Opening Statement to the Standing Committee on Public Accounts

The Financial Information Strategy: Departmental Readiness
(Chapter 21 - 1999 Report of the Auditor General)

10 February 2000

Thank you, Mr. Chairman. We are pleased to meet with the Committee to discuss our recent chapter on the government's Financial Information Strategy, or FIS. With just over a year left to April 2001, I want to express to you today a sense of urgency on meeting the deadline for FIS. But first, let me tell you why I believe that FIS is important.

We are seeing major changes in the way business and government are operating. The communications revolution, which includes the Internet, has resulted in an environment where citizens and consumers are demanding services to be delivered in more modern ways and where change is the only constant. Electronic commerce, on-line access to government, new ways of delivering government programs are a few examples of such changes. Organizations, including government, need to position themselves to react quickly to the changing demands of those they serve, or risk being left behind.

Decision makers require relevant and reliable information, including financial information, on a timely basis to manage in such an environment. FIS is designed to bring this financial information to the government.

The objectives of FIS, which I continue to support fully, are to implement full accrual accounting and new financial systems throughout the government, and to integrate into day- to-day management the more businesslike financial information that this will provide.

Under FIS, departments will have the responsibility of maintaining their own financial records. The quality of the government's overall financial statements will rely heavily on the quality of the information that these departments will provide. A failure in departmental systems that could affect the accuracy of the Public Accounts of Canada would therefore be embarrassing. To avoid this risk, the government must take appropriate steps, including proper contingency planning as new financial systems are brought online.

Chapter 21 of last November's report is the second in a series of chapters on the government's implementation of FIS. Our first chapter in September 1998 reported on broader issues related to FIS, including project management by the Treasury Board Secretariat, the development of central systems and the need for accrual appropriations. This year's audit focussed primarily on the readiness of departments to implement FIS. It also continued our review of project management by the Secretariat.

We are pleased to see your Committee's ongoing interest in this important project, which will benefit both parliamentarians and government decision-makers alike.

FIS has been an active project for a very long time. We should make every effort to implement it properly and without undue delays. I have previously expressed concerns on the slow progress. It was encouraging to see that, in the past year, the government has introduced the necessary central systems to receive departmental information under FIS. We were pleased with the project management discipline displayed by Public Works and Government Services Canada and its key partners in implementing these new central systems.

But we also found that departments were just beginning to focus on FIS. While most had implemented new financial systems, they still had a lot of work to do to prepare their systems for FIS and to implement accrual accounting. This is placing considerable pressure on both departments and central agencies to meet the April 2001 deadline. In addition, departments will need to ensure that they have the required financial expertise to properly exercise their increased responsibility under FIS.

This year's chapter was based on audit work completed in August. Since that time, we understand that there has been a flurry of positive activity. The Committee may wish to ask the Secretariat for a summary of this activity as well as a report on the FIS implementation status.

We continue to believe that moving appropriations to an accrual basis at the same time as the accounting is critical to the successful implementation of FIS. This would place all of the key accountability documents and processes on the same basis of accounting, which would reduce or eliminate the need for reconciliations or "two sets of records", one for parliamentary accountability and one for reporting and day-to-day management. There could be different options as to how to implement accrual-based appropriations but these should be debated as soon as possible.

The successful implementation of FIS provides much more than modern accounting. More importantly, it will go a long way toward providing managers with the financial information they need to bring government to the people in this rapidly changing environment that we are all facing today. FIS supports a new management philosophy, one that discloses all the resources that are being managed and consumed to achieve the goals of programs. As such, FIS could be a linchpin for a number of related initiatives such as comptrollership, performance management, results management and even the remuneration of managers.

In conclusion, Mr. Chairman, I believe that most of the right pieces are coming together to put FIS in place. For example, the Year 2000 problem is behind us, there is interest on the political side and additional funding has been made available. We will never have a better opportunity to provide ministers, deputy ministers and managers throughout government with the financial information they so desperately need. We simply have to get at it, and keep at it, until this job gets done. In this rapidly evolving world, the Government of Canada cannot afford to be left behind.

Thank you, Mr. Chairman. We would be pleased to answer any questions.