Public Accounts Committee on May 14th, 2019

[The Chair, Conservative, Kevin Sorenson]

Thank you very much.

We'll now move to Mr. Christopherson, please, for seven minutes.

[David Christopherson, NDP, Hamilton Centre, ON]

Thank you, Chair.

Auditor General, thank you for your presence again. We appreciate it.

I'd like to talk about this budget business. This is incredibly troubling.

Colleagues will know that traditionally, in the 15 years and five Parliaments that I've been here, at the end of this meeting, the one question the chair always asks of the Auditor General in closing, no matter what has transpired in between, is “Do you have sufficient funding to carry out your mandate?” The answer inevitably is yes. That wasn't always an easy road to get through.

I stand to be corrected, but I do not recall ever having the Auditor General come in and say, “I do not have sufficient funding to do the work I would normally do; therefore, I have to do less.” That's what I'm reading here.

I'm going to quote it again:

Although the 2018 federal budget provided us with some new ongoing funding, we did not get any of the new funding that we requested in the 2019 federal budget. We are continuing to explore our options to ensure we are properly funded and accountable only to Parliament. In the near term, we have no choice but to decrease the number of performance audits that we conduct.

I want to be crystal clear. You put in a request for more funding. It was denied, and as a result, you're going to do fewer audits. Is that correct?

[Sylvain Ricard]

That's correct. Again, I referred earlier to the fact that the former auditor general signalled those things over the last few years, that we were going towards the point that we are at now. We're now there.

I don't know if Monsieur Hayes wants to add to that.

[Andrew Hayes]

Yes, I might add to that.

The former auditor general, Michael Ferguson, started to signal the pressures for resourcing in the first quarter of 2017-18, in the quarterly financial statements.

He said:

increasing audit and service costs from a funding base that is not increasing will require reductions in products or services, or both, in the near future.

In the summer of 2017, he made his initial budget request to the Minister of Finance. We worked through the government system and we received approximately $8 million in additional funding in budget 2018. That represented only a portion of what Mr. Ferguson asked for. He went back, sharpened his pencil and asked for $10.4 million for budget 2019 and we didn't get anything.

What that will mean.... We don't have the ability to reduce the mandatory work that we do, the financial audit work that we do, so the place where we have discretion in terms of the amount of work we do is our performance audit work. That is the work, of course, that this committee focuses on.

[David Christopherson, NDP, Hamilton Centre, ON]

The performance audits are meat and potatoes. That's what we do and that's the main accountability of government. This is the premier oversight committee of Parliament. The one thing in my opinion that we cannot stand, and I don't care who the government is, is cutting the Auditor General. That's what autocrats do when they want to deny accountability. I'm hoping that we take this very seriously and that whatever action we decide is by majority, unanimous vote, to send a clear signal that regardless of whether we're a government member or not, when we walk into this room we are different and we are oversight. We have a responsibility to our colleagues and, to me, this is about as big as it gets.

This is right in there with the department saying, “No, we're not giving you information. We refuse.” Oh yeah? Well, we have legislation that says you can't refuse, but the funding is our responsibility collectively and this is not acceptable. I would hope that we would begin turning the wheels necessary to undo this, because just to be political for a moment, this government already has a bit of a deficiency on the democratic front. Here is yet one more knock against the professed belief and adherence to democracy and democratic values.

Chair, I am beside myself. This is not acceptable. I'm not going to raise any other issues because to me.... I have a couple of questions, but they pale in comparison to the question of whether....

Some of us do this work internationally. You've travelled internationally. Vice-Chair Mendès has travelled internationally. This is the kind of stuff where we say, ”Holy smokes, are you kidding me? Is that how your accountability system works?” Then we're so thankful that we live in Canada where that kind of thing doesn't happen. Well, this is exactly that and it's not acceptable that any government cuts the money of the Auditor General, which is the main accountability of government in this Parliament, period, full stop. I can only hope, Chair, that colleagues are in agreement and that we agree on a course of action, whatever that is, to send a signal to the government that this is not acceptable from an oversight point of view.

I'm good.

[The Chair, Conservative, Kevin Sorenson]

Thank you. I didn't hear a question there. I just see a lot of smiling faces from the Auditor General's office.

Now we'll go back to Mr. Sarai, please. You have seven minutes.

[Randeep Sarai, Liberal, Surrey Centre, BC]

It's actually Ms. Yip.

[The Chair, Conservative, Kevin Sorenson]

Ms. Yip.

