SIFS Committee Meeting

SUB-COMMITTEE ON INTERNATIONAL FINANCIAL REPORTING GUIDELINES AND STANDARDS FOR THE PUBLIC SECTOR OF THE STANDING COMMITTEE ON PUBLIC ACCOUNTS

SOUS-COMITÉ DES LIGNES DIRECTRICES ET NORMES INTERNATIONALES RELATIVEMENT AUX ÉTATS FINANCIERS DU SECTEUR PUBLIC DU COMITÉ PERMANENT DES COMPTES PUBLICS

EVIDENCE

[Recorded by Electronic Apparatus]

Wednesday, May 26, 1999

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[English]

The Chairman (Mr. John Williams (St. Albert, Ref.): Good afternoon, ladies and gentlemen. This afternoon we have witnesses from the Treasury Board: Mr. Colin Potts, the deputy comptroller general, and Mr. John Morgan, director of government accounting policy, comptrollership branch.

Today we're looking at the orders of the day pursuant to Standing Order 108(2), the role of the Government of Canada and the status of Canada's financial reporting vis-à-vis other countries. We have an opening statement by Mr. Colin Potts, and after that he will be going through a presentation with graphs and charts. I think everybody has a copy. He will be open for questions as he goes through them.

So we'll turn it over to you, Mr. Potts, for an opening statement.

Mr. Colin Potts (Deputy Comptroller General, Comptrollership Branch, Treasury Board of Canada Secretariat): Thank you, Mr. Chairman and committee members, and thank you for the opportunity to appear before the Subcommittee on International Financial Reporting Guidelines and Standards for the Public Sector.

With me is Mr. John Morgan, director of government accounting policy within the Treasury Board Secretariat comptrollership branch.

Complete, accurate, and transparent financial reporting is essential to ensure the credibility of reported results and effective accountability to Parliament.

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The Public Accounts of Canada is the primary vehicle through which the full nature and extent of the financial affairs and resources of the Government of Canada are reported. As referenced by the Auditor General of Canada, the financial reporting for the Government of Canada is well advanced compared to most other countries. It has evolved, and it continues to evolve, to satisfy the requirements of Parliament and to reach new levels of improved reporting.

Supporting this evolution has been the development of accounting standards for the public sector, not only in Canada but also internationally. The Government of Canada has played an active role in supporting and providing input to the development of these new standards. I believe this active participation has helped to improve not only public sector standards in general but also their application to the Government of Canada.

Mr. Chairman, with your permission, I have a few slides I'd like to take about 15 minutes to present to the subcommittee. These slides outline the past, present, and future financial reporting policies of the Government of Canada, the various forums through which the Government of Canada participates in the development of new standards, and how our reporting policies compare to a few other countries.

The Chairman: If members wish to indicate any questions, they can let me know and I'll be free to interrupt you at the appropriate times, Mr. Potts.

Mr. Colin Potts: Thank you, Mr. Chair.

If we could turn to the second slide, “Financial Reporting—Past”, this slide provides to members of the committee a brief history of how our accounting policies have evolved over the years, starting in 1867 with a cash basis of accounting.

I think it's interesting to note, Mr. Chairman, that there were not a lot of changes until the 1980s, in fact in 1980 when payables accrued at year-end were first introduced and charged to the appropriations of that particular year. This was a significant change at the time. Also of significance in the early 1980s was the formation of the Public Sector Accounting and Auditing Board by the Canadian Institute of Chartered Accountants, and that took place in 1982.

The Chairman: Mr. Potts, when you say in 1979 the allowance for the valuation of assets, are you talking about cash assets in the public accounts, the balance sheet of the Government of Canada?

Mr. Colin Potts: That's right, Mr. Chair. These would be the loans and advances to various corporations, other countries, I believe, etc., that appear on the books of the Government of Canada. In 1979 a change was made so that there was an estimated value of those loans taken into consideration.

The Chairman: But other assets such as real estate and so on were still not included in the financial statements?

Mr. Colin Potts: That's correct.

The Chairman: So you could more or less say strictly financial assets have been recorded since 1979 in the public accounts as published.

Mr. Colin Potts: Yes.

The Chairman: You're moving forward from there, and that's the story you will tell us.

Thank you.

Mr. Colin Potts: If we could turn to the next slide, where there are further changes outlined, I refer specifically to the 1990 change, which was when the accounting for the pensions was introduced, particularly the actuarial surpluses and deficits, and that's when we started the amortization.

Many of these changes were the direct result of the new public sector standards being developed by the Public Sector Accounting and Auditing Board of the CICA, which was formed in 1982. Most of these changes relate to the provisions and allowances required on various types of loans and loan guarantees that the government is involved in.

It was public sector accounting statement number 5 that brought the changes to the pension accounting.

A further change on April 1, 1997, or the 1998 year-end, was that interest costs on pension obligations were based on the actuarial pension rather than the superannuation account balance. That is a significant recent change that has taken place, and that change was a direct result of a statement by PSAB, a standard set by them, and introduced by the government after consultation with the Auditor General.

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The Chairman: I have a question on that, Mr. Potts, and I'm not talking about Bill C-78, but the fact that we are going to start a process of privatization of the pension assets of the civil service pension plans. Over the next number of years we're going to see a rising percentage invested in the private sector and some retained in government bonds. These are the existing pension plans. When the new pension plans are set up according to Bill C-78, these funds will be invested in the private sector.

Mr. Colin Potts: That's correct.

The Chairman: The Public Sector Accounting and Auditing Board said don't pay interest on the excess beyond the actuarial evaluation of what is required. When the pension plans are privatized, you will have no control over the return on assets because they will be invested in private capital markets.

Mr. Colin Potts: Yes.

The Chairman: That rule will have to be revisited, I would presume.

Mr. Colin Potts: That rule will continue to apply to the balance retained on the government's books, Mr. Chairman.

The Chairman: So it will apply to the old pension plan, but as far as the new pension plans, where the assets are invested in the private capital markets, that rule will not apply then.

Mr. Colin Potts: That's right.

The Chairman: Okay. Thank you.

Mrs. Elsie Wayne (Saint John, PC): I have a question, Mr. Chair.

In 1993, allowance for loan guarantees... there was a policy adopted by the government for loan guarantees for shipbuilding. Does that fall under that?

Mr. Colin Potts: That would fall...

