Public Accounts Committee on Feb. 1st, 2022

[The Chair, Conservative, Tom Kmiec]

I call this meeting to order.

Welcome to the second meeting of the House of Commons Standing Committee on Public Accounts. Pursuant to Standing Order 108(3)(g), the committee is meeting to receive a briefing from the Canadian Audit and Accountability Foundation on best practices for public accounts committees.

Today's meeting is taking place in a hybrid format, pursuant to the order of reference from the House on Thursday, November 25, 2021. This order allows members to attend in person or remotely using the Zoom application. The proceedings will be made available on the House of Commons website. So you're aware, the webcast will always show the person speaking rather than the entirety of the committee.

I will take this opportunity to remind all participants in this meeting that screenshots or taking photos of your screen is not permitted.

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

Members and witnesses may speak in the official language of their choice. Interpretation services are provided for this meeting. You have the choice, at the bottom of your screen, of either floor, English or French. If you can't hear the interpretation, please inform me immediately. I'll ensure that the interpretation is properly restored before proceeding with the work.

Please use the platform's “raise hand” function, which you can access on the main toolbar, if you wish to speak or draw the attention of the chair. Before speaking, please wait until I recognize you by name. If you're participating by video conference, please click on the microphone icon to unmute yourself. For those in the room, your microphone will be controlled as normal by the proceedings and verification officer.

When speaking, please speak slowly and clearly. When you're not speaking, your mike should be on mute.

With regard to a speaking list, the committee clerk and I will do the very best we can to maintain a consolidated order of speaking for all members, whether they're participating virtually or in person.

That said, I welcome our two witnesses. From the Canadian Audit and Accountability Foundation, we have Carol Bellringer, president and chief executive officer; and Lesley Burns, director of oversight.

You have five minutes for your opening remarks. I'm not sure which one of you wants to begin.

[Carol Bellringer, President and Chief Executive Officer, Canadian Audit and Accountability Foundation]

I'll start. We worked our presentation to 10 minutes, but we'll go fast.

Thanks so much.

Thank you for inviting us to today's meeting. We're very pleased to help guide this important parliamentary committee, which is somewhat different from other parliamentary committees.

For 40 years, our foundation has had a relationship with the Office of the Auditor General of Canada and with your committee. We encourage best practices and base all our products and services on well‑documented evidence.

We won't be following the slides closely, but I'll turn to a few in particular.

To start, the slide on the system of accountability just indicates the relationship of Parliament, through this committee, with audit—your Auditor General—and through government, the public service delivering all the services.

The feature of an effective PAC that we like to speak to is “Public money has no party”, so the public accounts committee operates slightly differently than all the other parliamentary committees.

Lesley.

[Lesley Burns, Director, Oversight, Canadian Audit and Accountability Foundation]

Thank you.

When I looked at the committee and realized just how much experience there was in the room, I was very impressed. There's a lot of experience on committees. I'm very glad that you have invited us to speak to you, even if you might wonder, “I've done this so many times. What am I going to learn?” I do want to let you know that the public accounts committee is different in how it operates. The key difference is that you are not looking at the merits of any policies; you are looking at how those policies have been implemented.

It's really reassuring to see such a strong team here on this committee, because the oversight of public money is more important now than ever before. I hope that the information we're able to share with you today helps make the transition to this role a little easier for you. Seasoned politicians, even the good ones, often don't know what the public accounts committee is, what the mandate is, or what the purpose is. If you hadn't heard of it before you were assigned to it, don't worry. You're not alone, and you're also not alone in trying to achieve this mandate.

Because you're looking at how policies have been implemented, you're inherently looking backward. That doesn't mean you're stuck in the past, but you're learning from the past and you're making changes in the present so that the future can be better.

We're very lucky to be speaking with the federal committee. All of your pieces are in place. You have the processes in place—and they're quite enshrined—to be a very effective committee. Sometimes when we're talking to committees, even other committees in provinces in Canada, they don't have those good practices in place.

