Opening Statement to the Standing Committee on Government Operations and Estimates

Report on Plans and Priorities of the Treasury Board Secretariat

5 May 2003

John Wiersema, CA
Assistant Auditor General

Mr. Chairman, thank you for this opportunity to appear before the Committee as it prepares to consider the Treasury Board Secretariat's Report on Plans and Priorities. I have overall responsibility for audit work at the Treasury Board Secretariat.

With me today is Assistant Auditor General Douglas Timmins, who has a number of responsibilities related to the Secretariat, including audits of financial management, comptrollership, and information technology. Also here are Richard Smith, a Principal in the Office who assists me in my work on the Secretariat, and Bruce Sloan, a Principal who works with Doug Timmins.

While we are not here to comment specifically on the Secretariat's Estimates documents, we can provide an overview of our recent observations that may be useful to the Committee in its review of those documents with Secretariat officials.

Given our mandate as a legislative audit office, it is not surprising that a great deal of our work has covered issues that fall within the Secretariat's areas of responsibility. An annex to this opening statement provides key findings of relevant reports tabled since 1997.

An ambitious agenda of management reform

As Committee members know, the Treasury Board is the Cabinet committee that is responsible for the overall management of the federal government's resources. The Secretariat supports the Board in fulfilling that role.

Over the past several years, the government has launched a number of initiatives to strengthen management in the federal public sector, with Results for Canadians: A Management Framework for the Government of Canada in March 2000, and continuing through the February 2003 Budget Plan.

These initiatives include:

• Citizen-centred Service Delivery
• Government of Canada On-Line
• Modern Comptrollership
• Improved Reporting to Parliament
• Program Integrity
• Developing an Exemplary Workplace
• Human Resources Modernization
• Compensation and Classification Reform
• Adoption of Accrual Accounting, and study of accrual-based budgeting and appropriations
• A systematic and ongoing examination of all non-statutory government programs to ensure that government programs continue to be relevant, effective, and affordable.

The intent of these initiatives is to help departments do a better job of managing and accounting for their use of the resources entrusted to them—that is, to increase the effectiveness of the public service by strengthening its management capabilities.

The goals are commendable – and we as an Office strongly support them. The government has set an ambitious agenda for achieving them. Given the size of government, however, any initiative that seeks to change the way government functions is a formidable challenge, no matter how desirable the change.

As government's management board, the Treasury Board and its Secretariat have been designated clearly to lead these change initiatives. Success depends on a strong commitment to change—commitment at the highest levels in government that must be translated into concrete action.

Our Office has been fairly critical of the Treasury Board Secretariat's performance over the years. Our past audits have found that the government must go beyond stating principles and put into effect clear, detailed plans of action. Strong leadership must be provided.

It is also vital that clear direction be provided. Those responsible for implementing initiatives must be held accountable for achieving key milestones by specific dates. And the initiatives need to be resourced adequately – both in the Secretariat and in departments.

We believe that after many years of taking a hands-off approach to departmental decision-making, the Secretariat needs to be involved more actively in confirming that departments are delivering programs with economy, efficiency, and effectiveness. In our view, that is what "active monitoring" should be all about. But it is not clear what the Secretariat means when it uses the term.

An opportunity to take stock

In conclusion, the federal government has taken a number of steps to strengthen management, and the Treasury Board and its Secretariat have been designated to lead these change initiatives. It is a daunting task.

Our Office will continue to examine the progress of specific government initiatives and to tell Parliament what we find. But we have encouraged the government to provide more information itself to Parliament about these change initiatives, the progress achieved, what remains to be done, and any difficulties encountered or anticipated.

Indeed, your review with Secretariat officials of their Report on Plans and Priorities provides a good opportunity to take stock of these change initiatives with them.

In March this year, we tabled in committee a report on Parliamentary Committee Review of the Estimates Documents. We have sent copies to all parliamentarians. The intent was to assist committees to undertake review of Estimates documents by describing the Estimates process and making a number of suggestions, which committees might find useful.

The document includes a set of questions that standing committees could ask officials when reviewing reports on plans and priorities and departmental performance reports. We have provided the Clerk with additional copies if you think it would be helpful in your review of the Secretariat's report.

Mr. Chairman, we would be pleased to respond to the Committee's questions.