Mrs. Elsie Wayne: Has anyone asked you, Mr. Potts, to look at a new loan guarantee policy that the shipbuilding industry has requested to make them competitive? Now they pay back their loan guarantees within a certain up-front time period, and they were looking at a longer period of time and what kind of an impact that would have. They were telling us that if they could get that loan guarantee changed—not that they weren't going to pay it back, but over a certain period of time... I have all that documentation, Mr. Chairman, but that and just one other request they had would make them competitive around the world. The way it is now they cannot compete.

You will find, from British Columbia through to Newfoundland, that the shipbuilding industry has bid on these international contracts that are out there, except for the United States, where you can't bid anyway—you can't build there. They have tried, and because they cannot compete... they're saying this is one area that stops them from competing.

I feel very strongly, myself, Mr. Chairman, that if Mr. Potts and Mr. Morgan would have an opportunity to look at it, they would come back and say, look, this isn't going to hurt us at all in Canada if we make this change for them. It would probably put about 20,000 people to work before we're through. I think it's something we should pursue, Mr. Chairman.

The Chairman: Did you get Mrs. Wayne's point there, Mr. Potts?

Mr. Colin Potts: I understand the point. We have not been asked to do any research on that particular issue.

Mrs. Elsie Wayne: You haven't been asked to look at it. That's what I thought.

Mr. Colin Potts: To the best of my knowledge.

The Chairman: Just for my own edification, you're saying in 1993 there was a change in the policy regarding allowance for loan guarantees. Can you give me a quick synopsis of what that change was, or what the current policy is? I want to compare that to what Mr. Wayne is talking about.

Mr. Colin Potts: The policy, from an accounting point of view, would be to recognize any losses that are likely to be incurred on those particular loans, Mr. Chairman.

The Chairman: That's what we're talking about here on this slide.

Mr. Colin Potts: It's similar to the valuation of assets.

The Chairman: Recognizing losses as they become apparent.

Mr. Colin Potts: As they become apparent.

The Chairman: Which is a different issue from what you were talking about, Mrs. Wayne, I believe.

Mrs. Elsie Wayne: But I think if you look at that and any loan guarantees when it comes to shipbuilding... I would be surprised if they came up with any losses, because the shipbuilding industry and those in the shipbuilding industry have paid back their loans. I would be surprised if any of them have not done that, particularly our people back in Saint John, New Brunswick. What they were saying when they came up here to talk to us was that if the policy was changed just a little bit when it came to loan guarantees, it would make it so that they would become competitive.

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I have all that documentation, which I'd like to bring sometime and sit down...

The Chairman: I think we're talking apples and oranges here.

Mrs. Elsie Wayne: I'm saying the new one wouldn't give them any losses either.

The Chairman: No. But what we're talking about here, and I think what Mr. Potts is saying, is in 1993 they changed the accounting policy so that if there were losses, if the losses became apparent, then they would be recorded and reported as an expenditure in that particular year. You're talking about the conditions under which loan guarantees are given to the shipbuilding industry. That's not the Treasury Board; that would be the Department of Industry, I would imagine, that would set these criteria.

Am I correct?

Mr. Colin Potts: In all likelihood, it would be the Department of Industry. I'm not sure on that.

Mrs. Elsie Wayne: Yes, it is the Department of Industry.

Mr. Colin Potts: It would certainly be a government policy that that department has developed and would be responsible for. We are talking here of purely the accounting policies that apply when we prepare the financial statements for the Government of Canada.

Mrs. Elsie Wayne: I just wondered if they had been asked to look at it—Mr. Potts and others—to see if it would have a negative impact, and the possible impact of changing that to what the shipbuilding industry was asking the Minister of Industry to do. And they haven't been.

Mr. Colin Potts: We have not.

Mrs. Elsie Wayne: Thank you.

Mr. Colin Potts: If we could turn to the next slide, which details some of the present financial reporting policies, generally our accounting policies are based on the standards that have been promulgated by the Public Sector Accounting and Auditing Board of the CICA. We refer to it at the present time as a modified accrual basis of accounting. So we're neither on a strict cash basis, which is where the government started, nor on a full accrual basis, which is the private sector basis of accounting. We're between the two.

We do report on the public accounts the results of the whole of the federal government. Obviously it does not include provincial governments, etc. It's purely the financial results for the federal government. All known liabilities are booked and reported within those financial statements, including the pension liabilities.

With respect to what we refer to as tangible capital assets—real estate being a good example, and vehicles—these were expensed, at the present time expensed when acquired.

The Chairman: Even large buildings and so on are expensed?

Mr. Colin Potts: Even large buildings.

Finally, the tax revenue is accounted for on a cash basis. Again, the historical difficulty we have with tax revenue is measuring such revenues on an accrual basis at the end of each fiscal year. It presents a unique challenge.

The Chairman: I understand the methodology we use to report, Mr. Potts, is also on a national accounts basis too, I believe. Am I correct in saying that? I understand that a national accounts basis is the best comparison we have on the international scene to compare one country versus another. Am I right in saying this?

Mr. Colin Potts: That's my understanding, Mr. Chairman. I have not done any research on the national accounts basis or comparisons with other countries. The national accounts, from my understanding, are prepared by Statistics Canada using information they glean from the Public Accounts of Canada and other government sources.

The Chairman: So the national accounts are more an amalgam of the federal government and provincial governments and some kind of consolidated financial statement then, which deals with all...

Mr. Colin Potts: It tries to deal with all government—

The Chairman: All government in the country, apart from municipal. Because we are a federal state, we are divided between federal and provincial, and unitary states would only have the federal government. But if they have some powers devolved to municipal governments, to try to get a comparison would be very difficult indeed. It's on that basis, on a statistical basis, that countries, as best they can, prepare these national accounts. So they're not true financial statements based according to accounting standards, but the best assessments by people for comparative purposes.

Mr. Colin Potts: That's my understanding, Mr. Chairman. I have not looked at the national accounts, I have to admit. Therefore I don't have any research on them to be able to confirm that. But from information I've been given, I think your summary is correct.

The Chairman: Okay. Thank you.

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Mr. Colin Potts: Just looking to the future and some changes that we're likely to implement over the next few years, we would like to have the accounting for tax revenues on an accrual basis. Work is underway with Revenue Canada to move to that basis. It's requiring a number of system changes so that we can have the information to set the tax revenues on an accrual basis.

