Public Accounts Committee on May 19th, 2020

[Karen Hogan]

Yes, absolutely. As I said, we got more permanent funding in 2018. We used part of that money to start working on our IT issues. That's not something we can let slide.

As you said, during his first appearance before this committee, Mr. Ricard mentioned that some of our systems were ancient. We've taken steps and are almost ready to transition to another system. That's important, and it's something that will always be top of mind. We need to keep adapting and make sure we're up to date, especially in light of the government's increasingly virtual interactions with Canadians.

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

Thank you for that answer, Ms. Hogan.

You have the latitude to decide what to audit and how to do those audits.

Do you think that the pandemic situation and the government's many announcements could have a negative impact on some organizations' accounting practices?

[Karen Hogan]

As you said, it's very important for the office to remain independent so that it can always choose where to go, when to go there, and who it's going to audit. Independence is essential to our work.

I'm trying to remember your exact question. Would you mind repeating it, please?

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

Do you think that the COVID-19 pandemic and the government's many announcements could cause the accounting practices within some government organizations to deteriorate?

[Karen Hogan]

Thank you.

I expect to see a change in accounting practices and controls. That's clear. Everyone is working remotely. In my opinion, what we are used to doing in person or on paper will be done electronically in some way. However, I don't expect all controls and accounting practices to disappear. Proper accountability and oversight is needed on everything that the departments do. There will therefore be changes, but this won't disappear.

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

Thank you, Ms. Hogan.

Are there accounting practices that currently go against public interest or do not meet standards?

[Karen Hogan]

That's a huge question.

I imagine that it's always possible to improve accounting practices and controls. That is a very big part of the office's role.

As part of all of the audits I will do, I commit to considering everything that is done well, everything that is done not as well, and the changes to be made.

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

I want to paraphrase Mr. Ferguson, who told the committee that he favoured a fair approach that sought to understand all of the challenges associated with each of the office's audits. He really insisted on making sure that the auditors' recommendations were achievable.

Can you speak to how you would maintain the office's effectiveness?

[Karen Hogan]

Thank you for your question.

As I said in my introductory remarks, as part of my duties, I've had the privilege to see both sides of auditing. Through this, I learned how important it is for the auditors' recommendations to be focused on improvement and results. It's not about creating a process just to create a process. I'll integrate this strategy into our own approaches and methods, as well as into the recommendations we will make to all departments. Results, and not the process, are what is important.

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

Thank you.

The committee regularly deals with issues related to decisions made by the Auditor General that are not always followed up on by departments or organizations at the end of the audit. There are response times, and enforcement of these measures is often lacking.

Do you believe that more reluctance to enforce your recommendations would sit well in the near future?

[Karen Hogan]

I don't think that all departments like being audited. The recommendations add to their already massive workloads. That's why our recommendations will have to be well crafted.

I think that the Standing Committee on Public Accounts and our office play a very important role in ensuring that departments actually do follow through with our recommendations. Your committee can support our office by examining and studying our reports, and also by calling departmental witnesses to ensure that they'll take the desired action. We'll do that as well, as an office, but this committee plays a very important role in that.

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

Thank you.

[The Chair, Conservative, Dean Allison]

Thank you very much.

We're now going to move to our last questioner of the first round.

Mr. Green, sir, you have six minutes.

[Matthew Green, NDP, Hamilton Centre, ON]

Thank you very much, Mr. Chair.

Certainly this committee plays an integral role in the work throughout the House of Commons. I have the privilege of also being a member of the government operations committee, so I can definitely appreciate the historic nature of this and the importance of this particular proceeding.

Given the nature and context of this proceeding, Mr. Chair, my statements will probably be longer than my questions. In that regard, I'd like to begin by thanking our past interim Auditor General, Sylvain Ricard, for all of his work and for stepping into the role after the loss of Mr. Ferguson.

I certainly look forward to working with Ms. Hogan here in the months and years to come on our public accounts committee. As noted, her CV and work have already been well established in this committee for her significant contribution to our public service and future vision for the role of the office of the Auditor General.

Members of this committee may know that earlier this month in the media I called on the government to make sure that her office had all the resources it needed to do its job to help keep the government accountable to Canadians. Whether it was the former AG Michael Ferguson or Mr. Ricard, the AG has spoken very publicly for years that this office did not have the adequate resources it needed to do its work properly. The OAG has warned that this funding shortfall would leave it without the capacity, the personnel and the technology to maintain its level of performance audits and that it had already begun to cut back on the number of audits it conducted.

Now, as has been noted, on top of what they have been mandated to do, we have also added responsibilities such as oversight for projects like Trans Mountain and the Canada Infrastructure Bank without increasing its resources.