Annex

Key Findings of Previous Reports of the Auditor General Regarding the Treasury Board Secretariat — 1997 - 2003

Part I: Overarching Matters of Special Importance to the Auditor General related to the Responsibilities of Treasury Board Secretariat

April 2003:

• Risk management in the federal government is vital to managing resources more efficiently, making better decisions, and ultimately making the public service more effective. It will help departments make wiser decisions about the environmental, strategic, operational, political, and financial risks within their control and to respond better to the risks beyond their control.
• Good information, good risk assessment tools, and people trained to use both; adequate performance measures; and management practices that integrate these elements into the decision-making process—these are the ingredients for managing risk well. In the end, they will take much of the guesswork out of managing risk and help to create a culture in which reasonable risks can be taken-an environment that encourages innovation and achieves beneficial results for Canadians.

December 2002:

• The need for sound information to Parliament. In order to hold government accountable and to make enlightened decisions on matters of policy, Parliament needs reliable and sound information on program costs and performance. In this section I give as examples three areas where information is simply not adequate to meet the needs of Parliament—the Canadian Firearms Program, health care, and foundations and other delegated arrangements.
• Government change initiatives. The government has undertaken many significant initiatives, all with a view to improving its management—from the introduction of modern comptrollership to the reform of human resources management to providing Canadians with access to government on-line. These initiatives have commendable goals and ambitious agendas but have progressed too slowly and, as a consequence, risk becoming stalled. I stress that strong leadership and active monitoring are essential to the successful implementation of initiatives designed to improve government's management.

December 2001:

• The erosion of parliamentary control over how the government raises money and spends it. Canadians have the right to control how public funds are collected and used, and ultimately it is the members of Parliament we elect who carry out this control on our behalf. That is why I am concerned about recent examples of the erosion of parliamentary control, involving billions of dollars of revenue and expenditure.
• Strengthening fiscal and financial management. Over the last five years there has been a significant change in the federal government's fiscal position. The transparency and discipline that have yielded impressive results so far are critical to continued success. Steps have also been taken to improve financial management in departments and agencies. Money must be managed prudently in the interest of the public.
• The undermanagement of grant and contribution programs. The recent attention paid to grants and contributions has not yet translated into an overall improvement in the way they are managed across government. Government-wide problems require government-wide solutions.
• The internal health of the federal public service. The government has established an ambitious schedule for modernizing human resource management. Good government depends on the performance of the public service.

September and November 1999:

• Focus on developments within the federal public sector, looking in particular at the budgetary planning process, performance reporting practices, financial management systems, new governance arrangements and public service renewal. The 1990s witnessed progress in all of these areas, but shortcomings remain:
  • The budget process is now more open than it used to be, but the two- to five-year budget horizon is much too short to take into account the longer-term implications of the fiscal choices we make, especially in the context of an aging population and the fiscal pressures it entails. Also, with the expiration of preset funding limits in 1998, there is no longer a mechanism in place to ensure ongoing review of programs.
  • Nearly five years ago, the government announced a commitment to results-based management and reporting. While real progress has been made since then in clarifying program objectives and publishing performance measures, departmental reporting is still oriented mainly toward activities and products, and management is not sufficiently focussed on outcomes.
  • The accounting methods and systems now used in government do not provide reliable and timely information about what operations or outputs cost. The Financial Information Strategy (FIS), a government initiative currently under way, is designed to fill this gap. Implementation of this initiative has experienced delays, however. It needs to be expedited, if the government's own target date for this initiative is to be met.
  • The delivery of government services is increasingly taking place through non-departmental mechanisms, often involving partnership arrangements with other governments or the private sector. Since no single minister is wholly responsible for results in such cases, these arrangements call for new ways of holding government accountable. Without appropriate accountability mechanisms, these arrangements can erode the ability of Parliament to scrutinize government and hold it to account.
  • Government efforts to revitalize the public service have intensified recently, but the job is huge and far from finished. Gaps created by years of downsizing and restructuring remain. People management practices need to be modernized. And an aging work force portends immense staffing needs in the years ahead. Reform and renewal of the public service may well be the government's biggest challenge.

