PACC Committee Meeting

37th PARLIAMENT, 1st SESSION

Standing Committee on Public Accounts

EVIDENCE

CONTENTS

Thursday, April 25, 2002

¹

1540

The Chair (Mr. John Williams (St. Albert, Canadian Alliance))

Ms. Beth Phinney (Hamilton Mountain, Lib.)

The Chair

Mr. Robert Bertrand (Pontiac--Gatineau--Labelle, Lib.)

The Chair

Ms. Sheila Fraser (Auditor General of Canada, Office of the Auditor General )

¹

1545

The Chair

Ms. Johanne Gélinas (Commissioner of the Environment and Sustainable Development, Office of the Auditor General)

¹

1550

The Chair

Ms. Sheila Fraser

The Chair

Mr. Michael McLaughlin (Deputy Auditor General, Office of the Auditor General )

¹

1555

º

1600

The Chair

Mr. Philip Mayfield (Cariboo--Chilcotin, Canadian Alliance)

Ms. Sheila Fraser

Mr. Philip Mayfield

Ms. Sheila Fraser

º

1605

Mr. Philip Mayfield

Ms. Sheila Fraser

Mr. Philip Mayfield

Mrs. Sheila Fraser

Mr. Philip Mayfield

Ms. Sheila Fraser

Mr. Philip Mayfield

The Chair

Mr. Gérard Asselin (Charlevoix, BQ)

º

1610

Ms. Sheila Fraser

Mr. Gérard Asselin

Ms. Sheila Fraser

Mr. Gérard Asselin

The Chair

Mr. Gérard Asselin

Ms. Johanne Gélinas

Mr. Gérard Asselin

Ms. Johanne Gélinas

Ms. Sheila Fraser

º

1615

Mr. Gérard Asselin

Ms. Johanne Gélinas

Mr. Gérard Asselin

Ms. Johanne Gélinas

Mr. Gérard Asselin

The Chair

Ms. Beth Phinney

Mr. John Bryden

Ms. Beth Phinney

Ms. Sheila Fraser

Ms. Beth Phinney

Ms. Sheila Fraser

Ms. Beth Phinney

Ms. Sheila Fraser

Ms. Beth Phinney

Ms. Sheila Fraser

Ms. Beth Phinney

º

1620

Ms. Sheila Fraser

Ms. Beth Phinney

Ms. Sheila Fraser

Ms. Beth Phinney

Ms. Sheila Fraser

Ms. Beth Phinney

The Chair

Ms. Sheila Fraser

Ms. Beth Phinney

The Chair

Ms. Beth Phinney

The Chair

Ms. Beth Phinney

Ms. Sheila Fraser

º

1625

Ms. Beth Phinney

Ms. Sheila Fraser

Ms. Beth Phinney

Ms. Sheila Fraser

The Chair

Ms. Beth Phinney

The Chair

Ms. Val Meredith (South Surrey--White Rock--Langley, Canadian Alliance)

Ms. Sheila Fraser

Ms. Val Meredith

Ms. Sheila Fraser

Mr. Michael McLaughlin

Ms. Val Meredith

Mr. Michael McLaughlin

Ms. Val Meredith

º

1630

Mr. Michael McLaughlin

Ms. Val Meredith

Ms. Sheila Fraser

The Chair

Mr. Gérard Asselin

Ms. Sheila Fraser

Mr. Gérard Asselin

º

1635

Ms. Sheila Fraser

Mr. Gérard Asselin

Ms. Sheila Fraser

The Chair

Mr. Alex Shepherd (Durham, Lib.)

º

1640

Ms. Sheila Fraser

Mr. Alex Shepherd

Ms. Sheila Fraser

Mr. Alex Shepherd

Ms. Sheila Fraser

Mr. Alex Shepherd

Mrs. Sheila Fraser

Mr. Alex Shepherd

Ms. Sheila Fraser

The Chair

Mr. John Bryden (Ancaster--Dundas--Flamborough--Aldershot, Lib.)

