Opening Statement to the Standing Committee on Public Accounts

2001 Performance Report of the Office of the Auditor General of Canada

Thank you, Mr. Chairman. I am pleased to present our 2001 Performance Report. In this document we look at whether we have met the commitments in our 2000-01 Report on Plans and Priorities.

We achieved our commitments under Denis Desautels' leadership and we are grateful for the contribution he made to our Office.

Our Office experienced intense activity in 2000-01. We completed the audit plan presented in our 2000-01 Report on Plans and Priorities. We published 43 value-for-money chapters on issues such as the environment, health and safety, immigration, and the education of Aboriginal children and identified opportunities for savings in government operations. In addition, we delivered the final report of the former Auditor General, which assessed the government's progress over the last 10 years with regards to our priorities.

We issued over 100 opinions on the financial statements of the Government of Canada, Crown corporations, other entities, and territorial governments. We conducted five special examinations of Crown corporations and assessed the sustainable development strategies of departments and agencies.

Achieving of this high-level of performance is the result of our staff's dedication and contribution. They are the strength of the Office and worked hard last year to complete our audit plan.

Office spending for 2000-01, in terms of parliamentary appropriations used, was $58.6 million or 97.5 percent of our total authorities. Our authorities increased from last year by $6.1 million to fund new audit work, the new FIS accounting system, and salary increases.

Our work improved a number of government operations. Exhibits 6 and 8 in our Performance Report illustrate our efforts in selected departments and by Office priority. The percentage of our recommendations that are being implemented by departments has increased from 60 percent to 65 percent. As we indicated to your Committee last April, we are committed to improving our performance in this area. We are developing a new follow-up audit approach that will provide Parliament with better information on progress made by departments in resolving issues raised in our reports.

We continue to improve our internal operations and have adopted an action plan that identifies seven areas for improvement. For example, we revamped our risk-assessment practices for the selection of audits and implemented a new financial system. One direct result is the publication of our first set of financial statements, prepared in accordance with generally accepted accounting principles, and the unqualified opinion of an independent auditor on these statements. Our financial statements will be an important tool in helping us to account for our performance.

We recognize that our performance is not perfect. Our 2001 Performance Report mentions areas that require improvements and challenges that face us. I would like to mention a few.

i) Value-for-money practice

A practice review of four 1999 value-for-money audits, identified opportunities for improvement in how we resource audits, how we conclude against objectives, and how we document audits. We attribute this in part to intense activity levels over recent years and an under-investment in training, particularly in the audit methodology and technology areas.

ii) Sustainable development performance

Our sustainable development performance is mixed. During the past year, the percentage of references to our Office, the environment, and sustainable development declined in the House of Commons and the Senate. We attribute this to a period where environmental issues were not as high as other issues on the minds of Canadians.

iii) Performance measurement

We made progress last year in measuring the impact of our audit work. We revised our performance measurement and reporting framework and developed a results chain that illustrates the outcomes we seek to achieve. We reviewed performance measurement practices used in other jurisdictions. Work in this area continues. We are working with the Canadian Council of Legislative Auditors to develop benchmark performance indicators. We are developing a survey strategy to obtain feedback from members of Parliament and from senior departmental management on the usefulness of information we provide.

The Eighth Report of the Committee, tabled in the House of Commons on 6 June 2001, contained a number of recommendations to improve our annual Performance Report. and I fully agree with them. Your Committee's recommendations have helped us prepare a better Performance Report and will continue to help us in the future.

You will note that our Performance Report has changed significantly. Where possible, we have addressed the Committee’s recommendations. Future changes to the Report will be a result of our new performance measurement and reporting framework.

iv) Effective audit office

The next few years will be challenging for the government and for the Office. Canadians want an effective public service, and we believe that building an effective audit office can contribute. We face continuous change in professional practices. A significant portion of our workforce is nearing retirement; therefore, we must ensure continuity in our management and audit capacity.

We have taken several measures to respond to these challenges and to improve our performance. We are reviewing our audit practice and methodology and pursuing several initiatives to strengthen our work force. We have developed a succession plan that prepares our employees to take on greater responsibilities and fill critical positions as senior professionals and managers retire over the next two to seven years. Our aggressive recruitment efforts, supported by modern technology, are promising. We are investing more in training employees to become proficient legislative auditors. We have almost doubled the size of our trainee program, recognizing that this is the best strategy to acquire and develop talent for the future.

Last April, we indicated to your Committee that we had requested from the Treasury Board Secretariat a significant increase to our base budget for 2001–02 to modernize our audit methodology and tools and to maintain our audit capacity. The government responded favourably to our request and increased our base budget by about 15 percent. This funding is, of course, subject to Parliament's approval. The additional resources will help us meet our challenges.

Before concluding, I would like to take this opportunity to share with you some of my priorities as Auditor General. They are not final, but I intend to address them more thoroughly in the next Report on Plans and Priorities.

I have identified five areas of focus for our audit work:

• accountability to Parliament;
• an effective public service;
• health, security and safety: the well-being of Canadians;
• heritage and legacy; and
• Aboriginal issues.

Over the next few months, I will define these priorities and the nature and extent of work that they entail. I would appreciate receiving your comments on these priorities or any other issue of concern to you.

Our Office enjoys a solid reputation in Canada and abroad. Our credibility and the trust the public puts in our work are the result of our sustained efforts to produce useful reports. I intend to preserve this track record. I will continue to maintain the Office’s credibility and tradition of excellence and to provide Parliament and the public with the same quality of information that they expect from the Office.

Now, Mr. Chairman, with your permission, I will ask Mr. McLaughlin to briefly take us through some of the sections in our Performance Report.

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