Evidence of meeting #52 for Public Accounts in the 45th Parliament, 1st session. (The original version is on Parliament’s site, as are the minutes.) The winning word was system.

A video is available from Parliament.

On the agenda

Members speaking

Before the committee

Hogan  Auditor General of Canada, Office of the Auditor General
Hayes  Deputy Auditor General, Office of the Auditor General
Armutlu  Principal, Office of the Auditor General

10:10 a.m.

Conservative

The Chair Conservative John Williamson

Good morning.

I call this meeting to order.

Welcome to meeting number 52 of the Standing Committee on Public Accounts. Today’s meeting is taking place in a hybrid format, pursuant to the Standing Orders. Members are attending mostly in person.

Pursuant to Standing Order 108(3)(g), the committee commenced consideration of the 2026 fall reports of the Auditor General of Canada, referred to the committee on Thursday, October 29, 2026, which is today.

I want to thank the Office of the Auditor General for coming in today and preparing the reports and briefings that parliamentarians received throughout the morning.

I would now like to welcome all the witnesses. We have many reports today, so we have many witnesses.

From the Office of the Auditor General, we have Karen Hogan, Auditor General of Canada.

Thank you very much for coming in today.

We have, as well, Andrew Hayes, deputy auditor general, and Markirit Armutlu, principal.

It's nice to see you.

We also have Milan Duvnjak, principal; Sami Hannoush, principal; Nicolas Blouin, director; Nicholas Brouwer, director; Lucie Despres, director; Jean-François Nadeau, director; and Stacey O'Malley, director.

Thank you, all, for coming in today. I know the Auditor General relies on you for your good work and occasionally turns to you for questions that are very specific. That's why we appreciate having you here today to answer our specific questions.

Ms. Hogan, the floor is yours for your opening remarks. Take the time you need. Then we'll go to our rounds of questions. I'm going to try to get three total rounds in. That will take us just over an hour, with everyone's co-operation.

It's over to you.

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

Thank you and good morning, Mr. Chair.

I want to begin by acknowledging that we are gathered on the traditional unceded territory of the Algonquin Anishinabe people.

With me today are Deputy Auditor General Andrew Hayes and the principals and directors responsible for the audits. Mr. Hayes will answer questions about the three environmental audits that were led by the commissioner of the environment and sustainable development.

The nine performance audit reports that were just tabled in the House of Commons touch on issues that matter directly to Canadians, including national security, public health, financial integrity, government services and environmental protection. Although the subjects are varied, these audits tell an important story about how federal organizations manage risks and deliver results.

Overall, our audits found progress in some areas, but they also revealed persistent problems in others. In several cases, we found that organizations were slow to address known issues. This contributed to delays, higher costs and programs that did not deliver their expected benefits. In contrast, our audits of two newer programs showed positive results and identified early opportunities for improvement.

Our audits of ammunition management and the public health emergency stockpile found weaknesses in how the organizations planned for future needs and managed essential supplies. In both cases, problems that had been identified through earlier audits had not been fully addressed. These weaknesses raise concerns about preparedness for future needs.

National Defence lacked reliable inventory information and a comprehensive assessment of the ammunition it needed, both for regular use and for its strategic stockpile. Its inventory controls also needed improvement, and there were significant gaps between what was required and what was available in some inventory classes. Without reliable information and sound planning, National Defence does not have a clear picture of the types and quantities of ammunition it needs.

The Public Health Agency of Canada responded to all 81 requests for medical supplies it received over the last two years. However, our audit found significant weaknesses in how the agency managed the stockpile for public health emergencies. It did not know the types and quantities of many supplies it needed to respond to major public health events in the future.

These findings highlight the importance of sound planning and acting on known problems before an emergency occurs. Responding to immediate needs is important, but so is being prepared for the future.

We also found weaknesses in how organizations managed major investments and measured results. The Canada Border Services Agency invested more than $800 million to develop and maintain the system it uses to process duties and taxes on commercial imports. While the system is operational, the agency has not realized expected benefits. Employees continue to rely on manual workarounds and older systems because some functions that the new system was meant to include were deferred to meet the planned deployment date.

