:
I call the meeting to order.
Good afternoon everyone.
Welcome to meeting number 115 of the House of Commons Standing Committee on Public Accounts.
[English]
Today's meeting is taking place in a hybrid format, although I believe everyone we're expecting is in the room. That could change.
Pursuant to the Standing Orders, members can be attending in person or by using the Zoom application.
I will remind you that all comments should be addressed through the chair.
[Translation]
Pursuant to Standing Order 108(3)(g), the committee is resuming consideration of Report 1 of the 2024 reports of the Auditor General of Canada entitled “COVID‑19 Pandemic: ArriveCAN”.
[English]
I'd now like to welcome our witnesses.
We have with us the Honourable Anita Anand, president of the Treasury Board. It's nice to have you here today, Minister.
From the Treasury Board and the Treasury Board Secretariat, we have Annie Boudreau, assistant secretary, expenditure management sector; Dominic Rochon, chief information officer of Canada; Karen Cahill, assistant secretary and chief financial officer; Francis Trudel, associate chief human resources officer; and Samantha Tattersall, assistant comptroller general, acquired services and assets sector.
Ms. Anand, you'll have the floor for up to five minutes. After that, we'll proceed to rounds of questions.
I'll turn things over to you, Minister.
:
Thank you very much, Mr. Chair.
Good afternoon everyone.
I thank all the members of the committee for inviting me to appear before them today to discuss the Auditor General's Report 1 on ArriveCAN.
[English]
Before I begin, I would like to acknowledge that we are speaking and meeting here today on the traditional unceded territory of the Algonquin Anishinabe people.
I am joined today by members of my department.
[Translation]
Mr. Chair, Canadians expect their government to introduce the necessary rules and controls to responsibly manage their hard-earned money.
Since the start of my mandate, with the collaboration of my cabinet colleagues, I've been working to ensure the efficient management of our resources and of public funds.
[English]
While the Auditor General confirmed that rules to ensure sound procurement and management practices across government are in place, her audit revealed very concerning conclusions.
[Translation]
That's why we've taken a series of measures meant to reinforce our oversight of departmental practices in support of efficient management and stewardship across government.
[English]
I recently announced a series of actions that the Treasury Board of Canada Secretariat will take to strengthen our oversight of departmental practices and processes to support effective and streamlined management across government.
First, we're introducing a new risk and compliance mechanism.
[Translation]
By using this mechanism, the Treasury Board Secretariat, or TBS, will more actively supervise management practices as well as results government-wide in order to prevent and detect inadequate performance and inappropriate use of public funds.
[English]
The process will be informed by several sources of information, including a horizontal audit that the comptroller general is undertaking across numerous departments. This audit will assess governance, decision-making and controls associated with professional services contracts, including IT.
[Translation]
You'll also remember that, in the fall of 2023, I published a policy called “Manager's Guide: Key Considerations When Procuring Professional Services”.
[English]
The purpose of this guide was and continues to be reliance on third party contracting. At that time, I said the manager's guide is evergreen. What that means is that it is continually open to be updated and changed.
[Translation]
We take the Auditor General's and the procurement ombud's recent conclusions very seriously, which is why, at the end of March, I announced some important updates to the manager's guide.
In order to further strengthen the guide's use, we will enforce managers' responsibilities when procuring professional services by integrating certain points of the guide into the mandatory procedures.
[English]
In addition, the chief human resources officer is reviewing the directive on conflict of interest to ensure that the requirements are clear and effective, particularly as they relate to employees who engage in outside employment.
We are also examining guidance on conflict of interest provided to deputy heads to support the effective exercise of their authorities and responsibilities under this directive.
[Translation]
We will also consider mandatory training for employees and managers, as well as additional oversight by my department, if need be.
[English]
Additional oversight could be included in terms of strengthening the consequences of non-compliance with the directive.
Finally, we are improving the Open Government portal to ensure that information about contracts is presented clearly, accurately and in a more user-friendly way for people inside and outside government.
Canadians deserve to know how their hard-earned tax dollars are being spent and that they're being spent wisely on priorities that matter to them. We will ensure that department heads of the public service manage their conduct effectively and preserve public confidence.
[Translation]
Thank you.
I'm available to answer your questions.
:
Thank you very much, Mr. Chair.
Thank you very much, Minister, for being with us here today.
Yesterday we had a historic day in Canada. We had an instance that has not occurred in over 100 years: A private citizen was called to the bar of the House of Commons and was reprimanded for not responding to questions that had been asked of him.
