Opening Statement to the Standing Committee on Public Accounts

April 2003 Report of the Auditor General of Canada

9 April 2003

Sheila Fraser, FCA
Auditor General of Canada

Mr. Chairman, thank you for the opportunity to meet with the Committee to discuss the Report tabled yesterday. With risk and uncertainty so much a part of our current environment, I am acutely aware of the timeliness of this report and its theme of risk management in the federal government.

The challenge of risk management is to strike the right balance between undesirable extremes. We don't want managers trying to avoid risk entirely, because that stifles innovation. Nor do we want them taking irresponsible chances that could jeopardize public safety or public assets.

These days, people are more aware of extraordinary risks such as terrorism, or threats to our health like SARS, but managing risk means more than preparing for the worst; it also means taking advantage of opportunities to improve services or lower costs.

The federal government took a very positive step two years ago when it introduced its Integrated Risk Management Framework.

But so far, government departments are still in the early stages of implementing this framework.

In Chapter 1, we looked at what six departments have done to date—and all six are missing crucial elements in their strategies to implement the framework. None of the departments we audited had a fully developed risk profile that set out their risk tolerances—that is, the levels of risk they are prepared to accept.

When the framework is fully in place, it will go a long way toward taking the guesswork out of managing risk. It will also foster a culture that encourages innovation, contributes to the efficient management of resources, and improves decision-making in the public service—goals that all Canadians support.

If the government wants to keep this initiative from stalling, senior managers of departments will need to demonstrate greater commitment and leadership. The Treasury Board Secretariat must also monitor this initiative more actively, provide more practical guidance, and play a more energetic role of co-ordination across departments.

Many of the most important risks the government has to manage stem from its role in assuring public security and protecting the environment. This report looks at how well federal departments have managed a variety of environmental, strategic, operational, and financial risks.

Chapter 5 looks at Citizenship and Immigration Canada's control and enforcement activities.

Every year, 100 million people present themselves at Canada's ports of entry. Determining who is a legitimate traveller and who should not be admitted to the country is an enormous challenge, but a vital one.

A comprehensive risk assessment of Canada's ports of entry by Citizenship and Immigration (CIC) would help identify the greatest risks so that it could then focus more attention on them. However, the Department has not done this, and several years have passed since the last time it assessed the effectiveness of its border controls.

It is also the Department's job to enforce the removal of people who should not remain in the country. However, our audit found that high workloads, insufficient resources, and inadequate information systems hinder CIC's ability to enforce removal orders. As a result, the gap between the number of removals that have been ordered and the number of departures that have been confirmed has grown by 36,000 in the past six years.

Care should be taken when interpreting this figure. It does not necessarily mean that all these people are still in Canada illegally—CIC cannot know how many are still here, because Canada does not have exit controls and some of them may have left without informing the Department—but the figure does indicate that the Department is falling behind in its enforcement efforts. The growing backlog in removals undermines the system used to admit people to this country.

On the positive side, the Department has taken steps to prevent inadmissible travellers from entering the country in the first place. In the past three years, its Immigration Control officers have worked with airlines overseas to stop some 20,000 people with fraudulent travel documents from boarding flights to Canada. This is a good example of allocating resources according to risk.

While I am encouraged by this initiative, Citizenship and Immigration still needs to determine how effective its controls are at ports of entry. After we completed our audit, the Department signed a long-overdue agreement with the Canada Customs and Revenue Agency, whose officers are the first point of contact for travellers coming into the country. This is an important step toward strengthening border controls.

Correctional Service Canada is another department that must manage risks effectively to protect public safety.

In Chapter 4, we note that the Service has done a great deal to improve how women offenders are incarcerated and rehabilitated, but our audit found two important gaps. Correctional Service needs to test the reliability of the tools it uses to assess offender security levels and their needs for rehabilitation programs.

It also needs to provide women offenders with timely programs tailored to their particular needs while they are incarcerated. These programs help them to prepare for their release and to rebuild their lives, reducing crime and the social costs it entails.

The Department of National Defence uses about 18,000 square kilometres of land to train Canadian soldiers and soldiers from other countries. If military training is to be realistic, it will have an impact on the environment—we understand that.

When we looked at how the Department currently manages the environmental risks that its training activities entail, we concluded that it can and must do much more to manage the resulting environmental damage.

To ensure that its training activities are environmentally sustainable, National Defence must develop mitigation and restoration plans, address how and when to use stressed or overused areas, and identify which type of training to conduct in certain areas. And it absolutely must abide by federal legislation that protects the environment.

Risks cannot be managed well without good information.

In Chapter 2, we found that managers still rely too much on their own informal records and still focus too narrowly on the short-term issue of how much cash they have left to spend in the current fiscal year. Instead, they should be using the new financial systems that the government has invested in, which provide a more complete picture. More guidance from the Treasury Board Secretariat is needed to ensure that high-quality financial information is prepared consistently throughout government. It has been two years since the government put in place the new financial systems for its Financial Information Strategy. It is now time to follow through with a concerted effort, led by the Treasury Board Secretariat and senior management, to begin reaping the benefits of this significant investment.

There is also a need for better information according to our analysis of federal support to First Nations for on-reserve housing. Federal funding totalled about $3.8 billion over the last decade. Yet many First Nations are facing a housing crisis. Unless action is taken quickly, the already unacceptable housing conditions are only going to get worse, with the population growth on reserves that is twice the Canadian average.

Indian and Northern Affairs Canada, Canada Mortgage and Housing Corporation (CMHC) and First Nations have not agreed on their respective roles and responsibilities for addressing the housing shortage on reserves. Programs and funding mechanisms are complex. They need to be streamlined, with clear assignment of responsibility for results. The government also needs to clearly articulate to Parliament the expected results and costs of housing programs. At present, Parliament does not receive complete information about the housing situation on reserves or the difference that federal assistance is making.

In addition to the above audits, this Report includes a study on Canada's strategy to combat money laundering and terrorist financing. Not only must Canada's strategy enforce the law, but it must also try to achieve other important objectives—protecting personal information, controlling costs, and supporting international efforts, for example. This study sets the stage for a future audit of the federal government's strategy to combat money laundering. In November 2004, we will address the issue of how well those challenges are being managed.

Striking a balance among multiple goals is a difficult challenge. In 2004, members of Parliament will review the legislation that underpins the strategy to combat money laundering and terrorist financing.

Thank you Mr. Chairman, we look forward to hearings on these chapters and we would be pleased to respond to questions.