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Media Relations
Tel.: (613) 952-0213, ext. 6292
E-mail: communications@oag-bvg.gc.ca
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The Auditor General said that the federal public service needs to give attention to the renewal and rejuvenation of its work force. It needs to address problems with three of the important personnel systems: classification and job evaluation, staffing, and collective bargaining. Various attempts have been made to modernize these, but more needs to be done. Corrective action can remove some of the constraints in the system so that the public service can more effectively respond to the needs of Canadians.
The Auditor General also said that attention is required to establish a more constructive dialogue on performance and partnership, and to ensure continuity of leadership and persistence in moving forward. "I am convinced of the importance of building on the strengths of the past to ensure that Canada enters the twenty-first century with a modern, world-class public service. Persistent and ongoing effort, however, is required to maintain a competent and efficient public service in the face of new realities," is one of the messages of the Auditor General.
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"Even with the financial information available to them, policy-makers are unable to estimate the financial consequences of their decisions," said Mr. Desautels. "This has been a major problem for decades that still requires ongoing attention, despite royal commissions, audits and other various attempts to fix it."
In the first phase of a new study on financial management in the public service, attention is drawn to the seriousness of the problem and to steps that should be taken to find solutions. The Auditor General's staff will work closely with senior departmental officials, the Treasury Board Secretariat and the Independent Panel on Modernizing Comptrollership, in a wide-ranging examination of all the issues.
When completed, the study is expected to provide a framework for eliminating shortcomings in the current financial management system. It will do this by providing departments with guidance for improving the quality of financial management information required for decision making.
"Eventually the government will have the means to assess the quality of financial information to determine what must be done to improve it," said the Auditor General.
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In his first in-depth study of the accounting function since he took office six years ago, the Auditor General stated that in the past decade the federal government has greatly improved its financial reporting, and now is at the forefront internationally. To remain there, however, the government is planning improvements in a number of key areas to ensure that the accounting function continues to provide information essential for managing government programs and for reporting financial results to Parliament.
Mr. Desautels noted that there was ample evidence in both public and private sector large-scale accounting operations to indicate that "the chances of success would be enhanced if someone with overall authority were put in charge now."
One example of the need for information is in the preparation of the Finance Minister's annual budget. Consistent use of sound accounting standards and a strengthened central accounting function should help officials analyze government-wide financial information.
Mr. Desautels describes several significant challenges for government accountants. Included in these challenges are getting the government's capital assets on the books (they are currently valued at $1) and modernizing the accounting systems in departments and agencies so that they can operate under the new accounting rules.
While Mr. Desautels agrees with the government's changes under way that address the challenges, he encourages the government to give immediate consideration to his report and its recommendations as part of that work.
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While Environment Canada has made a start in establishing a regime to control the legal transboundary shipments of hazardous waste, there is little chance of detecting illegal traffic of hazardous waste at border points. Customs officers need more training to enable them to recognize hazardous waste shipments. Effective sampling of potentially illegal exports and imports is very limited.
It is even more difficult to detect the presence of hazardous waste at rail yards or marine ports. Relatively few rail containers are examined, whether imports or exports. There are no targeted inspections of containers exported by ship.
The Auditor General also commented that it has taken five years for Environment Canada to begin to enforce the Export and Import of Hazardous Wastes Regulations. Mr. Desautels noted that shippers were required to comply with the Regulations as soon as they first came into force in 1992.
This chapter is featured in a video entitled "Selected Highlights", which can be obtained from the OAG Distribution Centre at (613) 952-0213, extension 5000 or by fax at (613) 954-0696.
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In an audit that looked at some of government's efforts to improve the system for managing spending and establishing priorities, the Auditor General found that government departments do not clearly describe to Parliament what their most important programs are expected to achieve. Without a clear statement of expectations, it is difficult to judge the success of a program.
Neither do departments clearly report what has been actually accomplished for Canadians. The focus has too often been on describing the services that are delivered rather than their results.
However, improvements piloted over the last two years have resulted in a greater focus on results and have improved the timing of this information.
Mr. Desautels welcomed the extension of the pilot performance reporting project to all federal departments and agencies, while cautioning that "although considerable improvement has been made in the system for reporting results, the content of the information needs more improvement. This will take time. Further progress requires leadership by Treasury Board Secretariat and senior departmental managers."
"The roles of Treasury Board Secretariat and of parliamentary standing committees are vital. They create powerful incentives by clearly communicating to departments that they use information on results," said Mr. Desautels. He also noted that the Sub-committee on the Business of Supply in the last Parliament had studied the work of standing committees in this area, and recommended that committees make good use of opportunities arising from improvements in performance reporting.
A related study reported in Chapter 11 of the Auditor General's April/October 1997 Report, entitled "Moving toward Managing for Results", examines the essential elements required for managing for results and improving performance.
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Contracting represents the most significant financial management challenge faced by most public servants. It is one that can be expected to grow in scope and complexity as government continues to downsize.
Treasury Board is responsible for setting overall contracting direction, and it shares responsibility with Public Works and Government Services Canada, with individual departments and with suppliers for the results obtained from the use of the goods and services acquired.