Part II: Key Findings Specific to the Three Principal Areas of Treasury Board Secretariat

1. Principal Area: Stewardship

April 2003: Chapter 1 — Integrated Risk Management

• The Treasury Board Secretariat has produced initial material to help departments start implementing the initiative. However, departments will need more practical guidance on how to carry out specific key steps toward integrating risk management into their management culture.

April 2003: Chapter 2 — Managing the Quality of Financial Information

• The Treasury Board Secretariat provides limited guidance on the quality of financial data, and its Framework for the Management of Information is still in the early stages of development. More guidance is needed to help ensure that departmental financial data are prepared to a consistently high standard, primarily for use by departments, but also for high-quality government-wide reporting. We found that some planning for this is underway.

December 2002: Chapter 5 — Financial Management and Control in the Government of Canada

• The government has not significantly advanced its study of accrual-based budgeting and appropriations. The Treasury Board Secretariat continues to state that this complex issue requires extensive study before a decision can be made, even though the issue has been under examination for some time. In our view, resolution of this matter is needed to help make financial management and control in the government effective.
• However, making financial management and control in government more effective involves more than simply preparing financial information or implementing financial systems. A change in the way financial information is used must occur at all levels within the government to ensure that financial management and control is an integral part of government operations and decision making.
• The Comptroller General of Canada needs to lead this change by
  • building on the momentum created by the importance and priority assigned to the Comptrollership Modernization Initiative by the Clerk of the Privy Council,
  • aggressively advancing financial management and control within government so that the environment for change can be improved, and
  • developing a strategy to increase the representation of professional accountants in the positions of senior financial officer and senior full-time financial officer.

December 2002: Chapter 9 — Modernizing Accountability in the Public Sector

• Accountability would be strengthened if Parliament played a more active role in scrutinizing the government's plans and performance expectations and comparing them with the performance reported later by the government.

April 2002: Chapter 1 — Placing the Public's Money Beyond Parliament's Reach

• As our audit was completed, the Treasury Board adopted the Policy on Alternative Service Delivery, which addressed elements of governance and accountability, as we and the Public Accounts Committee had recommended in 1999. Central agencies still need to show stronger leadership to help ensure good governance and adequate accountability.

April 2002: Chapter 7 — Strategies to Implement Modern Comptrollership

• The Treasury Board Secretariat (TBS) has a clear role: to provide overall guidance and direction for the comptrollership initiative and to provide Parliament with information on progress across government in implementing modern comptrollership. We found that while the TBS is committed to the initiative, it needs to provide much clearer direction and guidance on how to put into practice key aspects of comptrollership. It needs to set clear expectations for departments and dates by which they are to be met.
• The information that departments and the Treasury Board Secretariat provide to Parliament does not show clearly how well or how poorly departments are doing at modernizing their comptrollership practices. Nor does it show the enormity and importance of the task and the risks the government faces if departments and agencies fail to firmly entrench strong comptrollership capabilities in their culture and their day-to-day operations.

April 2002: Chapter 8 — Other Audit Observations - Treasury Board Secretariat - Vote 5

• At various times over the past 30 years, both this Office and several parliamentary committees have questioned the use of Vote 5 for grants. The Secretariat itself has acknowledged that the use of this Vote for grant payments is a grey area, yet it has done little to resolve the issue. The guidelines it has prepared for the use of its staff in reviewing departmental requests for access to the Vote do not mention grants; nor do they define "miscellaneous minor and unforeseen expenses."
• In the 2001-02 fiscal year alone, departments used temporary authority from the Government Contingencies Vote to pay, for example, $95 million in grants to the airline industry and $50 million in grants for sustainable development technology. In our view, these were not miscellaneous minor and unforeseen expenses. Moreover, at the time the departments made the payments, Parliament had not authorized them to do so—a view we believe is supported by Speakers' rulings on this issue.