Our audit of contracts to modernize federal call centre technology found problems with procurement and contract management. Costs increased, modernization was reduced, and weaknesses in planning for replacement systems created a risk that services to Canadians could be interrupted. We also found that Shared Services Canada did not consistently verify invoiced amounts or exercise rigorous controls over payments, which echoes findings from previous procurement audits.

We found similar concerns about effectiveness at the Financial Transactions and Reports Analysis Centre of Canada. This centre helps protect Canada's financial system from money laundering and terrorist financing. The centre takes an average of nearly four months to provide financial intelligence to law enforcement agencies. We also found that the centre had relaxed its approach to how it supervises businesses. As a result, there was less assurance that these businesses were meeting their legal obligations.

The findings from these three audits highlight the importance of both effectiveness and efficiency. Whether managing major investments or carrying out critical responsibilities, federal organizations should be able to demonstrate that they are achieving their intended results.

Transparency and accountability are also fundamental responsibilities of federal organizations. In that regard, our environmental audits raised concerns about how departments were working to meet Canada's commitments.

In our audit on the implementation of the Canadian Net-Zero Emissions Accountability Act, we found that Canada was moving further away from its 2030 greenhouse gas emissions target. The government's latest projections showed a smaller reduction in emissions than previously anticipated. As planned measures changed, with some being cancelled or adjusted, Environment and Climate Change Canada did not report how Canada's plan will shift to meet the government's 2030 reduction target.

In our audit of thermal coal commitments, we found that Environment and Climate Change Canada stopped working to implement Canada's ban on thermal coal exports. It did so without completing planned assessments or informing Canadians. In addition, Global Affairs Canada had not publicly reported on progress and implementation challenges related to Canada's financial support for developing countries moving away from coal-fired electricity.

In these first seven audits, we see the importance of preparing for challenges and delivering results. During the pandemic, we saw that the public service could rise to the challenge.

However, being as prepared as possible also means learning from experience and addressing weaknesses before they become persistent problems. This means optimizing the use of public funds and being transparent about results, challenges and the progress made.

Looking ahead, our two remaining audits show how newer programs can deliver results from the start and identify opportunities for improvement early.

These audits show that organizations can deliver results quickly.

Our audit of Health Canada's monitoring program for pesticides in water, which the department launched in 2024, shows that this program is already producing useful information and informing regulatory decisions. Now the department needs to take the next step and follow up on all pesticides identified as posing a higher risk based on monitoring carried out to date.

Similarly, our audit of the Canadian dental care plan, which was launched just under three years ago, found that Health Canada efficiently managed this new program to provide access to affordable dental care. As of March 2026, almost seven million people had registered for the plan. Our audit showed opportunities to build on these strong early results.

For example, Health Canada can improve its communications, better measure if oral health is improving for people receiving services and reduce barriers to access. For example, 61,000 children in care across Canada currently cannot access these dental benefits.

Acting on our findings will help federal organizations address known weaknesses, seize opportunities for improvement, better prepare for the present and the future, and deliver strong results that Canadians expect.

That concludes my opening remarks.

We would be pleased to answer any questions committee members may have.

Thank you.

10:20 a.m.

Conservative

The Chair Conservative John Williamson

Thank you very much.

For the regular committee members, I'm going to be quite strict with the time today.

For those who are joining us, the practice of this committee is that as long as you get your question in within your time, the witnesses will have an opportunity to answer briefly. Please keep that in mind. You just cannot interrupt them once your time is up. If you do, I will move on to the next person.

Mr. Mantle, you will kick us off for six minutes, please. The floor is yours.

10:20 a.m.

Conservative

Jacob Mantle Conservative York—Durham, ON

Thank you, Mr. Chair.

Ms. Hogan, thank you to you and your staff for appearing and for your continued work to uncover value for money for Canadian taxpayers. We appreciate you for that.

I want to begin my questions with FINTRAC, the Financial Transactions and Reports Analysis Centre of Canada. This is a very sobering report. I want to make sure that I understand your top-line conclusion correctly.

Your report notes that FINTRAC “did not effectively carry out its role in overseeing compliance with Canada’s anti-money laundering laws” and that its inability to do so limited Canada's “ability to help detect, prevent, and deter money laundering”.

Is that correct?

10:20 a.m.

