Public Accounts Committee on Oct. 26th, 2017

[The Chair, Conservative, Kevin Sorenson]

Good morning, everyone.

This is meeting number 74 of the Standing Committee on Public Accounts, and it's Thursday, October 26, 2017.

Everyone, I'd like to ask you to please adjust your communication devices. We are televised today, and we would prefer not being technically disturbed, especially by the electronics.

In our first hour today, we will be considering the Special Examination Report, Canadian Museum of Nature, from the Spring 2017 Reports of the Auditor General of Canada.

As witnesses, we have from the Office of the Auditor General, Michael Ferguson, Auditor General of Canada, and Etienne Matte, principal.

From the Canadian Museum of Nature, we have Margaret Beckel, president and chief executive officer. We also have Stephen Henley, chair, board of trustees, and Charles Bloom, vice-president, corporate services.

I'll just let committee members know that because there will be votes in the second hour, this may be 10 or 15 minutes shorter. As I went through the Auditor General's report, it looked pretty favourable, not that it is perfect.

We'll go to Mr. Ferguson first for a report from our Auditor General.

[Michael Ferguson, Auditor General of Canada, Office of the Auditor General]

Thank you.

Thank you, Mr. Chair, for this opportunity to discuss our special examination of the Canadian Museum of Nature.

As you know, a special examination seeks to determine whether a crown corporation's systems and practices provide reasonable assurance that its assets are safeguarded and controlled, its resources are managed economically and efficiently, and its operations are carried out effectively.

Our examination covered the period between July 2015 and April 2016.

Overall, we found that the Canadian Museum of Nature had in place good corporate management practices for strategic and operational planning and for performance measurement and reporting. However, we identified room for improvement in other areas. In particular, we found that the board of trustees didn't receive the information it needed to monitor compliance with laws, regulations, and key corporate policies, and to monitor the implementation of risk mitigation strategies. We also found that the corporation's efforts to ensure the timely renewal of board appointments were not successful, something that was beyond the corporation's control.

Our examination identified that the corporation had good systems and practices to manage its operations, most notably its research projects. However, it didn't establish a plan including priorities and achievable milestones to identify and digitize specimens in its collections. This finding is important because the full scientific value of specimens can only be realized if they are identified, and the digitization of collections requires a long-term effort. Furthermore, the corporation didn't have a conservation plan for its collections and didn't fully document its preservation practices and activities. As a result, it had to depend on the knowledge of staff members to ensure that conservation needs were met.

We also found insufficient project management practices for the replacement of two information systems supporting the corporation's operations: the admission system and the collections management system. These projects had undefined timelines, escalating cost estimates, lack of documentation, and limited information for senior management. This finding matters because sound project management practices ensure timely system replacement, within set budgets and with the expected benefits.

The corporation agreed with all of our recommendations and prepared an action plan in response to our concerns. However, because our audit work was completed in April 2016, I cannot comment on any actions that the corporation has taken since then.

Mr. Chair, this concludes my opening remarks. We'd be pleased to answer any questions the committee may have.

Thank you.

[The Chair, Conservative, Kevin Sorenson]

Thank you very much, Mr. Ferguson, again.

We'll now turn to Mr. Henley, please.

[Stephen Henley, Chair, Board of Trustees, Canadian Museum of Nature]

Good morning, Mr. Chairman and members of the committee.

I am Mr. Stephen Henley, chairman of the board of trustees of the Canadian Museum of Nature. I'm joined today by Meg Beckel, president and CEO of the museum, and Charles Bloom, vice-president, corporate services.

At the outset, I would like to assure the committee that I and the entire board take the recommendations of the special examination seriously and have monitored and will be monitoring management's execution of its action plan.

I'll speak briefly about the museum and then hand it over to Meg, who will speak to the action plans from the recommendations.

We are Canada's national museum of natural history and natural sciences, one of six national museum not-for-profit corporations. Our museum dates back 160 years to the Geological Survey of Canada. The doors of the current museum building originally opened in 1912. A $230-million renovation was completed in 2010, resulting in what now is a state-of-the-art museum building of international first rank.

We receive more than half a million visitors per year, and we and other national museums are the leading tourist attractions in the national capital. Like the other museums, we provide an education-based offering within the entertainment and leisure sector. But perhaps unlike the other museums, at the heart is scientific research. We are a national leader in research and have a strong international presence, representing Canada in many scientific bodies.

