Public Accounts Committee on April 5th, 2017

[Alexandra Mendes, Liberal, Brossard—Saint-Lambert, QC]

This is why I'm putting it out there to consider for next year's planning. If the committee really does decide to go this way, we can count on your collaboration to proceed, and I imagine your human resources department will have to look at the whole planning of it.

Thank you very much.

[The Chair, Conservative, Kevin Sorenson]

Thank you, Ms. Mendès.

We'll move to Mr. Weir again, please.

[Erin Weir, NDP, Regina—Lewvan, SK]

Regarding your studies on the Phoenix pay system, I'm wondering if either or both of the reports will include a tally of the costs for fixing Phoenix.

[Michael Ferguson]

At this point I can't say what will end up in the report so I can't comment. We're still in the process of working our way through it. I haven't seen any preliminary findings.

[Erin Weir, NDP, Regina—Lewvan, SK]

Okay, I'll rephrase it as a comment rather than a question. That would be quite a valuable thing to produce because, of course, in the last budget we didn't see any numbers about the cost of Phoenix. We have an estimate from the government on the cost of the temporary pay centres but we haven't seen any figures on the cost of compensating employees who incurred penalties or interest charges because they were not paid on time. Some sort of overall accounting of what the boondoggle has cost would certainly be of great interest to parliamentarians and to Canadians.

[Michael Ferguson]

Again, I can take this suggestion of understanding the cost of the system back and see what we are planning on doing in terms of the audits that we have under way.

[Erin Weir, NDP, Regina—Lewvan, SK]

I appreciate that.

To go back to your 2015-16 performance report, it noted that several audits were delayed by issues with client readiness. Could you elaborate on what that means, and what problems it created for your office?

[Michael Ferguson]

That probably refers to a number of the audits that we do in the northern territories. Remember that we don't just do audits for the House of Commons. We also are the Auditor General for each of the three northern territories. We report directly to the legislatures of the three territories. We do audits of crown corporations of those territories. In some cases, they struggle with capacity issues, and that can put us behind schedule.

I know we had a special examination planned of Atomic Energy Canada Limited in this time frame, but because it was undergoing a change in its model and how it delivered services, it made sense for us to put that special examination off a little bit. That would have been an example in the federal government realm where it wasn't ready for the special examination, but that was because it was going through a significant change in its structure and model, as opposed to the types of issues we come across in the territories where sometimes they just have capacity issues that can put us behind schedule.

[Erin Weir, NDP, Regina—Lewvan, SK]

Are there any issues relating to client readiness that you think we could make some recommendations to deal with, or is it really just an underlying lack of capacity in the territories?

[Michael Ferguson]

There was one issue, in particular, that I forgot in my first answer. It would be important for this committee or others to work on or help with, and we've raised it before, the audit of the Canadian Forces reserve force pension plan. We've tried to go in and do an audit of that pension plan a few times, but the information isn't in good enough shape for us to be able to produce an audit opinion on the reserve force pension plan. That situation has been going on for a number of years. The Department of National Defence has been before this committee before to talk about that issue.

That is perhaps the one that concerns me the most, because it's a long-standing issue. It's not caused by a one-time event. It's an issue that the Department of National Defence needs to resolve.

[Erin Weir, NDP, Regina—Lewvan, SK]

Thank you.

[The Chair, Conservative, Kevin Sorenson]

Thank you, Mr. Weir. I would like to ask one question.

In part of your report, you talked about cost recovery from international audits. We've heard that representatives from Australia are involved in doing some of the audits with your department. How many of these international audits would you do?

You also audit for the Canadian Council of Legislative Auditors, and we get paid for that. I guess you contract with these guys, and then they pay...who? Is it the Government of Canada? Does it go into general revenue? You go on to say:

Cost recoveries related to International Audits and to CCOLA become available for use when funds are received. Other refunds and adjustments are considered to be earned on behalf of the Government of Canada and are not available to discharge the Office’s obligations. As a result, these recoveries are deducted as costs recovered not available for use.

Can you explain that? Is there a problem there? Is there a remedy to the problem, or is this typically the way that it has always been done and the way it's done everywhere?

[Michael Ferguson]

In terms of the international work, until recently we were the auditors for the International Labour Organization, which is a UN organization. We had a mandate to do their financial statement audit every year and to do a little bit of performance audit work. The International Labour Organization paid us for the work that we did.

[The Chair, Conservative, Kevin Sorenson]

By “us”, you mean whom?

[Michael Ferguson]

That's “us” as the Office of the Auditor General. The money went back into our budget. Doing the audit of the International Labour Organization essentially didn't affect our budget.

Our mandate for that audit has now terminated, but we have recently started up a mandate as the auditor of Interpol, doing the audit of their financial statements. Again, they are paying the Office of the Auditor General of Canada for that. That money, again, will go into our budget and it doesn't have an effect on our budget.

We feel that we should be involved in those types of international audits as a regular part of our business, particularly in terms of the UN organizations. Interpol is not a UN organization. At all times, we try to make sure that we are involved with at least one UN organization, whenever UN organizations put out a request for proposals on audits, but again on a cost-recovery basis. That's something we try to pursue in a way that whatever we charge those organizations gets paid to us. Essentially it becomes revenue to us for the work that we do.

Just so that the committee is aware, in addition to that, we do other international work. We participate in various committees that look at audit issues that all legislative audit offices around the world are dealing with.

We work through a program funded by Global Affairs Canada and managed by the CCAF whereby we bring performance auditors from other countries over to work with our performance auditors. In fact, sometimes they will come over and be housed or they will work with a provincial auditor general office, but we always have two to four members within our office who come from audit offices of other countries, usually African countries such as Tanzania, Ghana, and Cameroon, but also Vietnam. They will come over and work with us for nine months. Those auditors then go back and take with them what they have learned to help the performance audit practices in their countries. That's another piece of work we do on the international front, through a program funded by Global Affairs Canada.

In terms of CCOLA, that's the community of all legislative audit offices across Canada, being the provincial auditor general offices and ourselves. On that front, we run a secretariat for that group, which keeps everything organized for us as a committee. We do have an agreement with provincial audit offices, because some of them don't have a lot of capacity. For example, the Office of the Auditor General of Prince Edward Island has maybe 17 to 20 people, so we help them through methodology or other advice, or legal support, that type of thing. We have agreements with the other legislative audit offices. They will pay us for that, which again is money that will go into our budget.

Beyond those things, though, there might be other small items that we end up charging for that just go back into the consolidated revenue fund and don't come into our office's budget.

[The Chair, Conservative, Kevin Sorenson]

Is there much of that? Are we speaking of hundred of thousands of dollars, or how much?

[Michael Ferguson]

In terms of costs recovered in 2016, on international audits, we recovered about $1.3 million. In regard to other costs recovered, part of that would have been the CCOLA. However, $178,000 would have been costs that were recovered but weren't available for our use. That's in the set of financial statements.

[The Chair, Conservative, Kevin Sorenson]

Thank you very much. I don't see any other questions that are ready to be posed, so I want to thank you for coming.

We also have to go through a couple of votes in regard to the amount granted in interim supply, so I will, right now, without suspending, move to the question. Shall vote 1, less the amount of $17,067,274.75 granted in interim supply, carry—

Go ahead. I should have called on you to explain.

[The Clerk of the Committee, Mr. Michel Marcotte]

Technically, the vote for the Office of the Auditor General this year, as in the main estimates, is $68,269,099, but the House approved interim supply a couple of weeks ago. You cannot vote on that.

Technically, you can approve the $68 million minus the $17 million and a few pennies.

[Alexandra Mendes, Liberal, Brossard—Saint-Lambert, QC]

It's $51 million and something. Okay, perfect. We get it.

[The Chair, Conservative, Kevin Sorenson]

I'm not sure if that's as clear as you'd like it, but—

[Alexandra Mendes, Liberal, Brossard—Saint-Lambert, QC]

It's very clear.

[Phil McColeman, Conservative, Brantford—Brant, ON]

That was catching us by surprise.

[The Chair, Conservative, Kevin Sorenson]

This always happens after we deal with the main estimates, if interim supply has already been voted on allowing some funds to be made available. Now we go back less the amount of interim supply.

OFFICE OF THE AUDITOR GENERAL

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

(Vote 1 agreed to)

Shall the chair report vote 1 under the Office of the Auditor General to the House?

[Some hon. members]

Agreed.