Auditor General of Canada, Office of the Auditor General

Karen Hogan

I would tell you that FINTRAC was slow to produce financial intelligence, and they weakened their oversight, which had a direct impact on their effectiveness.

10:20 a.m.

Conservative

Jacob Mantle Conservative York—Durham, ON

One of the things you highlight in your report on FINTRAC is the importance of “timely financial intelligence”, whether proactive or reactive, to law enforcement. However, you note that FINTRAC took an average of four months to provide financial intelligence to law enforcement.

Is that sufficiently timely for law enforcement?

10:20 a.m.

Auditor General of Canada, Office of the Auditor General

Karen Hogan

I think many Canadians can appreciate the speed at which financial transactions happen nowadays, and four months is not providing useful information. What we found was FINTRAC wasn't actually measuring whether their information was useful to law enforcement agencies.

We did a survey. Of the agencies that responded to our survey, 50% of them confirmed that the information was not received in a timely way. That was for the reactive information—when they asked for assistance. On the proactive side, about a third of the respondents to our survey said that it was useful: either it supported an ongoing investigation or, in most cases, it confirmed what they already knew.

10:25 a.m.

Conservative

Jacob Mantle Conservative York—Durham, ON

That's troubling indeed.

You reviewed FINTRAC's IT systems. In 2024, there was a disruption. They encountered a cyber-attack. Have they recovered from that?

10:25 a.m.

Auditor General of Canada, Office of the Auditor General

Karen Hogan

You're correct. There was a cyber-incident that took their registration system off-line in 2024. That system has not been put back online. It took them a few months to find a workaround, and that workaround is still in place. We looked at the slowness of that and the impact that it would have on registration. There is a backlog of money businesses that are trying to register in order to operate legally here in Canada.

The investment of money that they received to work on their IT systems hasn't been spent, and they still don't have a clear timeline for putting that system back online. We have made a few recommendations in that area, because you need to leverage technology in this field in order to provide timely and relevant financial intelligence.

10:25 a.m.

Conservative

Jacob Mantle Conservative York—Durham, ON

You noted that FINTRAC, in addition to not having a timeline, doesn't know the total cost of what this IT project will be, but it has spent $13 million of about $30 million so far. At the same time, you identified a program that could have been implemented for significantly less and that is used by over 70 countries already, including big countries like Germany, Switzerland and New Zealand, which is a member of the Five Eyes. Why has FINTRAC not considered that?

10:25 a.m.

Auditor General of Canada, Office of the Auditor General

Karen Hogan

That's an excellent question to ask FINTRAC.

We thought that even though they want to develop their own system that might be integrated with law enforcement in a better way, there is a temporary solution that could help them be more effective. That's why we encouraged them, in one of our recommendations, to at least consider it and consider the usefulness, the cost and so on.

10:25 a.m.

Conservative

Jacob Mantle Conservative York—Durham, ON

I have a few quick questions about the Canada Border Services Agency's customs and revenue management system.

The government promised that this system would improve the assessment and collection of customs duties. Were you able to determine whether, in a post-CARM era, the government is more effective at collecting customs duties?

10:25 a.m.

Auditor General of Canada, Office of the Auditor General

Karen Hogan

We didn't really look at the enforcement and didn't check how many receivables were out there on this system. We wanted to see if this system was doing what it intended to do, which was replace old legacy systems and a mostly paper-based border. In that respect, it did that. However, because of many delays in the development of the system and the need to go live, some of the functionality was taken out of the system, which reduced the effectiveness.

Now there are many manual workarounds, and there is still a reliance on some legacy systems, so the efficiency that was meant to materialize in the public service isn't there just yet. When people are dedicated to doing manual workarounds, they're not doing the more important work, which is checking on compliance and verifying the accuracy of declarations, which could help improve revenues.

Jacob Mantle Conservative York—Durham, ON

I have two final questions. I'll put them both to you and let you answer.

The first is on the cost of the system. I understand it was supposed to be implemented for about $400 million. Could you tell us where the agency ended up?

Second, you note that, for importers and people using the system, it's taking the agency an average of over a month to get back to them on their inquiries about the system. We all know that importing products happens on a daily basis based on a click on an Amazon cart. Could you tell us why it's taking so long or what the response was?

