Opening Statement to the Standing Committee on Public Accounts

2005-06 Estimates and 2005-06 Report on Plans and Priorities of the Office of the Auditor General of Canada

4 April, 2005

Sheila Fraser, FCA
Auditor General of Canada

Mr. Chair, we are pleased to be here and would like to thank you for the opportunity to discuss our 2005-06 Estimates and our 2005–06 Report on Plans and Priorities.

Accompanying me are John Wiersema, Deputy Auditor General; Rick Smith, Assistant Auditor General, Strategic Planning and Professional Practices; and Robert D’Aoust our Comptroller.

Members of this Committee are familiar with the scope of our work, but let me begin by briefly summarizing it. We audit the federal government, which includes some 70 federal departments and agencies, 10 departmental corporations, and 60 other entities. We also audit 40 Crown corporations, the 3 territorial governments, 15 territorial agencies, and 2 United Nations agencies, UNESCO and the International Civil Aviation Organization (ICAO). For these 2, we recover costs.

During the coming fiscal year we will conduct more than 130 annual financial attest audits and plan to complete some 25 performance audits. I have attached a list of planned performance audits to my statement (see Appendix A.)

The Financial Administration Act requires that our Office conduct special examinations, which are a form of performance audit of crown corporations done every five years. I have included the list of the 10 special examinations that we will be completing this fiscal year as Appendix B.

We do this work with parliamentary appropriations of $71.8 million—our Main Estimates—and a staff equivalent of 590 full-time employees. The total cost to operate our office is $81.2 million when the services received without charge from other government departments are included. This is comparable with our 2004-05 budget (see Appendix C).

Members will be aware that there are currently two pieces of legislation before the House that would expand the mandate of our Office to include the auditing of Crown corporations and access to foundations. Our preliminary analysis suggests that the impact of this expanded mandate on our budget would be modest.

When I appeared before this Committee in November I expressed concern that the Treasury Board had yet to take a decision on the continuation of a 2001 temporary increase to our budget. I am happy to report that that funding has now been made a permanent part of our budget, and is reflected in our 2005-06 Main Estimates.

Looking ahead, Mr. Chair, the funding mechanism for the Office remains an issue for us. We appreciate very much the support that the Committee gave to the Office in its February 14, 2005 report on our Report on Plans and Priorities and our Performance Report. In particular, we welcome the Committee’s recommendation that a new funding mechanism that safeguards the independence of the Office and ensures that it will be able to meet the expectations of Parliament, be established prior to the end of October 2005.

The Standing Committee on Access to Information, Privacy and Ethics is currently studying the funding mechanisms of the offices of the Information Commissioner, the Privacy Commissioner, and the Ethics Commissioner. I appeared before that Committee on February 24 to present our perspective on possible funding mechanisms for the Office of the Auditor General. We presented the three models that we have discussed with this Committee and the Treasury Board Secretariat.

I have provided assistance to the analysts of the Standing Committee on Access to Information, Privacy and Ethics to assist with the elaboration of a modified version of the United Kingdom model that takes into consideration the comments we received from Committee members at the February 24 hearing.

Members will recall that in the UK model, the National Audit Office prepares an estimate of its expenses annually. An all-party commission examines this estimate and lays it before the House of Commons with such modifications as it sees fit. The commission is required to take into consideration any advice given by the Public Accounts Committee and the equivalent of our Treasury Board Secretariat.

Let me now outline briefly three of our priorities for 2005-06:

• serving Parliament,
• providing a respectful and supportive workplace for our employees, and
• strengthening performance measurement and reporting.

These are ongoing priorities for the Office, but there are specific actions that we are taking this year to support them.

We exist to serve Parliament, and our relationship with parliamentarians is key to our effectiveness. That is why we have reviewed and renewed our parliamentary strategy. We have set four objectives for ourselves over the coming year. We want to:

• communicate our messages clearly to Parliament,
• ensure that our work remains relevant and useful to parliamentarians,
• promote the role and work of our Office, and
• maintain our credibility with Parliament.

Members of the Committee will recall that one year ago we received the report of an international peer review team on our performance audit practice. The review team concluded that our practice was suitably designed and operating effectively to produce information that parliamentarians can rely on to examine the government’s performance and hold it to account.

The international review team also identified opportunities for improvement, and those suggestions are now being implemented.

We are now undertaking a separate exercise to make our performance audit practice even better. We have reviewed practices of other national audit offices, consulted with senior public servants and our advisors, and would now like to consult with parliamentarians —focussing particularly on the members of this Committee. We will be working with the Chair to identify the most appropriate format and timing for this discussion.

Creating a working environment in which employees are treated with dignity and respect and are supported in their career aspirations is one of the Office’s most deeply held values. Our commitment to staff must be evident in everything we do.

