Public Accounts Committee on April 5th, 2017

[James Maloney, Liberal, Etobicoke—Lakeshore, ON]

I just want to pick up on the thread from earlier with respect to the parliamentary committees. You said it had increased from 44% to 55%, with a target of 65%. I'm just curious as to whether there are any trends as to which committees tend to do this more than others.

[Michael Ferguson]

Certainly, it's this committee, the public accounts committee, where we have the majority of our reports as the subject of a hearing. In terms of that increase, I think most of that increase has also been that this committee has been more engaged in more of our audits.

[James Maloney, Liberal, Etobicoke—Lakeshore, ON]

Thank you.

For my next question, I'm looking at your 2017-18 departmental plan. Two of the three priorities that you indicate you'll be focusing on relate to your department. The Office of the Auditor General is an arm's-length independent body, is it not?

[Michael Ferguson]

I guess it depends.... Certainly we are independent, and we conduct all of our work in an independent, objective, and non-partisan manner.

[James Maloney, Liberal, Etobicoke—Lakeshore, ON]

Okay. The second item you referred to was “to maximize the value and impact of our audit work”, and then the third item was “to improve the governance and management of our Office”. Maybe I'm misunderstanding this, but are you in effect auditing yourselves? Is that what you're going to be doing?

[Michael Ferguson]

I guess by definition one can't do that, but certainly—

[James Maloney, Liberal, Etobicoke—Lakeshore, ON]

That's what I thought too.

[Michael Ferguson]

Certainly it's part of our quality control, so what we are doing is saying, for example, that we want to identify all of the different rules and policies that we are supposed to comply with, and then we are doing a self-assessment of whether we believe we are complying with all of those rules. It is very much an internal assessment of our governance and oversight practices.

[James Maloney, Liberal, Etobicoke—Lakeshore, ON]

Will these two reviews take the form of an actual audit, which will generate a report that is then going to be reviewed, presumably by this committee?

[Michael Ferguson]

Only when it becomes part of our performance report and we come back and we say what we have done on these things, but all of these are sort of how we do our work. They're not the end product of our work.

For example, for the selection of audits that have significant impact and value, what we are saying is that we need to put more emphasis on how we add value and when our reports are bringing value to Parliament. That's more a matter of us trying to understand what is the value of our reports and trying to put more emphasis on audits with more value. It's not producing a report of any kind in that type of situation.

In terms of something like “effective, efficient, and accountable Office governance”, yes, we have projects under way. For example, I just mentioned a compliance project to make sure we're complying with what we are supposed to. That will result in a document. It won't result in a report, but it will result in an inventory of all of the different things we're supposed to comply with, whether we believe we're complying, and how we know whether we're complying and that type of thing. It's an internal management tool that we weren't planning on presenting to this committee. It would be a lot of detail.

[James Maloney, Liberal, Etobicoke—Lakeshore, ON]

Okay. The outcomes of these two priorities, then, are purely internal. It doesn't come to this committee or go to any other body?

[Michael Ferguson]

What we expect and hope is that by us putting the emphasis on how we do things, it will allow us to produce better audits and better audit reports, which will then bring more value to the committee and to Parliament. What we are hoping is that as the end result of this, while you won't see any reports specifically about this, hopefully over time it will allow us to keep improving the reports that you do see from us.

[James Maloney, Liberal, Etobicoke—Lakeshore, ON]

Okay. The answer to my question, then, is no. This is a “for your eyes only” outcome. Is that right?

[Michael Ferguson]

I wouldn't quite put it that way. If the committee is interested in seeing what we do here, we would be more than happy to bring it forward.

Again, in terms of something like the compliance project, it will be a long inventory list of all the different instruments that we think we're supposed to be complying with, whether we believe we are complying, how we know we're complying, and what we need to do if we feel that we're not doing what we're supposed to be doing. If the committee is interested in going through all of that detail, I wouldn't have a concern with that.

[James Maloney, Liberal, Etobicoke—Lakeshore, ON]

Is this self-audit or self-review process a standard operating procedure? Is this something that the office does periodically every few years?

[Michael Ferguson]

It's something that we started up a couple of years ago. We're still working our way through it. I think I would say that we decided to do it because we hadn't done it in a number of years.

