Opening Statement to the Standing Committee on Public Accounts

Voted Grants and Contributions: Government-wide Management
(Chapter 4 - December 2001 Report of the Auditor General)

Voted Grants and Contributions: Program Management
(Chapter 5 - December 2001 Report of the Auditor General)

Mr. Chairman, thank you for this opportunity to present the results of our audit of the management of grants and contributions across the federal government. In particular, we would like to discuss with you our government-wide observations and recommendations, presented in Chapter 4 of our December 2001 Report.

With me today is Peter Simeoni, the Principal responsible for this work. I would also like to introduce some of my staff who worked on these audits: Jean-Pierre Plouffe, Rafid Warsalee, Sue Morgan, Amipal Manchanda, and Yvon Roy.

Voted grants and contributions represent one of the largest forms of government spending—a planned $16.3 billion in 2001-02. Most departments and agencies manage grant and contribution programs, which may well be the most common vehicle the government chooses to meet its policy goals.

In 1999 this Committee tabled its Twenty-Fourth Report, following its hearings on our 1998 audit of grant and contribution programs in Industry Canada and the Department of Canadian Heritage. The Committee recommended that my Office undertake a comprehensive audit of the management of grant and contribution programs. The work we are here to discuss today was done in response to that recommendation.

We examined the management of 12 programs in nine departments and agencies. In addition, we followed up on previous audits in HRDC, the Industry Portfolio, and the Department of Canadian Heritage. We audited programs in Health Canada and the Atlantic Canada Opportunities Agency, which we reported in separate chapters last December. We also looked at the central role of the Treasury Board and the Secretariat in setting policy across government, approving individual grant and contribution programs, and checking up on departmental performance.

Based on our work, I concluded that the government still has a lot to do to fix chronic problems in the way grants and contributions are managed. Let me elaborate.

Departments have the principal responsibility for managing grant and contribution programs well. While our audit findings varied to some extent, all of the 12 programs we audited had problems in one or more areas:

• The design of most programs needed attention.
• Risk management strategies were needed.
• Where audits and evaluations had been carried out, their scope was limited.
• Information Parliament was receiving on program performance was still limited.
• Funding decisions were often based on partial or perfunctory assessments of project merits and of a project's need for government support.
• Financial control was generally satisfactory in most program.
• Project monitoring practices ranged from satisfactory in some programs to poor in others.

In contrast, our follow-up work found that departments had generally made satisfactory progress in fixing the problems we had reported in the past—which indicates that good management is achievable. In particular, we were pleased to report that HRDC was fixing its systems for managing grants and contributions.

In our view, there are a number of reasons why the problems we cited persist.

Training and work practices of departments, for instance, cause us some concern. We surveyed program officers and managers in nine of the programs we audited. A significant proportion said they did not feel adequately trained to do their jobs. Many believed they lacked the time to assess projects properly before recommending funding and the time to monitor projects once funding was approved.

We are concerned about program design. Good management of grants and contributions is founded on clear description of expected results and good assessment of associated risks. Unfortunately, we found only the beginnings of these practices in the programs we audited.

Until recently, the policies governing grants and contributions were deficient. In 2000, however, the Treasury Board provided departments with a comprehensive and clear policy framework. Still, it will take several years to bring all programs up to the higher management standards the framework sets out.

While the Treasury Board and Secretariat are on the right track, the monitoring of departmental operations is still a problem. At the end of our audit, the Secretariat still had little information on departments' performance, and their control systems for grant and contribution programs, and on progress in implementing the new policy framework.

Mr. Chairman, it seems clear to me that government-wide problems require government-wide solutions. A sound policy foundation is the first step, but now the government should put theory into practice by showing Parliament that each grant and contribution program meets the government's own standards of good management.

The first order of business is to make the system work the way it is supposed to. The Committee may wish to ask the Treasury Board Secretariat officials for an action plan on the following matters:

• adopting a risk management approach;
• compiling information on program performance;
• assessing whether the new policy framework is meeting its objectives;
• providing guidance to departments;
• ensuring that results and risks have been thought out thoroughly for new and renewed programs; and
• ensuring that departments report meaningfully on each grant and contribution program.

The government has committed itself to evaluating all of its grant and contribution programs and approving new terms and conditions before March 31, 2005. The next three years represent a unique opportunity to determine whether each program is achieving value for money and is worth continuing. However, the Secretariat may not be prepared for the workload this will create. The Committee may wish to consider asking the Treasury Board Secretariat officials how the results of these reviews, program by program, will be reported to Parliament.

Mr. Chairman, that concludes my opening statement. We would be pleased to answer any questions.