December 2001: Chapter 1 — Financial Information Strategy: Infrastructure Readiness

• The government has not progressed much toward deciding its approach to accrual-based budgeting and appropriations. Responding to a request by the Standing Committee on Public Accounts, the Secretariat said this complex issue requires extensive study before a decision is made. The government called the Committee's suggested April 2003 target date for the introduction of accrual budgeting and appropriations highly unlikely. But departments have said clearly that the change in culture demanded by accrual accounting will not happen without accrual budgeting and appropriations. We agree. Departments are worried about the added complexity during the interval when they will have to prepare the information in their Estimates on a different basis from the information in their financial statements.
• As FIS funding dries up and FIS project offices are wound down, there is a real concern that the momentum to finish the job may be lost. The government should not lose sight of its key objectives for FIS and the results it expects, such as better financial information for managers. It also needs to ensure that both it and departments produce their accrual financial statements. Then it can reassess the status of the strategy's other aspects and decide how best to ensure that they are completed.

December 2001: Chapter 4 — Voted Grants and Contributions: Government-Wide Management

• The government still has a lot to do to fix the chronic problems in the way it manages grants and contributions. Our most recent audits found a government-wide control system for grants and contributions that is not yet rigorous enough to ensure the proper management of public funds. We are concerned that serious and correctable problems remain unexamined and uncorrected.
• The Treasury Board Secretariat does not yet monitor departmental operations adequately, and departments often fail to exercise minimum control. Grant and contribution programs tend to be undermanaged-departments pay too little attention to their design, delivery, capacity, and performance and to the training of staff who manage them. Until the Secretariat and departments meet all of their responsibilities and manage grants and contributions rigorously, these programs will have chronic problems and run an ongoing risk of using public funds ineffectively and inefficiently.

December 2001: Chapter 12 — Follow-up of Recommendations TBS - Contracting

• The government has not addressed our concerns about management oversight that we raised in our 1998 and 1999 audits on contracting for professional services using sole-source contracts. However, it has issued a new policy on advance contract award notices and has acted on our recommendations related to training. The Treasury Board Secretariat continues to reject our recommendation that departments with significant levels of sole sourcing be required to conduct annual assessments of their compliance with the regulations.

February 2001: Reflections on a Decade of Serving Parliament (Extracts of final Report of Former Auditor General Denis Desautels)

Topic: Across Government

• As we all know, the government has made substantial gains in its ability to live within its means and is now achieving surpluses. I believe we are on the right track, and I take some satisfaction from the contribution the Office made by ensuring that Parliament received a clear picture of the problem. Nevertheless, a lot more needs to be done to ensure that we do not put ourselves back in the same position. The government made its cuts through a one-time process it called Program Review. This process forced the politicians to choose the services they really wanted and could afford, and forced the public servants to find more efficient ways to do the job. The cuts were made, but poorer service often resulted. With more money now available, gaps in service can be filled - but there is a risk that programs will balloon beyond what is necessary and that programs no longer needed will be retained because times are good. The issue is not whether the government should increase program spending or not, but whether there is a disciplined process in place to screen and review expenditures. The reassessment of priorities and the search for efficiencies occasioned by Program Review need to be made a permanent and continuous part of government. Stronger means of challenging and replacing old programs need to be put in place.

Topic: Accountability

• Although we see some indications that the public service culture is more willing to accept the measuring of results, and reporting to Parliament on government performance has improved somewhat, we have not really moved very far ahead. Other countries are rapidly strengthening accountability, and Canada is in danger of being left behind.
• Part of the problem is the nature of Canadian politics. There is a reluctance to let Parliament and the public know how government programs are working, because if things are going badly you may be giving your opponents the stick to beat you with. And even when a minister is not personally concerned about this, senior public servants assume this fear on the minister's behalf. The people who write government performance reports seem to try to say as little as possible that would expose their department to criticism.
• While auditors are not experts in constitutional law, it seems to me that the problem goes deeper than individuals and appears to be cemented in the Canadian version of the doctrine of ministerial accountability. In every Westminster-style government, ministers are responsible to Parliament for the state of their departments. Unlike other countries, however, Canada has never modernized its doctrine to distinguish between the minister's area of public responsibility and that of his senior public servants. To me, there is a certain lack of realism in holding ministers ultimately accountable for everything. Overall, our system makes it difficult to be candid and therefore Parliament has a hard time in discussing certain issues with officials.

