Public Accounts Committee on Nov. 18th, 2022

[Karen Hogan]

Honestly, I think it's better to ask the government and the Department of Finance what their projections and their plans are going forward. Typically, as the auditor, we opine on transactions that have happened and tell you the facts of what the financial situation is at the end of the year.

[Michael Kram, Conservative, Regina—Wascana, SK]

Okay. That's fair enough.

I would like to change gears a little and circle back to your opening statements, in which you talked about National Defence's inventory. I found it a bit strange that this would even be an issue.

Could you elaborate on that? Does National Defence not know how many guns it has or how many grenades it has? What is the problem with National Defence's inventory?

[Karen Hogan]

It's been almost two decades that we have been raising concerns with Parliament about National Defence's difficulty with recording its inventory. It's mostly in the last few years related to the quantities and the dollar values assigned to it and is a result of internal control weaknesses in how its employees record and enter these transactions.

We attend their inventory accounts at the end of the year, and when we count items, as you mentioned, like guns, bullets and so on, we can tell you they do an excellent job of tracking those. However, National Defence's inventory has hundreds of thousands of different elements, and it is giving us the comfort that the quantities and the dollar values assigned to them are accurate.

National Defence is still working hard at that. That bar-coding project that it intends to put into place, we believe, will significantly contribute to its ability to reduce errors in its inventory.

[Michael Kram, Conservative, Regina—Wascana, SK]

Could you elaborate, when it comes to quantities of items, on what seems to be problematic? Where are these blind spots? What is it that it doesn't know whether it has or doesn't have?

[Karen Hogan]

Sometimes it's not that National Defence employees don't know that they don't have it; it's that they can't tell you exactly the location. There are a lot of inventory items that move around. There are items on bases. There are items in big depots. The controls at all of those locations might be different, so managing inventory country-wide is a process that they need to get a handle on.

When we tested, we continued to find errors. I think it was about 15% of the items that we counted continued to have errors. It's an improvement from last year, but it is still a large error rate.

[The Chair, Conservative, John Williamson]

That's your time, Mr. Kram. I'll come back to you, though.

Turning now to Ms. Shanahan, you have the virtual floor for five minutes. It's over to you.

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

Thank you very much, Chair.

I too would like to thank the Auditor General for making herself available to this committee on such a regular basis, and the comptroller general too, of course, and all other witnesses who are here with us today.

It's so interesting to hear the questions from my colleagues concerning the long-standing problems, like the inventory problems. That is something this committee has been concerned about and addresses regularly.

Also, there was the openness and candour in the Auditor General's remarks concerning, for example, the “emphasis of matter”, the fact that the COVID expenditures are extraordinary. While we all know about COVID right now, and it's very present for us, I imagine that 20 years from now, a public accounts committee looking at historical work and wondering what the heck happened during those years will have that available.

I would like to ask both the comptroller general and the Auditor General about the tabling of the reports. I hear some concern from my colleagues that it should be sooner rather than later, and I think we all agree on that. Historically, especially outside of election years, what was the date that the public accounts were tabled?

Would that be Monsieur Huppé who can best answer me, or the Auditor General?

[Roch Huppé]

I could definitely start, and we'd be happy to share with the committee an exact list of the previous years and exact tabling dates.

I would say that outside of an election year, obviously, you're looking at usually mid-October to the end of October. Sometimes it will go to the beginning of November. We've had years where we made late September. The average is more around October 20 within a normal year.

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

With that, Mr. Huppé, I have some dates here. In 2012, it was October 30; in 2013, October 30 again; and in 2014, October 29. Of course, 2015 was an election year, so it was December 7, and so on and so forth until today's, on October 27.

Would you say that in any way in those years—2012, 2013 and 2014—when I believe there was a majority government, there was any kind of holding back of the public accounts?