10:25 a.m.

Auditor General of Canada, Office of the Auditor General

Karen Hogan

Sure. When it comes to costs, you're right. They've invested about $800 million so far in the development and maintenance of this system while the budget was about half of that, and we tried to understand exactly why. There were a few delays, one of which was linked to not having identified regulatory regime changes that were needed, which added about $100 million to the budget and caused a 17-month delay.

There was also the government's shift to having systems on the cloud versus having them on premises. That also caused delays and an increase to the budget. I think there were a few things that caused it, some well within their control—they should have known about regulatory changes—and some outside of their control.

When it comes to importers, that was what the third objective was about, really. The first two were to automate the border and improve efficiency in the government, but the third objective was to reduce the burden on importers. What we saw is that importers are waiting a long time to have assistance requests answered. I think it was a question of capacity. They receive about 19,000 calls a month to their help desk, and many of the importers that we surveyed said the guidance is too technical and is not useful. There are lots of opportunities for improvement there.

10:30 a.m.

Conservative

The Chair Conservative John Williamson

Thank you.

10:30 a.m.

Conservative

Jacob Mantle Conservative York—Durham, ON

Thank you very much.

10:30 a.m.

Conservative

The Chair Conservative John Williamson

Mr. Mantle, you're a fast learner at stacking your questions.

We'll now go to Mr. Gobeil, for six minutes.

Daniel Gobeil Liberal Chicoutimi—Le Fjord, QC

Thank you, Mr. Chair.

Thank you very much, Ms. Hogan, and to everyone here with us this morning.

I'd like to talk a bit more about the customs and revenue management system.

You mentioned that, given the development costs, the automation originally planned was put on hold, even though it was supposed to make the system more efficient.

Do you still believe that this would be an important measure to put in place for processing transactions?

10:30 a.m.

Auditor General of Canada, Office of the Auditor General

Karen Hogan

We recommended that the Canada Border Services Agency analyze all of its manual workarounds. They can sometimes be helpful, but right now, there are 38 manual workarounds, so they need to be analyzed to determine whether it's worth investing to incorporate them into the system, since improving or changing the system will cost money, or whether the manual workarounds should be maintained.

CBSA currently spends approximately 90,000 hours a year on these manual processes. In my view, these individuals could spend that time doing more important work to improve the management of the collection of duties and taxes at the border.

Daniel Gobeil Liberal Chicoutimi—Le Fjord, QC

In terms of time, if those work hours were freed up, what sort of activities could those people carry out within the agency?

10:30 a.m.

Auditor General of Canada, Office of the Auditor General

Karen Hogan

It's really up to the agency to decide, but I think it's fair to say that, instead of doing these manual processes, those employees could be analyzing importers' declarations to ensure that they've been done correctly and, if necessary, adjust the taxes and duties that need to be collected. This could potentially increase the Government of Canada's revenue. Taxes and duties on imported goods are the Government of Canada's second-largest source of revenue, after income tax, which is why it is so important to do this work effectively.

Daniel Gobeil Liberal Chicoutimi—Le Fjord, QC

Indeed.

Regarding the expected efficiency gains, yes, it is about processing the declarations to begin with, but will this also have an impact on the revenues collected? What are your criteria for assessing the efficiency of a process?

10:30 a.m.

Auditor General of Canada, Office of the Auditor General

Karen Hogan

We really focused on the budget compared to the current costs. The budget has almost doubled, which raises doubts as to whether taxpayers' money is being put to good use in this investment.

With respect to the border, the agency has no measures or indicators to assess the benefits of this investment. I would encourage CBSA to look at a 2025 document from the Organisation for Economic Co-operation and Development that outlines indicators for determining whether digitizing border processes has any real benefits. That would be a good place to start. That's one of our recommendations. The agency should assess whether there really are any benefits.

What is certain is that this is currently undermining the efficiency of the public service.

Daniel Gobeil Liberal Chicoutimi—Le Fjord, QC

Thank you.

Now I want to talk briefly about the Canadian dental care plan. As we know, this is an important social program that was put in place by the federal government. We haven't seen anything like it in a generation.

Based on the various figures available regarding participation and utilization rates, do you think this program is fairly well known to Canadians? Has it been sufficiently promoted?