Auditor General of Canada Award for Excellence in Annual Reporting by Crown Corporations

Purpose

The Award for Excellence in Annual Reporting by Crown Corporations was launched in 1994. The awards are given annually. The program's main purpose is to promote enhanced accountability through improved disclosure of information on corporate performance by recognizing Crown corporations that do this well.

Importance of Annual Reporting

Annual reporting is a critical vehicle for accountability. Although Crown corporations are distinct legal entities and have their own boards of directors, they are assigned mandates and powers by Parliament and are ultimately accountable to Parliament through the responsible minister. Corporate plan summaries and annual reports for Crown corporations are tabled each year in Parliament. The corporate plan summary provides an indication of future plans and expected performance. The annual report subsequently provides the corporate results in relation to goals and objectives set out in the plans.

Information on financial results alone does not adequately address the full range of stakeholders' interests and information requirements. Improved performance reporting is especially important in the case of Crown corporations because they deliver a mix of public policy and commercial objectives. The Treasury Board Secretariat has been very supportive of the program.

Judging Framework

All federal corporations that are obliged to report as parent Crown corporations are assessed for the awards. Corporations are grouped in one of two categories based on size, which is determined by assets, revenues, and employee numbers. A panel of experts selects the award winners by reviewing and evaluating the corporate plan summaries and annual reports that are presented to Parliament. The Office of the Auditor General has the role of Secretariat for the program.

Information provided in corporate plan summaries and in annual reports has some general similarities. To varying degrees, both the summaries and reports usually provide a corporate overview, a review of operations (future and historic), as well as financial and supplementary information.

The following briefly describes the characteristics of reported information that the panel of judges consider when evaluating corporate plan summaries and annual reports.

1. Overview

• The reports summarizes (in terms of both quality and quantity of information) the corporation's profile, mission, mandate, products and services, corporate environment, and industry outlook. Messages from the chief executive officer and the head of the board of directors are also considered as information sources.
• The report summarizes the overall performance (financial and operational) of the corporation.
• The report provides information on significant issues related to human resources and to social and environmental responsibilities and commitments.

2. Operational Review

• The report provides a comprehensive review of the corporation's operations, including, where appropriate, significant government directives and events, the industry sector, competitive conditions, management structure, production, products and services, research and development activities, and human resources issues.

3. Objectives, Strategies, Targets and Performance

• Objectives are clear and stated in an appropriate level of detail. They include commercial, public policy, and financial objectives. Wherever possible, these are measurable. Significant changes in the corporation's objectives, if these arise, are highlighted and trade-offs for conflicting objectives are explained.
• The relationship between the corporate plan summary (or the previous annual report for the Crown corporations that do not have a legislative requirement to prepare a separate corporate plan summary) and the annual report are clear. Budget amounts used in the financial analysis are consistent with those in the corporate plan or the difference between the two sets of numbers is explained.
• The corporation's performance is compared with each stated objective in terms of outputs, outcomes, or secondary impacts.
• Performance reporting, including financial and non-financial information (preferably subject to some form of external validation), clearly presents results as compared with targets. Actual results numbers used in the financial analysis are consistent with those in the audited financial statements or the difference between the two sets of numbers is explained.
• The corporation evaluates its performance with respect to its public policy objectives.

4. Outlook

• The report provides forward-looking information including budgets and forecasts (five years into the future) and details of significant events that could have a major impact on operations.

5. Risk Management

• The report contains a review of risk management, including identification of risks, the level of impact they could have on the achievement of objectives, the likelihood of the risks occurring, management's ability to reduce the risk should it occur, and an assessment of the costs and benefits of the risk strategy.

6. Management Discussion and Analysis

• The report contains an analysis and interpretation of operating results and the resulting impacts on the corporation's financial position.
• The report also contains
• historical information (five years minimum), and
• sector and ratio analysis.
• Results achieved are compared with targets, and explanations are given for variances in financial performance and position, both between years and against corporate plans.

7. Financial Statement Presentation

• The report includes a clear presentation of its financial statements, including a management responsibility statement, auditor's report with no reservations, financial statements and notes, and comparative financial highlights.

8. Governance

• The annual report summarizes the corporation's corporate governance policies and practices in relation to the government's Guidelines on Corporate Governance in Crown Corporations and Other Public Enterprises.
• The report summarizes the activities and performance of the board of directors. It includes the following information for all members of the board of directors: biographies, board and committee roles and responsibilities, major accomplishments of the board and its committees, and attendance and remuneration.
• The report highlights the board's involvement in the selection of the chief executive officer and the new members of the board, and in how senior management is replaced to ensure the continuing governance of the corporation.
• The report includes a summary of all communication with the shareholders, including any appearances before parliamentary committees.
• The report highlights existing weaknesses in governance, how they are being addressed, and any innovative practices related to governance that are being implemented.
• The report summarizes how the board assesses its own performance.

9. Balance

• The report conveys a sense of integrity in that it is balanced and openly presents negative as well as positive results.
• The report discusses openly the impact of negative results and the strategies for overcoming them.
• External factors (economic, political, and social) are appropriately credited for both positive and negative results.

10. Presentation

• The design and format of the report are well organized, logical, and easy to read and to understand. The language and style used are simple, clear, concise, and generally without jargon. A glossary of terms is provided.
• The report makes good use of charts, graphs, pictures, and tables to help users better understand financial and non-financial data. Visual effects are innovative and graphical integrity is maintained.
• Overall, the report gives a good understanding and appreciation of what the corporation has accomplished in the year under review.
• The report and the corporate plan summary have been tabled within the statutory deadlines.

If you have any questions on the Award or the characteristics that the panel of judges consider, please contact the Crown Corporations Group of the Office of the Auditor General of Canada at 613-995-3708.

Auditor General of Canada Award for Excellence

2005 AWARD WINNERS

Canada Deposit Insurance Corporation
Enterprise Cape Breton Corporation

2005 AWARD NOMINATIONS

PANEL OF JUDGES

Sheila Fraser, Chair, Auditor General of Canada
David Brown, Executive Director, Brown Governance Inc.
Carrie Hunter, Senior Director, Treasury Board Secretariat, Governance
Michael Eastman, Executive Director, CCAF-FCVI
Barry Lalonde, Partner, KPMG
Jon W. Singleton, Auditor General of Manitoba
David Smith, President, Canadian Institute of Chartered Accountants
Charles-Antoine St-Jean, Comptroller General of Canada, Treasury Board Secretariat

PREVIOUS AWARD WINNERS