Opening Statement to the Committee on Public Accounts
1999-2000 Estimates – Report On Plans and Priorities
13 April 1999
L. Denis Desautels, FCA
Auditor General of Canada
Thank you, Mr. Chairman for the opportunity to discuss with you our 1999-2000 Estimates, contained in our Report on Plans and Priorities.
The report establishes our performance expectations and outlines the general directions the Office wants to take in the next three years. It also provides additional details on our funding requirements for the coming year.
As we prepare for the 21st century, our Office will continue to place emphasis on our five priority areas. Some draft performance measures for each of these areas are indicated on pages 11 to 14 of the report. We will use these measures to determine our success in attaining these priorities and will provide the results in our Fall 2000 Performance Report.
We have provided you with a handout that shows the chapters we plan to include in upcoming volumes of our 1999 Report and, tentatively in the 2000 Report.
One of our current priorities is to look at the accountability and results implications of new collaborative arrangements. Parliamentarians have also shown an interest in this subject. Many departments are examining new ways to deliver services to taxpayers more effectively and efficiently, or ways to make existing arrangements work better. In some cases this means new organizations and in others, new agreements with provincial governments or the private sector. This year we are doing a broad government-wide survey of new arrangements as well as taking a more detailed look at some specific arrangements in departments such as Environment, Defence, Public Works, HRDC, and Agriculture. As in our previous work on NAV CANADA and Canada Communications Group, our audit objectives with these new arrangements are to make sure Parliament’s interest is protected and that expected results are clearly stated; we also want to identify lessons to be learned and pitfalls to be avoided.
A fundamental and continuing objective for the Office is improving economy and efficiency in the public service. This year we are working on four subjects well known to the Committee – Year 2000 preparedness, major capital projects, contracting, and human resource management in the public service. We will also be tackling some new subjects. As your Committee has asked, we will be monitoring the government’s Year 2000 report on mission-critical systems and also looking at the readiness of contingency plans. This year’s audit of major capital projects will examine those of the Department of Foreign Affairs and International Trade. Our contracting audit will look at the use of Advance Contract Award Notices. Another subject related to the economy and efficiency theme is the Canadian Police Information System.
Management of government revenues and expenditures is a theme that runs through several of our audits. Our revenue audits this year include the Underground Economy Initiative and GST processing. In part because parliamentary committees have shown an interest in cost recovery programs, we are planning audits of such programs in CIDA and Agriculture and Agri-Food Canada. Assessing the quality of financial management in departments is very important and, to do this, we have developed the Financial Management Capability Model that has recently been published. This year we are starting to use the model to assess the overall quality of financial management beginning with CIDA and Health Canada.
As you know, the government is introducing its new Financial Information Strategy (FIS). Accounting data, both for the government as a whole and for departmental use will now be produced by new departmental financial systems. In seven departments this year, we will be auditing the implementation of the first phase of FIS.
The environment and sustainable development are getting a lot of audit attention in addition to the nine chapters that the Commissioner is preparing for our May report. Other reports will have chapters on both East Coast and West Coast fisheries, and a chapter on how well National Defence manages hazardous waste.
Some other program audits could fall under more than one of our priorities. I might mention in particular the two dealing with the health portfolio. The first examines the quality and effectiveness of surveillance information in the Laboratory Centre for Disease Control and the second examines the implementation of the Canada Health Act.
Let me take a few minutes to briefly review our financial requirements and some of our new challenges in the year ahead.
The Main Estimates show that that we are asking for a total of $53.5 million to do our work in 1999-2000. The audit of the federal government’s financial statements will cost $4.5 million. The audits of financial statements of Crown corporations and other entities will cost $11.6 million. Our scheduled special examinations of Crown corporations will cost $4.3 million and our value-for-money audits in departments and agencies will cost $31.7 million, including $3.4 million related to the environment and sustainable development. Finally, planned spending by the Commissioner’s Office will be $1.4 million.