Mr. Desautels said the current contracting practice requires much improvement, which impacts on all departments' ability to achieve good contracting results.
"It was easier in the past, in more stable periods, for the government to deal with contracting," Mr. Desautels said. But the current circumstances of government require more active management. The Treasury Board Secretariat has to find better ways to arrange its shared responsibilities, to set clearer directions and priorities, and to see that its directions are communicated to the managers who actually manage contracts on a day-by-day basis.
The Auditor General acknowledged the progress made to date by the Treasury Board Secretariat in providing clearer direction. "If there were simple solutions they would have been found long ago," Mr. Desautels commented. "Contracting involves a range of participants, with their own objectives. This makes it difficult to set and maintain clear priorities to achieve improvement."
Mr. Desautels welcomes the report on government contracting issued in April 1997 by the Standing Committee on Government Operations. He stated that while both his Report and that of the Standing Committee examine the topic from different perspectives, they arrive at essentially the same conclusions.
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"Federal organizations need to develop systems of control that are appropriate to the growing use of cards," Mr. Desautels said. Many traditional financial controls, such as segregation of duties, are difficult to apply and new control measures are required. Problems could go undetected until departments and agencies improve control. "Much can be done to reduce risks and to pursue more rigorously the benefits of card use," he added.
The Auditor General noted, "Although available measurements do not point to serious losses at the present time, the severity and number of problems could increase if organizations do not strengthen control." He favours increasing the use of electronic tools as a key means to modernize control over the use of cards. The Auditor General also says that "government organizations could benefit from sharing of best practices."
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In his Report tabled in the House of Commons today, Auditor General Denis Desautels said, "We found that the equalization program is well run and doing what it is supposed to do, but there is always room for improvement."
He added, "This is a living, breathing program that requires constant care and attention if it is to keep up with the changing circumstances of the provinces. When provincial tax policies change and their respective capacities to raise revenues change, equalization can also change."
The equalization program is renewed every five years, with the next renewal scheduled for April 1999. To make the 1999 renewal as responsive as possible, Mr. Desautels noted, the federal government should do two things.
First, it should establish guiding principles to help ensure that there is a sound basis for any changes made. This is particularly important when considering how to incorporate provincial tax policies into the formula for making the payments.
And second, it should improve the process of consultation both with the provinces and with Parliament, the latter being important in order to widen the advice-seeking process beyond federal and provincial officials.
"In our view, improving this consultation process with both parties could be used to the advantage of the Department of Finance and to the betterment of the overall program."
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"As a result of a determined effort, the Department has resolved a number of issues reported in 1994 and in previous audits, such as overdue advances to employees, collection of shelter shares (rent) and financial training," commented Mr. Desautels.
However, the Auditor General noted that there were still problem areas in financial management and control. He observed that financial information was weak in several areas -- the initial identification of the cost of consular services, repairs and renovations to property, and expenditures on information technology.
"An effort similar to that which has gone into resolving issues raised in 1994 needs to be applied to developing better financial information and encouraging more positive attitudes to cost awareness and stewardship," said Mr. Desautels.
The audit noted that shared responsibility for management and decision making was present in a number of key support areas such as property management, information technology and use of the Foreign Service Directives. The Auditor General was concerned that this approach made accountability for decisions and for operating and financial results less clear.
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Modest resources are split among 16 energy efficiency initiatives, focussing on all end-use sectors and all major fuel types. From the extensive range of policy instruments available to encourage energy efficiency, the Department uses a limited number of instruments, namely selective regulations, information and voluntary action. Past large-expenditure grant programs have been replaced by much lower-expenditure partnership and promotion programs.
"NRCan's current performance information, both expectations and achievements, is not sufficient to determine the overall success of its energy efficiency initiatives," Mr. Desautels said.
Mr. Desautels noted that the objectives established for many of the energy efficiency initiatives do not provide a clear and concrete expectation of achievement against which the Department can assess its progress and report to Parliament. More work must also be done to measure and assess the overall achievements of its initiatives. However, he found that the Department is taking steps to improve the quality of its performance information, where cost-effective and feasible.
Mr. Desautels also stated, "For the energy efficiency initiatives, opportunities exist to enhance departmental transparency and accountability by better reporting to Parliament."
He further reported that the Department has begun to lay the foundation to improve the energy efficiency of its own facilities and fleet of vehicles.
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"Government managers must focus on achieving results if they are going to meet Canadians' expectations for cost-effective programs," says Denis Desautels. "Experience shows that this can be done without ignoring essential rules and procedures."
Five programs that demonstrate the successful application of the "managing for results" approach are featured in the Auditor General's Report. Among them is Revenue Canada's Travellers Program, which is concerned with the international movement of people and their baggage as they enter Canada. The Report describes how managing for results enabled the Program to respond to challenges created in the early 90s when record numbers of Canadians began to do their shopping in the United States.
The Investigation and Control Program, aimed at detecting abuse and fraud by claimants of the Employment Insurance program, is also featured, as are the North American Waterfowl Management Plan, the Canada Centre for Mineral and Energy Technology (CANMET) and a department-wide accountability framework in Environment Canada.
