Opening Statement to the Standing Committee on Canadian Heritage

Protection of Cultural Heritage in the Federal Government
(Chapter 6 - November 2003 Report of the Auditor General of Canada)

Support to Cultural Industries
(Chapter 5 - November 2005 Report of the Auditor General of Canada)

15 June, 2006

Sheila Fraser, FCA
Auditor General of Canada

Mr. Chairman, thank you for giving me this opportunity to meet the members of your Committee and discuss certain issues we raised in our 2003 report on the protection of cultural heritage and in our 2005 report on support to cultural industries. With me today are Richard Flageole, the Assistant Auditor General responsible for these audits, and Richard Gaudreau, Director.

In our chapter on the protection of cultural heritage, we concluded that the b uilt, archival, and published heritage under the auspices of the federal government is exposed to serious risks of losses. This is because of deficiencies in various protection regimes, weaknesses in management procedures, and the combined effect of growth in heritage to be protected and a decrease in protection expenditures.

Organizations we examined have taken some protective measures since the publication of our report. In 2006 and 2007, Library and Archives Canada plans to move its collections most at risk to more suitable storage space that it has acquired. However, issues such as the development of a legal framework for the protection of built heritage and the efficient acquisition of government archives of historic interest and archival importance have not yet been resolved.

We are following up on the measures Parks Canada and other departments have taken to protect national historic sites and federal heritage buildings. We plan to report our observations in 2007. We also plan to follow up on measures taken to preserve the federal government's documentary heritage.

In support of cultural industries, Canadian Heritage and other organizations such as Telefilm Canada, the Canadian Television Fund Corporation, and the Canada Revenue Agency, provide about $800 million a year to film, television, publishing, sound recording, and new media to encourage the creation, production, and distribution of Canadian cultural works.

In our November 2005 chapter, we made observations on strategic management, governance, and control. In strategic management, we concluded that Canadian Heritage has not yet clearly defined the results it wants to attain by investing in cultural industries. Furthermore, it has not set targets to measure the performance of its investments. We believe that this weakeness does not promote the cohesiveness the Department needs to achieve specific objectives and is less able to report on its performance to Parliament.

We noted that the governance of the Canadian Television Fund was particularly complex and that the administration of its program was cumbersome. At the time of our audit, Telefilm Canada and the Canadian Television Fund, administered the Fund's program. The boards of directors of these two corporations had to approve the budget, the business plan, and guidelines for the program.

The mandate of Telefilm Canada, which Parliament amended in 2005, is to promote and encourage the development of the Canadian audiovisual industry. We noted that the Department had considerable influence over the governance of Telefilm Canada through its contribution agreements with the Crown corporation. As a result of the administrative requirements of these agreements and the relative importance of the amounts involved, Telefilm Canada has little leeway to interpret its mandate and determine the best way of carrying it out. This degree of oversight is unique among Crown corporations.

Finally, we concluded that, despite the implementation of an appropriate control framework, Canadian Heritage, Telefilm Canada, and the Canada Revenue Agency do not apply their controls rigorously enough to ensure that Canadian requirements for content, project selection, and eligible expenses are met.

We know that the Department has taken some measures to improve the management of its programs and activities. However, we have not yet audited the implementation. Your committee may wish to ask Canadian Heritage and concerned entities about the measures they have taken or plan to take to remedy the shortcomings we found in our audit.

I would like to take this opportunity to let you know that we intend to initiate a risk-based planning exercise to help us identify future audit work in the heritage, arts, and culture sector. As part of this process, we would like to meet with some members of this committee to discuss any issues that may be of particular interest to the Committee and that we should consider in our audit work over the next three to five years.

Mr. Chairman, we would be pleased to answer the Committee's questions about these audits or our role, mandate, and work.