Topic: Financial Management

• In 1989 the government began to develop a financial information strategy. The major portion may be completed by 2002 - but that isn't certain, even after 13 years. I have not seen real progress toward a fully integrated management system that includes financial management. The big decisions - what programs to put in place and how to change program delivery - were often made without much relation to financial management. Attitudes have begun to change, but we have yet to see the changes carried through to actual management systems.
• Another challenge is linking performance to costs. This is difficult to do, but vital to managing for results. Even if managers can say that their economic development programs have increased employment, they need to know how much it cost. If they know how much things cost, they can make rational choices. It is vital that the new pay-at-risk system link senior public service pay and the allocation of resources to meeting financial and performance objectives. This will automatically raise the interest of deputy ministers and assistant deputy ministers in how well their financial management systems work.

Topic: Fixing the "head office" of government

• With the era of command and control over, the new era of active monitoring requires that the Treasury Board quickly equip itself with good radar. Our audits have found that during the 1990s the Treasury Board approved huge expenditures by departments that were based on flawed business cases, apparently without effective challenge by the Secretariat. For example, our recent audits of National Defence capital projects approved by the Board found major deficiencies in the options analyses that supported decisions. Our 1996 audit of the Canadian Automated Air Traffic System found that $230 million was spent before requirements had even been finalized - and before 11 significant issues between the contractor and the government had been resolved. The audit found that the project was restructured - increasing the price and reducing what the government would get - on the basis of financial information that was not fully disclosed to Treasury Board ministers. Failure to move ahead with a more active approach would allow these sorts of management lapses to continue into the future.
• It is evident that while active monitoring calls for less oversight than command and control, it will take more than the current level of effort. The head office radar has to work before ministers can home in on problems. The recent problems at Human Resources Development Canada in managing grants and contributions were partly a result of radar that had been defective for years. Treasury Board officials are now concerned that the Secretariat may lack the capacity to play its role on the management board. In financial management and other areas, it lacks the needed mix of skills and people. Turnover - endemic across government - is too high and the workload too heavy. New programs like alternative service delivery add to the burden in requiring the Secretariat to conduct new and more sophisticated analyses.
• Members of Parliament who have talked to me about the role of the Treasury Board are confused about what the Secretariat is trying to do. It would be useful if the Secretariat consulted members for their views on its role. I firmly believe that the Secretariat should aggressively pursue active monitoring - with the emphasis on "active." Our audit reports are filled with examples of failure to get the best value from spending when the Treasury Board Secretariat was taking a hands-off approach. While a rule-bound bureaucracy is undesirable, it is time for the government's head office to get involved more actively in confirming that departments are delivering programs with economy, efficiency and effectiveness.

December 2000: Chapter 19 — Reporting Performance to Parliament Progress Too Slow

• We noted that the Treasury Board Secretariat has provided leadership for reporting. And we did find pockets of good reporting and a number of strengths in the present regime of reporting. Nevertheless, after five years of experimenting, departmental reporting overall has only improved modestly.
• Three factors stand out as contributing to the current weak state of reporting:
  • basic principles of good reporting are not understood or applied;
  • performance reporting has political dimensions; and
  • there are few incentives for good reporting or sanctions for poor reporting.

December 2000: Chapter 20 — Managing Departments for Results and Managing Horizontal Issues for Results

• Over the past several years, the government has been clear about the importance of making results central to good management and accountability, and this vision is increasingly being accepted across government. However, bringing that recognition into practice will require central agencies to play a stronger role. They need to provide encouragement and support for departments to move beyond merely planning for results. We found the Treasury Board Secretariat's leadership too limited and its support too dispersed to be of real help to departments trying to manage for results. Nor does the Secretariat have a strategy for dealing with horizontal issues. It needs a strategic approach to these issues, given their growing presence in government.

September and November 1999: Chapter 21 — Financial Information Strategy: Departmental Readiness

• In our view, the Treasury Board Secretariat, overall project manager for FIS, will need to assume a greater leadership role, drawing on some of the lessons learned in dealing with the Year 2000 problem. In particular, the central FIS Project Office will need to put in place and keep current an updated overall implementation plan, and use appropriate risk management capabilities, monitor implementation by departments and intervene constructively if problems arise. In addition, it will need to provide departments with required accounting policies and manuals, which are currently being developed, and assist departments in developing an appreciation of the use of FIS in day-to-day management.