The Chairman: On that particular issue, as you perhaps are aware, at the public accounts committee we dealt with the underground economy taxation issue, an initiative to try to dig out the underground economy taxes. If you talk about an accrual basis, I guess you're talking about accrual in a projection concept. If you find a taxpayer who has been reassessed back for say three years, are you considering these retroactive taxes on an accrual basis? You're not going to go back and amend the financial statements.

Mr. Colin Potts: We certainly wouldn't go back and amend the financial statements, Mr. Chairman. Once we became aware of the amounts involved in that reassessment, it would be accounted for on an accrual basis, but it would be reflected on the current year's financial statements in the nature of an adjustment. That policy would be consistent with private sector treatment on an accrual basis.

The Chairman: People pay their taxes on a January 1/December 31 basis as individuals. Corporations pay them on a fiscal year-end basis. The government's year-end is March 31. You're not talking about accruing everything to a March 31 year-end concept, are you?

Mr. Colin Potts: I think you've just indicated some of the issues that we have to deal with as we move to this basis, Mr. Chairman. We're hopeful that there can be some degree of estimation made in order to reflect the tax revenues on a fiscal year basis. We have not completed our research in this area, but we would like to be able to provide an estimate of the taxes as of March 31. And you're absolutely correct, sir, that there are a number of complications in achieving that goal. We obviously have to work through those issues and, to some degree of certainty, project what the tax revenues might be and at the same time have sufficient rigor in the process to satisfy the Auditor General, who will be asked to report on the financial statements.

The Chairman: Okay.

Mr. Colin Potts: Another issue that has been commented on now by the Auditor General for the last few years has been the accounting for environmental costs and liabilities. In the fiscal year just completed, we have asked departments to submit to us estimates of what we call the state contingent liabilities, what they think the liability may be for the environmental clean-up of contaminated sites by the federal government. This, again, is a very complex area. It's going to require extensive testing and review, but we're moving in this direction with a hope to be able to record on the financial statements, in the near future, an estimate of the actual liability of the government with respect to environmental costs.

The Chairman: Would that be a note to the financial statements? That wouldn't be a line on the financial statements.

Mr. Colin Potts: At this stage, we're looking at a note to the financial statements, Mr. Chairman. Once the costs become known with some degree of certainty, it will become a line item within the financial statements.

The Chairman: So any environmental liability that becomes identifiable, quantifiable, and reasonably well estimated would then become a line item and there would be a note regarding nation-wide potential environmental problems.

Mr. Colin Potts: That's correct.

A clear area that is receiving some attention by the profession is the costs of post-employment benefits for employees. There is research being conducted at the present time by the CICA on this issue, and we're expecting to see a statement some time, I would estimate, within the next two to three years that would set out the recommendations for accounting for these costs.

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Our plan is to move to full accrual accounting, and our target date for full accrual accounting is April 1, 2001, the start of the 2001-2002 fiscal year. At that point we will start capitalizing the tangible capital assets of the Government of Canada. At this stage it really starts to move us more to the private sector basis of accounting.

With respect to accrual appropriations, this issue had some discussion before this committee previously. It's been reported on by the Auditor General. We're in the process of starting consultations as to how we might move to accrual-based appropriations and the benefits of this. We're hopeful of proceeding fairly quickly on this particular issue because it is quite a critical issue. Our plan is to ensure that as we report to Parliament that there is comparability not only in the actual financial results... but they can be compared to the basis on which the government had planned to spend; in other words, the estimates process. This is not an easy problem, but we are moving in this particular direction.

As I said previously, full accrual accounting is planned in the year 2001-2002, moving at that same time to have departments prepare a complete set of financial statements. We'll continue to prepare the public accounts, which will be the whole of government view, but encouraging each department and agency to prepare at the end of the fiscal year a complete set of financial statements as well.

The Chairman: If I can interrupt you, Mr. Potts—and I apologize for the interruption—I would like to introduce to the members of the committee a delegation that has just arrived from the Kenya-Canada Legislative Cooperative Program. The leader of the delegation is the Honourable Mr. Omino, the Deputy Speaker of the House in Kenya. We also have, as part of the delegation, Mr. Kombo, who is the chair of the public accounts committee in Kenya. So I would like to recognize the delegation here this afternoon.

Some hon. members: Hear, hear!

The Chairman: We hope you find your visit to Canada informative. This afternoon, in the subcommittee of the public accounts of Canada, we are discussing the advances we are making in the preparation of the financial statements of the Government of Canada. Basically the order of reference we have today for the committee is the role of the Government of Canada and the status of our financial reporting vis-à-vis other countries.

We hope in this subcommittee to be able to gather information about best practices around the world and perhaps be able to disseminate these best practices to other countries if at all possible. I think we recognize that the pillar of good accountability is good financial statements. Without them we have very little indeed.

In order for a government to have integrity of its finances, we have to have faith in the financial statements as they are prepared. By preparing financial statements in that manner, it promotes good governance, it helps us attack areas of corruption, it ensures that the rule of law is applied, and so on. One of the founding principles of integrity in government starts with financial statements.

We have with us as witnesses this afternoon, Mr. Colin Potts, the deputy comptroller general of the Government of Canada, who is giving testimony at this point in time. He is assisted by Mr. John Morgan.

Again, welcome, and I do hope you find your visit here informative.

My apologies, Mr. Potts. Continue.

Mr. Colin Potts: Fine, Mr. Chairman.

Mr. Chairman, that basically completes the first part of this presentation, where I've provided a little bit of history, if you like, background, in terms of the evolution of the government's accounting policies. I've reviewed very quickly the present policies and have given some indication as to policies that are evolving and may be implemented in the next few years.

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I'd like to now just comment on standards development, particularly the role of the government in developing our accounting policies.

First, let me say that we actively participate in numerous national and international forums. We meet annually with counterparts from the provinces and territories—this is the annual federal-provincial-territorial comptrollers' conference, and this August we'll be holding the twentieth such conference. This enables us to, again, with our colleagues across the country, exchange views on financial management and accounting policies and keep in touch with one another and up to date with other developments.

In addition, there's an annual colloquium on financial management for national governments. This particular colloquium started as a Canada-U.S. colloquium, and it's going to be the eleventh such colloquium this year. It has expanded beyond Canada-U.S. In the last two years we've had some 11 countries attend this particular colloquium, and last year representatives from the OECD also attended. This colloquium enables us to have discussions and consultations with colleagues from other countries as to the developments that are taking place in their country, and it allows for an exchange of views.