º

1645

Ms. Sheila Fraser

Mr. John Bryden

Ms. Sheila Fraser

Mr. John Bryden

Ms. Sheila Fraser

The Chair

Mr. Philip Mayfield

Ms. Sheila Fraser

º

1650

Mr. Philip Mayfield

Ms. Sheila Fraser

Mr. Philip Mayfield

Ms. Sheila Fraser

Mr. Philip Mayfield

Ms. Sheila Fraser

The Chair

Mr. Gérard Asselin

º

1655

The Chair

Ms. Sheila Fraser

Mr. Gérard Asselin

Ms. Sheila Fraser

The Chair

Mr. Robert Bertrand

Ms. Johanne Gélinas

Mr. Robert Bertrand

Ms. Johanne Gélinas

Mr. Robert Bertrand

Ms. Johanne Gélinas

Mr. Robert Bertrand

Ms. Johanne Gélinas

The Chair

Ms. Beth Phinney

Ms. Sheila Fraser

»

1700

Mr. Michael McLaughlin

Ms. Beth Phinney

Mr. Michael McLaughlin

Ms. Beth Phinney

The Chair

Mr. John Bryden

Ms. Sheila Fraser

The Chair

Mr. Joe McGuire (Egmont, Lib.)

Ms. Johanne Gélinas

Mr. Joe McGuire

Ms. Johanne Gélinas

Mr. Joe McGuire

Ms. Johanne Gélinas

Mr. Joe McGuire

Ms. Johanne Gélinas

Mr. Joe McGuire

The Chair

Mr. Philip Mayfield

Ms. Johanne Gélinas

The Chair

Ms. Sheila Fraser

»

1705

The Chair

Ms. Sheila Fraser

The Chair

Ms. Sheila Fraser

The Chair

Ms. Johanne Gélinas

The Chair

Ms. Sheila Fraser

The Chair

Mr. John Bryden

The Chair

»

1710

Ms. Sheila Fraser

The Chair

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CANADA

Standing Committee on Public Accounts

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NUMBER 050

l

1st SESSION

l

37th PARLIAMENT

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EVIDENCE

Thursday, April 25, 2002

[Recorded by Electronic Apparatus]

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[English]

    The Chair (Mr. John Williams (St. Albert, Canadian Alliance)): Welcome, ladies and gentlemen. Pursuant to Standing Order 81(4), the order of reference dated Tuesday, February 28, 2002, is as follows: main estimates 2002-2003, vote 20 under Finance, Office of the Auditor General; and part III, report on plans and priorities, relating to the 2002-2003 fiscal year.

    Our witnesses today are from the Office of the Auditor General: Ms. Sheila Fraser, the Auditor General of Canada; Mr. Michael McLaughlin, Deputy Auditor General; and Ms. Johanne Gélinas, Commissioner of the Environment and Sustainable Development.

    You also see on the agenda that, pursuant to Standing Order 108(3)(e), we intend to consider a draft report. However, as you know, we're going to deal with the Downsview Park report first, with the intention that we go on to others. I understand the Bloc members are at a conference and they have asked that the consideration of the other reports be deferred to another day. I think we should accede to that request. Are we all agreed?

    Some hon. members: Agreed.

    The Chair: Okay. So we'll only deal with the Downsview Park Inc. report today.

    You may have noticed we have Mr. Richard Rumas as our clerk today. Richard will be with us until the summer break.

    Ms. Beth Phinney (Hamilton Mountain, Lib.): Mr. Chairman, are we not doing the Auditor General's report?

    The Chair: Yes, but you'll see on the second page that we are doing draft reports. We will only do Downsview Park, after we've had our interview with the Auditor General.

    Monsieur Bertrand.

    Mr. Robert Bertrand (Pontiac--Gatineau--Labelle, Lib.): What's wrong with Ms. Sirpaul?

    The Chair: Oh, these Byzantine ways the House of Commons does things. I'll explain to you later.

    Ms. Fraser, do you have an opening statement?

    Ms. Sheila Fraser (Auditor General of Canada, Office of the Auditor General ): Thank you, Mr. Chair. We are pleased to be here today and would like to thank you for the opportunity to discuss our report on plans and priorities for this year, 2002-2003. We do welcome your views and suggestions on the orientation of the office.