You are a respected committee not only across the country, but internationally. You have excellent support staff, and in fact one of your support staff helps to literally write a guide to support other committees in Canada and internationally, so we thank the Library of Parliament for that.

Your work on this committee helps you focus on the effective management of the public sector, so you have the opportunity here to root out any waste that is found. The work you do on this committee will have a lasting impact on the programs and everything that follows them.

It may sound like a tough job, but you're really not on your own. You have reliable, evidence-based, independent research from the Auditor General that's designed to identify any issues. These investigations take hundreds of hours of audit work and around $117 million annually, and the evidence that is collected through this audit work provides you with the insight you need to make any positive impact.

You may ask yourself how you measure whether you're having an impact. The key for you on this committee is working with management to ensure that any deficiencies that are identified in audit reports are corrected. You might say, well, how do we go about doing that? We hope to provide a little bit more insight on that today.

A lot of people ask, if the auditors general know about all these problems, why don't they do something about it? Auditors do not have the authority to do anything about it. They can identify it, but they can't touch it. You, because you are elected officials, have that authority. It's part of your responsibility as an elected leader and as a member of the public accounts committee.

Carol, do you want to touch on the type of information that audit reports will give them?

[Carol Bellringer]

Sure, let's do that.

An audit is not an audit is not an audit. When you hear that they've done an audit, it's important to look at what type of audit it is. We've listed the types of audits that the Auditor General of Canada would issue, and the types of reports. Primarily, you will see a performance audit, which is mostly what this committee will be reviewing. Also a lot of time goes into doing financial statement audits. Those are similar to the private sector—

[Brenda Shanahan, Liberal, Châteauguay—Lacolle, QC]

I have a point of order.

[The Chair, Conservative, Tom Kmiec]

Yes, Mrs. Shanahan.

[Brenda Shanahan, Liberal, Châteauguay—Lacolle, QC]

Is there a PowerPoint being shown, because I'm not seeing it on the Zoom screen?

[The Chair, Conservative, Tom Kmiec]

No, it was distributed to the committee.

[Brenda Shanahan, Liberal, Châteauguay—Lacolle, QC]

All right. So we printed it. Thank you.

[The Chair, Conservative, Tom Kmiec]

Yes.

Please continue.

[Carol Bellringer]

Thank you. We can resend it as well.

If you look at slide 12, you see that it lists performance audits, financial statement audits. They will issue an information report every year. It's a commentary on the financial audits. The financial statement audit is an opinion that sits at the front of the financial statements, the public accounts, that are issued by the government, but it has an opinion by the Auditor General, saying basically that you can rely on the numbers and disclosures in these statements. That's it. It tells you in one or two pages that it's complete and accurate.

Performance audits are big. They're long reports that the Auditor General writes. The Auditor General in that direct report will let you know what they looked at, how they looked at it, the criteria they used, what [Technical difficulty—Editor].

[The Chair, Conservative, Tom Kmiec]

Sorry, Ms. Bellringer, I think we lost your audio. Can you just repeat the last 10 seconds?

[Carol Bellringer]

The performance audit will be quite [Technical difficulty—Editor] report to see what they looked at, how they evaluated it, what criteria they used and what they found, and then they'll make recommendations.

Some of the sample audit topics that you will have seen, read or heard about in the news [Technical difficulty—Editor] on Canada's food system, respect in the workplace and, not too long ago, a collaborative report from all the auditors general across Canada was done on climate change.

They do follow-up audits, which would be a separate thing. It would follow the original audit. It would get into a more current status for you. For example, one was issued on rail safety within Transport Canada.

The slides on page 22 have the link to the page on their website where they have a current summary of everything that's planned going into the future.

I'll leave it there. We certainly can get into much more detail. We do full workshops on actually walking through a performance audit, so that you fully understand how they lay it out and what kinds of things it will tell you. It gets into what kinds of questions you can ask around those performance audits.

Lesley, do you want to...?