In addition, the government has participated in the Canadian Institute of Chartered Accountants' accounting and auditing and standard-setting groups, in particular the Public Sector Accounting and Auditing Board. At the present time, Richard Neville, an assistant comptroller general with responsibility for financial management policy, is a member of that particular committee. Before him, a former comptroller general, Mr. Andy Macdonald, was a member of that committee, and in fact chaired that committee. John Denis, who has just recently retired as director of accounting policy, was a member of the committee for three years.

So the federal government has been represented on this particular body that sets the accounting standards for the public sector. In addition to that, there have been representatives from the Auditor General's office also actively participating in this particular process.

On the international front, there is the International Federation of Accountants and their public sector committee. Mr. Chairman, I understand you heard from Canada's representative on that committee, Mr. Erik Peters, at your first hearings. Again, I would point out that we, through the CICA, participate in that particular committee. In particular, we watch the developments that are taking place. Again, a former comptroller general, Mr. Macdonald, was also a member of that committee during his term as comptroller general. So we are actively monitoring the development of that through the CICA here in Canada.

Then we attend, whenever we can and it's appropriate to, various conferences, international conferences if applicable, and we monitor research studies that are undertaken by various countries.

I'd like now to turn to the next one, which is some comments on financial reporting by other national governments.

First, let me say that the public sector standards setting is really relatively immature, compared to perhaps the private sector. The private sector standards-setting bodies have been in place now for a number of years. I think Canada was perhaps one of the first countries to set a public sector accounting and auditing board and start the standards-setting process, and the international committee has now taken up that challenge internationally.

The Chairman: Mr. Potts, are you finding that this new initiative... I see you speak of it as being “an immature process” compared to other countries. Are you finding that the Public Sector Accounting and Auditing Board that we have, or their equivalent, is readily accepted? Is there resistance, or do they recognize the need for financial standards in order to prepare financial statements that have integrity?

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Mr. Colin Potts: I think, Mr. Chairman, there's a recognition of the need for standards to ensure the integrity of the financial statements. I would suggest to you that consistency of those standards year over year is particularly important.

I have no sense as to how well the Canadian standards are accepted internationally, but my sense is that they would be well received. Canada, even in the private sector standards-setting realm, is well regarded in terms of its standards.

The Chairman: Mr. Myers.

Mr. Lynn Myers (Waterloo—Wellington, Lib.): Mr. Chairman, just further to your question to Mr. Potts, I'm interested in the involvement of Treasury Board in all of this in terms of the IFAC public sector committee. Are they in fact involved in any of this standards-setting exercise? Do they comment? Are they given exposure, shall we say, to drafts or any of that? Does that take place? You may be covering it later.

Mr. Colin Potts: Let me deal with that now, Mr. Myers. It's an excellent question.

We do not have a direct representative on the international body. Canada's representative on the international public sector standards-setting body is nominated from the Canadian Institute of Chartered Accountants, along, I believe, with the Certified General Accountants Association. There's an agreement between those two national accounting bodies to have a representative from Canada on the international committee.

At Treasury Board, as I've just indicated, we do have a member on the Canadian standards-setting board. That board at its meetings regularly receives reports from the international representative. In addition to that, we do receive exposure drafts from the international standards-setting board, as we do from the Canadian board, and we comment on those and formally respond to them. In fact, one of Mr. Morgan's responsibilities is to monitor the developments, the new exposure drafts, that come from these various standards-setting groups and respond to them. Just recently I recall responding to the international federation on some exposure drafts they had issued.

Mr. Lynn Myers: Mr. Chairman, just a supplementary on the exposure drafts. I understand Treasury Board, you, and others are involved somewhat. It depends I suppose on how you view it. Is there a commitment by government then to follow through on any of this, or is it simply in limbo at this time?

Mr. Colin Potts: I wouldn't say it's in limbo. I think the fact that we do actively respond to these is... and I treat this part as being a government response; I take it seriously, and it's an activity we need to continually monitor and to be involved in. So I would say it's quite an active issue. It's certainly not the sort of thing you could say was in limbo.

Mr. Lynn Myers: What you're saying then is that the government, in your view, will follow through on this, or should follow through.

Mr. Colin Potts: When you say “follow through”, Mr. Myers, can you perhaps just—

Mr. Lynn Myers: I'm thinking in terms of adopting any of the recommendations being made at that level, especially with standards-setting and part of that exercise.

I guess what I'm really asking, Mr. Chairman, through you, is, is there a commitment, in your view, by government to follow through on what's being done at this level?

Mr. Colin Potts: I believe there's a commitment, and that's evidenced now in the public accounts. Our policies basically follow the standards set by the Canadian institute through the public sector board.

The role of the international board I think in terms of its input is still to be defined. It's at a fairly early stage. But certainly we take seriously the pronouncements by the Canadian standards-setting body and consider those and their impact on the accounts of the Government of Canada.

Mr. Lynn Myers: Thank you.

The Chairman: Okay, Mr. Potts.

Mr. Colin Potts: Mr. Chairman, just to follow on, my next three slides have just taken some specific issues and compared Canada with other countries. If you look at the reporting on the whole of government view, Canada is consistent with other countries, such as New Zealand, Australia, and Iceland. It's interesting to note that Germany does not prepare financial statements for the whole of government. The United States does. The United Kingdom does not at the present time, but it is moving to prepare whole of government statements.

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The Chairman: When you say the whole of government for Canada and Australia, are you talking about the federal government?

Mr. Colin Potts: The federal government, Mr. Chairman.

The Chairman: So even in Germany and, as we speak, in the U.K., there are still some piecemeal statements for the central government.

Mr. Colin Potts: That's correct.

The Chairman: And Germany has still not indicated any desire to move in this direction, that you're aware of?

Mr. Colin Potts: Not to my knowledge, Mr. Chairman.

On the issue of accrual accounting, Canada is indicated as what we refer to as the modified accrual, but we are moving towards full accrual, and our target date for full accrual is to start April 1, 2001, as against the three countries, New Zealand, Australia, Iceland, on full accrual. Germany is still following a cash basis of accounting. The United States is full accrual except for tax revenues. The United Kingdom is on a modified accrual, but also moving towards full accrual. So the trend here—and this has been confirmed by a statement from the OECD, where we participate in their work—is that certainly there is a move generally by countries to move to the full accrual basis of accounting.

Mr. Lynn Myers: I want to get your view, Mr. Potts, on accrual-based appropriations, and more to the point under FIS. Just when you speak about this on the slide with respect to FIS, it's my understanding that Treasury Board is in the process of developing four models. I think that's correct.

