Public Accounts Committee on May 5th, 2022

[The Chair, Conservative, John Williamson]

Good morning, everyone. I call this meeting to order.

Welcome to meeting number 18 of the House of Commons Standing Committee on Public Accounts. Pursuant to Standing Order 108(3)(g), the committee is meeting today to study the main estimates 2022-23 and the departmental plans.

Today's meeting is taking place in a hybrid format, pursuant to the House order of November 25, 2021. Members are attending in person in the room and remotely, using the Zoom application.

Given the guidelines from the Board of Internal Economy of March 10, 2022, everyone participating in person must wear a mask, except for members of Parliament when they are seated at their place during the proceedings.

To ensure an orderly meeting, I would like to outline a few rules for witnesses and members to follow.

First of all, before speaking, please wait until I recognize you by name. If you are on the video conference, please click on the microphone icon to unmute yourself. Please keep your microphone muted when you are not speaking.

For interpretation for those on Zoom, you have the choice at the bottom of your screen of floor, English or French. For those in the room, you can use the earpiece and select the desired channel.

I would remind you that all comments should be addressed through the chair.

For members in the room, please raise your hand if you wish to speak. For members participating via Zoom, please use the “raise hand” function. The committee clerk and I will do the best we can to maintain a consolidated order of speaking for all members, and we thank you for your patience and your understanding.

In accordance with our routine motion, I am informing the committee that all witnesses have completed the required connection test in advance of the meeting.

I'd now like to welcome our witnesses. Our panel includes, from the Office of the Auditor General, Karen Hogan, Auditor General of Canada; Jerry V. DeMarco, commissioner of the environment and sustainable development; Andrew Hayes, deputy auditor general; Lissa Lamarche, assistant auditor general and chief financial officer; and Paule-Anny Pierre, assistant auditor general.

Ms. Hogan, you now have the floor for five minutes.

[Karen Hogan, Auditor General of Canada, Office of the Auditor General]

Thank you, Mr. Chair.

We are pleased to have this opportunity to discuss the work of our office, including our most recent departmental reports.

I would like to acknowledge that this hearing is taking place on the traditional unceded territory of the Algonquin Anishinabe people.

With me today are members of my executive team.

The Office of the Auditor General of Canada contributes to well-managed and accountable government for Canadians. We do this by providing Parliament and territorial legislatures with independent and objective information, advice and assurance about government financial statements and the management of government programs. The commissioner of the environment and sustainable development assists me by conducting reviews and audits in his areas of expertise. We also support the development of legislative audit methodology and accounting and auditing standards, and we work internationally to build audit capacity and promote better managed and more accountable international institutions.

Let me turn first to our 2021 departmental results report. We provided this report to Parliament in February 2022. As shown in our financial statements, our net operating cost was $115.6 million, and we employed the equivalent of 632 full-time employees. With these resources, we reported 13 performance audits and four special examinations of Crown corporations.

In addition, the commissioner of the environment and sustainable development delivered the annual report on environmental petitions and the review of departmental progress in implementing sustainable development strategies. We also audited the financial statements of 90 federal and territorial government organizations and Crown corporations. We issued clean opinions on 86 of these financial statements. We also presented our annual commentary on our financial audit work.

Our departmental results report presents indicators of the impact of our work. One of the ways that we assess the impact of our performance audit work is through the level of parliamentary engagement with our reports. Overall, parliamentary committees reviewed 61% of our reports. This is due to our special examination reports and some of the commissioner's work not being reviewed.

I want to thank the Standing Committee on Public Accounts for reviewing all of the performance audits referred to it during the year.

Internally, in 2020-21, we continued to map the future of our workplace, including an interim phase that has seen us open hotelling spaces in our Ottawa office and begin planning the modernization of our hybrid workplace. The work to replace our audit working paper software, which is critical in modernizing how we conduct our audits, has also continued to advance. We have launched a vast, multi-year digital transformation initiative, which will renew our mindset, competencies, tools and systems.

