Madam Speaker, I rise today to speak to Bill C-277, the private member's bill put forward by the member for Repentigny.
Bill C-277 proposes amendments to the Auditor General Act that would enable the Auditor General of Canada to act as auditor or joint auditor for all federal crown corporations and a variety of independent, not for profit organizations.
I will focus my comments on the proposal to expand the Auditor General's mandate to include not for profit organizations. However, before speaking on this, I would like to comment on the proposals relative to crown corporations.
In principle, I am very supportive of the Auditor General's oversight of all federal government entities such as crown corporations. After all, these organizations are owned and controlled by the federal government and are part of the federal government. It seems reasonable to me that Parliament's auditor should be eligible to act as their auditor or joint auditor.
Although the government agrees in principle with fostering more transparency to ensure that public funds are used as intended, we still do not believe that an amendment to the Auditor General Act is the best way to achieve this objective.
The government is examining amendments to the Financial Administration Act as it relates to Crown corporations. It is very likely that these tools will be more effective to ensure transparency and achieve the objectives of this bill concerning Crown corporations.
Now, with respect to the proposal for the Auditor General of Canada to act as auditor or joint auditor for private, not for profit entities, I would like to express my concern that such an expansion of the Auditor General's mandate could be seen as an intrusion on the independence of these organizations.
These organizations are independent of government. Unlike crown corporations, they are neither owned nor controlled by the government. They have their own members and boards of directors.
As members know, not for profit corporations and the voluntary sector are essential to Canadian life and the economy. Their independence is fundamental. I believe a key element of this independence is their ability to choose their own auditor. Without this, I believe many Canadians would be reluctant to work or volunteer in such organizations.
The bill proposes a $100 million threshold in federal assistance in any 12 consecutive months above which the Auditor General would act as auditor or joint auditor. This appears to be a very arbitrary number and I believe would be extremely difficult and disruptive to apply. It would exclude organizations that receive just below this threshold even if they receive such annual funding every year.
However, it would include an organization one year and not the next year if the $100,000 million threshold is not reached. This would be very disruptive to these organizations, as they would be required to change their external auditor to suit the varying levels of payments. As members know, the external auditor role is fundamental to any organization and there needs to be stability in their appointment.
Several not-for-profit organizations rely on the revenues of public sector organizations, whether they are from federal, provincial or municipal governments. It is precisely because governments recognize the importance of these organizations that they support them.
Governments are consistent in providing assistance to these organizations, and a significant element is an adequate government and a specific audit regime. The appointment of their own external auditor general is one of their fundamental rights.
I should also point out that the bill simply refers to payments in excess of $100 million. As such, it covers all forms of payment, whether they be grants, contributions, payments for goods and services or lending activity. Some of these organizations could involve other levels of government and often do in their assistance or governance. It would certainly not be appropriate to impose Parliament's auditor on these organizations and risk alienating other governments in Canada.
It is very uncertain just how many organizations the bill would impact. In addition, while there would be additional costs to expand the Auditor General's mandate and accept such engagements, it is uncertain what the total of these costs might be.
Another aspect to consider is that the House is currently considering new legislation introduced by the Minister of Industry governing federal not for profit organizations. This proposed legislation would replace parts II and III of the Canada Corporations Act with a leading edge, modern corporate governance framework for these organizations.
It proposes to strengthen corporate governance and accountability rules so that not for profit corporations have the necessary tools to meet the challenges of the future. I believe this private member's bill may be congruent with the intent and spirit of the proposed Canada not-for-profit corporations act.
Putting aside the question of expanding the Auditor General's mandate to enable her to accept appointments as external auditor for such not for profit organizations, I do believe that Parliament needs to be comfortable with the governance, accountability and oversight regime with respect to the use of federal assistance no matter who receives this assistance and no matter what the amount.
However, there are many ways to achieve this that better respect the independence of these organizations.
Through existing policy frameworks and contractual arrangements with recipients of federal funds, the government should be able to ensure effective governance and oversight. Many of these regimes provide for performance reporting, audits, evaluations and other forms of oversight. If there is a need to explore ways to make these regimes more effective, then I would certainly be supportive of such.
An area in particular where the government has shown significant progress is not-for-profit organizations, sometimes known as “foundations”, which receive financial assistance directly. By being responsible in the use of public funds, the government is committed to keep the promises stated in the 2003 budget and reiterated in the 2004 budget. All these statements were made to demonstrate sound management.
Funding agreements are entered into between the foundations and the government through the responsible minister providing the funding to the specific foundation. The funding agreements are approved by Treasury Board and cover areas such as the purpose of the federal assistance to the foundation, reporting, audit and accountability requirements regarding the use of this funding, prudent investment vehicles for the endowment funding, and the expected results to be achieved from the specific foundation investment.
As with all not for profit organizations, officers and staff handle the day to day operations of each foundation appointed by the board of directors. The board is made up of individuals appointed under the governing charter. The federal government may appoint some directors, but in all such cases these would be in the minority. The foundation's membership appoints independent auditors to audit the financial statements, which must be prepared in accordance with generally accepted accounting principles. The government can undertake compliance audits to ensure that the terms and conditions of funding agreements have been respected.
I understand that the Auditor General Act already provides the Auditor General the power to inquire into and report on any organization receiving financial aid from the government. The expansion of the Auditor General's mandate as proposed by this bill could be seen as intruding on the independence of not for profit corporations in Canada.
That being said, there may be additional oversight measures that can be undertaken which would not be as intrusive, and I understand these are currently being explored.
The Auditor General does not need to be appointed external auditor for these organizations in order to provide additional oversight over the use of federal assistance.
In conclusion, I support the principle of expanding the role of the Auditor General as auditor or joint auditor of crown corporations on the understanding that the mechanism to put this into effect be examined. However, I oppose the provisions of the bill that deal with not for profit organizations.