Evidence of meeting #5 for Public Safety and National Security in the 39th Parliament, 1st Session. (The original version is on Parliament’s site, as are the minutes.) The winning word was costs.
4:10 p.m.
NDP
Joe Comartin NDP Windsor—Tecumseh, ON
I did a quick analysis, Mr. Baker. My estimation is that at best we're going to get a $2 million to $3 million saving if we dismantle the long gun registry.
4:10 p.m.
Conservative
The Chair Conservative Garry Breitkreuz
That is going to have to be your last question, Mr. Comartin.
4:10 p.m.
Former Commissioner, Canada Firearms Centre, As an Individual
I couldn't comment, because what we reported on—the only figures I have confidence in reporting on—is what the total cost of the registration program was, so I'm afraid I can't speculate on that.
4:10 p.m.
Conservative
The Chair Conservative Garry Breitkreuz
Just on that point, Mr. Baker, some of the numbers I've seen for pre-1995, when some years it was about $10 million and some years it was about $15 million to run the previous registration of hand guns and the licensing.... Are you familiar with those figures on an annual basis? They usually ran between $10 million and $15 million a year.
4:10 p.m.
Former Commissioner, Canada Firearms Centre, As an Individual
Mr. Chair, I have some vague familiarization with it. Just to repeat, our singular and sole focus—my focus since my appointment—was to address the issues on a go-forward basis and get better information and get the costs under control and provide a better service to Canadians. I did not spend time looking back.
4:10 p.m.
Conservative
Laurie Hawn Conservative Edmonton Centre, AB
Thank you, Mr. Chair, and thank you to the witnesses for appearing today.
I'd like to go back to the $39 million and $21.8 million for a question or two. Those development costs for CFIS II were not reported as expenditures in the appropriate year, and I'm wondering whether those failures to report certain amounts in the proper fiscal year are particularly unique accounting errors, or are they comparable with what your office may have found in other audits across government operations?
4:10 p.m.
Auditor General, Office of the Auditor General of Canada
I find it hard to respond to that, Mr. Chair. I would certainly imagine there are other errors and other amounts that aren't recorded in departments, given the way we do the public accounts audit. We do an audit of the summary financial statements, which means all of government, so we don't pay a lot of particular attention to individual departments. Our whole assessment of importance is based on the overall financial statements of the government. We tend to look for what we call “cut-off errors”—whether things are recorded in the right year—with very large transactions, so it is very possible that the $30 million would not be recorded in the right year.
In the case of the $21 million, it wasn't simply that someone overlooked it; there was a conscious decision not to record it.
4:15 p.m.
Conservative
4:15 p.m.
Auditor General, Office of the Auditor General of Canada
Well, it came up as we were doing the audit of the numbers.
The purpose of this audit, largely, was to go back to assess whether there had been improvement in financial reporting. We said the best way to do that is to actually audit the statement of costs of the Firearms Centre and be able to give an audit opinion on it. That's where we started our work.
It was in the course of doing that audit that we came across these errors. That's how we found it. We were not necessarily aware of this beforehand; it came up in the course of the audit. That's why we had to do the additional report, because it came up quite late in the audit.
4:15 p.m.
Conservative
Laurie Hawn Conservative Edmonton Centre, AB
This one is probably for Mr. Sims.
The special report of the Auditor General states that Department of Justice officials could not provide documentation showing any analysis or process by which the decision was made to report the $39 million in the appropriate year. Was there simply no documentation, or was it misplaced? How was it tracked?
4:15 p.m.
Deputy Minister and Deputy Attorney General, Department of Justice
Mr. Chairman, there was no documentation. I think there was a negative decision, a decision not to do something.
At year-end the chief financial officer is beset by many people in the department who are hoping to convince him that their money ought not to lapse at year-end or are trying to persuade that individual to please put their about-to-lapse money into the PAYE list so that it can be saved for next year. Many examples come in. The chief financial officer tests the requests against his understanding of the policy and frequently says no, they don't qualify. He gives many negatives and had not been recording those. It felt like a straightforward decision and was treated as such.
That's, I think, what happened.
4:15 p.m.
Conservative
Laurie Hawn Conservative Edmonton Centre, AB
For clarity—and I think you covered this before a little bit—you can't specifically say how decisions were made to report or not to report, other than what you've just mentioned. There was nothing documented as to why it was not done.
4:15 p.m.
Deputy Minister and Deputy Attorney General, Department of Justice
There is nothing to document it, Mr. Chairman, as to why it was not done.
4:15 p.m.
Conservative
Laurie Hawn Conservative Edmonton Centre, AB
Switching gears a little bit to costs, direct and indirect, the Canada Firearms Centre is now reporting some of the indirect costs of its federal partners, such as the RCMP, Canada Border Services Agency, and so on. But the Office of the Auditor General has recommended a clear definition of what constitutes an indirect cost.
Could you, Ms. Fraser, explain how an indirect cost would be different from a direct cost?
4:15 p.m.
Auditor General, Office of the Auditor General of Canada
I'll ask Mr. Kasurak to answer that.
4:15 p.m.
Peter Kasurak Senior Principal, Office of the Auditor General of Canada
Thank you, Mr. Chairman.
The direct costs are those that are reimbursed, and the supporting departments have a strong notion of what those are: there was activity, they're billing the program for it, and they're being reimbursed.
The indirect costs are ones for which there's no recovery. They have to assume those costs themselves.
What we found was that each department had a different means of doing it. There is no across-the-board cost accounting system in the Government of Canada, and so we had departments such as Corrections Canada using a formula based on prisoner days, and they would include various slices of overhead in that, whereas the RCMP had little cells of people working and contributing to the parts of the program, and so they could say that group's cost is about this amount, and they would charge that. There was no uniformity.
The centre was in the unenviable position of having to more or less accept these as given. It doesn't really have the authority to impose an accounting policy on another department. However, we felt that because there was no uniformity it would be better if some consistency were applied and the centre at least vetted them to know what it was receiving in the door and could report on that basis.
It's not a huge deal, but it's something that's significant enough, and it should be tidied up.
4:20 p.m.
Conservative
Laurie Hawn Conservative Edmonton Centre, AB
So is it an unfair suggestion to make, prior to their cleaning up and defining what a direct or indirect cost is, that indirect costs are possibly significant, but not recorded as an impact of the registry?
4:20 p.m.
Senior Principal, Office of the Auditor General of Canada
I don't think in the grand scheme of things they are likely to change the overall cost of the program. Individual departments might go up and down, but in the end I think that changes to indirect costs are not likely to make a huge difference to anybody's opinion about the value of the program.
4:20 p.m.
Conservative
Laurie Hawn Conservative Edmonton Centre, AB
Can you confirm for me what progress the Firearms Centre has made in clearly defining indirect costs and accounting for those?
4:20 p.m.
Senior Principal, Office of the Auditor General of Canada
We've only come to the end of the audit and made a recommendation, so we haven't had any discussion since then.
4:20 p.m.
Former Commissioner, Canada Firearms Centre, As an Individual
If I may, Mr. Chair, it's true these are new recommendations and that the centre, which is now with the RCMP, will be taking subsequent action. But I think it's important to point out that at the time of the 2002 audit, indirect costs were not being reported and that we have attempted to do that as accurately as possible.
4:20 p.m.
Conservative
Laurie Hawn Conservative Edmonton Centre, AB
You've probably made no attempt to go back and recapture those.