organization the time to choose whether they will follow up or not or act on your recommendations. What is the penalty for non-compliance?

[Michael Ferguson]

The only thing we do when we do an audit is to identify where we think things need to be improved. We make recommendations. The department comes up with an action plan to deal with the issues we've identified. I guess their penalty is that if things are not working the way they should, they have a very uncomfortable couple of hours in front of this committee and maybe come back again.

There's nothing in the legislation that requires people to implement recommendations of the Auditor General, nor in fact should there be, in my opinion, because these are recommendations we're making to the department and the government, and it's up to the government to decide what they're going to do with those recommendations.

[Todd Doherty, Conservative, Cariboo—Prince George, BC]

You're here before us asking for money. What are you going to do differently so that we get different results?

[Michael Ferguson]

In terms of the performance audits, remember that there are more clients than just the people we're auditing. There is also this committee and the public accounts committee. To the extent that the public accounts committee feels that our audits are adding value, that's our primary measure. We do from time to time sit down. Mr. Bergin will go around and talk to individual parliamentarians to get the sense of whether they feel those audits are adding value. We are constantly working towards making sure that we are selecting the right audits; things that are going to be of interest, things we believe there are risks with. We are also always working on ways to better communicate those audits and trying to make sure that the written communication we have is clear and concise. We're constantly trying to improve both how we select the audits and how we report the audits.

[The Chair, Conservative, Kevin Sorenson]

Thank you very much.

We'll move to Ms. Shanahan for five minutes.

[Brenda Shanahan, Liberal, Châteauguay—Lacolle, QC]

Again, thank you to the Auditor General and to your team for being here.

This session gives us a wonderful opportunity to understand more about the work you do, because indeed, in the various committees I'm involved in, I have the pleasure of seeing you and your work quite often.

I want to clarify something. Are the departments your customers, or are your customers Parliament and the people of Canada? Do the departments actually pay you for your services? This is why we're here this morning, to look at your estimates for your budget.

[Michael Ferguson]

Our budget is provided as a budget to the Office of the Auditor General, and within that we make the decision about what to audit.

Certainly, what we consider to be our primary client is Parliament. Also, we would consider the crown corporations and the territorial legislatures, of course.

In terms of the performance audits, again, we see that more as making sure that we have relationships. The term “client” in that sense would be used very loosely. It is about making sure that we have the right relationships. They are certainly important stakeholders in the work that we are doing, but they are not asking us—and therefore paying—to have a performance audit done. We are choosing to do those performance audits. Once we have chosen something, the performance audit is essentially going to be done, whether the department wants it done or not.