I'm sure we're well over the time. How do you want us to proceed? We can get into a few more good practices.

[The Chair, Conservative, Tom Kmiec]

If you want to wrap up in maybe another minute, that will get us to 10 minutes, and then we'll turn it over to the committee to ask you questions.

[Lesley Burns]

Sure, thank you.

I'm happy to go into any of the details on good practices or how you might want to achieve those.

A key thing I want to leave with you when you're considering your work on the committee is that when you're going into a hearing, it's very important to have a shared purpose for that hearing, so you know as a committee—as a group—what you want to accomplish. Put emphasis on ensuring that your reports are unanimous. The public and departments that are audited are very used to having politicians disagree. When there is agreement in those reports, it gives a very clear message as to what the committee is hoping the departments or audited entities will accomplish.

The other key thing is follow-up. This is a weakness we see in many committees. You have an excellent follow-up process in place. You can lean on your support staff and on the work of the audit office to know what needs to be followed up on. Committees before you have done a lot of work. You know and the public knows that there are reports outstanding that departments owe to your committee. You can follow up on those, ensure that progress is being made and then collaborate.

That may sound like it's more difficult to do than it first seems, but when you really focus on the fact that you're looking at the implementation of policy and not the merits of policy, it becomes much easier to collaborate as a committee.

I can leave it there and open it up to questions.

[The Chair, Conservative, Tom Kmiec]

Thank you both for walking us through your presentations.

Colleagues, in the interest of treating this like a workshop, I'm going to suggest that we forgo the motion that you passed at the first meeting, which allocates time based on party, and just open it up to anybody. Just grab my attention.

I would need an okay from the whole committee. This would give an opportunity for all new members to get in and be able to ask questions or shorter questions in the back-and-forth with these two experts, so we can learn about the public accounts performance audits.

Do I have the agreement of everybody to proceed in this manner? I see nods of heads. Thumbs-up would be great, or an indication that you are okay with this.

Thank you. We will proceed in this manner.

I will recognize Mrs. Shanahan first, because she has her hand up.

[Brenda Shanahan, Liberal, Châteauguay—Lacolle, QC]

Excellent. Thank you very much, Chair.

I'm sorry for interrupting before. I guess we're getting used to shared screens and all that sort of thing. Of course you can't do so for security reasons, I believe.

I have found the PowerPoint. Thank you very much to the presenters here this morning. It is very interesting.

I do have a previous history with this account, but I understand that while some things have evolved, other things have remained static.

Just briefly, the slide where you outline performance audit, financial statements audit, information reports.... Can you just give us a more fulsome definition? Especially on the performance audit, this is where the public accounts committee really distinguishes itself. We're not just studying the numbers, although the numbers are important. I want to know what you think are important questions for us regarding the annual public accounts—the actual reports.

Talk to us, please, about the difference between those kinds of reports.

Thank you.

[Carol Bellringer]

Sure.

First of all, the financial statement audit is the opinion on the public accounts. The Auditor General's office spends thousands of hours doing that. It's a large effort. It's the combination of everything under the government's control. It's a huge document.

That's the government's.... The government owns that public accounts document. The audit opinion is just placed on the top—after all of the Auditor General's work—saying that you can rely on it. One thing Canada can be very proud of is that there has been what we call in the audit world a “clean audit” opinion on the financial statements for...I think forever. I can't recall anything in the past. That means there's nothing they need to tell you to adjust in order to use those statements.

They also come across things in the process of doing those audits. That's put into a document that they label.... The name has changed over the years, but it's a commentary on those public accounts. You'll get that report every year from the Auditor General's office.

The performance audits are the bundle that they issue periodically. They're several chapters. They're large. They are independently selected and the criteria are developed by the office independently, depending on what they are choosing to look at. It used to be called value-for-money auditing. The terminology now is “performance audit”. There are Canadian standards for those assurance engagements. The audit office follows all of that good practice.