The government-funded scientists and experts at our research facility in Gatineau, Quebec, maintain and provide access to a scientific collection of 14.6 million specimens that tell the story of Canada's natural heritage and history. These cover all aspects of the natural world: botany, zoology, mineralogy, and palaeontology.

I will now hand it over to president and CEO Meg Beckel to speak to the business operations and the special examination.

[Margaret Beckel, President and Chief Executive Officer, Canadian Museum of Nature]

Thank you, Stephen.

Good morning, Mr. Chair and honourable members.

The Canadian Museum of Nature is a $36-million business. As a not-for-profit crown corporation, the museum relies on government funding, commercial revenues, and donor and sponsorship support to cover operating costs and the required capital investment for our two buildings.

Government support for operating funding has been frozen for the last four years. Commercial revenue and donor/sponsor contributions have filled the gap created by rising costs, such that government funding has decreased from over 90% of operating funding to 75% today. We achieved this through dramatic increases in museum attendance, driven by an aggressive redefinition of our value and of our business processes.

The museum welcomed and worked closely with the special examination team. For an enterprise of our size, the special examination represents a substantive investment in operational oversight that no business of our size outside of government purview could ever afford, so we see it as an extraordinary benefit that we aim to maximize.

While the special examination report was overwhelmingly positive, it did indeed note the need for improvement in the areas of governance, IT security policy, and project management.

The Auditor General recommended that the museum have a more formal project management practice when replacing systems related to operations. The museum agrees. We reviewed our existing project management approach to ensure that our practices are both cost-effective and appropriate relative to the nature, complexity, risk, and cost of a project. I'm pleased to report that we also introduced an updated approach to documentation of project initiation at the executive management level.

The OAG also recommended a process be established to ensure the board of trustees enhances its monitoring of the corporation's compliance with policy, acts, and regulations. The corporation agrees. I'm pleased to report that at our February audit and finance committee meetings we now provide annual documentation assuring compliance. In addition, the operations update for board and management now more clearly references actions related to risks.

With respect to board governance, a new process for board selection was launched by the government in November 2016, which demands less of the museum than what was recommended by the special examination report. I'm pleased to report that the corporation has been in close communication with Canadian Heritage, and we look forward to an imminent conclusion of the appointment process.

Last, the OAG report recommended that our IT security policy requirements be met, including the testing of our business continuity plan and our IT disaster recovery plan. The corporation agrees. Last year we made significant investments upgrading our IT systems, which were key to adhering to our IT policy.

As planned, we completed the testing of both plans just this week. This has been verified by a third party, demonstrating we have effectively completed these important components of our IT strategy.

In addition, we continue to undertake museum-wide training on security awareness, specifically focusing on phishing and ransomware.

Thank you for the opportunity to present to you today. We welcome any questions.

[The Chair, Conservative, Kevin Sorenson]

Thank you very much, Ms. Beckel.

We'll move into the first round of questioning, which is a seven-minute round.

Ms. Shanahan and Mr. Arya will split their seven minutes.

Ms. Shanahan, please.

[Brenda Shanahan, Liberal, Châteauguay—Lacolle, QC]

Thank you very much, Chair.

Thank you very much to everyone who is here this morning.

I'm one of the members who pushed that we would see you, and I'm so glad we have the time in our schedule to do so. As the public accounts committee, we have the opportunity to see agencies and departments from across the government, and every once in a while we like to see an agency that by and large has received a good Auditor General's report but also where there are some lessons to be learned. I think that's what we want to focus on here this morning.

From paragraph 4 of your remarks, Mr. Ferguson, you said that you “found that the corporation's efforts to ensure the timely renewal of board appointments were not successful, something that was beyond the corporation's control”. What did you mean by that?

[Michael Ferguson]

Mr. Chair, in the course of the audit, we identified that there was, I believe, one position vacant at the time we looked at the composition of the board. I believe six members of the board were still serving even though the term of their appointment had expired. They were still able to serve, but they didn't have a specified term anymore. That's something we see in a number of organizations. It's something that concerns us. We believe that board member vacancies should be filled. They should be filled by people with specific terms. All of those aspects of board appointments should be well understood and adhered to.

Obviously, the board of the museum can't do anything about the actual appointments, because the board doesn't control the appointments. They're Governor in Council appointments. We did identify that the museum had raised the issue, had identified the issue, but that there was nothing more they could do. Again, they aren't in control of the appointments.

[Brenda Shanahan, Liberal, Châteauguay—Lacolle, QC]

Thank you for that, Mr. Ferguson.

Clearly, that's a theme we've seen over the past two years. Empty board seats cannot lead to good governance. I think we're only fortunate that this has been addressed and that indeed, in the case of the Museum of Nature, enough corporate knowledge remained at the museum that you could continue with your good work.

That brings me to the whole challenge of our technology and how you were able to deal with that. It is a challenge. I get it. I can just imagine the number of specimens you have at the museum. Can you speak to us a little about what those initial challenges are and how you are addressing them?

That's for whoever is able to take that one.

[Margaret Beckel]

Sure. Is this with regard to the management of the collections system?

[Brenda Shanahan, Liberal, Châteauguay—Lacolle, QC]

Yes, particularly because we're talking about big bucks here when we're talking about scientific research projects and the leadership role that you have.

[Margaret Beckel]

Yes. That's a great question. Thank you.

We have been using a system for managing the data and housing the data with regard to our 14.6 million specimens collection.

[Brenda Shanahan, Liberal, Châteauguay—Lacolle, QC]

Could I just take a moment and ask you about the budget for the IT transformation? How much money are we talking about?

[Margaret Beckel]

For the system itself, the total budget was $300,000. It's a very modest budget for a system conversion. It was converting an existing database management system into a new database management system.

We're converting it over a number of years, so the cost is less than $100,000 per year during the run of the project. It's important that it's phased over time because of the drain on staff time. We're doing the project with the existing staff resources we have. For us, that was the best way to do it—they are the owners and the users of the data and of the system afterwards—rather than bringing in outsiders.

[Brenda Shanahan, Liberal, Châteauguay—Lacolle, QC]

Interesting. So how did you address training?

I think I'll toss it over to Mr. Arya. That's more his area of expertise.

[Chandra Arya, Liberal, Nepean, ON]

Thank you, Mr. Chair.

The Auditor General mentioned that the board of trustees did not receive the information needed to monitor compliance with the laws. From my past experience I know that many charitable organizations and not-for-profit organizations sometimes do not brief their boards of trustees adequately.

I know in your case they are most involved, for example, in managing the investments that are quite modest. However, under the Ontario Trustee Act, every single trustee is individually and personally responsible for any of the mismanagement that may take place. It's very important. I know you are running a good show. I did see in your report that you are managing these investments through the Ottawa Community Foundation, which you use at arm's length, but even then the trustees need to be updated and briefed on their responsibilities. I hope it is done by now.

My colleague already touched on my second question which is on the project management practices.

Irrespective of the modest size or the big size of a public project, it is important that there be timelines so there are no cost overruns. In your case, even a small cost overrun will make a significant dent in your budget.

[Margaret Beckel]

In terms of the first comment with regard to the board oversight, our finance and audit committee is chaired by Ron Colderoni, who I think Etienne would agree is very diligent about the role of the board of trustees in overseeing all financial matters of the institution. That was never put into question during the audit.

[Chandra Arya, Liberal, Nepean, ON]

No. Absolutely.

The point I was trying to make is not whether you are diligent or not, but that it is the duty of the corporations to give the trustees an update on the roles and responsibilities and to keep to them.

[Margaret Beckel]

Yes. What was absolutely fair is we were working on an inventory of regulations and acts that the Museum of Nature as a crown corporation needs to be compliant with, and so we did come up with an inventory from the Museums Act, to the Financial Administration Act, to the Species at Risk Act, to the Plant Protection Act, and the Pest Control Products Act.

We have a unique set of acts and regulations that as a natural history museum we need to ensure the board that we are compliant with. Although management does the review, we're now sharing that regularly with the board so the board is assured we are indeed compliant with some of these unique acts and regulations that are unique to us as a corporation.

With regard to the oversight on the IT project, most of the changes in the scope and the cost of our system investments were through management choice. We were making specific decisions and choices about the components that we wanted to bolt onto the system we selected. In one case, it was actually the choice of provider.

After going out to tender, we discovered a provider that we had never heard of before, and it was one that would be ideally suited to meeting the needs of the institution, but it did cost more. Once again, the change in budget was a management choice based on meeting the needs of the institution and based on the resources available.