We have been named auditors of the new Government of the Territory of Nunavut, established on 1 April 1999. In 1998-99, Treasury Board approved funding for this new work. These Estimates provide for amounts ranging from $700,000 to $1,400,000 for the period 1999-2000 to 2002-2003 and beyond as this work increases.
Although we have presented here our best estimate for the 1999-2000 fiscal year, the timing of Estimates preparation, direction from Parliament to undertake new work and changes to government’s financial systems mean that we will be requesting supplementary estimates. I will now highlight the new work that in total, may require an additional $2 million in funding in 1999-2000.
In 1998-99, for the first time, the Office was required by legislation to carry out a financial audit and provide an assessment of the performance information reported by a new service delivery agency, the Canadian Food Inspection Agency. Beginning in 1999-2000, we will conduct the same type of work for the Canada Parks Agency and the Canada Customs and Revenue Agency. We are seeking various amounts annually for this new work – ranging from $580,000 to $960,000 for the period 1999-2000 to 2002-2003 and beyond.
The government’s phased implementation of its decentralized Financial Information Strategy (FIS) will also have an impact on our resource requirements for the audit of the financial statements of the Government of Canada. We are seeking $500,000 in 1999-2000 and $1 million in each of the years 2000-2001 to 2002-2003 and beyond, to cover the additional work this will require.
We have recently been named auditors of two newly created agencies: the Ridley Terminal Inc. and the Canadian Tourism Commission. We have also been asked to conduct special audit work at the Canadian Wheat Board. We intend to request additional funds in the coming year for our audit work in these agencies.
On other matters, last year we conducted a survey of parliamentarians to obtain their views on the work of our Office. Survey responses indicated that the type and amount of work we are doing is useful and many of our 1999 chapters relate to the priority themes that we asked about in this survey. Survey results also indicated that our Office should make more effort to inform parliamentarians about the work we do in the areas of environment and sustainable development. We will address this concern.
We consider feedback from parliamentarians to be an important performance measure for our Office. I want to thank you, Mr. Chairman, members of your Committee and indeed all the MPs and senators who participated. We had hoped for a higher response rate but we are heartened by the fact that all parties responded favourably to the work we are doing. We are considering other measures to learn more from parliamentarians in the coming year.
Finally, in our continuous review of the way we conduct our audit work, I have requested an external audit of our Quality Management System for annual financial audits. Through an open bidding process we have selected the accounting firm of PricewaterhouseCoopers to conduct this important review of our Office. Its report will be completed early in 2000.
Before I ask Michael McLaughlin to review the financial aspects of our Estimates, I would like to bring to your attention a few concerns that I have regarding the administration of my Office.
One concern is our independence in managing staff. Traditionally, we have adopted the collective agreements negotiated with the public service by the Treasury Board Secretariat. This was done with mutual understanding and concurrence. But in our current round of negotiations for the CR/ST bargaining unit, TBS will not give us a mandate to negotiate similar settlements. In addition, in parallel with the government’s own efforts to simplify staff classification, we have, as of 1 April 1999, created a classification structure unique to our Office, making the adoption of TBS-negotiated agreements no longer appropriate. However, there is a Cabinet decision requiring that separate employers obtain a negotiating mandate from TBS. Section 56 of the Public Service Staff Relations Act further requires that we may enter into collective agreements only with the approval of the Governor-in- Council. The new Canada Customs and Revenue Agency is not bound by that section. Because we do not enjoy the same exemption, our collective agreements must be approved by Governor-in-Council. I believe that this reduces the independence from government that Parliament sought to give us in the Auditor General Act.
Another concern is the appointment of auditors for various government activities, including alternative delivery arrangements. In the past, members of this Committee have questioned me about these appointments and the factors that are considered in making such appointments. I am currently preparing a paper that sets out my views and proposes a framework of guidance for the selection of auditors.
In closing, I would like to add that I have the opportunity of working with highly skilled employees and it is through their dedication that our Office has always been able to maintain a very high level of excellence and credibility in its work.
Thank you, Mr. Chairman. We would now be pleased to respond to your questions and would like to discuss with your Committee our 1999-2000 work plan. We truly welcome your suggestions and we will pay close attention to them.