[Roch Huppé]

I can honestly tell you—and I've been in this job for five years—that there's never been any holding back of the tabling of public accounts. It's simply a matter of going through the steps: the quality assurance process. As I said earlier, we take extremely seriously the discussion we had at this committee last year. Even before receiving your report on the 2021 public accounts, we had already initiated some steps to work with some key stakeholders to see how we could be more efficient.

The goal, to be honest, is trying to aim for earlier in October. As you stated in your latest report to us on 2021, you're asking us to table by October 15. We think that plausibly, if what we're trying to accomplish gets done, we would be in a position to most likely—in a non-election year—meet that date.

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

Well, that's certainly good news for everyone here at this committee, but what I'm wondering, too, as we heard earlier in your remarks regarding the types of information included in public accounts, is that it sort of has a cumulative effect. Is that right? I suppose that every year or so parliamentarians—we're a demanding lot—are wanting to have information as to exactly how many cellphones were issued to the defence department or whatever.

I understand you're doing a survey now. We certainly hope to see some streamlining. What are the chances going forward that there will be less of a requirement for information or, in other words, the ability to streamline?

[Roch Huppé]

That's a great question.

It's not necessarily about having less reporting. It's that there's a lot of reporting happening at the same time and a lot of duplicate reporting. There's a lot of information on different departmental sites or other sites. What we're trying to do is make sure we eliminate the duplication as much as possible. We're not trying to take away the transparency.

You've kind of said it.... We're always asking for more, but at the same time, we're being asked to table and prepare the public accounts in a faster fashion. Again, right now, we have about 2,500 pages. When I take a look at provincial public accounts, for example, the average is about 450 pages. We're trying to find that balance.

Also, to be fair, for decades we had thresholds on what we reported. For example, on ex gratia payments, we report on a line-by-line item everything that's above $100. Everything below that is grouped together. On this notion of $100, it's not worth the same as it was decades ago, so again it's the materiality of how we report things. That's the type of thing we're trying to look at to gain efficiency, while at the same time making sure we're not going to lose any transparency. That remains available.

[The Chair, Conservative, John Williamson]

Thank you. That's the time.

I allowed for more time because I was quite interested in the answer from the comptroller on that question, which I suspect and hope will be coming back to this committee for consideration before any final decisions are made.

Ms. Sinclair-Desgagné, you have the floor for two and a half minutes.

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

Thank you, Mr. Chair

I'd simply like to repeat my question to the Department of Finance.

Why would you entrust a $50‑billion program serving nearly 900,000 businesses to a Crown corporation that's not used to making these kinds of loans, but especially not used to dealing with the public and small businesses?

[Nicholas Leswick]

Thank you for your question.

Quite honestly, there are two things. One is there's no excuse for the poor client service experience that you're associated with, or that your client or your interlocutors are talking about. That sounds terrible.

EDC were a key partner with us at the very front edge of the crisis. Honestly speaking, it was because they had the full waterfront of financial instruments available to them. They had expertise in guarantees, insurance, lending and equity. They had plugged-in relationships with financial institutions and credit unions in both federally and provincially regulated spaces. We needed them at that point in time.

When we deployed the emergency business account, which was the big thing for small and medium-sized businesses, we relied on EDC.

Downstream, their client service performance and your request for better reporting and better identification of who got the loans regionally and by the size of business.... The point has been completely taken. I haven't looked at a CEBA performance report in a long time. Perhaps I should brush up on my understanding of that, but it's certainly been noted.

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

Thank you for your response.

I will stay on the same topic.

In this case, if we agree that, in terms of performance and reporting of activities, things need to be done better, wouldn't it be appropriate to simply ask Crown corporations to report information the same way that departments do?

The Canada emergency business account, CEBA, is a very good example of this, but in general, going forward, if there's one thing CEBA can be used for, it's to demonstrate how important it is that Crown corporations be transparent.

Don't you think so?