These examples demonstrate that shifting the focus from managing resources to managing results requires a change in management culture, including agreement on expected results, reliable measurement and communication of results.
"There is good buy-in for the concept, but managing for results is not yet widespread in government," says Denis Desautels. "It is not easy and will take several years of concerted effort to move government in this direction. It is imperative that we profit from lessons learned to date. Strong leadership across government and departments is required."
A related audit reported in Chapter 5 of the Auditor General's April/October 1997 Report, entitled "Reporting Performance in the Expenditure Management System," examines the reporting of performance to central agencies and Parliament.
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"Year 2000" has been under much discussion in the information technology world. It refers to the potential for systems errors and failures caused by a past computer practice of coding the year with two digits. Failure to deal with this issue could threaten the functioning of government systems that support the delivery of programs and services to the public, as well as internal operations.
In assessing the government's general state of readiness for Year 2000, the Report has concluded that, as of 30 April 1997, the risks for government systems remain high. "If the government were to continue at the same pace that we observed at the end of April, systems would probably not be ready in time for the year 2000," said the Auditor General. The Treasury Board Secretariat has been working to help raise awareness, find common solutions and co-ordinate government efforts.
Mr. Desautels added, "I am very concerned that continuous delivery of major government programs and essential services into the year 2000 remains at risk." The Report indicates that the potential impact can include health and safety concerns, financial consequences to the government and interruption to other essential services.
The Report calls for urgent and aggressive government action in dealing with the Year 2000 challenge. It has recommended ranking Year 2000 as a top priority, taking on a government-wide perspective for the most critical systems, and considering a role for ministers and Parliament.
This chapter is featured in a video entitled "Selected Highlights", which can be obtained from the OAG Distribution Centre at (613) 952-0213, extension 5000 or by fax at (613) 954-0696.
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Denis Desautels identified significant weaknesses in the management of Health Canada's health programs directed to First Nations. Health Canada spends $1 billion a year on these programs.
The Non-Insured Health Benefits program provides benefits such as prescription drugs and dental care to First Nations people. These benefits are delivered through a system involving physicians, pharmacists, dentists and a contractor who operates a claims-processing system for the Department.
The audit found significant weaknesses in the management of pharmacy benefits, allowing clients to access extremely high levels of prescription drugs. Although the Department has been aware of the problems in this area for almost
10 years, the audit found no evidence that the ease of access to prescription drugs has changed in any significant way. Despite the seriousness of the problem and numerous reports of prescription drug addiction and prescription-drug-related deaths in First Nations communities, action to intervene has been slow.
"Although prescription drug misuse is not unique to First Nations, there are serious implications for First Nations health, particularly when the program is intended to improve the health of First Nations," said Denis Desautels. "It is very important to ensure that the new point-of-service system that the Department plans to implement will result in timely and effective intervention."
Health Canada is also responsible for community health programs delivered through separate contribution agreements with First Nations. The audit found that the management of these agreements by Health Canada was weak.
"The Department needs to monitor contribution agreements with First Nations in a way to give them flexibility and control to tailor programs to meet community needs and, at the same time, fulfil its obligations to manage programs efficiently and effectively," said the Auditor General.
The Department is in the process of transferring more control of these programs to First Nations. A sound framework for transfer has been developed but has not been fully implemented yet.
This chapter is featured in a video entitled "Selected Highlights", which can be obtained from the OAG Distribution Centre at (613) 952-0213, extension 5000 or by fax at (613) 954-0696.
Chapter 14 - Fisheries and Oceans Canada - Sustainable Fisheries Framework: Atlantic Groundfish sets the stage for the other chapters by describing the factors contributing to the groundfish decline, and highlights the urgent need for a national sustainable fisheries policy.
Chapter 15 - Fisheries and Oceans Canada: Rationalization and Renewal reports on the Department's progress in reducing the number of fishing licenses in the Atlantic groundfish industry. A serious overcapacity problem remains. Concerns associated with the fisheries management practices are also highlighted.
Chapter 16 - Human Resources Development Canada: The Atlantic Groundfish Strategy concludes that more than three years after the implementation of the Strategy (TAGS), there has been no substantial improvement in the lot of fishers and fish processing workers. What began as a strategy aimed at restructuring the industry became essentially an income support program. The chapter identifies some of the significant weaknesses of TAGS.
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The 1980s and early 1990s saw the collapse of groundfish stocks in Atlantic Canada resulting in a crisis in the groundfish industry. As we approach the end of 1997, the fish have not yet returned in sufficient quantity to sustain the industry.
According to the Auditor General in his Report tabled today, significant excess harvesting capacity in the Atlantic groundfish industry still remains and the number of Atlantic Canadians relying on the fishery is too high. As it stands now, there is little incentive for fishers to abandon the fishery. Remaining attached to the fishery is more attractive than leaving it.
In this context, the development of a national fisheries policy is urgently needed, says the Auditor General. "Such a policy would give primary importance to sustaining the fisheries resource base, as opposed to policies in the 1970s that focussed on maximizing employment from the commercial fishery. Conserving the resource needs to be the primary focus. Further, a healthy fishery will contribute in turn to sustainable development, including social and economic objectives."