Of course I'm referring to Kristian Firth, one member of the two-person GC Strategies company. They were responsible and were the main vendors in the ArriveCAN scandal for a $60-million app. A minimum of $60 million was spent on the ArriveCAN app. In fact, there are individuals who state that they could have made this app for $80,000, but Kristian Firth, the person I'm referring to here today, and GC Strategies made $19 million, as far as is known currently, off the ArriveCAN app.
My colleague, in the first round of questioning for Mr. Firth, asked Mr. Firth directly if the Government of Canada—at a time when there is a $52.9-billion deficit and when Canadians are struggling—had asked Mr. Firth and GC Strategies to repay these funds to Canadians. His response was no.
I am asking you, please, Minister Anand, if you have asked GC Strategies and Kristian Firth for this money back for Canadians from the ArriveCAN app and from GC Strategies. Have you asked for this money back, Minister?
:
Given the outcomes, I definitely would show concern over these discussions outside of the office.
Minister, you were just indicating that you were taking steps to eliminate conflicts of interest, yet when I'm looking here at a report from last year, 2023-24, out of the 162 public servants who declared a conflict of interest, 38% of them were actually determined to be in a conflict of interest, which is an increase of 2% from the 36% before.
I'd like to ask you this, then, Minister: What is the value of the contracts of the 38% of public servants who were found to be in a conflict of interest?
:
Thank you very much, Mr. Chair.
I want to thank the minister, as well as the other witnesses on the panel, for being here today in front of this committee.
I'll just remind Canadians watching at home, and maybe some colleagues, that it is not normal practice for ministers to attend meetings of the public accounts committee. Normally, we study the reports of the Auditor General and we hear from officials up to the deputy minister level. However, I am very pleased to see that the minister is in front of us today to answer questions if, of course, members would allow her to answer questions, which would be very helpful to the work that we have before us.
My first question for the minister is this: What role did the Treasury Board have in the development of ArriveCAN?
:
Thank you for the question.
Treasury Board sets the policies and defines the responsibilities for departments. Given the volume of procurement, controls are in place at various levels based on contract value, risk and complexity. Deputy heads of departments and heads of agencies are responsible for procurement activities in their organizations.
The Auditor General's report specifically mentioned the CBSA. It is the CBSA, in all of her recommendations, that bears responsibility for ensuring contracting practices are compliant with the policies that define the responsibilities for departments.
Approval from Treasury Board is only required for contracting values over certain dollar amounts or risk levels. The department heads and deputy heads bear responsibility for compliance, and we want to see compliance with Treasury Board guidelines.
Minister, thank you for accepting the committee's invitation.
As you know—you even stated it publicly—ArriveCAN is a shocking development for Quebec and Canadian taxpayers, and obviously for each and every member of this committee.
We've discovered that ArriveCAN is but the tip of the iceberg and that this file points to a number of issues in Canada's public service.
As for you, minister, you've had an impressive career. During the pandemic, you were Minister of Public Services and Procurement. When the ArriveCAN contracts were signed, you then went on to become Minister of National Defence. Some people have noted the fact that David Yeo's employment at the Department of Defence was confirmed when you were Minister of National Defence and Mr. Yeo's business had contracts with the Department of Defence. So he was in a conflict of interest.
Now here you are at Treasury Board, one of whose roles happens to be to define the conflict of interest policy.
I'd like to know how your experience allows you, today, to never repeat all the mistakes that were made these last few years.
[Translation]
I thank you for your question, and also for the opportunity I'm given to answer it.
I don't know if you're aware of this, but on March 20, I announced along with my colleague Mr. Duclos, , a series of measures to improve oversight of departmental practices and processes and to support efficient management across the whole of government. For instance, we now have horizontal audits in some of the larger departments in order to assess their governance, decision-making and controls related to professional services contracts.
I've also introduced a new edition of our guide for managers who are responsible for contracting with third parties. Lastly, we will be reviewing our conflict of interest policy yet again. So obviously, we will be taking steps. We continue to work on this but as the Auditor General stated, the problems were at the Border Services Agency, who will now have to keep following the rules.
:
Thank you very much, Chair.
Thank you to the minister for being present.
I agree that rules have to be followed. In the Auditor General's report, page 8, finding 1.33 reads as follows:
Given the urgency created by the pandemic, the Treasury Board of Canada Secretariat encouraged government organizations to focus on results while still demonstrating due diligence and controls on expenditures. To support this direction, the agency invoked exceptions so that certain procurements were not subject to the provisions of the trade agreements and the Government Contracts Regulations and allowed for the consideration of a non-competitive approach to address urgent needs.
There were rules in place. We had the government contracts regulations, which would have prescribed, for example, that the government could issue a non-competitive contract, which ultimately went to GC Strategies. That was part of how they were able to get access to the government service.
