Recommendation 1
Decisions about accounting issues
be based on accounting standards and policies not legal opinions.
Decisions regarding the accounting
treatment of transactions for reporting in the government's financial
statements are based on accounting standards and policies. Decisions regarding the accounting for the
use of spending authorities provided by Parliament involve the interpretation
of legislation. While legal interpretations are influenced by accounting
standards and policies, they must respect legislative provisions as provided in
the Financial Administration Act.
In this regard, the advice of legal counsel is sometimes sought prior to
making a decision.
Recommendation
2
The Treasury Board Secretariat issues a statement of
agreement with the opinion of the Auditor General of Canada regarding the
proper recording of the Canadian Firearms Information System II (CFIS
II) delay costs in fiscal year 2003-04 and issues a clarification to ensure
that this type of accounting error does not occur again.
The Government recognizes that this was a complex
issue with differing interpretation and accepts the interpretations of the
Auditor General of Canada and the support of this interpretation by the
Standing Committee on Public Accounts.
The Policy on Payables at Year-End has been re-drafted
as part of the Government of Canada's review of its financial management
policies. The Office of the Auditor
General of Canada has been consulted during this process. In addition, all
departmental Senior Financial Officers were surveyed at year-end so that any
transactions requiring interpretation were brought to the attention of the
Comptroller General of Canada. This
information was shared with the Office of the Auditor General of Canada and it
is the Comptroller General's intent to repeat this exercise for 2006-07.
Furthermore, as required by the Federal
Accountability Act, departments are in the early stages of forming their own
independent audit committees. One of
the roles of these committees will be to enquire about and discuss the
accounting and reporting related to transactions undertaken by the department.
Recommendation 3
The Treasury Board Secretariat develops a
clear protocol for resolving disagreements on accounting standards and policies
between the Comptroller General of Canada and Deputy Heads.
A protocol for obtaining advance audit opinions from the Office of the
Auditor General of Canada on transactions has been established by the
Comptroller General of Canada.
Policy proposals under
consideration in the area of financial information and reporting would require
the Chief Financial Officer of a department to seek advice in writing from the
Comptroller General of Canada in cases where it could be reasonably expected
that an accounting treatment of a transaction could lead to a material
misstatement, an inappropriate application of authorities or a qualification in
the external audit report. Should the
Comptroller General of Canada not agree with the proposed accounting treatment,
this disagreement will be communicated in writing to the Deputy Head, the
Secretary of the Treasury Board and the President of the Treasury Board. Deputy
Heads, as accounting officers under the Federal Accountability Act, will
make the final determination of the treatment in the departmental accountsasthey are responsible for the signing of these accounts.
Recommendation 4
The Comptroller General of Canada has the final word
on the interpretation and application of accounting standards and policies
within the Government of Canada.
As mandated by the Federal Accountability Action
Plan, a committee of deputy ministers is reviewing and providing
recommendations to strengthen and streamline the Treasury Board financial
management policies. The revised
financial management policy suite will clarify the role of the Comptroller
General of Canada in providing accounting policy direction. This role would support Deputy Heads who, as
accounting officers under the Federal Accountability Act, are
accountable before parliamentary committees for signing departmental accounts
and measures taken to comply with government policies.
Policy proposals under consideration would require that, in cases where
the Comptroller General of Canada does not
agree with an accounting treatment of a department, this disagreement would be
communicated in writing to the Deputy Head, the Secretary of the Treasury Board
and the President of the Treasury Board.
Recommendation 5
The Government of Canada continues its movement
towards financial statements for all departments and agencies. That the Treasury Board Secretariat provides
the House of Commons Standing Committee on Public Accounts with a timeline for
this project and reports progress in its departmental performance report.
The government already tables
departmental financial statements in Parliament. Starting with fiscal year 2005-06, departmental financial
statements were published in the Departmental Performance Reports for all
departments as defined in Schedules I, I.1, and II of the Financial
Administration Act. While the
majority of these financial statements are unaudited at this time, work is
underway, in consultation with the Office of the Auditor General of Canada, to
enable the audit of the departmental financial statements commencing with
larger departments.
Recommendation 6
The
Auditor General of Canada be the external auditor for departmental financial
statements. That the Office of the
Auditor General of Canada be given adequate funds and, if required, a clear
legislative mandate to do so. Parliamentary appropriations should be included
in the audit program of those statements.
It
is the intent of the government to have departmental financial statements,
audited by the Office of the Auditor General of Canada. It is the view of the government that
current legislation permits the Auditor General of Canada to perform this work
and discussions between the Office of the Comptroller General of Canada and the
Office of the Auditor General of Canada have commenced. At present the Office of the Auditor General
of Canada is providing audit opinions on some departmental financial
statements. It is also recognized that
increasing the number of departmental financial statements audited by the
Office of the Auditor General of Canada may require an increased budget for the
Office of the Auditor General of Canada.
Recommendation 7
The Royal Canadian Mounted Police records CFIS
II development and delay costs against annual appropriations as they are
incurred.
For the year ended March 31, 2006, the Office of the
Auditor General of Canada reviewed and accepted the accounting treatment for
costs related to this contract. On April 27, 2006, prior to the Service
Effective Date of the contract, the government issued a stop work order on the
part of the contract related to the development of the CFIS II system. In the event that future costs are
incurred in relation to the CFIS II, they will be
recorded and reported as required by Treasury Board policy and charged to
appropriations as incurred.
Recommendation 8
If it becomes apparent that there was a
failure to comply with Treasury Board's Policy on the Management of Government
Information, serious sanctions be imposed, up to and including dismissal from
the public service.
The Treasury Board Policy on the Management of Government Information
requires that decisions and decision processes be documented.
The Treasury Board Policy on the Management of Government Information
states that federal institutions must actively monitor management practices and
controls, take remedial action where significant deficiencies are encountered
or improvements are needed, and inform the Treasury Board of Canada Secretariat
of significant management concerns in a timely manner. Policy proposals under consideration would
further clarify that Deputy Heads are accountable for ensuring
that decisions and decision-making processes are documented to account for and
support the continuity of departmental operations.
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