    As you mentioned, I am accompanied by the Deputy Auditor General, Mike McLaughlin, and the Commissioner of the Environment and Sustainable Development, Johanne Gélinas. They will both be covering certain aspects of this presentation and of our report.

    We have noted in section three of the report that during my term as Auditor General the office will pay special attention to five areas. Those are accountability to Parliament; an effective public service; aboriginal issues; the well-being of Canadians, which includes our health, safety, security, and environment; and legacy and heritage. We have begun to develop a new strategic plan for the office that will establish a framework for directing how these focus areas will influence the audits and studies planned for 2003-04 and beyond, and we look forward to discussing that framework with the committee at a future hearing.

    This year we plan to publish a status report on follow-up work in September, the annual report of the Commissioner of the Environment and Sustainable Development in October, and finally, the annual report of the Auditor General in December. These three reports will contain more than 25 chapters, and of course tabling of these reports will depend on the parliamentary calendar.

    We have provided you with a handout that shows the list of chapters in our 2002 and 2003 reports. In the interest of time, I will not go through all of them. The work for these reports is well underway, but there is room for adjustment to our plans for the latter part of 2003. We would appreciate the committee's suggestions on issues we should consider in subsequent audits, and would be pleased to discuss any of the matters listed in the appendix to the statement.

    The committee may be interested in the work we are doing with our provincial counterparts. This is a special report to provide third-party verification of the September 2002 health indicator reports, as agreed to by first ministers in their 2000 communiqué on health. Each provincial auditor will also issue a separate opinion.

[Translation]

    This year, we will introduce a new kind of report. We are calling it The Auditor General's Status Report. It will be devoted entirely to assessing the progress departments have made in implementing our recommendations. The new Status Report will focus on a few key issues of continuing interest to Parliament and offer our opinion as to whether or not departments have made satisfactory progress. The first Status Report will be tabled in September and future reports will be tabled each spring, beginning in 2003. We hope that the Status Report will highlight the very important work that departments undertake to remedy any problems we raise in our audits. I believe it provides the final step in the auditing process—our audit work, reporting to Parliament, discussion of action plans in this Committee, departmental implementation, and this assessment of progress.

    In addition to this work, we will continue monitoring the implementation of recommendations. An annual summary will appear in the Status Report. This information, along with the chapters on departments' progress, will be a useful performance indicator of my Office.

    Over the past couple of years, we have made significant strides in identifying performance measures that are more focused on outcomes. Like other legislative audit offices, we are finding this effort to be an ongoing challenge. This year, we are surveying a number of parliamentarians to gain further insights on their expectations and to get their reactions to the work of the Office. We will use the results of this survey to measure how well we serve Parliament and to improve our operations. The results will appear in our 2002 Performance Report.

    We have talked about the work we do at the federal level. But we also have an international program that helps strengthen our legislative audit practice and enhances our reputation and credibility in Canada and abroad. We are the external auditors for UNESCO and ICAO, the International Civil Aviation Organization, both UN organizations, and conduct this work on a fee-for-service basis. Over the past two decades, Canada has become known and respected throughout the world for its expertise in legislative auditing. In 2001, we were honoured to receive the prestigious Kandutsch award from the International Organization of Supreme Audit Institutions, also known as INTOSAI. We have recently assumed two new responsibilities within INTOSAI: chair of its working group on environmental auditing and chair of a new sub-committee on the crucial issue of auditor independence.

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[English]

    We are also active in the north, as a legislative auditor for the three territories. We conduct annual financial audits of the territorial governments and related corporations and entities. We prepare broad-based audit reports for each territory. In addition, we are asked by territorial legislatures to undertake special examinations and audits from time to time. In fact, at present we have one underway in the Yukon and another one underway in the Northwest Territories.

    Turning now to the work of the Commissioner of the Environment and Sustainable Development, I would first like to provide further details on the mandate, role, and responsibilities of the commissioner.

