Public Accounts Committee on May 3rd, 2022

[Roch Huppé]

No, private sector standards apply to Crown corporations, and we cannot change that.

That said, when Crown corporations present their financial statements in accordance with international financial reporting standards, we convert them to our accounting standards in order to consolidate them and record them in volume I so you can see them.

As to volumes II and III, that information is not audited. They contain additional figures that we provide. As I said, Crown corporations also provide additional information in their corporate plan and on their website.

[Nathalie Sinclair-Desgagné, Bloc, Terrebonne, QC]

Yes. With respect to those plans, we also noted that the vast majority of Crown corporations had not had their corporate plans approved. I was really quite surprised though when the auditor general mentioned that. Government approval of corporate plans and the reporting of financial statements is not the same in the case of Crown corporations.

Let me put it another way.

I am a citizen and I would like to know in which province and region of Canada expenditures are made by a Crown corporation that provides a lot of funding, such as Export Development Canada. Yet there is no way for me to get that information. I know this because my team and I looked into it and that information does not exist.

Do you not think that Canadians and Quebecers should have access to that information if they wish? Very specifically, who could ask Crown corporations to disclose that information in such cases?

[Roch Huppé]

I am not sure Treasury Board could do that. I assume legislation would be required for that information to be disclosed. Each Crown corporation has a board of directors that could also play a key role by requesting that that information be published in some way. At present, Crown corporations are not subject to Treasury Board policies, as much as we try to convince them to comply with them to the greatest extent possible.

[Nathalie Sinclair-Desgagné, Bloc, Terrebonne, QC]

Okay. You said you try to convince them. Can you give me any specific examples?

[Roch Huppé]

For example, policies that dictate which travel and hospitality expenses can be claimed. Crown corporations and agencies are entitled to have their own policy on travel and accommodation expenses. Yet we try to make sure there is common ground as to which travel expenses employees can be claimed, for example.

[Nathalie Sinclair-Desgagné, Bloc, Terrebonne, QC]

Thank you very much.

[The Chair, Conservative, John Williamson]

Your six minutes are already up, Ms. Sinclair‑Desgagné.

Mr. Desjarlais, you have the floor now for six minutes, please.

[Blake Desjarlais, NDP, Edmonton Griesbach, AB]

Thank you very much, Mr. Chair.

I want to thank all of the witnesses for being present today. I want to thank especially those who are here in person. It's a delight to see all of you here. Welcome to our committee.

I want to begin by reflecting the comments from the Auditor General on some of the financial control weaknesses related to the pay administration system. This is something that's been going on for a very long time. I continue to get phone calls from regular folks, from Canadians who are growing more and more concerned with the fact and reality that we continue to have this immense problem. I've spoken to members of our public service, including PSAC, which has echoed these concerns.

I would be remiss not to mention them and to ensure that we find a better, more transparent process for ensuring that employees who work for us, who do good work on behalf of the Government of Canada, continue to have that support. I think that's something they deserve and something that's critical to our ongoing efforts to make sure that this place works well.

For the Auditor General, can you explain how the audited process led to the findings of the HR-to-pay process and when that process began? More particularly, from this audit, how many outstanding pay action requests were there?

[Karen Hogan]

I will likely ask Etienne or Chantale to add a little about the outstanding pay action requests.

About the audit, I can tell you that we began in 2016, when the Phoenix pay system was implemented and the entire HR-to-pay process was changed within the federal government. Our entire audit approach needed to change because of weaknesses in the IT system and so many changes around the manual processes feeding into that IT system. Since then, we've been doing detailed transactions of actual pay for employees instead of relying on automated computer controls.

This year's audit found that 47% of the individuals in our sample still had an error in their pay at least once during the fiscal year compared with about 51% the year prior. What's concerning is that about 41% of those people were still waiting for their pay to be adjusted at year-end. What we looked at then was the pay action requests. There will always be requests in the system to have adjustments to pay, but what was particularly concerning was that a large portion, almost 20%, of those pay action requests have been outstanding for more than three years. Individual public servants have been waiting a very long time to have their pay adjusted and be accurate.

When it comes to actual pay action requests outstanding, I think I might ask one of my colleagues to give some more details on the actual numbers, if you'd like them.