Mr. Colin Potts: That's correct.

Mr. Lynn Myers: Can you give us the status of those models? Are they ready? What's happening to them? Where are they at right now?

Mr. Colin Potts: Mr. Morgan may indeed correct me. It's been his responsibility to develop the models. They have been developed. I saw a draft of the four models a few weeks ago. Some further changes are being made to them. We will then start a consultation process, and I'm meeting with staff in the next week or so to set in place that consultation process, so that we ensure that we consult widely and get the views of various constituents on the models. From that I hope to come to a consensus, if we can, as to the best way to proceed, Mr. Myers.

Mr. Lynn Myers: Mr. Chairman, it seems to me that those four models are something this committee should take a look at. I'm sorry, I have to leave for another meeting, but I would ask that perhaps that be provided. It seems to me that's something that we as a committee would be interested in.

The Chairman: Absolutely, Mr. Myers.

Mr. Colin Potts: Mr. Chairman, I think I can say that on the draft of the constituents we have to consult with, this committee is already there.

The Chairman: We're part of your constituency.

Mr. Colin Potts: Yes, so as far as I'm concerned, we are definitely prepared to come back to this committee at the appropriate time. But I need to do some internal consultations first. Obviously the Auditor General will be a part of that process as well.

The Chairman: Okay, that's good to hear indeed.

Mr. Colin Potts: Mr. Chairman, I think that basically completes the presentation.

The Chairman: Thank you, Mr. Potts.

Before we get into some general questions and debate about the issue, again I would like to recognize our guests from Kenya. As I mentioned earlier, the delegation is led by the Honourable Omino, the Deputy Speaker of the House of Commons in Kenya. I'd invite him to make a few remarks to our committee, if he would feel free to do so.

Mr. Joab Omino (Deputy Speaker, National Assembly of Kenya): Thank you, Mr. Chairman.

We are a delegation of members of Parliament from the Kenya National Assembly. We've come here principally to learn about your committee system because we are ourselves introducing a committee system in our working system in Kenya. We thought that a country like Canada, which shares with us many things in common, would be a good place for us to go and learn about how a committee system works.

We have members here who are chairmen of various departmental committees in our Parliament, and chairmen of two of our most important committees, the public accounts committee, David Mwiraria, and the public investments committee, Mwangi Githiomi. Really, without stealing their thunder, I will let David Mwiraria speak about his committee.

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The Chairman: Very good. Since this is a subcommittee of the public accounts committee, and Mrs. Wayne and myself are members of the public accounts committee, I think it's only appropriate, Mr. Mwiraria, that you say a few words. So welcome, and we look forward to what you have to say.

Mr. David Mwiraria (Member of Parliament for North Imenti, Democratic Party of Kenya): Let me add my words to those of the leader of our delegation in thanking you for giving us this opportunity to come and observe first-hand how your committee works.

Our public accounts committee has been a very active committee over the years, and it's been traditionally led by the leader of the official opposition. But my chairman, the Honourable Mwai Kibaki, who is the leader of the Democratic Party and the leader of the official opposition in Parliament, couldn't come. So as his deputy, I'm here really to deputize for him.

In our context, the public accounts committee deals with the audited reports prepared by the comptroller and the auditor general. By the time the reports get to the committee, they are historical in nature. During the last financial year—that is 1998-99—the public accounts committee dealt with a report for the financial year 1995-96. That's two years out of date. This August we propose to deal with the report for 1996-97.

Since you have a representative—is it a representative or the comptroller and auditor general?

The Chairman: It is the deputy comptroller general of the Government of Canada, yes.

Mr. David Mwiraria: Maybe he could tell us how up to date his reports are so that we can bully our team in Kenya and get them to do a little better.

The Chairman: Mr. Potts, since your signature appears on the financial statements, perhaps you can tell us a little bit about them.

Mr. Colin Potts: The financial statements—and we have a copy of the financial statements here—

The Chairman: I think it's appropriate that we make a copy available. I'll ask our clerk to make sure that you get a copy of the financial statements, a copy of the most recent Auditor General's report, and I think one or two reports on the public accounts committee that we table in the House so that you can take these back with you. I think it would be appropriate that we give these to you.

Mr. David Mwiraria: Maybe I should just make one other comment before I get that reaction.

Our second problem is that each year we look through the audited accounts, the financial statements. We interview people, the government officials involved, and we make recommendations as a committee. Unfortunately, we don't get our recommendations implemented. Some are implemented. Others, which we may consider important, are not implemented. Do you have this problem here in Canada? If so, what—

The Chairman: We've been known to have that frustration, haven't we, Mr. Potts?

Mr. Colin Potts: I'm not sure if it's a frustration, Mr. Chairman. We've had differences of opinion, I think.

Mr. David Mwiraria: We've come here ready to learn, to see how your system works, to see what we can borrow from it, and to see by and large whether you have established a system that enables the committees to get their reports implemented by the government, because most of the reports would then be useless unless we get them implemented.

• 1625

In Kenya at the moment we've only had the departmental committee. The committee has been working for a year, and we are trying to address subjects that we think are of direct interest to the government, to the various ministries, and in this way we are getting cooperation from the ministers.

When bills come to the House, we give the committees an opportunity to discuss them before they go to second reading in Parliament. In this way some of those are being heard, but in the case of the public accounts committee, I was particularly interested in getting timely reports and implementation of recommendations.

Thank you very much for having us.

The Chairman: You're welcome indeed.

Mr. Potts, do you want to tell Mr. Mwiraria about the preparation of the financial statements and the timeliness of them and so on? Then I'll cover off the Auditor General's reports and the public accounts reports in the House.

Mr. Colin Potts: I'd be happy to, Mr. Chairman.

First, just let me say there's an important distinction between our two countries. In Canada the Comptroller General and the Auditor General are two separate individuals, and that's important to note. The Comptroller General is like the chief accountant perhaps and is responsible for preparing the financial statements of the Government of Canada, along with the Receiver General.

The Auditor General plays a very important role and is quite impartial in the actual preparation, but provides an opinion on the financial statements and therefore is independent of the actual preparation, theoretically. That's an important distinction to make.

Our fiscal year-end is March 31, so March 31, 1999 has passed. We're in the process now of preparing the Public Accounts of Canada, looking at our schedule, and based on prior years... For instance, last year the March 31, 1998 financial statements were completed in the summer. The Auditor General signed his opinion on the financial statements on July 27, so that's four months after the year-end. Then there's the printing, and they're tabled in Parliament generally in late October, early November at the latest.

