Opening Statement to the Committee on Public Accounts

Chapter 20 - Preparedness for Year 2000: Government-Wide Mission-Critical Systems - (December 1998 Report)

Mr. Chairman, thank you for the opportunity to appear before this Committee to discuss with you our second audit report on the federal government’s preparedness for the Year 2000 computer problem.

The subject is not new to members of this Committee. You have met on three occasions to discuss the risk of systems errors and failures in January 2000 caused by the past use of a two-digit year code. You have also asked the government for periodic progress reports on its state of readiness.

In 1997, we focussed our first audit on the government’s overall state of readiness. At that time, we raised a concern that if the pace of Year 2000 work to that date continued, it would likely not be sufficient to make all the necessary changes to systems and to test and implement them so that they could continue to function as intended.

Since that time, many events have taken place. The Monty Task Force led a survey of Canadian business readiness. Through its reports, it promoted awareness of the Year 2000 problem and helped businesses prepare for it. The House Committee on Industry held numerous hearings on this issue and submitted a report to Parliament recommending action on many fronts. In addition to the three hearings your Committee held on Chapter 12 of our 1997 Report, your report to Parliament underscored the significance of the Year 2000 problem. You not only recommend that we review progress reports submitted by the Treasury Board Secretariat but also encouraged us to continue audit work on this important subject.

That was one of the reasons for our second audit, in 1998. In addition to following up on our previous report, the 1998 audit focussed on the systems that support government-wide mission-critical functions -- those that deliver essential programs and provide key services to Canadians.

I am pleased to report that we found that the government had reacted favourably to our 1997 observations and recommendations. It has recognized the significance of the issue and departments are giving it top priority. Overall, the pace of Year 2000 work has accelerated and there has also been progress in central monitoring and advancing some horizontal issues. For example, by July 1998 the government had approved loans of about $365 million to 15 departments and agencies so they could proceed quickly with Year 2000 work.

Nevertheless, after analyzing the Treasury Board Secretariat’s summary of the June 1998 survey results, we remained concerned.

According to milestones set by the government, Year 2000 work on systems ought to have been at least 50 percent complete by June 1998. However, nine departments and agencies responsible for 18 of 48 mission-critical functions had completed 50 percent or less of the work needed to make the systems compliant. The Secretariat considered a progress rate of 60 percent or more at that time to be “good”; only four departments responsible for 7 mission-critical functions met that criterion.

Mr. Chairman, I would like to remind the committee that we are dealing with a list of mission-critical functions for the government as a whole. Each and every one of these functions is considered important to Canadians; otherwise it would not have made the list. The situation is also more complex than meets the eye. Over 1,000 systems support these 48 mission-critical functions. Moreover, there are many more systems that are “department-wide mission-critical”. That is to say, they may not be critical to the government as a whole but are essential to departments and agencies so that they can continue to carry out their mandate in the usual fashion. The central monitoring and the reports did not cover those systems.

The government’s deadline for final testing and implementation of compliant government-wide mission-critical systems is 30 June 1999. It allows six months for departments and agencies to deal with slippage or unexpected problems that may arise. I should also note that some systems supporting the government-wide mission-critical functions have target dates for completion later than June 1999.

In the 1998 audit, we identified six mission-critical functions for examination. We selected and assessed the readiness of some key systems that support the six functions. The functions are inspection for food safety and plant and animal health, emergency assistance and support, the delivery of income security programs to Canadians, First Nations transfer payments and trust funds, border crossing services for commercial goods, and law enforcement services.

Assessing the systems using data as of 30 June 1998, we concluded that several key systems and subsystems supporting three of those functions remained at risk of not becoming fully compliant before 2000. They are the inspection services for food safety and plant and animal health, income security programs – more specifically the Canada Pension Plan component, and law enforcement services. We found the risk to be lower or not significant for some of the key systems supporting the remaining three functions. I should emphasize that we did not assess all systems supporting the six functions. Also, it would be inappropriate to generalize our findings to the state of Year 2000 work in the six departments.

Mr. Chairman, our findings were based on information as of June 1998. The status of Year 2000 work is very dynamic, as it should be. Last month, Minister Marcel Masse announced that the government’s rate of progress on systems supporting mission-critical function had reached 82 percent in December 1998. In December, I received a letter from Human Resources Development Canada, indicating that the Canada Pension Plan system – one of the systems that we concluded was at risk as of June – had been fully tested and received internal certification.

The auditors and I are pleased to receive the news. But it begs two important questions:

• How should one interpret this information in a broader context?
• Does the Auditor General’s concern still stand?

We can take comfort in the fact that the pace of Year 2000 work has picked up even more since our 1998 audit. However, one cannot infer from this that the final 18 percent will not run into any unexpected hurdles. The Treasury Board Secretariat recently released a report on government-wide mission-critical progress. It reflects progress as of December 1998 and the Secretariat plans to update this report monthly. The report shows that not all departments and agencies are progressing at the same rate. Where there are stragglers, further attention and close monitoring may be required. This report also provides more detail than was contained in previous progress reports to this Committee. We believe that it provides a good basis for members of the Committee to be kept informed of Year 2000 progress in departments that are responsible for mission-critical functions for the government as a whole. Mr. Chairman, the Committee may wish to use this report as a starting point and explore further how it could be made more meaningful for your Committee.

In my Office, we are cautiously optimistic. We are encouraged by the accelerated pace and progress, and by news such as the certification of the Canada Pension Plan system. We remain guarded because slippage and unexpected problems can occur and the last 10 percent can be difficult to achieve on a timely basis. Even the government acknowledges that there will be glitches come January 2000. For those reasons, I believe it would be prudent to act upon the audit recommendations in our 1998 report.

We recommended that the government continue its focus on Year 2000 as a top priority, and that the Treasury Board Secretariat consider intervening strategically as appropriate and take strong action such as triage if warranted. In order to ensure continuation of essential programs and services, contingency plans should be developed and tested in advance. We also recommended that the Secretariat develop a work plan for common horizontal issues that remain to be addressed.

In my view, the seriousness of the Year 2000 computer problem is real. Even with the accelerated progress to date, we must not become complacent. No efforts should be spared in bringing the problem in check.

Time is of the essence and we do not have a lot left. But we do have 325 days before 2000. If we devote our full efforts and also have contingency plans in place and tested, there is no reason why essential programs and services cannot continue without interruption.

In my Office, we continue to view the Year 2000 computer problem as a priority issue and we are planning to start a third audit. I expect to bring that report to this Committee in November. If we identify specific risks during the audit, we can act as a catalyst by bringing them promptly to the government’s attention when there may still be time to address them. By the time our report is tabled, we hope that few issues would need to be addressed before 2000. The ultimate objective should be to ensure that all essential programs and services continue for the public at large.

Mr. Chairman, that concludes my opening remarks and we would be pleased to answer any questions that the members of this Committee may have.