September 1998: Chapter 18 — The Financial Information Strategy: A Key Ingredient in Getting Government Right

• However, the government has yet to implement its plans to deal with the important area of making full accrual financial information available to officials within departments and agencies who manage business lines and related components on a day-to-day basis. One of the objectives of FIS is to provide officials with more complete information on costs to compare with results achieved when making key decisions. Until this is done, the full benefits of FIS will not be realized.

April and October 1997: Chapter 5 — Reporting Performance in the Expenditure Management System

• Further progress requires strong leadership by the Treasury Board Secretariat and senior departmental managers. The Treasury Board Secretariat has implemented positive innovations in a short period of time, but needs to improve the consistency of the assistance it provides to departments as well as its efforts to document and communicate good practices in measuring and reporting performance.

April and October 1997: Chapter 6 — Contracting Performance

• The Treasury Board and Public Works and Government Services Canada have put in place important elements of a framework to support greater departmental autonomy in contracting. Overall, however, much remains to be done to see that these objectives are understood, accepted and realized in practice.
• To maintain effective overall control over increasingly delegated contracting activities, delegation needs to be supported by more effective functional direction and improved visibility for results and decisions. Treasury Board Secretariat needs to:
  • explore better ways of managing long-standing tensions among the responsibilities, expectations and authority of individuals and organizations; and
  • periodically provide Parliament with a better overall strategic assessment of contracting performance and priorities, showing the progress made toward agreed objectives.

2. Principal Area: Human Resources Management

December 2001: Chapters 2 and 3 — Recruiting for Canada's Future Public Service

• Our review of public service recruitment found that an alternative system of short-term hiring has emerged as the main hiring practice. We found that flaws in the system prompt managers to work around what they view as an overwhelmingly cumbersome process. Systemic problems are further complicated by weaknesses in human resource planning, workload and funding pressures, and the need for improved recruitment tools. These system- and practice-related problems have combined to create a culture of short-term hiring that will have significant long-term repercussions on the public service.
• A more global view of human resource management is needed to break the cycle of meeting recruitment needs one job at a time and to ensure that actions will be taken to meet present and emerging needs.

February 2001: Reflections on a Decade of Serving Parliament (Extracts of final Report of Former Auditor General Denis Desautels)

• In my view, the efforts to streamline and modernize human resource management have been stymied by the tangle of roles and responsibilities of the institutions that manage human resources and by the legislative framework that applies.
• The complex legislative framework and authority structure that applies to core departments dates back to the late 1960s, when collective bargaining was introduced. It has spawned an administrative regime that is cumbersome, costly, and constraining, one that needs to be modernized and simplified. The staffing system, in particular, is widely viewed by public service managers as an unreasonable constraint, notwithstanding the Public Service Commission's repeated efforts over the last three decades to streamline it and adapt it to departments' needs. Efforts to reform staffing have been largely nullified by almost three decades of legal decisions on appeals of staffing actions. The net result is a protracted process that impedes managers from getting on with the business of government, while many employees continue to question the fairness of staffing in their workplace.
• To ensure that their organizations can operate effectively in today's environment of constant, rapid change and become learning organizations, deputy ministers must make a further significant shift in the way they manage. They must go well beyond responsibility for administering central systems to assume a pivotal, ongoing role in creating and maintaining a healthy workplace. They must ensure that their departments develop and maintain a work force with the competencies and capacity to meet the challenges ahead. If statutory responsibilities were more decentralized, I think these changes would occur naturally as deputy ministers became more self-reliant. Perhaps now is a good time to reflect on the lessons that the new, more independent agencies have learned.
• Real advances in human resource management will require systemic, legislative change, as well as changed attitudes, practices and organizational culture. All of these changes must be managed coherently. The government needs to move beyond the pattern that characterized the 1990s - setting up committees of senior officials to study the problem and develop plans, but failing to resolve the issues. The rotation of senior officials exacerbates the situation, as each new appointee begins by re-examining the issues. Given the wave of retirements anticipated at the most senior levels, the problem will not be easy to solve. But a solution must be found if human resource management is to keep up with the challenges and rapid pace of the new century.

December 2000: Chapter 21 — Post-Secondary Recruitment Program of the Federal Public Service

• We continue to find a clear lack of co-ordination and direction in dealing with the government's recruitment priority partly because of unclear roles and responsibilities.