It's often referred to as looking at economy, efficiency and effectiveness. It does get into the environment. Were the intended results achieved? It's very broad in nature. It could be on any subject. They will look into a particular area that could be around risk management, compliance or, as I mentioned, climate change and so on.

It does not assess the merits of policies. This is consistent with the public accounts committee's role, as this is not a committee for policy discussion. Once the policy has been put in place, it looks at whether it has been administered appropriately. They will select an aspect of that. They are only looking at a selection through the year.

In addition to the performance audits, financial statement audits and the action plans that ministries or organizations that have been audited must provide to the committee to tell where they are in following up with the recommendations made by the Auditor General, the Auditor General will also select a few to re-audit. They will produce a follow-up audit. It's not the same as the original audit. It's shorter and it gets a little bit more into the risk areas that they don't think were addressed. They will go into those.

They also do special examinations on Crown corporations. Again, it's through a cycle. They will produce a report to the committee as a result of those special examinations.

Those are the four different types you'll get: commentary on financial statement audits; the financial statement audits themselves, which are attached to the statements; performance audit reports, which is what you will primarily be examining; and special examinations. Follow-up audit reports are just performance audits of another aspect.

[The Chair, Conservative, Tom Kmiec]

Thank you.

I'll recognize Mr. Fragiskatos next.

[Peter Fragiskatos, Liberal, London North Centre, ON]

Thank you very much, Chair.

Thank you both for your work. This is the first time I've served on this particular committee. I really look forward to it. This is a nice primer, so to speak.

I see that on page 25 of your presentation, under the heading “Effective Questions”, you say “Focus on the big picture”. I think you have touched on some of that, in terms of what is meant there, but can you share with the committee how you would define “big picture”? If we were being advised to take the view from 30,000 feet, so to speak, what does that entail? What sort of things are we looking at in particular to get to that outcome?

Thank you.

[Lesley Burns]

Thank you. I can take that.

By “big picture”, in a sense we also mean what's going on in the context of everything. When you hold a hearing and you're asking those questions, you'll have two types of witnesses. One will often be the Auditor General, and one will be the audited department.

You would want to ask the Auditor General for clarity on the audit and the audit's scope. An auditor won't speak to something outside of the scope of the audit, because the nature of the information they're giving you is very much evidence-based, and they would only have evidence on that scope. Then, in terms of the big picture for the audited entity, what you really want to look at is whether they are implementing changes to address the issues that were identified in the audit, and whether that is going to improve public administration. That's what we really meant by ”big picture” on that slide.

There are a lot of ways of going about questioning, and we do an entire workshop on questioning, so I won't get into the details on that, other than to reiterate that it's very helpful as a committee if you go into a hearing knowing the types of questions you want to ask. What aspects of the changes and improvements do you want to understand more about? Are there holes that weren't addressed in the status updates or progress reports that you have received from the department? Those reports are intended to let you know and to outline what they plan to do.

Another key issue on effective questioning is keeping an ear open for whether they are contradicting anything in that action plan or status update. Get more details on that if you need them, and then you can take that information and use it for the report you're writing.

[Peter Fragiskatos, Liberal, London North Centre, ON]

Thank you very much for that.

[Carol Bellringer]

May I throw in a couple of words around it? I'm recalling a number of public accounts committee meetings many years ago and in another place—it was in another province in Canada—and far too much time in the meeting was taken up discussing a $1,500 fire extinguisher. Needless to say, this is not a good practice. The committee needed to move into what caused it to happen: What was the system failure?

That was listed in the audit reports, but they went into the disclosure document and focused on some small things like, “Why did you buy the fire extinguisher?” as opposed to, “How are the systems preventing that from occurring?” It's about balancing the time and not getting into.... Some things are pretty tempting to get into because you know they're going to catch attention, but they may not get to the root cause of the problem.

[Peter Fragiskatos, Liberal, London North Centre, ON]

Thank you very much.

[The Chair, Conservative, Tom Kmiec]

Mr. Lawrence, go ahead.