Public Accounts Committee on Oct. 17th, 2017

[The Chair, Conservative, Kevin Sorenson]

Yes.

Thank you.

[Bill Matthews]

Mr. Chair, can I...?

[The Chair, Conservative, Kevin Sorenson]

Oh, I'm sorry, Mr. Matthews. Go ahead.

[Bill Matthews]

Regarding the lapse in the National Research Council, just to break it down a bit, it is a split between capital and grants and contributions dollars. So it's not just one thing; there are two things happening there. From my memory, the National Research Council is not what I would call a serial lapser, where you have huge lapses year after year. It would be a good question to ask what was different about this year, and we will do a follow-up.

There are other departments that are on the serial lapsing list, for example, Infrastructure, and we can explain why that is, but this sounds a bit unique.

[The Chair, Conservative, Kevin Sorenson]

Thank you, Mr. Matthews.

I think Mr. Massé, as far as I know, has the final question of the day.

Mr. Massé, please.

[Rémi Massé, Liberal, Avignon—La Mitis—Matane—Matapédia, QC]

Thank you, Mr. Chair.

Mr. Ferguson, your Commentary on the 2015-16 Financial Audits drew my attention.

On page 7, under “Crown corporations have limited financial visibility”, you say the following: “Crown corporations' financial visibility is limited within the Public Accounts of Canada, yet they account for a significant portion of government activity.”

I won't read everything, but you provide two examples further down in the document:

For example, both Ridley Terminals Inc. and the Royal Canadian Mint reported in their December 2015 financial statements unusual losses in connection with certain capital assets totalling, on a combined basis, $165 million. Those losses resulted from adverse circumstances that led to a reduction in the ability of certain capital assets...

In the next paragraph, the following is stated: “These losses were significant for the Crown corporations involved: they represented one third of the net value of Ridley Terminals Inc.'s capital assets, and one quarter of the Royal Canadian Mint's.”

Once again, you say that, “they were not visible in the Public Accounts of Canada”.

What do we have to do to ensure that those losses and the agencies' relevant information are made public? Should we be concerned about this?

[Michael Ferguson]

All the information on those organizations' financial statements is public. However, it is important to understand that not all information is solely in the Government of Canada's financial statements. There is a lot of other information on those organizations.

Mr. Matthews mentioned various crown corporations.

Their results are included in the financial results of the federal government, but they are included at a very summary level, so you don't always see the details like the fact that these two organizations in that particular year had some unusual transactions.

In order to again get behind the details of what's going on, sometimes you have to look at the financial statements of the organizations themselves.

[Rémi Massé, Liberal, Avignon—La Mitis—Matane—Matapédia, QC]

Thank you.

Is there any information on what led to those losses? Why were they called unusual losses?

Is there a mechanism that could encourage those organizations to ensure that this kind of information can be included in the Public Accounts of Canada?

[Michael Ferguson]

I will ask Ms. Hogan to answer you.

[Karen Hogan]

Crown corporations' losses have to do with the fact that they could not generate asset-related revenue.

Tangible capital assets are supposed to generate future cash flows. In this instance, they felt there was a downturn in certain business lines in the crown corporations. For example, in the Royal Canadian Mint, they felt they couldn't realize all the future cash flows they thought they should from those capital assets. The international financial reporting centres allow you to take a loss on those assets, so that you better reflect your future ability to use those assets.

Losses are included in the Public Accounts of Canada. In the case we are talking about, it's just the way the financial statements of crown corporations were consolidated. The losses of those two crown corporations were grouped into a single line. Losses on assets are not visible, but they are included in the government's results.

[Rémi Massé, Liberal, Avignon—La Mitis—Matane—Matapédia, QC]

Could something be done to improve the presentation of that information and provide more details? Is there a mechanism that would help do that?

[Karen Hogan]

Accounting standards are followed. That's exactly how the results should be presented. As we mentioned, in the analysis of the senior management's discussion, more details could be provided on assets at the beginning of financial statements.

[Rémi Massé, Liberal, Avignon—La Mitis—Matane—Matapédia, QC]

Okay, I understand. Thank you.

Thank you, Mr. Chair.

[The Chair, Conservative, Kevin Sorenson]

Thank you, committee, for your good questions. Thank you to our guests who appeared today for answering our questions.

In the course of this meeting a number of you have said that you would take the question, and you would get back to us. Let me encourage you to do that, to get the information to our clerk.

If you also consider that a question was asked and maybe the clarity of the answer could have been better expressed, bearing in mind that we do a report on this meeting today and on the Public Accounts that have been published, please feel free to get back to our clerk, and to answer those questions with more clarity as well.

We thank you for being here, and for your part in holding governments to account and the transparency aspect, so all Canadians can understand, first of all, that there are those who are keeping it transparent and accountable.

We thank you for your presence today.

The meeting is adjourned.