April 2000: Chapter 9 — Streamlining the Human Resource Management Regime: A Study of Changing Roles and Responsibilities

• The current framework governing human resource management in the "core" public service is unduly complex and outdated. Administrative systems are cumbersome, costly and outmoded. The framework is ill suited to an environment that demands flexibility and adaptability - an environment that faces significant challenges in human resource management and an increasingly competitive labour market.
• Public service staffing is a major source of frustration both to managers and to employees. The system is rule-bound and inefficient. Managers need to have more authority in staffing, but they also must be more clearly accountable for their decisions. The interests of employees must be respected, but there is a pressing need to modernize and streamline the processes for staffing and related recourse.
• Concerns about "fractured responsibility" for human resource management are long-standing. Responsibility and accountability for the changes needed to simplify, streamline and strengthen the current human resource management regime need to be clearly assigned and appropriately supported. This is particularly important in areas of divided responsibility.

April and October 1997:Chapter 1 — Maintaining a Competent and Efficient Public Service

• Particular attention needs to be given to renewing and rejuvenating the public service work force and resolving long-standing human resource management issues.

3. Principal Area: Service Improvement

April 2002: Chapter 1 — Placing the Public's Money Beyond Parliament's Reach

• As our audit was completed, the Treasury Board adopted the Policy on Alternative Service Delivery, which addressed elements of governance and accountability, as we and the Public Accounts Committee had recommended in 1999. Central agencies still need to show stronger leadership to help ensure good governance and adequate accountability.
• More needs to be done to ensure that the arrangements institute and maintain public sector values and ethics. Sponsoring departments should make provision for the responsible parties to be aware of their duty in this regard.

April 2002: Chapter 3 — Information Technology Security

• We found that the IT security standards that support the Government Security Policy are out-of-date and a plan to update them has yet to be completed. The security policy will not be fully effective without updated standards, setting out the minimum requirements that departments and agencies must meet. The standards are an essential tool for supporting appropriate IT security practices across government.
• Moreover, there was little monitoring of the 1994 policy. As a result, the government does not have enough information to assess the overall state of IT security. It does not have an adequate basis for determining whether current practices across government are acceptable, nor does it have an appropriate baseline for measuring future progress. Furthermore, the revised policy calls for a report on its effectiveness but not before summer 2004. In our view, a report is needed sooner.
• The government has made a commitment to connect Canadians and provide them with on-line access to services. The Government On-Line initiative was launched to accomplish these goals. Security and privacy concerns have been identified as a key issue in this initiative. It is important that the government promptly address those concerns in order to support Government On-Line.

February 2001: Reflections on a Decade of Serving Parliament (Extracts of final Report of Former Auditor General Denis Desautels)

Topic: Delivering Services to Canadians

New Arrangements:

• Most of the new special operating agencies and arrangements are too recent to have established a track record. We do know that the need for improvement is greatest in setting performance targets and reporting on their achievement. Without a management structure that includes these elements, it is unlikely that the government can substantiate its claims that its actions have made a difference. And without a complete management structure in place, Parliament cannot oversee spending, and public accountability is thereby weakened.

  In Departments:

• In a report like this I cannot summarize the evolution of service delivery throughout the federal government. However, I can present several examples that I believe reflect the whole and that are in themselves important: Human Resources Development Canada, a department that manages major social programs; Canada Customs and Revenue Agency (formerly Revenue Canada), which collects most of the government's income; Fisheries and Oceans, a large resource and environmental portfolio; Indian and Northern Affairs Canada, a unique department with critical social and economic responsibilities; and National Defence, the largest security agency in the government.
• The stories of these five departments illustrate some of the key problems the federal government struggled with over the past decade. They show how costly it can be to defer hard choices. Choices that result in winners and losers or in reduced levels of service are understandably difficult to make, but ducking them only increases the difficulty. Three of the departments provide examples: Indian and Northern Affairs Canada, which has not addressed the findings of the 1996 Royal Commission on Aboriginal Peoples; Fisheries and Oceans, which still lacks an overall framework for sustainable fisheries; and National Defence, whose budget is overstretched by the size of the armed forces the government is trying to maintain.
• Three of the departments - Human Resources Development Canada, Fisheries and Oceans, and National Defence - were greatly affected by budget cuts and restructuring; their performance difficulties can be attributed at least in part to their having to rebuild while they continued to deliver services.
• Finally, these departments reflect many of the government-wide problems I have discussed at length elsewhere in this report: weak control structures, difficulty moving to results-based management, and the lack of enough highly trained people to do the work. Together, I think these cases provide readers with an overview of the state of program management in the federal government.