[Jean Yip, Liberal, Scarborough—Agincourt, ON]

With the budget increase, I'm just wondering. Aside from most of the funds going towards the staff pension, what were the remaining amounts attributed to?

[Sylvain Ricard]

Do you mean the portion of the funding we received?

[Jean Yip, Liberal, Scarborough—Agincourt, ON]

Yes, I mean the increases due to contributions to employee benefit plans. That's almost $1 million, but there's some that is not.... I don't want to say not accounted for, but I want further explanation of what the remainder is going to be attributed to. I think somewhere in the report it also mentions IT, but besides that, is there anything else?

[Sylvain Ricard]

What I have as a note here, and hopefully we're talking about the same thing, is that there's also an amount for the economic increase that was decided for all of the government staff at the centre, which we've also applied in the office. The economic increase was for the salary levels of staff.

[Jean Yip, Liberal, Scarborough—Agincourt, ON]

Following what Mr. Christopherson said, if there is an increase in the budget and so forth, what are some of the reports that you would bring back, or is that not even possible with the increase?

[Andrew Hayes]

Thank you.

At this point, we are in our planning process for the 2020 fall report right now. We have had to plan for fall 2019 and spring 2020 based on the funding we have already in place. We worked through the government process, worked with the Minister of Finance and with the Treasury Board.

We received the funding that we got in budget 2018 in October of 2018. We have started to try spending that money by hiring staff, by putting contracts in place that we need to work through the next year, but at this point in time, if we receive additional funding we expect it would probably be coming in budget 2020, in which case we will have to wait until the government process for allocating those funds is complete.

What Auditor General Michael Ferguson asked for was a budget funding mechanism for the Office of the Auditor General. He would have extended it to other agents of Parliament—in fact, he wrote that to the Minister of Finance—whose work is linked directly to the work we do. In the case of the Auditor General, that could be to overall government program expenditures. Without the funding in our hands, however, we can't plan for audits that we would like to do.

[Jean Yip, Liberal, Scarborough—Agincourt, ON]

What are some of the office“s revenue-generating activities?

[Sylvain Ricard]

If we want to call it “revenue-generating”—I'd more define it as cost recovery, because we're not trying to make a profit on it, obviously—we're doing some international audits, for example, UNESCO. We used to do the ILO, the International Labour Organization, and right now we're doing Interpol. For the costs we incur in those audits, we get payments to recover them.

[Jean Yip, Liberal, Scarborough—Agincourt, ON]

Are there any thoughts of generating more income by doing some educational workshops to other organizations?

[Sylvain Ricard]

I'll turn to my colleague here, a lawyer, but we don't have the authority to do business just to generate revenue.

[Jean Yip, Liberal, Scarborough—Agincourt, ON]

Okay. It's mentioned that the OAG will replace the human resource management systems and replace the audit management software. I'm wondering what safeguards have been implemented to make sure that the experience of Phoenix isn't repeated in your area, for both the human resource support system and the audit software.

[Sylvain Ricard]

Thank you for this opportunity. I'm saying “opportunity”, because it will allow me to refer again to the former auditor general. As you can imagine, having gone through the Phoenix audit, from which the message that was conveyed as a result of the audit was of the necessity for people at all levels to speak up and say it the way it is, Mr. Ferguson was very clear within the office about the expectation for people to speak up.

When we started the IT project, we got people into a room, including the Auditor General for part of it, and the message conveyed was to call it red when it's red—“red” meaning green, yellow, red, those dashboard-type things—meaning that if there's an issue, everybody, at all levels, calls it the way it is. This helped to make sure that the whole process would play out in a smooth, structured way, having all the flags come up in a timely manner and ensuring a minimization of the risk that comes with any IT project.

[The Chair, Conservative, Kevin Sorenson]

Thank you, Ms. Yip.

We'll now move to Mr. Davidson, please.

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

Is this the second round?

[The Chair, Conservative, Kevin Sorenson]

This is the second round, so you have five minutes.

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

Thank you, Mr. Chair.

Thank you all. Good morning. I want to thank your office for all the hard work you do for Canadians and your employees.

I have a couple of questions. The financial report issued by your office in March indicated that there were insufficient funds available and a capacity shortage to perform all the functions expected and that five planned audits were cancelled.

On what basis were the performance audits cancelled, and has the reality of these financial challenges changed since the report was published?

[Sylvain Ricard]

May I ask Mr. Bergin to answer?