We do have a legislative requirement to have the public accounts completed and tabled before December 31 of the year following the March 31 year-end. So the maximum timeframe we should be taking really is nine months. The statements are generally completed by late summer, and it's a couple of months later before they're tabled.

Mr. Chairman, we're moving to new financial systems, and our object, our hope, is that we can speed up that process and get these financial statements tabled in Parliament sooner rather than later.

I think that's the basic process and timing for preparation.

The Chairman: Okay. I would just again reinforce what Mr. Potts said, that he, as the chief accountant of the government, has the responsibility to prepare the financial statements. The Auditor General is not a civil servant. He is an officer of Parliament, appointed by Parliament, and he reports directly to Parliament. He is therefore completely and totally separate from the government as such. He is charged with the responsibility of auditing the financial statements, giving an opinion on the financial statements, which is included in the published documents when they are tabled in the House of Commons in late October or November.

This is part of what we call the integrity, to ensure that we have integrity in these financial statements.

The Auditor General is appointed by Parliament and reports to Parliament. He is not a public servant in the sense that he is working for the government, and therefore he is impartial.

We hold usually one public meeting a year in the public accounts committee dealing strictly with the financial statements. The rest of the time the public accounts committee deals with other reports by the Auditor General, which is in the area of what we call value-for-money auditing, and we will give you a copy of his latest report to take back with you. He looks at various issues.

Just a couple of weeks ago we looked at, for example, an initiative by Revenue Canada where they hired 1,000 auditors to try to ensure that taxes were not being lost and were being properly reported. We were looking at how efficient that initiative was.

• 1630

This afternoon we were being briefed by the Auditor General's office on an issue of intercollaborative arrangements between the federal government and provincial governments in the delivery of the national child benefit, which he has tabled a report on, and we are going to be talking about that next week.

When the public accounts committee meets we have the Auditor General as a witness before the committee. He is not an assistant to the committee; he is here as a witness to answer questions. We also have the department involved; for example, National Revenue, when we're dealing with taxation, is there to answer the questions. Sometimes Mr. Potts is here as a representative of the Treasury Board when we're dealing with the financial statements.

So we have the witnesses here to answer the questions of the parliamentarians, who are aided by two worthy assistants from the Library of Parliament. They are our research staff, Mr. Brian O'Neal and Jean Dupuis, and our clerk, Jacques Lahaie, who assists us in the committee.

After we have heard the witnesses and have the testimony and the Auditor General's report, we prepare a full report for Parliament. It is debated by the government members, who sit on this side, and the opposition, who sit on that side. I am from the opposition, as the chairman. That report is tabled in the House of Commons, and it requests that the government respond within 150 days to the recommendations we make.

Sometimes we have the departments respond directly to us. If we find these responses are not satisfactory, we write a letter to them saying we expect more. More and more of our reports are requiring that they respond to the issues we raise through a new document called the performance documents. Every department has to table in the House of Commons every fall, for the year ending March 31, the performance document, their own self-appraisal of their performance for the year. For issues raised by the public accounts committee, we expect to find those addressed in their performance documents.

That's the process by which we, the public accounts committee, hold the government accountable. We hear the testimony. We hear from the Auditor General. We table a report in the House of Commons. We demand a response. If we don't like that response, we follow up on it even more.

I think the Auditor General mentioned that about 60% of our recommendations are being adopted. So I think the public accounts committee has a real responsibility, as part of the integrity and accountability process, to ensure that the government is focused and efficient.

That kind of gives an overview. Today we're dealing with a subcommittee, trying to ensure that we are focused on financial statements, financial rules and regulations that bring us to the forefront of the world, and to perhaps help countries such as yourselves.

So we're so glad that you're here this afternoon to see the process we have, where we have people like Mr. Potts, who does a wonderful job on behalf of the Government of Canada, to prepare these financial statements. We spend $160 billion a year. I'm not sure if Mr. Potts counts all of it himself—

Mr. Colin Potts: No.

The Chairman: —but he keeps track of it. So that's what we're talking about this afternoon.

Are there any other questions? The gentleman down here, were you going to ask a question, or did you want to make a statement?

Mr. Mwangi Githiomi (Member of Parliament for Kipipiri, Democratic Party of Kenya): No, I didn't want to make a statement. I just wanted to add my voice to what the leader of the delegation and my colleague on the public accounts committee have said in thanking you. I would also like to thank you most sincerely for giving us this opportunity. This is my first opportunity to be in the Canadian Parliament, and it is good for me.

• 1635

Public investment deals with public corporations, and at one time there used to be public accounts. Then public accounts was split into two: public accounts and public investment. In public investment we deal more with the accounts of the auditor general's corporations, and this time around, unlike what there is in Canada, the auditor general's corporations... he is a civil servant within the public service, and the comptroller and auditor general, who also does the accounts for the public accounts, is also a civil servant. So we look into the way the public corporations go about their businesses and whether they deal with their day-to-day activities in accordance with prudent commercial practices. Then we do a report at the end of about seven months and take it back to Parliament for adoption.

One major problem, as the chairman of the public accounts committee has told you, is that at the adoption of the report, the implementation of the report is another issue at times. Part of it is implemented, and there are times when some of the report is not implemented, after working on it for a whole year. I think it's a problem that we in Parliament are trying to address, to see to it that these reports are implemented, because without implementing them... there's no point in wasting government funds and actually sitting for a whole year, writing a report, a very good report, which can go a long way to assist the government to save money, which is sometimes misappropriated, just like we have in every other government.

So this is an issue that we are looking into, but basically these are the operations of the public investment committee. It has everything to do with the accounts, just like the public accounts, except the public accounts deal with government ministries and the public investment deals with public corporations. Most of them now are being privatized, so probably in another five years the public investment committee is not going to be very busy. As it is now, we've been very busy.

I warned the chairman last session, and I was re-elected as chairman, so I can rightly say that it is very busy at the moment.

Thank you very much, Mr. Chairman.

Mr. Joab Omino: Mr. Chairman, what's your quorum?

The Chairman: Because we are a subcommittee, we're pretty relaxed on our quorum. There are seven members of this subcommittee, and the concept is to hear the testimony. As I say, the focus is on gathering the best practices around the world and to make sure we are doing what we can to have them implemented here in Canada. Once we have assimilated that information, we find out if there's any way we can help other countries, such as yourselves, to implement best practices, good governance, to ensure integrity in your financial statements and in your processes so that your people are well served.

