Public Accounts Committee on May 3rd, 2022

[Kelly McCauley, Conservative, Edmonton West, AB]

It was solely the government's decision, then, to reopen—

[Karen Hogan]

At this point it is, but as I mentioned earlier, there are different types of subsequent events. As soon as the year-end ends, before the financial statements are signed off and an audit opinion is issued, the government as well as the auditors are required to consider all events and decide whether or not they have an impact that's important enough to adjust the financial statements, be disclosed in the financial statements or just be left to the subsequent year.

In this case between when the financial statements were signed and finished, but not made public, the onus really does lie with the government, the preparer, to determine if something is important enough to reopen the books. Then my job becomes to ask, was that an appropriate action? I signed off on a clean opinion indicating that I agreed that it was.

[Kelly McCauley, Conservative, Edmonton West, AB]

Thank you.

How much time do I have?

[The Chair, Conservative, John Williamson]

You've got time for a comment, 15 seconds, so not a question, Mr. McCauley.

[Kelly McCauley, Conservative, Edmonton West, AB]

That's fine. Thanks very much.

[The Chair, Conservative, John Williamson]

Thank you, then.

Turning now to our next member, Ms. Bradford, you have the floor for six minutes.

[Valerie Bradford, Liberal, Kitchener South—Hespeler, ON]

Thank you, and thank you to our witnesses today, those returning and those who are new. It is a treat to see witnesses in the room, live and in person. It's been awhile since that has happened.

Ms. Hogan, could you please explain to the committee why it's important that you certify the public accounts and whether Canadians can trust them?

[Karen Hogan]

Absolutely. There's a requirement in legislation, both in the Financial Administration Act and the Auditor General Act that I issue an opinion on the consolidated financial statements of the Government of Canada. The government's financial statements are an important accountability document. They are really the closing loop of that accountability relationship that government has with Canadians. You put out a budget to indicate how you plan to spend, and the financial statements is the accounting of how you actually spend taxpayers' money. So it's important to compare those financial statements against generally accepted accounting principles and ensure that they provide a transparent and just accounting of the financial results for the year, as well as the financial position of the government.

My opinion, which is done in accordance with accounting standards, allows you to then rely on the fact that the information in those financial statements and accompanying notes is reliable, so you can now look at the statements and say the content is one that Canadians can rely on and base decisions on.

[Valerie Bradford, Liberal, Kitchener South—Hespeler, ON]

Great. Thank you for that.

Can you tell me what you think of the GC InfoBase tool? Do you think it helps the public understand what is in the public accounts?

[Karen Hogan]

There's a considerable amount of information in the GC InfoBase tool. I think even within the three volumes of the Public Accounts of Canada there is a considerable amount of information, and for someone who doesn't feel comfortable with financial information, it can be somewhat overwhelming.

I think any opportunity to streamline or make it easier to understand is one that financial statement preparers, in this case the government and Crown corporations, should always consider.

[Valerie Bradford, Liberal, Kitchener South—Hespeler, ON]

Thank you.

Turning now to Mr. Sabia, Finance transfers to other levels of government were really up due to the emergency pandemic supports.

Did any of the provinces leave a lot of money on the table that was transferred to them?

[Michael Sabia, Deputy Minister, Department of Finance]

Mr. Chair, by and large, those transfers have been used and, in effect, consumed substantially by all of the provinces, whether they were transfers to support the health care system in provinces or whether they were designed to facilitate the reopening of schools. There were a variety of different measures that the government took at the time. Based on our discussions with provinces, we are certainly satisfied that the money was spent in large measure. That's done, and it's mission accomplished.

[Valerie Bradford, Liberal, Kitchener South—Hespeler, ON]

Okay, thank you.

Can you tell us about the government's debt management strategy and how the public accounts compare to what was recently announced in the budget of 2022?

[Michael Sabia]

As a result of substantially improving the deficit track that the government laid out both in the past and certainly in the most recent budget, the financial requirements of the Government of Canada are declining. As a result of that, needless to say, our debt management strategy reflects that because we need to borrow less.

The first important thing that has changed is a reflection of what I'll call the normalization of the government's fiscal position as the COVID crisis recedes is that those financial requirements are coming down and coming down quite substantially. That's number one.

Number two is that the other thing that we are—and have been indeed—attempting to accomplish over the last while has been to extend the term of the debt portfolio itself so that, in future years, the government can benefit from what are quite low interest rates during the preceding period and even the current period today.

We continue to want to term out the debt to get the benefit of those low interest rates for as long as we can, as we try to lock in the benefit for the overall fiscal picture of the government for as long as we can. As a result of those efforts, the overall term on average of the government's debt portfolio has lengthened from when we began this work, which was, at that point, about a five-year term. Now, it's quite close to a seven-year term.

Those are the two big drivers of our debt management strategy, lower requirements and longer duration.

[Valerie Bradford, Liberal, Kitchener South—Hespeler, ON]

Thank you.

[The Chair, Conservative, John Williamson]

Ms. Bradford, you have about 15 seconds, which is time for a comment but not really a question.

[Valerie Bradford, Liberal, Kitchener South—Hespeler, ON]

Oh, really, that went very quickly.

For the Treasury Board, public accounts recorded an exceptional year.

Very quickly, was there anything about it that made it harder to put together the public accounts this year?

[The Chair, Conservative, John Williamson]

I'm afraid I'm going to have that answered on another round. I'm sorry.

[Valerie Bradford, Liberal, Kitchener South—Hespeler, ON]

Okay.

Thank you.

[The Chair, Conservative, John Williamson]

We'll turn now to our next MP.

Ms. Sinclair‑Desgagné, you have the floor for six minutes.

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

Thank you, Mr. Chair.

Let me begin by thanking the witnesses for being here. As my colleague said, it is nice to see witnesses in person. I would also like to thank the other witnesses who are joining us via Zoom.

Let me get straight to the point.

Upon careful review of the Public Accounts of Canada, we noted that Crown corporations do not report information the same way as departments do. Let me explain and provide an example.

In Volume III of the Public Accounts of Canada, departments and agencies are required to provide, for each main category of service, a detailed list of all payments to individuals and organizations of $100,000 or more. Professional and special services are in section 3. Acquisition of land, building and works are in section 4. Transfer payments are in section 6. This list provides the organization name and the city where they are headquartered. The departments are required to provide this information.

My first question is probably from the officials from the Treasury Board Secretariat. Why are Crown corporation not required to report the same amount of detailed information, although they represent a major source of federal government funding?

[Roch Huppé]

Thank you for the question.

Of course, some Crown corporations present reports in accordance with international financial reporting standards. A number of reports are published on their own websites and provide a wide range of information. The financial statements are consolidated. There are two different approaches depending on whether or not the Crown corporation receives votes. The financial information is consolidated in the financial statements.

You must bear in mind that the information required in Volume III is not subject to audit by the Auditor General.

In short, I would say that a wide range of information can be found right on the organizations' websites.

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

There is indeed a great deal of information, but not the same degree of detail.

Would an act or regulation have to be amended to require Crown corporations to report the same information about their expenditures as departments do?

[Roch Huppé]

As I said, when preparing their financial statements, Crown corporations follow private sector standards in some regards. For our part, we follow public sector standards.

As to the information reported that is not audited, Crown corporations are not subject to Treasury Board policies. In many cases, we ask Crown corporations to follow basic standards. That said, Crown corporations have their own reporting policies and practices.

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

When you say “we”, do you mean Treasury Board? Could Treasury Board require Crown corporations to follow the same standards as departments do as opposed to private sector standards?