Under the Green Plan, the federal government was to develop a national fisheries policy as part of a strategy to ensure the long-term sustainability of fishery resources. While background papers were prepared, a national fisheries policy and action plan have yet to be developed.
Mr. Desautels added that the government as a whole must deal with difficult socio-economic decisions about the future of Canadians whom the fishery cannot support, in order to ensure an ecologically and economically sustainable fishery.
Chapters 15 and 16 also deal with Atlantic groundfish.
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In response to the collapse of the Atlantic groundfish fishery, the government has taken steps to reduce the number of groundfish licenses. In his Report on the rationalization efforts, the Auditor General notes that only 545 licenses will be retired by the Department under The Atlantic Groundfish Strategy (TAGS). A further 2,626 have been identified for eventual removal from the fishery through other initiatives.
"Even if we assume that the Department is able to retire these additional licenses, the government is still faced with a serious overcapacity problem," stressed Auditor General Denis Desautels. "About 10,000 groundfish licenses remain active, and some of the fishers who continue to hold these licenses are those who historically have caught most of the fish."
Capacity rationalization efforts were reduced to meet increased demand for income support under the Strategy. The original allocation of $300 million was reduced to $97 million.
"There is a need to implement a precautionary approach to conservation and to further improve catch monitoring and enforcement activities. Problems still exist in the processes used to collect information in the stock assessments," noted the Auditor General.
The Auditor General also reports that the Department is in the process of reorganizing and reducing its overall fisheries management activities in anticipation of increased fisher responsibility. As a result of Program Review, resources are scheduled to be reduced by 40 percent by 1999.
"There are potential risks to conservation if changes are made to fisheries management prior to the industry accepting greater responsibility," stressed the Auditor General.
Chapters 14 and 16 also deal with Atlantic groundfish.
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"What began as a strategy aimed at restructuring the groundfish industry became essentially an income support program," stated Mr. Desautels.
Of nearly $2 billion spent on this program, 76 percent of the funds currently go toward income support, compared with the planned figure of 36 percent.
Due to difficulties in applying the eligibility criteria, Human Resources Development Canada did not allocate income support consistently and equitably among all participants.
The Auditor General also identified the following concerns in connection with the TAGS program:
Chapters 14 and 15 also deal with Atlantic groundfish.
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"The Department has set the specific goals that it wants to achieve, consulted with its employees, and implemented a performance measurement system, and senior management has committed itself to changing its management philosophy," said Denis Desautels.
However, the Report points out that the Department provided Parliament with very little information on the results obtained from its 1996-97 budget of $56 billion.
The Auditor General urged Human Resources Development Canada to submit a distinct report to Parliament on the Employment Insurance Account.
"We believe that the importance and the special nature of the Employment Insurance Account, which is wholly funded by employers and workers, warrants a distinct report," said Mr. Desautels. "As it stands now, parliamentarians do not have available a single, comprehensive source of financial information on the Account's performance. Therefore, it is difficult to evaluate results."
The premium rate of $2.90 for each $100 of insurable earnings could result in a reserve of approximately $12 billion by the end of 1997. The Report points out that actuarial analyses are not tabled in the House of Commons; therefore, Parliament is not in a position to assess the appropriateness of the premium rate for the Program.
"The tabling of a distinct report on Employment Insurance, along with the relevant actuarial analyses, would greatly improve the transparency of the Employment Insurance Account," added Mr. Desautels.
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A series of audits of Revenue Canada and the Department of Finance were conducted between 1992 and 1996. This Report outlines progress achieved to date in implementing recommendations arising from those audits.
The follow-up observed the following with respect to Revenue Canada:
At the Department of Finance, steps have been taken to close tax loopholes related to foreign affiliates and taxpayer migration. However, evaluations of the programs of tax assistance for retirement savings and incentives for research and development are slow in coming.
"A strong tax administration protects the integrity of the tax base," says Mr. Desautels. "The tax base is one of the most valuable assets of a civilized society, and parliamentarians, government and the public have an interest in preserving it."
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On 31 October 1996, in exchange for a payment to the Crown, a substantial monopoly in perpetuity for the operation of Canada's civil air navigation system was transferred to NAV CANADA, a not-for-profit corporation.
The Report reviews the value placed on the system by Transport Canada prior to the sale. "We concluded that the most reasonable valuations were significantly higher than the reported purchase price," emphasized Auditor General Denis Desautels. "The Department agreed to transfer the air navigation system for a negotiated payment of $1.5 billion. This amount was less than the entity's going-concern value of $2.4 billion estimated by the Department's own financial advisors, and we considered even that to be a conservative estimate."
Another major issue examined by the audit is Transport Canada's safety oversight of the new provider of air navigation services. However, the audit did not examine the safety of the system itself and the Report does not comment on that. "The Department will not be in a position to have full assurance concerning NAV CANADA's compliance with safety standards until it makes significant progress in implementing its own safety regulation regime," says Mr. Desautels. As of mid-August - approximately nine months after the transfer - the Department had not yet conducted its first audit or inspection of NAV CANADA's operations.
The audit is critical of the Department's contracting practices for financial advisory services. Transport Canada was unable to provide adequate justification for entering into a sole-source contract with its principal financial advisor for nearly $7 million.