I also want to highlight how important this is. This isn't just a one-off; Canadians are used to seeing multiple corruption schemes like this, regardless of who is in power. Since 2006 we've seen a massive increase in outsourcing and vulnerabilities, as the Auditor General's report outlines. It's very clear that some rules and the exceptions for those rules were waived.
Minister, you were the Minister of Public Service and Procurement Canada at the time, for which these regulations were waived for the purpose of allowing non-competitive contracts.
Do you regret that now?
:
I appreciate that answer, Minister, but I'll quote the Auditor General:
I have to say that I am deeply concerned by what this audit didn't find. We didn't find records to accurately show how much was spent on what, who did the work, or how and why contracting decisions were made. That paper trail should have existed. Overall, the audit shows a glaring disregard for basic management and contracting practices throughout ArriveCAN's development and implementation.
She went on to state the following:
Government organizations needed to be flexible and fast in responding to the COVID‑19 pandemic
-—and I give you that. It was a difficult circumstance—
but they still needed to document their decisions and demonstrate the prudent use of public funds. In this audit, we found serious failures and omissions everywhere we looked.
These aren't my words, Minister. These are the words of our Auditor General. We have to take them quite seriously. I want to be able to do my best as a member of the public accounts committee to give Canadians the best perspective I possibly can. I know this issue of ArriveCAN has been deeply partisan, and it deeply troubles many of us that it has become that way, but I want to find a way to give true accountability on this issue, which is why I submit that those regulations had to be more flexible.
However, I agree with the Auditor General that what happened was inappropriate and should not have happened.
Do you agree with the Auditor General's comments made on February 12 that there still needed to be documentation of decisions and the demonstration of the prudent use of public funds?
Now I want to move to a particular issue that was announced earlier this week in relation to the budget.
We know that much of the work in procurement and what happened with ArriveCAN was because of the deep tradition of outsourcing work to wealthy contractors with preferential access to the government. They have been profiting like a systemic rot since that time. It's a very difficult circumstance Canadians find themselves in, particularly due to the reality of the affordability crisis. It's hard for Canadians to witness a government not be able to track or even know the amount of money the ArriveCAN app cost.
I hope you understand and can sympathize with Canadians who are struggling right now to pay for their bills, rent and groceries while seeing the hard-earned dollars they are paying toward taxes not being used properly. I have sympathy for that. I would hope that governments since 2006, when this started increasing, could heed that message.
Why is it that over 5,000 public service employees were told on Tuesday that they may be out of a job? The government's excuse is attrition. This will hurt the public service.
Thank you, Minister, for appearing here, and thank you as well to the panel of witnesses.
ArriveCAN has been a focus of this committee and many investigations. We've heard reference to an RCMP investigation, and departments are investigating the ethics and conduct of their employees. I recall sitting here and hearing from the Auditor General and feeling shock and disbelief in the findings of her report.
What has your reaction been, Minister, to the Auditor General's report and the many reports and inquiries that have come out of this matter?
:
Thank you very much, Chair.
I want to echo my support for my Bloc colleague's request with regard to institutions that would support this work, because it's critical. It's been decades. We've had procurement issues since 2006, so it's particularly important.
I don't want to waste all my time on that, however. I want to turn our attention to page 13 of the report and finding 1.51, which reads:
We found that Public Services and Procurement Canada, as the government’s central purchasing and contracting authority, challenged the Canada Border Services Agency for proposing and using non-competitive processes for ArriveCAN and recommended various alternatives.
My goodness. What a great thing to have done, but the problem is that the checks and balances didn't work. Unfortunately, the Auditor General's finding after that is:
Despite alternative options proposed by Public Services and Procurement Canada, and statements from Canada Border Services Agency officials that other vendors were capable of doing the work, the agency continued to use a non-competitive approach.
It's disappointing. I don't even know what I can say, Minister, to try to highlight how disappointing it is to know that we had an opportunity. You were the minister. Your officials reached out and said, “Hey, there's a red flag. This is a problem. You can't be using non-competitive approaches like this, non-competitive contracts. Why are you giving your buddies access when you shouldn't be?” However, the CBSA continued business as usual.
What do you have to say to Canadians who had faith in Public Services and Procurement Canada, but lost that faith in its ability to keep contractors and proposers of contracts accountable when non-competitive approaches are used?
:
Thank you, Chair. Hello, Minister.
You served as the Minister of Public Services and Procurement Canada and the President of the Treasury Board during the period of the arrive scam scandal. There are two major outstanding questions that I hope I can get answers to today. The first is to ask why GC Strategies was so special to the Trudeau government. Second, what were Liberal ministers doing while this was unfolding?