[The Chair, Conservative, Kevin Sorenson]

Thank you very much, Ms. Beckel.

We'll now move to Monsieur Deltell.

Monsieur Deltell, welcome.

You have seven minutes.

[Gérard Deltell, Conservative, Louis-Saint-Laurent, QC]

Thank you very much, Mr. Chair. I want to commend you on your French skills; you should be proud.

Hello, everybody. It's good to see you this morning and welcome to your House of Commons.

First of all, Mr. Ferguson, and Mr. Henley, this is a good report. It's very interesting, and a good answer to each and every point that is raised in this report.

I have two or three concerns.

In honour of Mr. Sorenson, I'm going to switch to French now.

I'd like to focus first on the recommendation in paragraph 25, which deals with vacancies on the board of trustees.

I'd like to know whether not having the required number of trustees, or the total number you would like to have, makes it very difficult for you to operate. Do you experience operational delays when you don't have enough people on the board, versus when all the positions are filled?

[Stephen Henley]

Your question is quite timely and very appropriate.

The board of trustees is appointed on a regional basis to represent districts in Canada from coast to coast. It's acknowledged that the board of trustees requires various skill sets such as law, marketing, IT, governance, nominations, and so forth. The current board has trustees who are on their third term and many who are on their second term, and a number regions in the country are not represented. This has been the case since my appointment four and a half years ago.

When you have a core of trustees who are carrying a heavier load, it impacts the ability to drive down as far as the board might want to. We have a core of individuals who sit on the governance nominating committee, a core of individuals who sit on finance, and then we have the same core at the board carrying the weight again. I think we've done these people an injustice, a serious injustice, by continuing to rely on them and their good nature and time to deliver what we need in governance at the institution.

It's really important that the right horsepower is put behind our crown corporations, our not-for-profits, and our museums. I've had over 30 years of not-for-profit experience. It's tough enough when you have a full team, but it's much harder when you don't. We have been working with one hand behind our back, if I could put it that way.

Therefore, I appreciate very much your question, and we continue to hope.

Museums don't seem to have a great importance in this country. That's why the dialogue around the museum was on changing it to natural science. Science seems to have more of a dialogue now, and that's what the museum is about. I do hope that this committee can extend some very positive messaging around that into the process, because I'm sure it's affecting not only the Canadian Museum of Nature but also many of our crowns and organizations. This is unfortunate, and I'll just leave it at that.

[Gérard Deltell, Conservative, Louis-Saint-Laurent, QC]

Well, thank you so much, Mr. Henley, for saying that my question was good, but I also thank you so much for your answer. Your answer was better than my question.

Now let's move on to information technology.

The report lists certain challenges related to the website, which doesn't have all the content it should. Allow me to explain.

I may not look like it, but I'm a historian by training. I adore history. I often say that, when I was in school, we didn't have the Internet or Google. Back then, it took entire days to find the information that is now available after a three- or four-minute Google search. That's great.

In light of that, however, it's essential that our museums be as connected as possible and that their content be as easy to access as possible. That will give young inquiring minds the desire to learn and visit the museum afterwards.

What is your strategy to ensure you post as much content on the website and Internet as possible and make that content as easy to access as possible?

[Margaret Beckel]

Our website is an absolutely critical communication tool, as you say, not only for disseminating knowledge, but also for holding the data on our collection, sharing it not only with young people and the general public, but also with researchers and government public policy-makers around the world. It's also an important marketing tool.

Our website is currently going through a complete and total review process. This was something that was already under way when the special examination was done, and it certainly validated the need for us to do a complete refresh of what we call our content management system, which is what drives and hosts our website.

We have brought in expert advice in content management systems. These experts are looking at what we currently have, what our needs are, and what the needs of our users and stakeholders are. They'll make a recommendation on what kind of content management system would be in the best interests of the museum, and then we will go out to market to procure a new system. Then, we'll go through a training and implementation process.

We currently use Drupal, which is one of the many content management systems that host websites. We're on Drupal 6. I think the market is already on to Drupal 8, so we are behind.

Like all museums, we're very good at eking out every last morsel of usefulness of whatever it is we invest in. I think we've had this one long enough, so the process is well under way.

[The Chair, Conservative, Kevin Sorenson]

Thank you, Mr. Deltell.

Mr. Christopherson, you have seven minutes.