Lessons learned from the audit of the commercialization of the air navigation system may be relevant to future divestitures of government operations.
This chapter is featured in a video entitled "Selected Highlights", which can be obtained from the OAG Distribution Centre at (613) 952-0213, extension 5000 or by fax at (613) 954-0696.
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"The sale process followed by Public Works and Government Services Canada was well managed, transparent and open to all potential bidders" notes Mr. Desautels. "The St. Joseph Corporation bid was the best value that could be obtained at the time, given the conditions placed on the sale by the government."
St. Joseph Corporation agreed to purchase the Canada Communication Group on 7 March 1997 for $7 million, and to hire 570 employees at full salary. Before it was privatized, CCG, a special operating agency of the government, provided printing, distribution, warehousing, publishing and information management services to government departments and agencies on a fee-for-service basis. It had been operating at a loss for a number of years prior to the privatization.
On the whole, the privatization of the CCG was well managed. However, the audit made the following findings related to the net cost of the divestiture of the agency:
This audit was part of an ongoing effort by the Auditor General to examine privatization initiatives of the government. Identification of lessons learned is the ultimate goal.
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"The Standing Committee on Public Accounts had several concerns about this issue," said the Auditor General Denis Desautels. "Our audit revealed that there are a number of areas that warrant action, not further debate or extensive study."
Changes are overdue in the way the government procures services for moving household goods, he noted. Existing contractual arrangements need to be less driven by least cost and more focussed on quality of service provided to the employee being moved. Too much emphasis on least cost may have had unintended consequences - for example, increasing the inherent risk of weight manipulation.
The audit further revealed that systems for preventing waste and abuse need to be tightened. There are opportunities for saving several million dollars.
An estimated 19,000 employees were moved by the federal government in 1995/96 - one quarter of all moves by van lines in Canada. The management of the relocation of household goods is overseen by an interdepartmental committee chaired by National Defence that includes representatives of DND, the RCMP and Public Works and Government Services Canada.
The Auditor General believes that the government should be encouraged to take prompt action on this issue. "As the largest employer in Canada, the government moves thousands of employees each year," said Mr. Desautels. "Moving is stressful for families. Federal employees deserve as good a move as that provided to employees of other organizations."
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In his chapter Matters of Special Importance released today, the Auditor General noted that many of these agencies - including the Canadian Food Inspection Agency and the proposed Customs and Revenue Agency - will deliver important public services and will continue to require significant public funding. As such, Parliament must remain able to scrutinize their affairs and ensure the interests of Canadians are protected.
"While these new arrangements can bring important benefits, proper attention must be paid to maintaining public accountability," said Mr. Desautels.
A second challenge facing the new Parliament is the beleaguered state of the public service. "Canada needs to enter the twenty-first century with a modern, world-class public service," said Mr. Desautels. "But to do that, long-standing human resource issues have to be addressed. Government needs to keep, motivate, develop and attract good people, but personnel systems are getting in the way." The challenge for parliamentarians is to make sure efforts under way to address these problems are working.
The Auditor General also raised issues related to the financial condition of government, the tools available to parliamentarians in their scrutiny of government, the government's performance on sustainable development, the "Year 2000" computer problem, information technology project management, privatization and commercialization of services, financial comptrollership in government, protecting the tax base and ethics in government.
Matters of Special Importance is the chapter in which each year the Auditor General highlights particularly significant issues arising from the Office's audit work of the year, and issues from previous years that continue to be of special importance.
This chapter is featured in a video entitled "Selected Highlights", which can be obtained from the OAG Distribution Centre at (613) 952-0213, extension 5000 or by fax at (613) 954-0696.
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Performance measurement is central to good management and accountability. Crown corporations as well as government and Parliament need information on Crown corporation performance in order to judge results. Developing and using performance indicators is a key element of this process.
The Report provides practical examples of the pitfalls and successes encountered to date, including how some corporations are beginning to use indicators as a strategic management tool, as well as insight into how best to develop useful sets of indicators. The Report also suggests what corporate boards of directors as well as government and Parliament should expect from Crown corporation reporting.
Management leadership and support, and clear corporate objectives and strategies are essential to the development of a complete and balanced set of performance indicators.
"There has been progress in the area of performance measurement in Crown corporations," says the Auditor General. "However, it is important that senior management, boards of directors, government and Parliament keep up the momentum for the long term."
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The government has embarked on a number of in-house information technology projects in its drive to respond to the needs of taxpayers and reduce costs. The Auditor General examined three of these projects, namely Revenue Canada's Standardized Accounting and Corporate Tax System, the innovative Strategis website project of Industry Canada and the Self-Serve Systems run by Human Resources Development Canada. The latter project is directed primarily toward dispensing employment insurance information.
The report identifies the risks associated with failing to record and track time and actual project costs. "Without this kind of tracking, projects can take longer, cost more and deliver less," says Denis Desautels. The Auditor General estimates that each project will cost taxpayers between $50 million and $100 million.
Ironically, the government does not apply to itself the performance measures it demands of its contractors. When the government contracts out computer systems development work, it always demands costs and schedule performance measures from the contractor. However, the three in-house projects that were developed primarily by government staff were not subject to these same performance requirements.