On the first question, GC Strategies was founded in 2015. It has done extensive and lucrative work with your government, receiving contracts and then doing subcontracting. It has been a go-to contractor and adviser, even though its business is simply to get contracts and subcontracts. In fact, Kristian Firth spoke yesterday about being flattered by being a go-to adviser and resource for the government, even asking questions about what would be the content of RFPs that he would then bid on.
I want to ask you what your government saw in GC Strategies. Why did you have this special relationship with it?
:
Minister, the company was founded in 2015, and even similar companies had much lower magnitudes.
I want to drill down on this question.
You've hopefully at least asked some questions about it, even if you didn't know about it until recently. Your own department did about $10 million in contracts with GC Strategies. Kristian Firth testified that he was gone to multiple times for advice on RFPs.
I want to ask the minister again, because the minister is responsible for the department, whether she has sought information about the close relationship between the government and GC Strategies.
I'm just trying to understand why GC Strategies was this go-to for the government for so long, at such magnitude.
:
Thank you very much, Chair.
Thank you, Minister and officials, for being here today.
Just to carry on with that point, Minister, I know that over the past eight years you have been a huge advocate for ensuring there is inclusivity in our procurement system and that there is transparency in our procurement system. We've had a number of conversations on this as well, and I want to highlight that when we talk about the public service—the thousands and thousands of employees who do the hard work, who provide the service to Canadians—this ArriveCAN app and all of these ensuing committee meetings and investigations are not a reflection of the public service.
Minister, perhaps you can start by helping us to understand, as you have been responsible for dealing with this portfolio, the steps you have taken to rectify this. How have we, as a public service, tried to make sure that these instances by a small number of people do not disrupt the trust in our public institutions and the work we do collectively as a government to provide these services to Canadians?
:
Mr. Chair, I want to review the measures that I announced on March 20 to further improve the policies that we have in place at the Treasury Board related to contracting.
First and foremost, I released an updated guide on the issues related to third party contracting to ensure that there is greater oversight on contracting with external consultants. That is the second edition of the guide that I have announced and provided since I was appointed, which was less than a year ago, so you can see how seriously I take that issue.
The second announcement that I made was related to a horizontal audit that we are taking across government, especially with large departments, with regard to governance and decision-making. We plan to find out exactly what is happening in those departments, especially in the area of contracting with third parties.
The third announcement was that we are updating our directive on conflicts of interest, because we need to make sure that in this economy, the conflict of interest directive is applicable and pertinent and responds to the realities of the work environment that we currently have. You will see me publish a revised version of the conflict of interest directive this year.
:
We're well over. I wanted to hear a full answer, and we did. Could you provide that to us in writing?
We're well over the time. I also know, Minister, that you have another appointment.
I do want to thank Ms. Anand and officials of the Treasury Board Secretariat for appearing today and assisting us in our work in relation to the study of “Report 1: ArriveCAN”.
Could you please send any other information? I know we had several items that were promised to us. We thank you for that.
I will now suspend this meeting for about five minutes so that these witnesses can be excused and our next witnesses can come in.
This meeting is suspended for five minutes.
:
Welcome back, everybody.
I appreciate the journalists who are being respectful of the parliamentary rules with regard to cameras. That's greatly appreciated.
[Translation]
Pursuant to Standing Order 108(3)(g), the committee is meeting today to study the Main Estimate, 2024-25, more specifically Vote 1 under Office of the Auditor General.
[English]
I'd like to welcome our witnesses.
From the Office of the Auditor General, we have Karen Hogan, Auditor General of Canada; Andrew Hayes, deputy auditor general; Jean-René Drapeau, assistant auditor general; and Paule-Anny Pierre, assistant auditor general.
Thank you for joining us here today, everyone. I appreciate seeing you all again. I feel we're becoming family.
Ms. Hogan, you have the floor for five minutes. It's over to you. Then we'll go to questions from the members.
Thank you.
We are pleased to have this opportunity to discuss the work of our office, including our most recent departmental reports.
I would like to acknowledge that this hearing is taking place on the traditional unceded territory of the Algonquin Anishinabe people.
The Office of the Auditor General of Canada serves Canada primarily through auditing and other work that assists Parliament in its authorization and oversight of government spending and operations. We provide Parliament and the territorial legislatures with independent and objective information, advice, and assurance about government financial statements and the management of government programs.
We also assist boards of Crown corporations and audit committees in overseeing the management of government activities. The Commissioner of the Environment and Sustainable Development assists me by focusing on the environment and sustainable development. We also support the development of legislative auditing and accounting standards and contribute to improving public sector auditing in Canada and internationally.