Our quorum is for testimony, once we get the committee started. Some people come and leave, and as you can see, we have nobody left here at the moment. In order to make motions, we need a minimum 50%.

Mr. Potts, it's you and me. I'm not sure if Mrs. Wayne's absence is temporary or permanent.

• 1640

I think you've given us an excellent presentation this afternoon about where we are as far as the Government of Canada is concerned. I personally would like to see us move a little bit further and faster in the accrual accounting. From there we get on to accrual budgeting and accrual appropriations. In 1989, I think, we made the commitment that we'd move in that direction, and we're getting there—I know we're getting there—but perhaps a little bit more speed would be advantageous.

There are two things. When we move to accrual accounting—maybe you haven't had a chance to take a look at all this yet, but I understand there's going to be a fairly significant change to our debt position, because we're bringing other assets into the financial statement. Give us an explanation of how this will affect our debt situation.

Mr. Colin Potts: It will affect it with the net debt number, Mr. Chairman, because we will be bringing it onto the assets. The balance sheet for the Government of Canada now, the statement of assets and liabilities, as you're aware, only includes the “financial assets”. We will be adding to those assets the non-financial, such as the land, buildings, and other capital assets owned by the Government of Canada. It will be a one-time entry to record those as an asset. The estimated value at this stage is in the $40 billion to $50 billion range. The offsetting entry, because we're moving to double-entry accounting, will be to reduce the accumulated deficit or the net debt. It's often referred to as the net debt.

The Chairman: We'll still have our financial debt there as a number on the financial statements, which is the actual debt instruments outstanding.

Mr. Colin Potts: The debt instruments that are outstanding—that number will not change.

The Chairman: Aren't you going to set up an equity line for the people of Canada?

Mr. Colin Potts: We have an equity line in effect now, Mr. Chairman, and that is the accumulated deficit of some $579 billion.

The Chairman: Okay.

Mr. Colin Potts: That's the number that will change. The actual total liabilities number, the interest-bearing debt that the government has at the present time, at March 1998, was at $467 billion. Add to that the regular accounts payable and accruals, the pension debt, which is completely financed within the financial statements—the total liabilities were some $638 billion. That number, in effect, won't change, except for any annual debt reductions for various means, etc., or whatever happens, but the accumulation deficit obviously is that shareholder equity deficit line that you're perhaps accustomed to seeing in private sector financial statements.

The Chairman: The negative equity.

Mr. Colin Potts: Negative equity.

The Chairman: Unfortunately, that's the situation we're in at the moment.

I'm going to interrupt again, Mr. Potts. I understand our delegation has to leave us. Again, on behalf of the Parliament of Canada, I'd like to say welcome, and I do hope we are able to offer you some assistance.

As I said, our clerk will ensure that you have a copy of the Auditor General's report, the financial statements, and a report of the public accounts committee to the Parliament of Canada. We thank you very much for coming to see us. We wish you a pleasant stay in Canada.

Are you going back to Kenya after this, or are you moving on to somewhere else?

Mr. Joab Omino: The rest of the delegation is going back to Kenya. I will be going to Egypt.

The Chairman: We wish you bon voyage.

Mr. Joab Omino: Thank you very much.

The Chairman: Again, my apologies, Mr. Potts, for the interruption.

Mr. Colin Potts: No problem.

The Chairman: I can see you're not going to be inundated by questions this afternoon.

Mr. Colin Potts: Some of the toughest questions always come at the end of the hearings, Mr. Chairman.

• 1645

The Chairman: So we're going to record the value of assets, land assets, building assets, and so on. The government has a myriad of assets—national parks, etc., just to name something. Are we going to be able to evaluate these, or will they just be in nominal sums?

Mr. Colin Potts: I don't have an answer for you on that one, Mr. Chairman. That's still an issue. There are a lot of those assets, not just parks. I'm thinking of the rest—museums, collections, etc. I suspect we will come up with a nominal value on those.

The Chairman: Yes.

Once we get to the financial statements on an accrual basis, then we move to the next step, accrual budgeting and accrual appropriations. At this point in time, when we have expensed buildings as we have acquired them, obviously programs are being run from these particular buildings and the cost is not being built into the delivery of that particular program. In the private sector, of course, overhead is very much a part of a profit centre, its revenues and its costs, so we can determine the actual profit or loss of any particular profit centre. I use programs as somewhat of the equivalent of a profit centre in the government. In a program delivery are we going to be able to find that our programs are much better costed than they have been in the past?

Mr. Colin Potts: I certainly hope so, Mr. Chairman. I think the benefit we hope to gain from moving to full accrual accounting, and particularly with improved financial systems and financial information in departments, is a better costing of government operations and government programs. We'll be linking that with the full performance reports so that we have some integrated reporting on results and the cost of those results. That's perhaps the ultimate. How far we get and when we get there will take some time.

The Chairman: You don't have a timetable?

Mr. Colin Potts: We have a timetable of April 1, 2001 of moving to the departments. Within that timeframe, soon after, we need to work with departments in terms of ensuring that the additional information they then have within their departments through the new systems being put in place... they will then start costing of programs. I don't believe we're going to get the ultimate results immediately. It may take another one or two years.

The Chairman: So we're talking only one or two years; we're not talking ten years.

Mr. Colin Potts: I would hope we're not talking ten years, Mr. Chairman.

The Chairman: Okay.

Once we're into the full costing of programs—overhead, administration, and so on—as well as the cost of funds delivered through the program, will we be able to move into some kind of consistent evaluation process to determine focus, efficiency, productivity, results gained, and so on from these programs?

Mr. Colin Potts: I think that may well depend on the nature of the programs, Mr. Chairman. There are evaluation processes in place now within the program evaluation field for evaluating the effects and the results of various government programs. I think what's going to happen is that process will continue, but we'll have additional information, particularly financial information, and better financial information, to assist in that process.

The Chairman: We learned from the Australian and New Zealand experience—and I'm thinking more about the New Zealand experience, where they have this very distinct separation relationship between their minister as a political person and the CEO of the department, the deputy minister. They have a very clear agreement as to what is expected from the department and at what cost. From a management perspective, are we going to start using these financial statements, now that they're going to be prepared on a full accrual basis, to hold the senior managers accountable for productivity, efficiency, focus, and so on?