I know this was referenced earlier by Mr. Blois, but I'm going to continue down this line. Parliament once again has thrown more work at the OAG by asking it to examine the federal government's $187-billion infrastructure plan, the audit on COVID-19 and warrants issued under the Financial Administration Act, which is an audit on Ottawa's pandemic emergency response. These are massive audits and they're going to take tremendous amounts of staffing to go through with all these details.

Mr. Chair, the House passed a motion on April 11 that called on the government to take such measures as necessary to ensure that the Auditor General has sufficient resources to conduct their work.

My predecessor, Mr. David Christopherson, as you know, was very vocal about the need to ensure proper funding for the Auditor General. We believe the AG should have the additional $10.8 million in funding requested provided to their office immediately. This was last year, before the pandemic.

What would you consider are needs to be assured that your office has the sufficient resources it needs to do all its work?

[Karen Hogan]

When it comes to funding, that is probably one of the key areas that would help us ensure that we have all of the adequate resources to do our work, as you mentioned, the people, the capacity and the IT technology that we will need.

If appointed Auditor General, I would focus on continuing that discussion. While obtaining funding in the short term makes sense and is absolutely needed, in my view, working on a long-term, stable funding mechanism that has appropriate oversight by this committee or parliamentarians is crucial to ensuring the long-term predictable funding for the organization, given the role the office plays in accountability and transparency and in supporting the public accounts committee in holding the government to account.

[Matthew Green, NDP, Hamilton Centre, ON]

Based on your incredible CV, you're an incredible accountant. Given the scope of work you've planned out, I would suggest that you probably have a number attached to that in the order of magnitude that you would need in funding for the new work. What is that number?

[Karen Hogan]

Well, I absolutely love numbers. I haven't delved into that in great detail, to be very honest with you. Our focus has been on making the tough choices in order to redirect our resources to where they really matter and where we can absolutely have an impact. Right now, that's looking at investing in Canada and COVID-19 as well as ensuring that we continue to deliver on our annual audit and special examination mandates.

[Matthew Green, NDP, Hamilton Centre, ON]

You have certainly raised the important question of funding mechanisms. I'd like to reassert that ultimately, we need to find a funding mechanism for your office so that you don't have to come and beg for money and we don't have to be shy about talking about the kind of budget that will be required for the scope of your work. Essentially, we need to depoliticize it.

Would you care to comment on what the best possible funding mechanism for predictable, adequate funding might look like?

[Karen Hogan]

I agree with your statement that an independent funding mechanism is what's best for our office. Removing the need for us to turn to a department, currently the Department of Finance, that we audit brings in its challenges and makes it uniquely different, given the role that we play versus the role that other departments play.

In terms of the mechanism I would look for, there are so many options. There are other places we can look at in the world. This already exists in some of our provinces and in other countries, such as the U.K., I believe. We don't need to look too far for examples. I would be very happy to work with the government to develop something that makes sense for our office as well as for this committee, because someone should continue to hold auditors to account as well.

[Matthew Green, NDP, Hamilton Centre, ON]

I couldn't agree more. I certainly look forward to working with you, Ms. Hogan, and this committee on those precise things. Thank you for your time.

Thank you, Mr. Chair.

[The Chair, Conservative, Dean Allison]

Thank you, Mr. Green, for the line of questioning.

We'll move to our second round, which will be five minutes for questions and answers.

I'd like to welcome Luc Berthold today.

The floor is yours, sir. You have five minutes.

[Luc Berthold, Conservative, Mégantic—L'Érable, QC]

Thank you, Mr. Chair.

I want to congratulate Ms. Hogan on her appointment.

Ms. Hogan, you're coming in during a particularly difficult time, but I think it's necessary. We need an Auditor General for the long term. I wish you well in your term, if your appointment is confirmed. We'll be here to work with you.

I'd like to ask a quick question, out of sheer curiosity.

Did you apply for the position of Auditor General on your own, or were you asked to apply?

[Karen Hogan]

Since I work at the Office of the Auditor General of Canada, I was aware that the position was open. I applied through the Privy Council Office's website in January.

I spoke with a retired Assistant Auditor General, who encouraged me to apply. I also spoke to one of our Deputy Auditors General before applying.

[Luc Berthold, Conservative, Mégantic—L'Érable, QC]

When exactly were you informed that you had been selected?

[Karen Hogan]

I applied in January, and I was interviewed on February 19. I then provided references and went through psychometric testing. Privy councillors called me from time to time to ensure that I still wanted the position. Around the end of March, I was informed that the process had been temporarily halted because of the pandemic and the scope of the work to be done by Parliament in relation to the appointment process. On April 29, the minister called me and informed me that I had been selected and that the consultation process would begin.