Opening Statement to the Legislative Committee on Bill C-2

Bill C-2, an Act providing for Conflict of Interest Rules, Restrictions on Election Financing and Measures Respecting Administrative Transparency, Oversight and Accountability

9 May 2006

Sheila Fraser, FCA
Auditor General of Canada

Good afternoon, Mr. Chair and members of the Committee. We are pleased to be here and would like to thank you for the opportunity to discuss aspects of Bill C-2 that affect the Office of the Auditor General.

Accompanying me are John Wiersema, Deputy Auditor General and Jean Ste-Marie, Legal Advisor and Assistant Auditor General.

As legislative auditors, we provide objective information, advice, and assurance that parliamentarians can use to scrutinize government spending and performance. We appreciate the confidence in our work that is demonstrated in many of the provisions of Bill C-2.

Today, I would like to comment on four areas of the Bill that specifically affect our Office:

• the expansion of our mandate,
• access to information,
• the process for appointing the Auditor General, and
• immunity for agents of Parliament.

Last year, changes to the Auditor General Act addressed our concerns about audit access to foundations. We are now able to conduct performance audits in non-profit organizations that have received $100 million or more in a five year period. Legislative amendments have also made us the auditors of three additional Crown corporations. We are now the auditors or joint auditors of all Crown corporations except the Bank of Canada and the Canada Pension Plan Investment Board. The current Bill would expand our mandate further, to what has been called "following the dollar" to any recipients of public funds who have received $1 million or more over five years in the form of grants, contributions, or loans.

First of all, let me say that I appreciate this confidence. Now I would like to explain to the members of the committee how we would intend to carry out this mandate:

• It is management's job, in departments and Crown corporations, to ensure that grants, contributions and loans provided to individuals or institutions outside the federal government achieve their intended purposes. They do this by establishing the systems and procedures needed to ensure that these funds are used appropriately.
• Our role as government's external auditor is to determine whether those systems and procedures are in place and how well they are working. We then report to Parliament on the adequacy of the systems, and we provide recommendations where improvement is needed.
• We do not believe it is our role to routinely audit recipients of grants and contributions. As previously noted, this is the responsibility of the managers of those programs. Therefore, I expect that we would rarely exercise this option.

The proposed amendment would also give us the right to audit funding to most First Nations. It has been the policy of governments to encourage First Nations to move toward greater autonomy and self-government. The need to build institutional capacity in First Nations is an important part of this process. We have engaged for some time in discussions with First Nations and government officials on the creation of a First Nations Auditor General. Furthermore, previous work of the Office has shown that First Nations programs are already the subject of extensive reporting and audit. For these reasons, we believe that we would exercise this option rarely, if at all.

Since I expect to "follow the dollar" only in very rare and unusual circumstances, we are not seeking additional funding to carry out this expanded mandate.

We support the extended application of the Access to Information Act to our Office as set out in the Bill. In the past, we have voluntarily provided access to non-audit information, and we post our hospitality and travel expenses and contract disclosures on our Office Web site.

We are pleased that the Bill excludes our audit papers from access to information requests, and view this exclusion as essential. Without it, our ability to audit would be compromised.

We support the exemption of internal audit working papers from disclosure under the Access to Information Act. We reported in November 2004 that we found the current Access to Information Act to be negatively affecting the effectiveness of internal audit in departments and agencies.

We welcome a greater involvement of parliamentarians in the process for appointing the Auditor General. A secret ballot procedure, similar to the one used to elect the Speaker of the House of Commons, would prevent the process from being politicized. Divulging the specific number of votes cast for a nominee could make it difficult for that person to carry out the functions of an agent of Parliament, if it were known that a significant number of members opposed the appointment.

Other agents of Parliament and many provincial Auditors General benefit from civil and criminal immunity in relation to matters arising in the performance of their statutory powers, duties or functions. We are pleased to see similar indemnity provisions extended to my Office by the Bill.

This concludes our comments on the aspects of Bill C-2 that directly concern our Office. As committee members are aware, there are many other parts of the Bill that involve policy issues, on which we do not comment.

We would be pleased to answer any questions committee members may have.