While these initiatives were geared toward improving service to the public, in two cases, technology solutions were introduced prior to proper identification of end-users and their needs. "Clients should be properly identified and involved throughout a project-from the planning stage to final implementation," stated Mr. Desautels. "Understanding the client is the first step of good planning."
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The Prairie Farm Rehabilitation Administration, with its headquarters in Regina, is a branch of Agriculture and Agri-Food Canada. It was originally founded to help the Prairies recover from the droughts and drifting soils of the 1930s. PFRA currently has about 700 employees in offices providing resource conservation and rural development across the Prairies and administers a budget that varies between $50 million and $100 million per year.
"While it has built a sound reputation for being responsive to the needs of the Prairies," said Denis Desautels, "PFRA could do a better job if it were to develop a clear strategic direction. And it needs to show what it has accomplished so it can better prove its worth."
The audit found that PFRA does not allocate its resources according to its priorities. Despite significant differences in workload and regional characteristics, resource and staffing levels for each of the regional offices are basically the same. One result is that clients in some districts receive services that clients in other districts do not.
The need for better focus extends to individual PFRA programs. For example, the organization's "Permanent Cover Program" was intended to address soil degradation problems. However, funding under the program was not targeted toward areas facing the highest risk of erosion.
"PFRA is at a particularly important juncture in its history," says the Auditor General. "Faced with increasing demands and given the high priority being placed on rural development and the environment by the government, the administration needs to determine how it can best dedicate its resources to provide the maximum effect."
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In his Report tabled in the House of Commons today, the Auditor General deplores the fact that it takes on average more than two and a half years to settle a refugee status claim. "It is worrisome to note that more than 35,000 persons are currently awaiting a decision at some stage in the process. This situation has a major human impact," said Mr. Desautels.
In 1996, more than 26,000 persons claimed refugee status in Canada. Responsibility for processing these claims lies both with Citizenship and Immigration Canada and with the Immigration and Refugee Board, which is an administrative tribunal that rules on the merit of claims.
The problems raised in the report include:
This chapter is featured in a video entitled "Selected Highlights", which can be obtained from the OAG Distribution Centre at (613) 952-0213, extension 5000 or by fax at (613) 954-0696.
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In his Report tabled today in the House of Commons, Denis Desautels concludes that some of the Board's financial practices would not "bear the closest public scrutiny."
"Until they were revised earlier this year, certain Board policies on reimbursement of travel expenses for accommodation, food and incidentals deviated significantly from those of the government and were not consistent with government financial rules," says the Auditor General.
Between January 1987 and March 1994, Board members were eligible to be paid between $125 and
$180 per diem even when they stayed in private accommodation. During the same period, all public servants and Governor in Council appointees in entities comparable with the Board received a maximum of $84.50 per day, including $18.00 to defray expenses for private accommodation.
Until January of this year, Board members were also allowed, under the Board per diem, to make claims for reimbursement without receipts.
The Report concludes that these and other problems plaguing the Board are largely the result of an ongoing dispute between the Chair and the Vice-Chairs over control of the Board. According to the Auditor General, the conflict has impaired the Chair's ability to act as a deputy head and the senior financial officer's ability to protect public funds.
The Board investigates, adjudicates and renders decisions on matters covered by the Canada Labour Code, which governs labour relations between employers and approximately 700,000 Canadian workers.
The Auditor General acknowledges the fact that the government has already reintroduced legislation to clarify responsibility for control of the Board.
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The audit found that while Canada has met or exceeded its international treaty obligations under the Montreal Protocol , Environment Canada is weak in its enforcement of regulations to control ozone-depleting substances (ODS) in the private sector.
"Ozone layer depletion remains one of the biggest threats to human health and to the environment," notes the Auditor General. "Canada is one of the countries most at risk, and the journey to repair the ozone layer is far from over. Even with planned efforts and international co-operation, scientists predict that it will be 50 more years before the ozone layer fully recovers."
Despite awareness of the danger, recent studies suggest that more than half of all Canadians fail to protect themselves from exposure to burning UV-B rays. While the health risks and costs of this behaviour are potentially high, the federal government has no strategy in place to communicate the risks of such exposure to the general public.
The federal government has also failed to live up to its commitment to lead by example. Individual departments are trying to control ODS, but no one is in charge to set the overall direction for management of ODS in federal operations.
"There is still much that Canada can do to speed recovery of the ozone layer," says Denis Desautels. He encourages the federal government to use sound scientific methods to identify effective strategies, and to continue to work with the provinces to implement them.
The Commissioner of the Environment and Sustainable Development, Brian Emmett, will be monitoring progress towards sustainable development and reporting to the House of Commons, through both his annual report and in the Auditor General's future periodic reports. In the Commissioner's next report, which is expected in May 1998, he will focus more specifically on the results of his reviews of the sustainable development strategies of various departments and agencies, as well as report on a number of audits and studies related to environmental issues, such as climate change.
