Public Accounts Committee on May 19th, 2020

[The Chair, Conservative, Dean Allison]

I call this meeting to order. I want to welcome everyone to meeting number five of the House of Commons Standing Committee on Public Accounts. Pursuant to the order of reference of Monday, April 20, 2020, the committee is meeting to study the certificate of nomination of a permanent Auditor General of Canada, tabled in the House on Wednesday, May 13, 2020.

I remind you that all comments by members and the witness should be addressed through the chair. Before speaking, please wait until I recognize you by name. When you are ready to speak, you can either click on the microphone icon to activate your mike or you can hold down the space bar while you are speaking. I think you all know by know that when you release the bar your mike will mute itself, just like a walkie-talkie. It's preferable that you activate the microphone by clicking on the icon.

When speaking, please speak slowly and clearly. I'd also like to explain some guidelines regarding the interpretation channels to use during the video conference meeting. If you are speaking in English, please use the English channel. If you're speaking in French, please use the French channel. As you are speaking, if you plan to alternate from one language to the other, you will need to also switch the interpretation channel to the language you are speaking. You may also allow for a short pause when switching languages as I think that would be very helpful for the interpreters.

Before we get started, would everyone click on the screen in the top right-hand corner and ensure you're on gallery view. With this view, you'll be able to see in the grid everybody who is on the call, and you'll be able to see one another. I think most of you have probably already done that.

At the end of the meeting, we're going to take about 10 minutes to discuss the recommendation to the House.

I just want to mention, Ms. Hogan, that it's great to have you here today. This is probably a unique time in history. I believe you'd be the 13th permanent Auditor General in the country—now, that's according to Wikipedia, and I didn't get my analysts to verify that for me—and actually only the 16th person to sit in the role. This is a pretty significant meeting in terms of that, given the fact that we only see Auditors General come every 10 years.

This is a pretty significant meeting. I'm going to turn it over to you, Ms. Hogan. I want to welcome you. You will have your remarks, and then we'll have a chance to go around the room and ask some questions back and forth, just like we would in committee. We have until one o'clock. We'll move forward from here.

Welcome, Ms. Hogan. The floor is yours.

[Karen Hogan, Nominee for the Position of Auditor General of Canada, As an Individual]

Thank you very much, Mr. Chair. Good morning to you and to all the committee members.

I am very honoured to stand before you today as the nominee selected to become Canada’s next Auditor General.

The role of the Auditor General is integral to the accountability portion of our democratic system of government. The Auditor General provides Parliament and the three territorial legislatures with independent, objective, credible information, advice and assurance regarding the stewardship of public funds. In other words, elected officials can rely on the Auditor General to bring them independent information that they can draw from to ask public servants important questions about how the organizations they lead are spending public funds. Canadians across the country look to the Auditor General as the voice they can rely on to cut to the heart of matters.

Having appeared before this committee on a number of occasions, I am appreciative of its great work and would like to recognize its legacy. The fabric of the relationship between the Auditor General and the Standing Committee on Public Accounts speaks directly to the depth of accountability in our federal system. It is also built on trust and confidence. I believe these flow out of ethics, integrity and independence. These values are the anchor points of my own value system, in addition to being central to the work of the Auditor General’s office. If I am appointed Auditor General, I will strive to continue in the distinguished tradition that has been established by past auditors general and work to the best of my abilities to serve this committee in fulfilling its mandate.

I was born in Montreal, and that’s where I began my career. I have been a chartered professional accountant for more than 25 years. My career has been almost evenly split between the private and public sectors. Most significantly, I have been with the office of the Auditor General for 14 years. I joined the OAG when Sheila Fraser was sitting in the Auditor General’s chair. I want to especially acknowledge the work of the previous Auditor General, the late Michael Ferguson, and the stewardship of the current interim Auditor General, Sylvain Ricard, who honoured Mike’s legacy by guiding the OAG along the path he defined.

Mike Ferguson was a devoted public servant, who simply wanted the public service to do service well. I look at the incredible impact that he and Sheila Fraser had on the public service and the country. Both were outstanding, inspiring leaders, and I was fortunate to learn from each of them. They were leaders who did not fear change, but rather recognized its strength and necessity and therefore welcomed it. It is a fine tradition that extends over a century and a half for the office of the Auditor General of Canada. It is one that I eagerly hope to continue to shape and transform with my own leadership. I am humbled to think that I might be given the opportunity to serve my fellow Canadians as Auditor General of Canada. I commit to upholding the same standards and tradition of excellence set by these outstanding public servants.