I would like to move on now to our Main Estimates and our Departmental Plan for the upcoming 2022–23 fiscal year. For the upcoming fiscal year, our total budget is $119.9 million. With these resources, we plan to employ the equivalent of 747 full-time employees. I would like to thank this committee because your unwavering support over the past 2 years was instrumental in resolving our resourcing challenges.

In addition to our financial audit work and special examinations, we plan to issue more reports on the COVID-19 pandemic response and on other topics, including protecting aquatic species at risk, processing disability benefits for veterans, and the surveillance of Arctic waters. We also plan to provide updates on past audits.

Another priority in 2022–23 will be to continue modernizing our approaches, tools, and products. We will complete the replacement of our audit working paper software and focus on advancing our digital transformation and renovation of our workspaces.

During the past 6 months, my office experienced its first labour dispute, which culminated in a strike by our Audit Services Group of employees. Impacts of this strike included delays in some of our audit work and operations. Despite these circumstances, we continued auditing, and critical work was prioritized and completed.

The labour conflict also meant that salaries were not paid to striking employees and that a number of large corporate initiatives were temporarily slowed, including our digital transformation and the renovation of our workspaces. This, among other unforeseen events, affected our ability to spend our budget in 2021–22. We expect expenditures to return to planned levels in 2022–23.

I recognize that the most profound impact of the strike has been on our people. We have already begun engaging with employees across our office with the goal of identifying actions to renew the workplace and foster a healthy, safe, inclusive, and productive environment. We all know it will take time to move forward from this experience, but we have taken very important first steps.

Mr. Chair, I could not be prouder of everyone in my office. My colleagues are resilient, caring, and devoted to excellence.

We thank the committee for its ongoing support and use of our work.

We would be pleased to answer the committee’s questions.

Thank you.

[The Chair, Conservative, John Williamson]

Thank you very much, Ms. Hogan, Canada's Auditor General.

Turning to Mr. Lawrence, you have the floor, sir, for six minutes.

[Philip Lawrence, Conservative, Northumberland—Peterborough South, ON]

Thank you very much.

We don't need to discuss this at this point, but members can think about it. I was thinking about ending this meeting at 12:45, as I don't know how much questioning will actually be required here, and having 15 minutes for an informal subcommittee group where we can decide future topics. I'll leave that there for now and get into my questions. We can talk about that later.

Madam Auditor General, thank you very much for being here. As always, it's much appreciated.

My line of questioning will be following along the following approach. We're glad to see that you have the resources you have required and have asked for, for many years from the government, but I'm surprised, and perhaps you can help me understand. The number of reports and, quite frankly, the results aren't necessarily coming forward, even though we, the taxpayers, are contributing significantly more. There are many more employees and increases in funding of millions of dollars.

Can we expect more reports, and quite frankly, more results going forward?

[Karen Hogan]

I guess I should take us a little bit further back to when we actually received our funding. It was confirmed in the fall economic statement of 2020. We had asked for only a portion of that funding to be received in that year. We actually received it on the last day of the fiscal year in 2021.

In anticipation of that, we took some smart risks. As you say we actually hired people, because we knew the funding was coming. It does take time to onboard those individuals and to get an audit started and conducted. In the year in question, 2020-21, we had 13 audit reports. Our plan for 2021-22 is also 13, which will be slightly lower, actually, when it's all said and done, given I had to delay the release of reports from March of this year to the following year.

In 2023, you'll finally see that impact. We anticipate that we will have upwards of 25 audit reports to provide to Parliament to study.

[Philip Lawrence, Conservative, Northumberland—Peterborough South, ON]

Thank you. That's great news. I look forward to those reports going forward.

The other area coming from the reports, of course, the result we're trying to achieve—everyone here as well as you—is to improve the performance of the public sector. In my two years on the committee, I personally have been frustrated—and I imagine many taxpayers have been as well—that these reports are put in place, yet we seem to come back to the same reports over and over again, whether they be on clean drinking water, shipbuilding or public health. We have recommendations that just don't go anywhere, and five or 10 years later we still don't have any results.