A related chapter of the Auditor General's December 1997 Report, Chapter 35, entitled "Follow-up on Recommendations in Previous Reports," examines progress on implementation of our recommendations on past audits related to the environment. The follow-ups include: Chapter 2, 1995 - Environment Canada: Managing the Legacy of Hazardous Wastes; Chapter 3, 1995 - Federal Radioactive Waste Management; and Chapter 24, 1992 - Emergency Preparedness: Accidents Involving Oil and Chemical Spills.
This chapter is featured in a video entitled "Selected Highlights", which can be obtained from the OAG Distribution Centre at (613) 952-0213, extension 5000 or by fax at (613) 954-0696.
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"There is evidence that habitat loss is putting stress on some stocks," says Denis Desautels. "However, Fisheries and Oceans has not produced an overall status report assessing the impact of habitat loss on the resource."
While the Department has built up major salmon stocks, others are declining and many are considered threatened. It estimates that habitat loss probably accounts for 20 to 30 percent of the disappearance of small stocks in British Columbia.
A Habitat Policy was adopted by Fisheries and Oceans in 1986; however, the Department has never conducted a review of the effectiveness of the Policy.
Monitoring is one strategy under the Policy; it requires Fisheries and Oceans to monitor the effects of proposed projects that may alter or destroy fish habitat. The Department noted a lack of attention to monitoring back in 1994 but little has been done to correct the problem. "Without serious attention being paid to monitoring, the long-term conservation of habitat is at risk," states the Auditor General.
Due to its limited freshwater jurisdiction, Fisheries and Oceans relies on the co-operation and assistance of the Province of British Columbia, municipalities and other parties to protect habitat. Agreements are in place to co-ordinate departmental and provincial efforts. The signing of the new Canada-B.C. Agreement on the Management of Pacific Salmon Fishery Issues provides a window of opportunity for Fisheries and Oceans to further develop and strengthen its relationship with the province.
Although much has been accomplished through co-operative efforts and projects to encourage habitat restoration and raise awareness about the issue, there is a long way to go before the sustainability of Pacific salmon stocks is assured.
"Pacific salmon are a vital part of life on the west coast of Canada," says Mr. Desautels. Governments must work together now to protect stocks and habitat while there is still the opportunity to do so."
This chapter is featured in a video entitled "Selected Highlights", which can be obtained from the OAG Distribution Centre at (613) 952-0213, extension 5000 or by fax at (613) 954-0696.
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The Small Business Loans Program, which is administered by Industry Canada, encourages lenders (banks, caisses populaires, trust companies) to make loans of up to $250,000 to small businesses for the purchase or improvement of land, buildings and equipment. In the event of the default of a guaranteed loan, the government pays the lender 85 percent of the amount lost.
In the last four years, 177,000 new loans to small businesses have been guaranteed for a value of approximately
$11.2 billion. In the same period, claims on defaulted loans have risen significantly.
The Report highlights a number of problems:
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In particular, Denis Desautels calls on OSFI to strengthen its human resources management practices in order to ensure that the right people with the right competencies are attracted, retained and used to the best advantage.
Co-ordination between OSFI's examiners, analysts and actuaries needs to be improved. The Office must also strive to do a better job of communicating with the financial services industry and other regulators.
The Report acknowledges that OSFI is highly regarded by the insurance industry and by its provincial and foreign counterparts.
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Currently, Revenue Canada collects about $850 million and disburses some $425 million on average each working day. While Revenue Canada scores well in aspects of strategic planning and enhancing management accountability, many of its financial systems require considerable modernizing. For example:
The Report also observes that Revenue Canada does not perform all of the reconciliations that are needed for good financial management. Consequently, it cannot provide full assurance that the revenue figures it reports are accurate and complete.
"The proposed move to a Revenue Collection Agency will only add substantial additional pressures and further intensify the need for solid financial management," says the Auditor General. "Steps need to be taken now to ensure a strong foundation." The Department has initiatives planned or under way to deal with some shortcomings.
This chapter is featured in a video entitled "Selected Highlights", which can be obtained from the OAG Distribution Centre at (613) 952-0213, extension 5000 or by fax at (613) 954-0696.
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31 March 1996; however, the government has not been able to give a solid reason for the decrease, according to the Auditor General in his Report tabled in the House of Commons today.
For the year ending 31 March 1996, net GST revenue was $16.4 billion - $400 million less than the previous fiscal year and $800 million less than what was forecast in the March 1996 Budget.
While both Revenue Canada and the Department of Finance have examined the issue, in the view of Auditor General they didn't go far enough. "The departments are not able to provide a conclusive explanation for the decrease because they didn't analyze the matter sufficiently, and because of limitations of the data."
The Report suggests an appropriate process for analyzing movements in the GST and in other revenue streams, and describes the minimum extent the process should be followed when conducting such an analysis.
The Report also discusses the need for reliable and timely data - echoing a theme touched upon in the report on Revenue Canada's financial management systems (Chapter 31). The Auditor General further suggests that more information may need to be collected from GST registrants.
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"Receiving, investigating and reporting on complaints by inmates in federal prisons is the core function of the Office of the Correctional Investigator," states Denis Desautels. "Yet, the way in which the Office deals with individual complaints is not conducive to an efficient and consistent handling of cases. The time spent on a complaint can be more of a reflection of an inmate's ability to communicate and persistence than the relative importance of the case."