I was attracted to the OAG because of its leaders, its people and its work. I firmly believe in the importance of the institution and in the value of its work. That work touches virtually every area of government programs, services and spending and, as a result, most if not all the groups that make up this great country of ours. In the past, our office has focused on issues that matter to parliamentarians and Canadians, whether economic, environmental or social. For example, we looked at Phoenix, defence spending and the economic action plan. Some concerns cut so deep that we audit them repeatedly, such as indigenous issues and climate change.

If I am appointed Auditor General, I would focus on issues of national importance that are facing us right now, such as the government's infrastructure investments and COVID-19 and also on issues of regional impact, such as fisheries and the oil and gas sector. The audits I would choose to do would focus on supporting the work of the public accounts committee and all MPs.

I led government-wide performance audits for several years before shifting mostly to financial audit work. For almost seven years, I was responsible for the overall audit of the consolidated financial statements of the Government of Canada. Leading the country’s largest financial audit allowed me to work closely with senior officials in Crown corporations, departments and agencies as we focused on sensitive and complex audit issues.

Having been fortunate through my career to experience the audit relationship both as the auditor and as the person responsible for preparing financial statements, I believe I was uniquely positioned to understand the challenges these entities faced. Though we did not always necessarily agree—for example on the government’s approach to estimating its long-term liabilities—I believe my analysis was fair and sound. Following several years of discussions with senior public servants, changes ultimately came that I believe enhance public transparency and accountability on pension obligations.

Having spent the last 14 years with the OAG, first as a director, then a principal and most recently as Assistant Auditor General, I have been and continue to be inspired by the people who work in our office. They are caring, creative, skilled, incredibly intelligent and professional, and always focused on upholding high standards while contributing to a well-managed and accountable government. It has been my privilege to work alongside these individuals and to have played a part in shaping the strategic direction of the office and leading organizational change. It would be an even greater honour to now have the opportunity to continue this work of guiding the organization to become an even better version of itself.

If I am appointed to the position of Auditor General, I will focus on achieving success in two key respects. As deputy head and accounting officer for the OAG, success to me will mean leading the organization of approximately 575 people with empathy and compassion, being concerned about their well-being, mental health and professional growth, while inspiring and empowering them to be dedicated to deliver on the mission and vision of the office. Success will also mean modernizing how the office does its work so it is positioned to keep pace with significant shifts in the auditing world and in the government landscape, such as digital transformation.

As Auditor General who supports Parliament, success to me will mean keeping the trust of Canadians, parliamentarians and the public servants whom we audit and supporting Parliament in being well informed and engaged so we can all work together for better outcomes and a better Canada.

Finally, I would like to take a moment to recognize the efforts of so many front-line workers and thank them for their dedication to Canadians during this global crisis.

I also want to recognize the work of countless public servants and their continued devotion to supporting the country through these trying times.

That concludes my opening remarks. I'd be very pleased to take any questions from the committee members about my candidacy.

[The Chair, Conservative, Dean Allison]

Thank you very much, Ms. Hogan.

We're now going to have our first round, which typically is six minutes. The lineup was sent to Angela ahead of time, so we have that.

We're going to start with Mr. Kelly for six minutes, then go to Mr. Blois, Mr. Blanchette-Joncas and Mr. Green, in that order. I'm going to time you on my trusty iPhone, and I'll break in as we get down to a minute just to let you know that your time is almost up. Of course, if you have an iPhone or any other phone and you want to time yourself, by all means you can do that as well.

Mr. Kelly, the floor is yours for six minutes.

[Pat Kelly, Conservative, Calgary Rocky Ridge, AB]

Before I begin my questions, I would like to once again recognize the legacy of Michael Ferguson and recall his enormous contribution to his office and his service to Canadians. His motto was “Do service well”, and our committee chose that as its motto for the legacy report that we prepared in the last Parliament.

I would like to thank Sylvain Ricard for his work as interim Auditor General for the past year and a half. He's done great work during his limited time in that role. It's difficult to be an interim office-holder, but he did so with courage and professionalism, and ensured that Michael Ferguson's legacy continued.

With that, congratulations to you, Ms. Hogan, on your nomination as Auditor General. You've been with the office for many years. You have served during the tenure of different governments, different Auditors General.

During this current time of crisis of funding for your office, what is your experience from your past service with different Auditors General under different governments? How does that inform you in how you're going to deal with the budget issue?

[Karen Hogan]

Obviously, having resource constraints puts a strain on our ability to deliver our mandate to the degree we would like. Individuals within our organization are so passionate and focused on delivering on that mandate and providing information to this committee and to all parliamentarians in order to hold the government to account.

One of the first things I will have to do is continue the work of Mr. Ferguson and Monsieur Ricard in the conversations in order to ensure that we have adequate funding, both in the short term and in the long term.

As you mentioned, for its legacy report, the previous public accounts committee studied our funding and made a recommendation. I fully agree that finding a long-term, sustainable, independent funding mechanism for our office is a great solution. I see this committee and Parliament playing a key oversight role in it as well. This would be one of my first priorities should I be appointed Auditor General.

[Pat Kelly, Conservative, Calgary Rocky Ridge, AB]

So your priority would be to ensure that there's an independent funding mechanism, just so we get away from the idea of an officer of Parliament having to go cap in hand to the very government that he or she is going to audit and ask for his or her budget.

How important are these performance audits? Right now, this committee will have very little to do if performance audits have to be suspended. I think that these reports are incredibly important to Canadians. How important are performance audits?

[Karen Hogan]

I completely agree with you that performance audits are a key tool for this committee in order to deliver on its mandate and hold government to account for the use of public funds.

Prior to the pandemic, our office was prepared to table three performance audit reports, so we do have some that are ready to go. There were three Auditor General reports and the reserve report from the interim commissioner of the environment and sustainable development, so there are four audit reports out there we are prepared to table as soon as we possibly can.

We as an organization will turn our attention to two very important matters, which are auditing investment in Canada and the government's COVID-19 spending. We will do our best, and I commit to getting information to Parliament as quickly as we can so we can begin to see if there were any lessons learned or changes we can make to better prepare ourselves and the government should we have to go through this again.

[Pat Kelly, Conservative, Calgary Rocky Ridge, AB]

What about the other reports that were in progress and the ones that were suspended? It would be normal for the office to table eight or nine reports in the spring, not just three or four.

[Karen Hogan]

Unfortunately, with some of our resource constraints and the need to make sure that a significant portion of our auditors are focusing on our financial audit work and examinations, especially examinations in Crown corporations, which is something set in legislation, we've had to make the difficult decision to delay some audits. There is some work under way that we expected to table, I believe, in the fall of 2020, which will get delayed a little bit as we try to reorganize and focus our efforts on investing in Canada and COVID. So the work is coming, and we're doing the best we can.

[The Chair, Conservative, Dean Allison]

Pat, you have about 30 seconds left.

[Pat Kelly, Conservative, Calgary Rocky Ridge, AB]

That's a good point about the additional work you have with the creation of new Crown corporations. The Canada Infrastructure Bank and Trans Mountain Corporation all have to undergo a financial audit, so there will be more work for your department.

If I have any time left, could you provide whatever comment you have on that, please?

[The Chair, Conservative, Dean Allison]

Please give us a quick response, Ms. Hogan.

[Karen Hogan]

Thank you, Mr. Chair.

As you mentioned, prior to COVID, our mandate was expanding with the creation of Crown corporations and the expansion of the work our office has to do on sustainable development in Crown corporations across so many departments. Yes, the recent creation of another Crown adds to that pressure. Financial audits are required annually, and we are committing to do those, as required through legislation.

[The Chair, Conservative, Dean Allison]

Thank you very much, Mr. Kelly.

Now we'll go to Mr. Blois.

Sir, the floor is yours for six minutes.

[Kody Blois, Liberal, Kings—Hants, NS]

Thank you very much, Mr. Chair.

Ms. Hogan, congratulations on your nomination.

I would like to echo the remarks of my colleague Mr. Kelly in relation to Mr. Ferguson and his great work.

I've had the chance to review your CV and resumé. You have a very impressive body of work and background. You touched generally in your opening remarks on the broad themes of leading the organization and modernizing.

Could you drill down on some specific outcomes you might have in mind, given, hopefully, your new role here as Auditor General?