[James Maloney, Liberal, Etobicoke—Lakeshore, ON]

All right. Those are my questions. Thank you.

[The Chair, Conservative, Kevin Sorenson]

Thank you very much, Mr. Maloney.

We'll now move to the second round. We'll go to Mr. Jeneroux, please, for five minutes.

[Matt Jeneroux, Conservative, Edmonton Riverbend, AB]

Thank you.

Thank you, Ron, Michael, Sylvain, and Susan for being here today and for being patient with the votes.

I just have a couple of questions for you from my end.

Under the special examinations of crown corporations—correct me if I'm wrong—you audit every department every year, but for crown corporations, is it selective? How is that determined? Is that by you? For example, I understand you're auditing CMHC this year. Is that because there has been significant public attention due to mortgage rules that have been changed? How is that process done?

[Michael Ferguson]

In terms of our financial audits, we do the audit of the financial statements of the federal government every year, so that will take us into some departments every year but not all departments.

We also do audits of financial statements of most crown corporations, so again, that will take us into those crown corporations every year to audit their financial statements. We audit the financial statements of CMHC every year, for example.

Under the Financial Administration Act, we have a mandate to do special examinations of crown corporations. That mandate tells us that we have to do a special examination of every crown corporation once every 10 years. We put together a schedule over a 10-year period to make sure that we get in and we do that special examination of each of those crown corporations at least once in that 10-year period.

For example, for something like CMHC, it's just that their time in that schedule is coming around for us to do that special examination, but as I said, we'll be in there every year to do the audit of their financial statements.

[Matt Jeneroux, Conservative, Edmonton Riverbend, AB]

Is there ever a time that you would do a special examination outside of the 10-year schedule?

[Michael Ferguson]

We could because, under the Financial Administration Act, it just sets a minimum that indicates that we have to do every crown corporation at least once every 10 years. If we had a particular concern about a crown corporation—if we issued a special examination that had a number of significant deficiencies—we might decide to go back in and do another one before the 10-year cycle came up again.

Generally, that doesn't happen. Generally, we just try to get into each of the crown corporations once every 10 years.

[Matt Jeneroux, Conservative, Edmonton Riverbend, AB]

My second question is based on the performance indicators. We often see a number of departments come before us and they haven't met their performance indicators. You have a number of performance indicators. Can you provide an explanation of how you determine your performance indicators and then also how you quantify that they have been met?

I turn to an example on page 9. You identified a target of 80% as your performance indicator of the “percentage of senior managers in the organizations we audit who find that we are independent, objective, and non-partisan”. That seems strange and it jumped out at me. Why only 80%? I would assume that target would be 100%, as opposed to 80%. I'm just curious about how you come up with your numbers.

[Michael Ferguson]

Overall, we have 11 strategic objectives.

We broke our organization down, looking at it in a number of ways, looking at our internal processes, looking at how we manage our people, looking at the product that we produce externally. We looked at our organization through a number of different lenses and came up with these 11 strategic objectives. Then, for each strategic objective we looked for indicators to help us understand whether we are achieving that objective or not. That's out of the whole list of performance indicators that we have in the reports.

In terms of the particular indicator that you talked about, in order to get the results of that, we do a survey at the end of every audit, of the people we have audited. Setting those targets is a little difficult.

I would say that fundamentally we want everybody to believe and understand that we are approaching our work independently and objectively. I think that the probable reason that we set it lower than 100% was that sometimes some of the audits are difficult, and on occasion, I think departments will use the survey tool as their opportunity to express that they weren't necessarily happy with the way that the audit rolled out.

It may or may not be a real indication. It's probably more that they're expressing some concern about whether they felt we were objective, not about the independent or non-partisan side. Sometimes I think departments will wonder whether we were objective.

We do a lot of work to try to make sure that we are being objective, so getting their point of view is important for us to help improve on the audit, but I don't think we ever get too many questions about us being independent or non-partisan. I think it's more that sometimes departments feel that we haven't understood their point of view enough, even though we spend a lot of time trying to make sure we do.

[The Chair, Conservative, Kevin Sorenson]

Thank you, Mr. Jeneroux.

We'll now go to Ms. Shanahan, please, for five minutes.