Is that a source of personal frustration for you? Maybe you could give us some thoughts on how we can get results from this.

[Karen Hogan]

I share your frustration. I believe I can also speak on behalf of the commissioner of the environment and sustainable development to say that he does also.

Many of my reports in the past year have actually raised, exactly as you mentioned, long-standing, known issues with limited action. I hope that at the end of my 10-year mandate I'm not still asking the government to act on known issues in a faster way.

I do think it's time for us, as an organization, to follow up on really important matters—which we're going to do. We have a new product available on our website through which you can search through past recommendations or results to see how the government is doing. We're hoping that additional pressure will help drive action.

Having committees studying reports and asking for action plans will help drive action, so I'm very happy that the public accounts committee is doing that. I was also very happy to see that the environment committee recently adopted the same motion—to ask all entities that are audited to provide an action plan.

It is sustained pressure from Parliament, but it's also concrete actions—not just planning, strategies and announcements but some real concrete actions—from the government to see some change.

[Philip Lawrence, Conservative, Northumberland—Peterborough South, ON]

I think that's an excellent answer. Maybe I'll go even further.

I would say that the reports of your predecessors, including Ms. Fraser and Mr. Ferguson, used harsher and stronger language than your reports do, just from what I have read and observed. Perhaps that's understandable, given that most of your time has been during the COVID era and perhaps some grace was required. If we do see continued failing, can we count on your office to perhaps take a stronger tone at these repeated failures to achieve the results that taxpayers demand?

[Karen Hogan]

I have the utmost respect for Sheila Fraser and Michael Ferguson and the work they carried out, but as you said, I am the first Auditor General of Canada to audit the departments and agencies in the middle of a pandemic. I believed we needed to recognize what every single Canadian, including public servants, was going through throughout the pandemic. There's a balance to be struck as to how to respond to a pandemic and how to learn from what was done and move forward.

When I do need to be harsh, as I was with drinking water and with temporary foreign workers, I will be. When the results are so bad, you will know.

It's good to see that you recognize that I was recognizing the situation everyone was in, but then everyone should pay attention when I get a little more serious about matters.

[The Chair, Conservative, John Williamson]

Thank you very much.

We are turning to our next questioner.

Mr. Dong, you have the floor for six minutes. Go ahead, please.

[Han Dong, Liberal, Don Valley North, ON]

Thank you very much, Mr. Chair.

It's good to see the Auditor General again.

I was listening to the question of my colleague across. I agree that if there are any long-standing recommendations that are outstanding, perhaps we should talk about how to bring them back, revisit them, update them and understand what the problem is. That's the job of this committee. Maybe we'll have a chat later on about how to bring them back and take a look at them.

Auditor General, the Parliamentary Budget Officer has proposed requiring the publication of the public accounts to September 30. What constraints are there on your ability to meet that deadline?

[Karen Hogan]

I think there are constraints on both sides to meet an advanced publication deadline for the public accounts of Canada. The government will need to advance some of its deadlines and speed up some of its processes. We can also find more ways to be efficient and effective in our audits, but it needs to be a shared responsibility. We can't just move a deadline and expect the auditors to do exactly the same work in less time. It really does have to be a shared compromise.

What's in our way is getting information in a more timely fashion and making sure the government has a better handle on its data and on providing it to us in a more usable format.

These are all issues that can be overcome but ones that need to be done collaboratively with the comptroller general's office, the Department of Finance, the Receiver General and our office. The public accounts of Canada are very large, and it takes some time to get through the audit.

[Han Dong, Liberal, Don Valley North, ON]

I saw those three volumes. It takes some time for me to even just go through them. I guess it's better communication between departments. In terms of formatting, you will probably get better consistency going forward if you talk to each other.

Could you please explain how your office selects topics to audit and how you filter suggestions?