[Nicholas Leswick]

I'm going to go out on a limb here, because I've been to this committee three or four times now and this is a very common theme from the member. I completely agree. These Crown financial organizations are massive federal enterprises that have a lot of capital and a lot of spending power, but they are distinct beasts. They live in different corners of the Financial Administration Act, and they have different powers and authorities in governance structures.

However, I totally understand the point here. I don't know that we consolidate them or integrate them line for line in our public accounts, but whether their annual reporting and corporate planning processes aren't really meeting the needs of parliamentarians.... We don't have a good understanding of what they're spending or how they're deploying capital, which is 100% taxpayer money. I absolutely take that point.

[The Chair, Conservative, John Williamson]

There, your time is up.

I let you have a little more time, because I find this discussion very interesting. With your permission, I'll do that from time to time, but not often.

You're all still on the time clock, but thank you for those questions and the answers.

Mr. Desjarlais, you have the floor for two minutes and 30 seconds.

[Blake Desjarlais, NDP, Edmonton Griesbach, AB]

Thank you so much.

I'd like to turn to an area within the report containing information related to additional information and outcomes. It was noted that there could be in this instance work related to environmental, social and governance reporting. It's the mandate of this committee in many ways to look at outcomes and the processes of those outcomes to make sure that, in fact, public spending reaches those targets.

In relation to environment, social and governance reporting, we have Commissioner DeMarco on behalf of the environment making his contributions, too.

Outcome studies are important for the work of understanding how Canadians can expect results for their investments. With regard to social and governance reporting, it's important, I feel, to find meaningful ways to enhance our reporting to take into account those other aspects.

To the Auditor General, you made mention of a part of this in your commentary. How could the government ensure that other aspects of reporting, including social and governance reporting, are relative and complete and can contribute to a meaningful and holistic understanding of our reports?

[Karen Hogan]

In our financial commentary report, I encouraged parliamentarians to ask that question of the government. I believe it is up to the government to decide how best they want to do it.

What we were highlighting is that international accounting standards are moving in that direction. I think, traditionally, good governance.... Any stakeholder is expecting an organization to discuss how they impact the environmental and social aspects and discuss their governance. It is a good corporate citizen approach.

I think the honourable member's question should go to the government.

[Blake Desjarlais, NDP, Edmonton Griesbach, AB]

Is there a comment from the Treasury Board?

[Roch Huppé]

Absolutely. This is an area that is extremely important. I have to say that it is on our radar quite a bit.

Obviously, there is some reporting that is happening right now. If you think about environmental types of reporting, we have the greening government strategy and others. That said, there's a lot of work now that's going to get done on imposing, potentially, other standards that will come and affect what we report and how we report on this.

My team, the Auditor General and I.... Actually, we both sit on the Public Sector Accounting Board and are privy to a lot of discussions about what could be coming down the pipe. Be reassured that we are following this. Obviously, as soon as more information and standards get developed and imposed, we will adapt our reporting accordingly.

[Blake Desjarlais, NDP, Edmonton Griesbach, AB]

Thank you very much.

[The Chair, Conservative, John Williamson]

Thank you. That is the time.

We're turning now to Mr. Genuis.

You have the floor for five minutes, please.

[Garnett Genuis, Conservative, Sherwood Park—Fort Saskatchewan, AB]

Thank you very much, Chair.

I've been poring through these public accounts. It's one of the most comprehensive documents on government spending that I've worked with. There's a lot of interesting information in it.

I want to jump to the issue of the Passport Canada revolving fund. I've been hearing a lot from constituents about concerns about passports and horrific failures in terms of service levels. I was interested to see how the money was being spent in the area of passports. This is on page 97 of volume III.

I was struck by a few things. Number one, if I'm reading this right, is that the numbers in brackets, which are most of the numbers, are still unaudited. Number two is that in both 2021 and 2022, the actual spending was way over the amount contained in the estimates. It was more than double in 2021 and still $100 million more in 2022.

What's going on here? Maybe I'll go to the Auditor General first and then the Department of Finance.

What's behind these seeming oddities I'm identifying here?