Public Safety Committee on May 31st, 2006

[Tom Wappel, Liberal, Scarborough Southwest, ON]

All right. The Auditor General identified a second accounting error. Let me ask you the same question, then. Was the second accounting error—without going through it again, because you've been talking about this in public accounts—or the methodology that resulted in it ever discussed with the minister of the day?

[John Sims]

Mr. Chairman, we're playing pass the microphone, but between the first accounting error and the second accounting error, the responsibility for the Canadian firearms program had left the Department of Justice and moved to a separate agency, and Mr. Baker by this time had become responsible for the program. So perhaps, Mr. Chairman, that question—

[The Chair, Conservative, Garry Breitkreuz]

All right. Mr. Baker, you heard the question.

[William Baker]

If I could, I'd like to take a moment to identify the events leading up.

As I mentioned, in April 2003 the Canada Firearms Centre left the Department of Justice to join the Solicitor General's portfolio as a separate agency, and I was appointed the commissioner shortly after, when Bill C-10A came into effect.

One of my first orders of business as a separate agency of government was to build capacity, primarily in our operating and financial areas, which, as you know, based on the Auditor General's 2002 report, was an area that was particularly problematic. I recruited a chief financial officer who over the course of the fall built the accounting capacity of the Canada Firearms Centre.

It was in the course of doing that and analyzing the books and records that were in place that we identified the possibility that the way the charges for the development costs of CFIS II had been booked against the appropriations year over year may have been in error. This was discussed with the Office of the Comptroller General at the chief financial officer level, and they concurred that an error had occurred.

Based on that--and it's now late January 2004--we realized that if all of those charges had to be booked in 2003-04, we would not have sufficient money in the budget. The time to submit supplementary estimates (B) was fast approaching, so the first order of business was that I advised the minister that we may need supplementary estimates, otherwise the Canada Firearms Centre could blow its vote.

Then we took the matter to the more senior officials at Treasury Board Secretariat, Office of the Comptroller General, and Public Safety to have this matter more fully analyzed. That led to a conclusion, based on a number of factors including a legal opinion, which is referred to to some extent in the Auditor General's report, that those amounts did not effectively constitute a liability that would require the establishment of a charge against the appropriation in that year.

Based on the conclusion coming out of that process, supplementary estimates were not required. Instead, we noted it in our accounts, our departmental performance report, as an unrecorded liability.

[Tom Wappel, Liberal, Scarborough Southwest, ON]

Who's “we”?

[The Chair, Conservative, Garry Breitkreuz]

Mr. Wappel, your time is long over.

[Tom Wappel, Liberal, Scarborough Southwest, ON]

Yes, but who's “we”?

[William Baker]

On government accounts, I sign them off with the chief financial officer, and we did it in concert with the Treasury Board Secretariat.

[The Chair, Conservative, Garry Breitkreuz]

I'm wondering, Mrs. Fraser, you really have not had a chance to comment on this. Do you have any additional insights as to...no?

[Sheila Fraser]

No. I think the description of the errors is correct. If we get into the reasons why we disagree, we could perhaps do that later.

[The Chair, Conservative, Garry Breitkreuz]

Okay. Well, maybe somebody else would like to raise that.

Monsieur Ménard, seven minutes.

[Serge Ménard, Bloc, Marc-Aurèle-Fortin, QC]

Thank you, Mr. Chairman.

Now that I have you all here, I am going to ask the question that I have been asking myself, and that the public has been asking. Could you give us a simple explanation as to why the costs rose from 2 million to $946 million?

[William Baker]

Let me try to explain. Several factors contributed to the increase in costs, especially in the field of computerized systems, and I thought that the Auditor General had set them out clearly in her report. Quite a few other costs had not been provided for, such as expenses in court and those incurred in implementing new regulations.

I also think that once the program was launched in 1985, we did not have the information that we needed to make any realistic projections. I think that all those who are involved in managing this program accept this as a fact.

[Serge Ménard, Bloc, Marc-Aurèle-Fortin, QC]

Do you know enough about this to reassure us that there has been no fraud, no invoices for work that was not done and no favouritism in choosing suppliers, and that regular procedure was followed in finding the suppliers? Do you know enough about this to reassure us that the increase in costs is not due to this type of activity?

[William Baker]

Of course. I am absolutely sure that during the time when I was in charge of the centre, all the rules were followed.

[Serge Ménard, Bloc, Marc-Aurèle-Fortin, QC]

In what year were you put in charge?

[William Baker]

In February 2003.

[Serge Ménard, Bloc, Marc-Aurèle-Fortin, QC]

It seems that since then, things have been under control. The Auditor General told us that since her 2002 report, management has greatly improved, as she expected. As you seem to be the only one able to answer this very important question, can you confirm that before you were in charge, there had been no fraud, no invoices for work that was not done, nor any favouritism in the choice of suppliers?

[William Baker]

Frankly, sir, I was not in charge of looking into the situation that existed before I was appointed. My mandate was to do whatever was needed to establish a functioning centre.

[Serge Ménard, Bloc, Marc-Aurèle-Fortin, QC]

You know that there was a great scandal, the sponsorship scandal, that came to light when the Auditor General reported a great increase in costs. To get to the bottom of this scandal, it took more than an accounting investigation. It took a commission of inquiry. Do you think that, to really find out why there was an increase from 2 million to $946 million, to understand this and to avoid any repetition of this error, we should also set up a commission of inquiry into this program?

[The Chair, Conservative, Garry Breitkreuz]

Have you completed your questioning, Mr. Ménard?

[Sheila Fraser]

Mr. Chairman, let me simply add that in our auditor report, we pointed out several problems with the granting of contracts, especially certain contracts that we have not yet finished auditing. We indicate that we are still auditing certain contracts. If anything important comes up, we will report it to Parliament, probably in the fall.

[Serge Ménard, Bloc, Marc-Aurèle-Fortin, QC]

Have I any time left?

[The Chair, Conservative, Garry Breitkreuz]

You have two minutes.

[Serge Ménard, Bloc, Marc-Aurèle-Fortin, QC]

Thank you, Mr. Chairman.

You have decried the absence of any benchmarks for performance, benchmarks that allow us to see whether a program is reaching its objectives. What kind of benchmarks would you suggest for this program?