It is ultimately the high quality of work, integrity, and consummate professionalism of the men and women who serve the Office that will assure its continued credibility. We know from surveys that our people already think the Office is a good place to work—in the coming year we are dedicated to making it even better.

In 2005–06, the Office will work toward four specific objectives:

• enhancing employee satisfaction,
• increasing bilingualism,
• assembling a more representative workforce, and
• ensuring that we provide opportunities that attract high-quality employees.

We have established specific targets and indicators for e ach of these objectives, and we will monitor our ongoing performance in attaining them.

Good performance measurement and reporting is fundamental to good management and accountability. As longstanding proponents of this, the Office has been working to enhance our own systems and reports.

The basis of our performance measurement process is a “results chain” that explains how we seek to make a difference for Canadians. The results chain illustrates graphically the logical connection between what we deliver—audits, information, and advice—and the long-term result we seek—well-managed, accountable and environmentally responsible government.

Our results chain also shows how our key stakeholders engage with us and contribute to the process. In 2004–05, the Office strengthened its results chain, and in the coming year we will finalize key indicators and set targets for each of our four major types of audits.

Thank you, Mr. Chair. My colleagues and I would be pleased to answer your questions.

Appendix A

Office of the Auditor General
Performance Audit Reports Planned for the Remainder of 2005

April 2005

• Natural Resources Canada—Governance and Strategic Management
• National Security in Canada—The 2001 Anti-Terrorism Initiative: Air Transportation Security, Marine Security, and Emergency Preparedness
• Passport Office—Passport Services
• National Defence—C4ISR Initiative in Support of Command and Control
• Rating Selected Departmental Performance Reports
• Indian and Northern Affairs Canada—Development of Non-Renewable Resources in the Northwest Territories

September 2005
Report of the Commissioner of the Environment and Sustainable Development

• Canada 's Oceans Strategy
• Maintaining and Restoring Ecological Integrity in Canada's National Parks
• Sustainable Development Strategies Government-Wide Direction and Green Procurement
• Federal Contributions to Safe Drinking Water
• Follow-Up Audit of the Canadian Biodiversity Strategy
• Water Quality and Infrastructure on Reserves
• Environmental Petitions

November 2005

• RCMP — Contract Policing
• The Quality and Cost of Federal Surveys
• Individual and/or Trust Taxpayers
• Managing Horizontal Issues
• Support Given to Cultural Industries
• The Federal Electoral Process
• Treaty Land Entitlement
• Tentative list of reports planned for 2006

February 2006
Status Report

• Military Recruiting and Retention and Pilot Training
• Canadian Firearms Program —Status Report
• Managing GovernmentUsing Financial Information
• Status Report —Grants and Contributions
• Aboriginal Issues

April 2006

• The Management of Government Information
• Canada Revenue Agency —Collections
• Public Safety Probity Issues
• National Defence—NORAD Region/Sector Air Operations Centre Modernization
• Financial Management and Control —Health Canada
• Income Security Programs
• Canada Revenue Agency —Source Deductions
• Rating of Departmental Performance Reports

September 2006
Report of the Commissioner of the Environment and Sustainable Development

• Climate Change —Federal Management Performance
• Climate Change —Impacts and Adaptation
• Climate Change —Reducing Greenhouse Gas Emissions During Energy Production
• Climate Change —Reducing Greenhouse Gas Emissions During Energy Consumption
• Sustainable Development Strategies —Monitoring Performance
• Environmental Petitions

Appendix B

Office of the Auditor General
Special Examination Reports Planned for 2005-06

In 2005–06, we will report the special examinations of the following 10 Crown corporations:

• Canadian Broadcasting Corporation
• Cape Breton Growth Fund Corporation
• Laurentian Pilotage Authority
• Canadian Museum of Civilization
• Canadian Dairy Commission
• Royal Canadian Mint
• Queens Quay West Land Corporation
• Canada Lands Company Limited
• Ridley Terminals Inc.
• Canadian Tourism Commission

Appendix C

Office of the Auditor General of Canada Funding
2004–05 and 2005–06
($ millions)

Notes

¹ The 2005–06 Main Estimates of the Office are made up as follows:

² This represents the 2.5% compensation increase for the management category retroactive to 1 April 2004 announced by the President of the Treasury Board on 13 December 2004.

³ This represents the services received from other departments such as the cost of accommodation provided by PWGSC and the contributions for the employer’s share of insurance premiums paid by the Treasury Board Secretariat.

⁴ The Office recovers the cost for the audits of the International Civil Aviation Organization and UNESCO. These funds are not used by the Office but are returned to the Consolidated Revenue Fund (CRF) as non-respendable revenue.

⁵ The net cost of program reflects the total cost to operate the Office. This includes parliamentary appropriations voted for the Office and the costs that are paid for by other government departments on behalf of the OAG.