Let me turn first to our 2022-23 Departmental Results Report. We provided this report to Parliament in November 2023. As shown in our financial statements, our net operating cost was approximately $144 million, and we employed the equivalent of 732 full-time employees.
With these resources, we completed financial audits, performance audits, special examinations of Crown corporations, and other reports. In total, we delivered 117 audit reports to Parliament, federal and territorial legislatures and boards of Crown corporations.
[English]
In addition, the commissioner of the environment and sustainable development delivered the annual report on environmental petitions and several other reports related to sustainable development and climate change and began work on additional reporting requirements under the Canadian Net-Zero Emissions Accountability Act.
As part of our follow-up work, we updated our online dashboard, which provides a snapshot of the progress that select departments and agencies achieved in areas we previously audited.
As we do every year, we audited the financial statements of 90 federal and territorial government organizations and Crown corporations, including those of the Public Accounts of Canada. We issued clean opinions on 87 of these financial statements. We also presented our annual commentary on our financial audit work.
Our “Departmental Results Report” presents indicators that measure our performance and the impact of our audit work. One of the ways we have historically assessed the impact and performance of audit work is through the level of parliamentary engagement with our reports. In the 2022-23 fiscal year, parliamentary committees reviewed 88% of our federal and territorial performance audit reports, up from 80% in the prior year. I want to thank the Standing Committee on Public Accounts for reviewing all performance audit reports referred to it during this period and for reviewing two reports of the commissioner of the environment and sustainable development.
Internally, in 2022-23, we made progress on initiatives to review and renew the foundations of our work. This included enhancing our process for selecting performance audit topics to reinforce the relevance of our work for Canadians, legislators and the entities we audit. We also made progress on modernizing our IT infrastructure, reducing our environmental footprint, and supporting a healthy and inclusive workplace culture.
I would like to move on now to our main estimates and our department plan for the next fiscal year.
In the previous department plan, we introduced our updated departmental results framework. This framework articulated revised results and the indicators we will use to measure our progress. In this departmental plan, we added targets to our indicators, and we will be reporting on the results of these indicators for the first time in our next departmental results report.
For the 2024-25 fiscal year, our total budget is approximately $128 million. With these resources, we plan to employ the equivalent of 770 full-time employees.
During this period, we plan to issue 90 financial audits, 25 performance audits and three special examinations. These reports are planned on a wide breadth of topics, such as cybersecurity of government networks and systems, the Canada emergency business account, and critical minerals and batteries.
During the 2024–25 fiscal year, we will continue to work on several ongoing internal initiatives, such as our engagement with interested parties, our transformation journey, and initiatives to sustain and further develop a skilled, diverse and engaged workforce. All of these initiatives are fundamental to delivering value to those we audit and meeting the needs of legislators and people living in Canada.
Mr. Chair, I would like to acknowledge the committed, hard-working and devoted team of professionals in my office. I am incredibly proud of the excellent work that they deliver every day.
We thank the committee for its ongoing support and the use of our work. We would be pleased to answer any questions the committee members may have.
:
Thank you very much, Auditor.
Before I turn to Mr. Stewart, for those of you on the earpieces, I think there was a crack or a crackle. The translators have asked us to be careful with the headpieces, even close to your phones. I'm trying to determine if it's the microphone or the earpiece, but if you can, be aware of that.
Mr. Chen, maybe you can hold your phone away from the microphone. Just watch out. There's an audio issue, and we do not want to harm our translators.
Mr. Stewart, you have the floor for six minutes.
I'd like to welcome Auditor General Hogan and her team today.
We truly appreciate the great work you do every day to assist this committee and Parliament in our oversight of government spending and operations. It's a challenging task you have with the Liberal government's $480 billion in program spending while running an annual $40-billion dollar deficit.
I believe the work you've done to uncover the historic levels of corruption and fraud associated with the ArriveCAN scandal will have a lasting legacy.
Your recent report reminds me of the work of Canada's first female Auditor General, Sheila Fraser, whose report on the sponsorship scandal rocked Canada's political scene during the last Liberal regime. Auditor General Fraser stated that the troubling transfer of hundreds of millions of dollars in sponsorship funds used “highly questionable methods”. She also referred to the Liberal sponsorship scandal as a “pivotal event with a lasting impact” and said it “broke just about every rule in the book”. Her quotes sound very familiar in regard to your comments to this committee about ArriveCAN.