The Report notes that the Office's adversarial relationship with Correctional Service Canada is partly due to its approach to handling prisoners' complaints.
Establishing and maintaining a more balanced relationship with Correctional Service is an important element in developing long-term solutions for the most serious problems in Canadian penitentiaries, suggests the Auditor General. He urges the Correctional Investigator to make changes to the Office's strategies and procedures in order to ensure that the most serious problems are consistently flagged and investigated to the extent necessary. "The end result would be more assurance that the underlying causes of the complaints are identified and thus more progress made toward developing long-term solutions," says Denis Desautels.
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"Although its name may suggest otherwise, the RCMP Public Complaints Commission is a civilian oversight agency, completely independent of the RCMP," says Denis Desautels in his Report tabled today in the House of Commons. "It serves a useful role-to ensure that members of the Force are properly accountable to the public for their conduct. It is therefore essential that the Commission develop a communications strategy to improve public awareness of its existence and mandate as well as its independence from the Force."
The Commission provides an avenue for external and independent review, investigation, and hearing of complaints about the conduct of RCMP members in the performance of their duties. If a member of the public is not satisfied with the RCMP's own investigation and disposition of a complaint, that person can ask the Commission to review the case.
A number of Commission practices require improvement. The Report concludes that the Commission's process for reviewing complaints and conducting public hearings is slow. A substantial backlog of cases must be addressed; approximately 400 complaints are awaiting review right now-more than the Commission's yearly workload.
While the Commission has been criticized for taking too much time to complete a hearing, the Auditor General confirms the importance of its public hearing role. "The Commission needs to continue hearing important issues that are in the public interest in order to fulfill its mandate," says Denis Desautels. "However, in order to do so the Commission needs to significantly improve the way it carries out these hearings, both by setting out clear terms of reference for each hearing and by providing its members with appropriate training in conducting hearings."
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Other follow-up reviews provide status reports on regional development programs, Correctional Service, and Indian and Northern Affairs, among others.
The Auditor General stated, "With significant reorganizations completed, and in a climate of tight fiscal control, full implementation of our recommendations will help departments make the best use of the resources available to them."
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In 1995 and 1997, Revenue Canada awarded a duty free shop licence at the same land border crossing using standards and practices that differed significantly from those used to award licences at other land border crossings. "The precedents set may undermine the transparency and credibility of the duty free shop licence award process," said the Auditor General. "In our opinion, a reasonable case can be made that the awarding of the licences was not done in accordance with the intent of the law."
The estimated costs of an on-reserve water supply project, funded by Indian and Northern Affairs Canada, increased from $1 million in September 1995 to $2.3 million by April 1997. The Department was aware of various alternatives, including the one from the engineering consultant engaged by the First Nation. The consultant suggested that the contamination in the river used as a source of drinking water could have been treated by improving the existing water treatment plant at an estimated cost of $26,000.
Indian and Northern Affairs Canada failed to comply with the conditions of its funding arrangement with a First Nation when it approved an $8.9 million on-reserve infrastructure project in October 1996. The general contractor was awarded the contract on a negotiated fixed-price basis, resulting in extra costs estimated at up to $1 million.
Since August 1995, Agriculture and Agri-Food Canada has used a "special measures" section of the Farm Income Protection Act to authorize more than 30 different programs, creating a new class of safety net programming called provincial "companion programs". Orders-in-council authorizing these programs have not been tabled in Parliament, as required under the Act. "Parliament has not received any detailed information about objectives, costs and results of the companion programs-information that is essential to any meaningful oversight role," said the Auditor General.
The Coast Guard has paid a supplier over $300,000 to maintain an inventory of spare parts for the Louis S. St. Laurent icebreaker. The spirit and intent of this new approach are consistent with the objectives of better service at less cost; however, it appears that neither of these objectives is being maximized. In 1994, the contract was entered into without adequate analysis. In 1996, a new contract did not reflect changes in requirements that would have reduced costs. "In our opinion, the Coast Guard needs to re-examine the provisions of this agreement in light of past performance and the current operational requirements of the vessel," stated the Auditor General.
The design and construction of the National Archives of Canada's Gatineau Preservation Centre could have been achieved in a less costly building, and have been achieved at a significantly higher unit cost than a similar-purpose U.S. facility. The Gatineau Preservation Centre project illustrates the lack of cost-saving incentives under the government's "build [up] to budget" approach.
The funding agreement to provide $801 million to the Canada Foundation for Innovation does not obligate the Foundation to report on results it achieves with this money. "In our view, it is important that any future funding agreements with similar organizations provide for a full annual report on performance to Parliament," said the Auditor General.
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"We feel that these strategies constitute an important planning tool for most large organizations, whether public or private, and that is why we considered it a priority to have such a strategy," said Auditor General Denis Desautels.
The OAG has set itself the goal of promoting sustainable development both in its audit work and in its day-to-day activities. It will help parliamentarians, federal organizations and the public to consider the consequences of their decisions and actions on the environment and sustainable development, while minimizing the negative impact of its own activities on the environment.
Through its action plan , the Office will: