Public Accounts Committee on May 14th, 2019

[Ronald Bergin, Principal, Strategic Planning, Office of the Auditor General]

We have a committee that oversees the performance audit planning schedule. They went through all of the planned audits. They determined which five were, if I may say this, the least important to deliver to you, and those were the five that we've had to cancel.

[Scot Davidson, Conservative, York—Simcoe, ON]

Nothing at all has changed in the meantime with that.

[Ronald Bergin]

No.

[Scot Davidson, Conservative, York—Simcoe, ON]

It was basically the audits that your office deemed to be least important that were deleted.

[Ronald Bergin]

Yes.

[Scot Davidson, Conservative, York—Simcoe, ON]

At present, is the Auditor General's office capable of meeting all of its statutory reporting obligations?

[Sylvain Ricard]

I'll have to say yes, because obviously we want to do that as they are mandatory, but at a cost. There's a cost to doing it. I referred to many areas in the office that we've been underinvesting in for some time. Again, this year the fact that some of the audits didn't pick up as fast as they could have, along with delaying some other initiatives, made us able to deliver on all of the mandatory mandates.

[Scot Davidson, Conservative, York—Simcoe, ON]

Over the last five years, would you say the number of special audits and examinations of government departments conducted by your office has increased or decreased due to any limited capacity needed to meet any statutory deadlines?

[Andrew Hayes]

I might answer that question, if that's okay.

We have continued to do the financial audit work that we are required to do. We have continued to do all the special examinations of Crown corporations that we're required to do. Those happen on a 10-year cycle. We've been working through that.

We obviously had a bit of catch-up to do because we delayed some of those special exams to do the work that we did on the audit of senators' expenses.

What you'll see in terms of the audits that we are producing is a decrease in the number of performance audits. On average, we would have had somewhere around 25 or 26 performance audits per year, which would include the ones that the Auditor General presented to Parliament, the ones that the commissioner of the environment and sustainable development presented to Parliament, and the three reports that we do in the northern territories, one in each of the Yukon, the Northwest Territories and Nunavut.

With the funding we have, Auditor General Michael Ferguson expected that we would probably be dropping to a total of 14 performance audits per year, so dropping by about 10 per year.

[Scot Davidson, Conservative, York—Simcoe, ON]

That is significant, 10 performance audits.

Lastly, in the 2018-19 report, there were indications of overworked employees and low morale—we always worry about employees—and changes to senior management. The 2019-20 report again identifies a lack of resources as a significant challenge for employee morale, which we all worry about.

How is the situation at present? Do you feel that it has affected any of the work output? We hate to see low morale.

[Sylvain Ricard]

Obviously, and as management, you always do your best to improve that. However, it remains that there are a bunch of smart people in the office and they see exactly what we're facing.

We're referring to the number of performance audits going down and the staffing level going down. Through that, if I may mention another angle, another place where we've had to invest over the years is in what we call “knowledge of business”. It's one thing when you're reducing your capacity and your funding to keep delivering audits, and delivering them one after the other, but another when one of the places that has suffered is in terms of reducing the knowledge of business, the analysis up front to be able to identify the best audits and then conduct them in an efficient way and to have the most impact and more value.

You can do that for a little while, but it's like IT systems. You can delay it for a little while, but at some point you realize what you're facing. You see it coming all the way, obviously, but you're hoping for the best. You're asking for money and you're waiting. You're delaying pieces of your business, but it comes to a point where all those things fall apart.

[The Chair, Conservative, Kevin Sorenson]

Thank you.

Mr. Hayes, I think you wanted to add a little more.

[Andrew Hayes]

I might just add one thing.

Our staff is very committed. They're very dedicated. They're very intelligent people and they care deeply about the work of our office. There's no question in my mind that the audits that we continue to deliver are of the highest quality. That's borne out in the internal audits that we do. Right now, we're having another international audit office complete a peer review of our work. We are proud of the work that we do.

[The Chair, Conservative, Kevin Sorenson]

I think Canada is recognized as a leader, but I want to be sure that skill continues.

Next we have Mr. Arseneault, please.

You have the floor for five minutes.

[René Arseneault, Liberal, Madawaska—Restigouche, NB]

Thank you, Mr. Chair.

I thank the witnesses for joining us.

There will be no trust for the representatives of the Office of the Auditor General who are asking for a funding increase for their organization. You won't be surprised by that. I am still a bit confused. Perhaps I misunderstood your questions and answers, but I am missing something. The 2017-2018 budget, in round figures, was $78 million. Is that correct?

[Lucie Cardinal]

Yes, that also includes employee benefits. In the main estimates, the amount was $69 million. This year, we are requesting $79 million. So there is an additional $10 million. We talked earlier about an amount of $88 million, which includes the $10 million intended for employee benefits and is funded through the central agency, the Treasury Board.

[René Arseneault, Liberal, Madawaska—Restigouche, NB]

That has nothing to do with the operating budget—activities on the ground. Right?

[Lucie Cardinal]

We use it. That covers salaries. When we have employees, we have to use the benefit plan, but that is not in our main estimates.

[René Arseneault, Liberal, Madawaska—Restigouche, NB]

I will get right to the point. You want to add 15 employees to your staff, which means you would go from 580 to 595 employees. The $10 million represents $666,000 per employee. How can that convince me that you will be able to go further in the audits?

[Lucie Cardinal]

It is certain that, when we talk about adding 20 employees—

[René Arseneault, Liberal, Madawaska—Restigouche, NB]

It says here it is 15 employees. That is my understanding.

[Lucie Cardinal]

We are talking about 580 employees for the 2019-2020 fiscal year. That number will go up to 595 employees in the coming years.

[René Arseneault, Liberal, Madawaska—Restigouche, NB]

So we are talking about 15 employees and $10 million, which represents $666,000 per employee. I know that not all of that amount is for salaries; I understand that. However, I would like to know how that financial resource is broken down. I am thinking of what is necessary to make it possible to go further in audits, to carry out the ones that are difficult to conduct or those that are slow, and so on.

[Lucie Cardinal]

The increase of $10 million represents the additional funding we are requesting in our main estimates this year. In the coming years, we will maintain the extra $10 million, but we want 15 additional FTEs. This means that, in 2020-2021, we will have to use a portion of our budget that is not intended for salaries to cover them, or else we will no longer operate. Essentially, we have the same budget. We want $88 million, which includes employee benefits, but we want 15 additional FTEs. Our salary budget will not suffice. We will have to take money out of our operating expenses other than salaries or reduce them.

[René Arseneault, Liberal, Madawaska—Restigouche, NB]

Mr. Ricard, do you want to comment?