In her 2011 speech, Madam Fraser also criticized the truly shocking lack of improvements on first nation reserves and said the following: “I actually think it’s quite tragic when you see that there is a population in this country that does not have the sort of basic services that Canadians take for granted.” I've seen this up close as minister of aboriginal affairs in my own home province of New Brunswick.
Your recent reports on housing and first nation communities and on policing show a lot of similarities to Auditor General Fraser's comments. It's very unfortunate to have seen a lack of progress over the past nine years.
The Office of the Auditor General has stated that it is committed to improving socio-economic outcomes for indigenous peoples by increasing opportunities for first nations, Inuit and Métis businesses in procurement processes. For example, you have stated plans to award a minimum of 5% of the total value of all contracts to indigenous businesses.
Because of the egregious misuse of indigenous set-asides that your ArriveCAN audit has uncovered, may I ask if you have considered taking a deeper look at the 5% program, and have you put in place a directive that your office not subcontract with Dalian Enterprises and David Yeo?
:
I can start by letting you know that we have never had contracts with Dalian Enterprises.
We have a plan, as you've stated, to help meet the 5% minimum target that the government has set. This past year, I would say, didn't achieve the levels that we were hoping to achieve.
Part of it was that as a result of our audit work, we have introduced an extra layer of rigour, an extra layer of examination, to ensure that the organizations we contract with are truly indigenous organizations. We don't want to issue a contract to an organization that might be a joint venture and was awarded the contract just to meet a set-aside. We truly want to make sure that the work we're giving goes to indigenous people.
We're going to work hard at trying to meet our commitment, but it's more important for me to make sure that it's done in the right way. Based on what we've found, we're also considering whether we want to audit this government-wide, and we haven't really landed on that yet.
I would distinguish between employees who have come forward to disclose that they have external employment and have received proper approval for that versus the ones who haven't. The cases the Auditor General was referring to were largely ones of people not disclosing that they had alternative employment.
In one case, we found that there was a employee who had other employment, and there was a problem because when we hired them, the process for “secret” clearance signalled that there was a problem. In another case, PSPC advised us that there was an ongoing investigation involving one of our employees in a number of other departments. A third case, which is currently being considered, is another case that was brought to our attention.
In terms of the contractors, one of them was identified in the PSPC disclosure about a month ago. There were three contractors working for a number of departments and agencies. The last case was one that we uncovered because we had identified signals that raised red flags.
In all of those cases, we took prompt and immediate action. We've undertaken investigations where appropriate. In the ones that have been completed, either those contractors don't work for us anymore or their employment has been terminated.
:
We do annual financial audits of the federal government as well as the three territorial governments, and we do financial statement audits for many territorial corporations and Crown corporations. Those are audit opinions that are given to the boards of directors or to Parliament about whether or not the financial statements accurately present the results of the organization for the year.
I'll tell you that when it comes to the public accounts of Canada, it's really that final accountability loop, so you get to see what was committed in a budget and then, in the financial statements for the year, what actually happened.
Those would be our financial audits. We do about 90 of those every single year.
We also do performance audits. In performance audits, we go into departments and agencies—at times, they include Crown corporations, depending on the program we might be looking at—to determine whether the programs have been managed with due regard to the economy, efficiency and the environment, and whether or not management has put in place ways to measure whether these programs have been effective and provide good value for money for Canadians.
Very closely linked to a performance audit is a special examination. It's about the equivalent of a performance audit, but in a Crown corporation. The parameters of that, however, are dictated by the Financial Administration Act. We must do a special examination for parent Crowns once every 10 years, and it's about processes and whether they have processes in place to safeguard their assets and deliver on their mandate.
We provide all of that to their boards, but we also provide it to Parliament so that you can hold Crowns accountable for managing their assets and delivering against their mandate.
The commissioner of the environment will usually issue performance audits, so he does my job on the sustainable development and environment side. He also has responsibilities arising out of other acts, like the net-zero emissions act and so on, so he provides other reports to Parliament that show whether or not the government is meeting the commitments it has made for sustainable development.
:
That's a very important question.
Our office does seek its funding through the regular parliamentary budget process. We submit a budget request to the Department of Finance, and it goes through the normal process that every department must go through.
You may recall that when I was nominated back in early 2020, my office had been looking for additional funding. At that time, I had put in a request for funding as well. We received the money I asked for, but I then talked about the need for an independent funding mechanism.
I think this is something that so many agents of Parliament should ensure they have. It is difficult for us to ask for money from a department that we audit. There should really be an independent mechanism through which we can turn to Parliament and have some accountability there.
I will tell you that since I received that money back in 2021, we have received additional mandates that have been unfunded. This is a continuous pressure point on my office.