[Karen Hogan]

Audit selection is a really key business process within our organization. It's a very rigorous one that involves external consultations. I've increased those external consultations since I became the Auditor General, meeting with members of Parliament both in the House and in the Senate to understand the topics relevant to you. Then we do go out and talk with deputy heads.

We have a very thorough process to look within departments to see significant concerns and significant risks. We consider what's important to Canadians. We do have an area on our website where Canadians can provide suggestions to us on topics to audit. Then we take all of this data, sit down together and decide what makes sense in the context we're in.

We set out a plan for a couple of years, but that plan is not cast in stone. We have to reconsider it before we start audits if there's something more relevant that needs to replace an audit we had planned to do.

We're constantly refining that process. In fact, we've started within our organization over the last few months to identify ways to improve that process so we can ensure we remain relevant and provide work in a timely way to Parliament.

[Han Dong, Liberal, Don Valley North, ON]

That's good.

Under the current government—you also talked about this earlier—your annual funding has gone up by 50%, but your office continued to produce roughly the same number of financial, performance and special audits.

Can you explain what's driving this result? Is it the cost of labour? Is it the complexity of the report, perhaps some current event or some other reason?

[Karen Hogan]

I just want to make sure I understand the question. Is it, what's causing the fact that we received additional funding and the output has not increased?

[Han Dong, Liberal, Don Valley North, ON]

That's right, yes. The output has basically stayed the same.

[Karen Hogan]

Let's start with our financial audit work. We received many new financial audit mandates over several years between 2017 and 2021 that had not been funded when we received funding. We were redirecting resources to do those audits. It was nice to finally get some funding so we could increase some of our financial auditors. We then freed up those resources and returned them to do performance audit work.

As I mentioned earlier, it takes time. During the pandemic, we even hired 150 people in the organization. It takes time to onboard those people and to train them. Many of them do not have audit skills, so we have to train them. We then select audits and get our audits done. An audit, on average, takes about a year to be completed. As those resources trickle in, you will start to see the increase in our output in 2023, where we will go back up to—

[Han Dong, Liberal, Don Valley North, ON]

That's what I want to hear. That's great.

I forgot to ask if, when you talk about consulting with stakeholders and the general public on selecting the topic to audit, you also consult with MPs. If you do, how do you make that selection? Do you randomly pick MPs from different parties and consult with them, or do you consult with MPs at all?

[Karen Hogan]

We absolutely consult with MPs. We receive letters from many members of Parliament. We consider those and add them to the mix of topics to audit. I have not yet met with this committee, but typically I do sit down with the public accounts committee and ask all of you about your thoughts and inputs on areas we should go.

We have done so with senators, and we will continue to do so. Those are all data points, as I mentioned, that we put into the bucket to consider what the most relevant audits should be going forward.

[Han Dong, Liberal, Don Valley North, ON]

That's great. Is there a system—

[The Chair, Conservative, John Williamson]

I'm afraid that's time for now. It was a good round.

Regarding that meeting, we will be doing that, Ms. Hogan, when we're all back in Ottawa together. Just bear with us. Thank you.

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

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

Thank you, Mr. Chair.

I thank the witnesses for being with us today.

In a democracy like ours, their work is fundamental. It is important to verify whether expenditures are being used properly. So their role is certainly important. As representatives of the people, we are privileged to have access to their studies.

I would remind you that it was through the committee that one of the biggest scandals of the last 50 years—the sponsorship scandal—was uncovered. That scandal was brought to light because a report of this kind was made. So we have an important role to play.

Madam Auditor General, I would like to ask you two questions.

The first one is about all the unforeseen expenditures, that is, expenditures that are not budgeted for. If I remember correctly, you did an additional audit on the Trans Mountain project in 2018. As we know, we can't always plan for all expenditures up front. It may be expenditures to help areas affected by natural disasters or unplanned expenditures to help one sector or another.

Do you always evaluate these expenditures and how do you do it?

[Karen Hogan]

I've only heard one question. Do you have a second question for me?

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

I'm waiting for you to answer my question before I ask the next one.