[Blake Desjarlais, NDP, Edmonton Griesbach, AB]

Yes, please. I think it's important to demonstrate the fact that this year, to my understanding, there were 254,500 outstanding pay action requests. Apparently, that's a big improvement from the 334,000 requests that were filed the year before.

I don't see that as an improvement. I can see how it's an improvement to some folks, but 254,500 pay action requests—that's people. That's people who work around here and who work across our country. Three years is extremely unacceptable. We have to find better ways to do this.

Auditor General, what steps should the government take to reduce this number of outstanding pay action requests, and how can we do that quickly?

[Karen Hogan]

We've issued recommendations to the government on ways to improve the internal controls and the whole processing around the HR-to-pay system. It is important that they act on those. It's important that they act on long-outstanding pay action requests to correct people's pay.

Also of good importance is that no matter what system you go to, while they are looking to transition to a new system, you need to have accurate data. You need to get an individual's pay corrected now, before you move them to a new system or even if you stay in the system. It's important to find a way to tackle all of the issues surrounding the entire HR-to-pay process.

[Blake Desjarlais, NDP, Edmonton Griesbach, AB]

In your opinion, Ms. Hogan, what has been the major barrier to at least a response from the ministry? This has been going on since 2016. Why hasn't this been remedied?

[Karen Hogan]

I think there are a few reasons behind why this hasn't been remedied. It's a shared process. There are many parties involved in pay. Each individual department has the responsibility to enter accurate information about a new employee or about changes to an employee's pay. Some departments rely on the pay centre. Other departments do not rely on the pay centre. Everyone uses the Phoenix pay system, where there are some limitations in the system to deal with the pay of the federal government.

The federal government is sort of a “pay behind”, right? We pay a few weeks later, whereas the system is more real time. As soon as you have a real-time adjustment that's not reflected in a timely way, there could be a possibility to have an error in pay. It's about lining all of that up and fixing the complex web of rules around compensation.

[Blake Desjarlais, NDP, Edmonton Griesbach, AB]

Mr. Chair, how much time do I have?

[The Chair, Conservative, John Williamson]

You have 30 seconds, time for a quick question and quick answer.

[Blake Desjarlais, NDP, Edmonton Griesbach, AB]

Sure.

What do I tell our public service employees who come to me and ask for a remedy and a fix and for some kind of project that will address their concerns going into the future on this? What do we tell our 254,500 people with pay requests—that we haven't gotten it right yet? The government continues to fail with the Phoenix pay system. Do we tell them that the government is working on it still?

[The Chair, Conservative, John Williamson]

Could you let the witness give a quick answer, please?

[Karen Hogan]

Honestly, I think the best answer to that question comes from the government. We continue to follow up on it, to monitor it, to make recommendations and to push them to improve their internal controls and their processes, but the action rests with the federal government to fix it.

[Blake Desjarlais, NDP, Edmonton Griesbach, AB]

They're just not doing it. That's the problem.

[The Chair, Conservative, John Williamson]

Thank you. That ends our first round.

We will go now to round number two.

Turning back to Mr. McCauley, you have the floor for five minutes.

[Kelly McCauley, Conservative, Edmonton West, AB]

Thanks, Mr. Chair.

Ms. Hogan, I want to get back to the tabling dates of the public accounts.

C.D. Howe, last year I think, gave the federal government an “F”—compared to the provinces getting an A or B—on fiscal reporting, mostly around the delays in tabling the public accounts.

Do you see an issue with them being tabled so late, especially around transparency and accountability, and especially to Parliament?

[Karen Hogan]

I believe you reference some real fundamental principles to audited information. It needs to be relevant and shared in a timely way, and it needs to be understandable and comparable to its counterparts. Obviously, being able to issue the audited financial statements in a more timely way should always be a goal that both the government and my office strive for.

With regard to the timelines that the government uses now, you should be asking them about how and if they plan to modify those timelines.

[Kelly McCauley, Conservative, Edmonton West, AB]

Do you see a reason that we can't have it legislated for September 30 every year?

[Karen Hogan]

I don't necessarily understand all of the complexities of putting the financial statements together. I can talk to you about how long it takes to audit them, but that question is better asked to the Comptroller General's office.

[Kelly McCauley, Conservative, Edmonton West, AB]

Mr. Huppé, is there a reason we cannot do it by September 30?

I'll preface this by saying that I understand in the Senate, TBS said it was too complicated to do by September 30.