Since 2021, the commissioner has received a mandate in the net-zero emissions act. There are five additional Crown corporations that we have been asked to audit, and none of those audits came with additional funding.
This is something I monitor. I will tell you that very soon I might be saying that if I don't want to impact the number of performance audits that I provide to Parliament, it's likely that I'll be needing additional funding.
:
That's a question I have to admit that everyone sitting here, as members of senior management, thinks about and talks about often. I view the employment equity targets as just the minimum that we should meet. We are exceeding most of them, except for representation around indigenous individuals. However, that's our workforce as a whole.
When it comes to management, we are still struggling to meet employment equity targets. It's probably due mostly, in my view, to attrition. Our historical attrition rate has been about 10%. In the past few years, that has dropped to around 4%, and that is much higher in our working level than it is in our management. Management is even less than 4%.
That's an issue that I know we have to tackle in a real, concrete way in the coming months and years. We're very management-heavy. How can I increase diversity in that cadre if there is no turnover?
It's a challenge that we have to face coming forward, because we haven't met the equity targets that we've set for ourselves in management.
:
I think that the Clerk of the Privy Council has started an important dialogue. He's asked all departments to establish a dialogue with their employees.
For our part, we're creating a training program that everyone in our office will have to take. It won't be a once-in-a-career occurrence, however. People will have to take it now and again later, on a regular basis. I don't know the number of times in all, but I think we need to establish an ongoing dialogue. Right now, we ask people to learn about their obligations when they join the public service, but there's no follow-up later on.
We have an annual form that everyone has to sign. We're in the process of updating it to include more questions and more checklists instead of just a link that people can follow to read our policies. We're going to encourage our employees to discuss any conflicts with their managers.
:
Thank you very much, Mr. Chair.
I want to thank the Auditor General and her office for the departmental plan and for ensuring that the work of her office can continue.
I want to touch on some of the items brought forward by some of my colleagues, but before I get into that, I'll ask questions about the incident that several members have already spoken about in regard to what was reported in public about two employees.
You and Mr. Hayes spoke about some of that important work. You also described the annual process that is required for employees. Was it through that annual process and in the reporting of documents that you were made aware? Did they declare that through this process of annual review, or did your office have another tool through which you were able to review that?
:
Why didn't your audit contemplate, for example, a recommendation related to that instance alone? PSPC gives the directive. That should be the check and balance Canadians rely on to say, “Whoa; this is a big problem, and even PSPC sees that.”
What recommendation or advice, given that hindsight is 20/20, could be made in this particular instance? I personally believe a grave error took place, and that we had an opportunity... It was almost like a flag was raised, and we could have caught this issue before it became as detrimental as it did.
What tools could PSPC have had, in that instance, rather than just saying, “Hey, CBSA, I got the email return. You said, 'No problem; it's fine. You can go ahead with the non-competitive contract, even though we know at PSPC that it's bad'”?
Is there maybe a recommendation around some kind of enforcement mechanism for PSPC to be able to say, “Hey, CBSA, you shouldn't be doing this. We're going to stop you.”?
:
Your question is built on a foundation of quality information.
Take, for example, the fact that every organization in the government essentially has the ability to enter into contracts. Not all of those contracts will be known at PSPC. The big ones will be, but not all of them. In order to find the situations we're talking about—when, say, employees are working for multiple departments or have contracts or are subcontractors, etc.—there needs to be a way to look at quality information, accurate information, and monitor it and cross-check it. The government can do that if it pulls all of that information together.
Hopefully, PSPC's solution of an integrated procurement system will help achieve some of that. I think that was a response to our audit. We'll be very interested in seeing how it gets implemented.
:
I've really built on some of the priorities of my predecessors, but we have had a really big push since I became Auditor General to ensure that sustainable development goals are considered in everything that we do. We even try to remind Crowns and remind the territorial legislatures of them, even though they haven't signed on to the sustainable goals in a formal way.
We have also committed to using an EDI lens, an equity, diversity and inclusion lens, in all of our work, so we try to think about regional distribution and employment equity. You'll see that a lot of our audits are chosen that way as well. We try really hard to keep the lens on racialized and indigenous employees so that we can make sure that we think about all Canadians when we carry out our work.
Those would be two big main streams that I have definitely tried to push and keep alive.
I also hold the view that when we audit a department or an entity, we should then look at what we are doing, because if we're going to make recommendations for an organization to improve, chances are we might not be doing as well either, so we're trying to adopt those recommendations even in our own organization to improve our own processes.
:
Thank you very much, Mr. Chair.
I want to speak about the recommendation you made, Ms. Hogan, on an independent funding mechanism.