[Karen Hogan]

When I talk about modernizing the way we work, it touches so many aspects. I would like to see us modernize not only our internal processes in order to be more effective and efficient but also the way we approach audits. The auditing world is changing dramatically and exponentially with the disruptive technology and the use of IT technology. While we already do a great deal of work with respect to data analytics, there's definitely room for us to continue to challenge ourselves to do auditing better and more efficiently in order to add value for this committee and the government to see everyone change. I firmly believe that every organization should constantly want to challenge itself.

I would also like to see us look at the way we communicate to Canadians and the way our reports are used by them. Right now, a long-form technical report makes sense for the technical subject matter expert, but so many Canadians have learned very recently that there are different ways to digest information, and I'd love to see us explore those as well.

[Kody Blois, Liberal, Kings—Hants, NS]

Thank you very much. That will probably have some resonance for Mr. Green, who might ask questions in that regard as well.

How has COVID-19 impacted the ability of the office to do their actual work? Obviously, we know that COVID-19, as Mr. Kelly suggested and you made clear, will become a focus for the office. Has the work been able to continue for the employees? I think you mentioned that there are roughly 575 employees.

[Karen Hogan]

Like every organization and every department across the government, we are all taking some time to deal with our new normal, working remotely and connecting in different ways. While it has slowed down and absolutely caused some delays in our ability to get information, and the ability of the entities that we audit to provide us information, it is still moving along.

When it comes to the COVID-19 audit, as soon as we accepted taking on that body of work, we put together a steering committee at our executive level. I am part of that. We started right away talking about the scope of work and where we might like to go. We've already begun engaging with deputy ministers in order to make sure we have the quantum understood so that we can figure out the best way for us to divide the audits to make it easier to deliver, easier for Canadians to understand and easier for this committee and Parliament to work with.

[Kody Blois, Liberal, Kings—Hants, NS]

With more COVID-19 audits to conduct, will the office of the Auditor General of Canada ask for additional funding in the coming days over and above what has already been requested?

[Karen Hogan]

As you pointed out, the office has put in its request for budget 2020. Everyone's waiting to see what that budget looks like.

We recently reorganized our operations. It was a very difficult but necessary decision because we needed to make sure we could go ahead with COVID-19 audits. It's still a little too early to know if we're going to need more money, but as I said off the top, I'll be making sure that conversations happen about a mechanism to ensure long-term, predictable funding for the office.

[Kody Blois, Liberal, Kings—Hants, NS]

Thank you.

How has funding for the office of the Auditor General changed year to year since 2010?

[Karen Hogan]

You're asking me to think back and tell you if I know how our funding has changed over time. I'll admit I don't have all the details, but I know that it was our own decision to cut our budget a few years ago. When our mandate expanded, we decided to ask for additional funding. We got a little money in 2018. We asked again in 2019 but got no extra money. We asked again in 2020.

As I said, one of my priorities will be to ensure that we have adequate funding to do our job and provide the committee with the reports it needs to fulfill its mandate.

[Kody Blois, Liberal, Kings—Hants, NS]

Mr. Chair, I have just a few seconds left, and I'm wondering if Ms. Hogan could talk about rural broadband. I noticed in her remarks with the Senate that this was perhaps a priority focus. I come from a rural riding, Kings—Hants in Nova Scotia, where many of my constituents deal with this issue.

I don't know how much time I have left here. If Ms. Hogan could address that, perhaps not now but during future questions, I'd appreciate it.

[The Chair, Conservative, Dean Allison]

Thank you very much, Mr. Blois. You're over your time now.

Ms. Hogan, please keep that in mind. We can try to work that into a later round.

We'll move over to the Bloc.

Mr. Blanchette-Joncas, you have six minutes, sir.

[Maxime Blanchette-Joncas, Bloc, Rimouski-Neigette—Témiscouata—Les Basques, QC]

Thank you very much, Mr. Chair.

Congratulations on your nomination, Ms. Hogan. I read your resumé and, as my colleagues noted, I see that you have extensive and impressive professional experience. Some of your predecessors, such as Ms. Fraser and Mr. Desautels, have had an impact on recent political history.

The Office of the Auditor General operates resolutely at arm's length from the government, and that will never change. Under the circumstances, there is enormous pressure related to auditing government activities. Mr. Ricard, your acting predecessor, identified problems with your organization's funding, especially relating to IT equipment.

Have you already taken steps to enhance the means at your disposal?