April 2001: Chapter 12 — Follow-Up of Recommendations -Treasury Board Secretariat

• The launching of the Government On-line initiative in 2000 has changed the context substantially for our 1998 observations and recommendations. Our recommendations continue to be relevant and significant, but the required time to implement them and the complexity of some of them have changed. In summary, we observed good progress in many areas, such as developing on-line business applications and a government-wide strategy for advancing electronic commerce. Yet, much work remains to put in place common technology infrastructures to support electronic service delivery across government.
• Further attention and increased oversight in developing common technology infrastructures and establishing and enforcing standards are needed to fully support seamless access to government services. The ability to interoperate across government, especially among those departments and agencies with common beneficiaries and stakeholders, is essential for the Government On-line initiative.

April 2000: Chapter 1 — Service Quality

• The purpose of our audit was to see whether the federal government is providing better quality of service to Canadians, after a decade of commitments and a series of initiatives to improve it. The most significant improvement since 1996 has been to make telephone services more accessible.
• For most services delivered by means other than telephone, such as counter service, there was not enough performance information for us to determine whether service has improved.
• Departments and agencies need to consult more with their clients to identify the aspects of service that matter most to them, as well as the quality of service they expect. This information would help the service providers establish appropriate targets and indicators of performance to measure.
• Communication to clients at points of service has improved since 1996. However, more attention is needed to informing them on what it costs to provide the services, whether targets have been met and how they can lodge and resolve complaints.

December 2000: Chapter 23 — Information Technology: Acquisition of Goods and Services

• In auditing acquisition activities (procurement) for large information technology projects in the government, we found that two recent acquisitions followed some essential elements of a procurement approach and project management framework designed to improve large technology projects. The approach emphasizes the benefits to be derived from a project, rather than focussing on a specific solution to a business problem. Although both projects are still in the construction phase, they have progressed and delivered as planned. While full implementation and deployment of the new systems are not assured, the results to date are encouraging.
• We found, however, that the acquisition activities still spanned 18 months or more. The government needs to improve the timeliness of those activities to adequately support its objective of putting government on-line by 2004.
• Acquiring software licences and software solution services appropriately continues to be a challenge. The government needs to consider a strategy for acquiring software as a technology investment.

September and November 1999: Chapter 23 — Involving Others in Governing: Accountability at Risk

• The Treasury Board Secretariat should clearly identify and communicate the essential elements of an effective governing framework for new governance arrangements and provide departments with consistent guidance on its use when they design and implement new arrangements.
• The framework should provide for:
  • appropriate reporting to Parliament and the public on the extent to which the arrangement has achieved its federal public policy purpose and on the expenditure and investment of federal moneys and the stewardship of federal assets;
  • effective accountability mechanisms to ensure that adequate and appropriate evaluation and audit regimes are established;
  • adequate transparency of important decisions on the management and operations of the arrangement; and
  • protection of the public interest so that delivery of the federal objective adheres to essential and traditional values of public sector administration.

September and November 1999: Chapter 27 — Alternative Service Delivery - National Defence

• The government lacks an adequate policy framework for "partnering" with the private sector and contracting out large service programs. In particular, the $2.8 billion NATO Flying Training in Canada contract:
  • was let without competition, contrary to government contracting policy and regulations, thus forgoing the benefits of price competition; and
  • did not follow Public Works and Government Services Canada's profit policy and guidelines for sole-source contracts, and profit markups were not supported by adequate analyses.

December 1998: Chapter 19 — Electronic Commerce: Conducting Government Business via the Internet

• A senior sponsor is needed to advance electronic commerce in government. Many issues remain to be resolved before adequate common infrastructures exist to support the delivery of services across multiple departments and agencies.
• If the government does not address on a timely basis the identified risks and areas requiring action, its objective of making electronic commerce its preferred way of doing business may not be fully realized and its goal of becoming a model user of the information highway by 2000 may also be in jeopardy.