I think it's important that Canadians try to understand why that's important. Of course, for members of Parliament, including me, it's important that we understand the need for an independent funding mechanism.
Let's rewind the clock a bit to a time when the Office of the Auditor General didn't have the kind of funding needed to achieve its goals.
When I first became a member of Parliament earlier this session—when we first met—you came to us asking for more support and money. Of course, there is a deep connection between accountability and the Auditor General's office. If the Auditor General's office can't perform audits, the government can't accept recommendations. Worse yet, we can't hold the government accountable. The Office of the Auditor General is very important, which is why it's one of the oldest offices in the country. It's what made our country and what makes Canada highly democratic. It's a very valuable democratic contribution to the world.
What is the value, do you think, of a government that would fund the Office of the Auditor General versus a government that would not fund the Office of the Auditor General? What impacts would that have on your service and work?
:
I think I would like to answer that question by saying that the role of the Auditor General is critical to democracy. We bring forward impartial, objective and independent advice. We make our recommendations on the basis of facts that have been cleared and have been certified by the departments themselves as accurate.
Ultimately, when it comes to our funding, it is difficult to go to a government and say, “Give us more money so we can critique you.” That's where the role of parliamentary committees comes in. This committee, in particular, through a series of governments, has shown itself to be an incredible ally to the Office of the Auditor General and an ally to democracy. It was because of the work of this committee, even before 2020, that we got our funding. Quite frankly, it was the pressure this committee put on the government.
I would refer the members to the report that was submitted by this committee to Parliament in the previous Parliament signalling the importance of independent funding mechanisms. This committee does great work for democracy, and I would highlight the importance of non-partisanship and the importance of support for the Auditor General not being lost.
This week the Treasury Board Secretariat provided the public accounts committee with a shocking summary of the contracts that GC Strategies, Dalian Enterprises and Coradix Technology Consulting have had with the federal government. There were 1,108 contracts in total, with a value of more than $914 million.
Just three companies closed in on a billion dollars. That's very concerning to us, but not, apparently, to the government—especially on top of the more than $120 million in untendered contracts the Liberal government has handed to McKinsey & Company.
Can I ask your thoughts on the massive number of questionable contracts for outside consultants? When do you expect your McKinsey review to be completed?
:
Thank you very much, Chair.
I want to thank the Auditor General and her entire team again for appearing in front of our committee and for the wisdom of the responses we get. Chair, I think you'll agree that whatever we hear from the Auditor General, whether it's through the reports or in answer to questions that members bring up, is measured and balanced. There is a lot of work behind those answers. They're not gratuitous. They're not looking for sensationalist headlines. They're not trying to mislead Canadians. We're getting the right time of day when we hear from the team at the Auditor General's office and from the Auditor General herself.
Along that line, Auditor General, among the things you've talked about today was this issue of chronic underfunding of IT projects, which has led to big trouble, as we've seen, later on, with problematic contracts later on and this idea that being penny-wise and pound foolish is somehow the way to handle public finances. We've heard this time and time again, and we've seen this in previous governments: Cheap gets what cheap buys, and this use of public taxpayers' money is just a disservice to Canadians.
You also talked a little earlier about how piling on regulations is not necessarily the way to go, nor is doubling the work being done by different agencies, your office, the ombud or the RCMP, but Conservatives and other members have been quick to criticize any institution or office that does not push a narrative they support. Can you confirm for Canadians here today that your office is free from political interference?
:
Once my reports are made public, they are on the public record. Any individual can use them as they would like.
This is why I appreciate that when we come to committee, especially here in the public accounts committee, we appear when departments appear, so that we can tell you what we found and make sure that we can articulate clearly what our report says, if it's being misunderstood.
We strive very hard to make our reports easy to understand, but there is always the chance of someone misinterpreting something.
I appreciate the number of committee appearances we have before this committee, before other House committees and before the Senate so that we can help everyone understand our work and they can hold government to account.
That concludes our witnesses.
I want to thank Ms. Hogan and her team from the Office of the Auditor General.
We'll just be 30 seconds. You're welcome to leave, if you like, but we'll be really quick here.
I'm going to ask members for their attention, please. This is a vote on the estimates.
OFFICE OF THE AUDITOR GENERAL
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Vote 1—Program expenditures..........$114,689,350
(Vote 1 agreed to)
The Chair: Shall I report vote 1 under the Office of the Auditor General of Canada, less the amount voted in interim supply, to the House?
Some hon. members: Agreed.
The Chair: Thank you very much.
Thanks very much for coming. We'll see you after the recess week.
Without further ado, I adjourn this meeting.