• 1650

Mr. Colin Potts: It's an issue that really hasn't had a lot of exposure or discussion, Mr. Chairman, within the very senior levels. I think the direction we've taken with the performance reporting and linking those results to the plans and priorities documents of departments is moving in that direction. I'm not sure we'll go quite as far as New Zealand has gone, where, as I understand it, there is actually a signed document between the minister and the deputy head, but there is a movement in that general direction.

The Chairman: The key is that once we are in command of information on a consistent basis, we use it from a managerial point of view as much as we can. You are evolving, as you said, standards and policies regarding the preparation of these financial statements. I would hope we would then continue to evolve managerial standards in the use and evaluation of these financial statements to provide comparative analysis, one department versus another, regarding overheads, administrative costs, and so on. It's going to be a lot easier than today. If somebody is occupying rented space and has a rental payment and somebody else has fully owned government space, then obviously the cost of delivering these programs is skewed because one has a rental cost and one is living in free space. So we're going to be applying an imputed rent cost, I would imagine, for all properties we own.

Mr. Colin Potts: There are discussions underway now, Mr. Chairman, with the real property services, the Department of Public Works, on the rental issue and the imputed rent question. That's certainly on the table.

The Chairman: You mean it hasn't been decided yet?

Mr. Colin Potts: To the best of my knowledge, it's not a final decision. I know it has been looked at in certain departments.

The Chairman: You mean there's a possibility we wouldn't be charging imputed rents to those people occupying properties fully owned by the government?

Mr. Colin Potts: It's my understanding that a final decision hasn't been made, but certainly I know in some departments those calculations have been done, Mr. Chairman.

The Chairman: From my perspective, I'd certainly want to see it done.

Mr. Colin Potts: It's a matter of how far we're going to go as a government in the allocation of costs. We could use the same argument with respect to interest. You have a notional capital account that departments are employing; therefore, should there be a notional interest charge passed from the centre to the departments? It's on issues such as that that we've got to firm up our policies.

The Chairman: I had the opportunity of going through the parliamentary centre, which organized the Kenya delegation. Through the Parliamentary Business and Labour Trust, I had the opportunity of visiting the executive offices of a large bank here in Canada, whose capacity to measure was really quite astounding. They had a guiding philosophy: if you don't measure it, you can't manage it. And they measured virtually everything. By the 15th of the month they had the results from every branch on a financial basis. They could manage by exception. They could point to and see which ones were lagging behind. They could start to focus their attention on what was going on there.

As you know, banks are focused, efficient, and productive because that's the nature of the game. I would have thought that, moving into the accrual accounting basis, the double entry, and the financial statement, we would want to take full advantage of that, and I'm surprised we aren't.

Mr. Colin Potts: As I indicated, Mr. Chairman, the final decision has not been made. Certainly that issue has been discussed, and I know in some departments there have been calculations made as to the impact of it. It is an issue. It can be done now, but it has not been implemented.

The Chairman: Unless you've got something else to add, Mr. Potts, I think we will bring the meeting to a close.

Mr. Colin Potts: I have nothing further to add, Mr. Chairman. I'd be happy to remain here and respond to any further questions you might have, sir.

• 1655

The Chairman: No, I think that gives me a clear opinion of where you are. I think the committee wants to encourage you as much we can to move as fast as you can, not just to accrual accounting, but onto accrual budgeting and accrual appropriations. I would like to see the day when Parliament has the plans and priority statements where we can see programs offered by the Government of Canada to the people of Canada on an overhead administrative cost, the full cost of each program set out in a financial statement basis so that we can compare it year over year. On a cash basis, as you know, it's not too easy to really understand, from an overview point of view as a parliamentarian, what's going on in these programs.

I think we will want to re-examine the presentation to Parliament on the plans and priorities, the old estimates documents, the way they are presented to Parliament. I think we will want to take a look at that and expect that to be revamped along a more financial statement basis.

Mr. Colin Potts: If I can respond to that, Mr. Chairman, the revamping of the financial information and the plans and priorities documents is tied into the issue of the accrual appropriations.

The Chairman: I know.

Mr. Colin Potts: We will be addressing that issue at that point in time.

The Chairman: As I say, we want to encourage you to move fast on that one.

Mr. Colin Potts: Sir, I am getting a lot of encouragement from other quarters also to move fast. I'm under tremendous pressure to get the accrual accounting implemented. It will be physically impossible for us to do it before 2001. The systems implications are significant. We have been running with the new systems as part of the Y2K issue as well, which you're very familiar with. It will be impossible for it to happen before then. We're doing the best we can.

The Chairman: I have one final point. Are you keeping best practices around the world? You mentioned international organizations that we participate in. Other countries obviously are participating in these organizations as well. Are the nations moving forward somewhat in tandem, or are we finding that maybe the fully developed countries, Europe and North America and so on, are way at the forefront? Of course, we must include Australia and New Zealand in that too. Are they way at the forefront and the rest are lagging behind, or is the whole world tending to move forward? We just heard our colleagues from Kenya say they would want to improve their position. Is everybody wrestling with this issue and saying what can we do to improve it?

Mr. Colin Potts: I think a lot of countries are wrestling with this issue, Mr. Chairman. I think certainly the U.K., the U.S., Australia, New Zealand, and Canada I would put at perhaps the forefront. Iceland is another one. In other European countries it seems to be quite mixed. I've demonstrated today that Germany is still on a cash basis, and I'm not sure there's any movement there. This issue has been raised and discussed at OECD meetings. I think that is an organization that could perhaps assist in moving ahead with better financial reporting through encouraging nations to adopt the accrual basis.

Certainly in the countries that have attended our annual colloquium, and I'm looking at Mexico, China, Spain, Turkey, France, Sweden, they are interested in developments, particularly within North America, and are looking to follow the lead we're setting. That's the basis on which we have garnered the information we have from wherever we can.

You mentioned benchmarking. That's somewhat difficult. I believe at the present time, as I said, through the informal contacts we have and the informal networks, we are attempting to establish where we stand on our policies vis-à-vis other countries. I think we've got a fairly good sense of that with other major partners we have. We'll continue to monitor developments.

• 1700

The Chairman: Thank you Mr. Potts. Thank you, Mr. Morgan. We appreciate your coming here this afternoon and giving us the overview of where things are financially with the Government of Canada.

Mr. Colin Potts: Thank you.

The Chairman: The meeting is adjourned.