    In March 1995 the Minister of the Environment asked the House of Commons Standing Committee on the Environment and Sustainable Development to consider how an environmental auditor general could be established to ensure that the government carried out its actions in sustainable ways.

    The standing committee recommended the establishment of a commissioner of the environment and sustainable development, and in 1995 amendments to the Auditor General Act created that position. The amendment also established that ministers would be responsible for the preparation of departmental sustainable development strategies.

    Mr. Chair, with your permission, I would like to ask Johanne Gélinas to brief you on the activities of the group of the commissioner for the upcoming year.

    The Chair: Thank you.

    We'll now turn to Ms. Gélinas.

    Ms. Johanne Gélinas (Commissioner of the Environment and Sustainable Development, Office of the Auditor General): Thank you, Mr. Chair.

    As part of the Office of the Auditor General, I provide objective independent analysis and recommendations to members of Parliament for their use in examining the federal government's performance and holding it to account for their performance. More specifically, the commissioner has responsibilities in four main areas.

    The first area is on audits and studies. We examine how federal organizations manage environmental and sustainable development issues. We have audited issues such as ozone layer protection, climate change, and urban smog.

    The second area is monitoring of sustainable development strategies. We monitor and report on the extent to which departments have implemented the action plan and met the objectives of their strategies.

    The third area is petitions. The commissioner receives petitions on environmental and sustainable development matters that are the responsibility of federal departments and agencies, and monitors the government's responses to them. I encourage Canadians to use this valuable tool, and invite members of Parliament to encourage its use by their constituents for environmental and sustainable development concerns.

    The fourth area is reporting. The commissioner reports annually to the House of Commons on these and other matters related to the environment and sustainable development that she believes should be brought to the attention of the House.

[Translation]

    The theme of my annual report this year, to be tabled in October, is the progress the government is making toward sustainable development. My staff is examining five issues. The first one is invasive species. How does the federal government manage species that invade and disrupt Canadian ecosystems? Next are federal contaminated sites. Has the government made meaningful progress in managing its contaminated sites since our audits in 1995 and 1996? Another issue is northern abandoned mines. How has the government managed contaminated sites resulting from abandoned mines in northern Canada? My staff is also looking at the issue of toxic substances. How has the government progressed in managing toxic substances since our 1999 audit? Finally, it is looking at sustainable development strategies. Are these leading to real changes in departmental policies, programs, and operations?

    My staff also assists in the special examinations of Crown corporations with important environment and sustainable development responsibilities, Crown corporations such as Via Rail Inc. and Atomic Energy of Canada Limited.

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[English]

    As the Auditor General mentioned earlier, our office has recently become the chair and secretariat of the INTOSAI working group on environmental auditing. This working group, composed of auditor general equivalents from around the world, has a mandate and objective to promote the global adoption of environmental auditing. In the coming years the working group will be providing guidance on how to conduct environmental and sustainable development audits, developing training programs, conducting regional and global audits, and building relationships with other international organizations.

    I will be pleased to answer any questions the committee members may have. Thank you.

    The Chair: Thank you very much indeed.

    Ms. Sheila Fraser: Mr. Chair, if I can just continue for a couple of seconds before I hand it over to Mr. McLaughlin, I'd like to talk about our funding situation.

    As you may recall, last April we indicated to your committee that we had requested from the Treasury Board Secretariat a permanent increase of 15% in our base budget. This increase was required to provide sufficient resources for our value-for-money work, audit methodology, technology, and intellectual capital. We are pleased to report we have received increased funding for 2001-02 and 2002-03.

    As reported by the Treasury Board Secretariat in their response to this committee's eighth report:

    “At the time that the Auditor General's funding request was approved, ministers also authorized TBS to undertake consultations with the Office of the Auditor General that are to lead to a process for determining future years' funding requirements for the office. This process will respect the independence of the Auditor General and its mandate to audit government programs and activities.”

    We are waiting for government officials to develop a study paper on this matter. We are concerned about the progress made to date--or I should say, perhaps, lack of progress made to date--and hope the secretariat will take the necessary steps to ensure that this matter is resolved fairly soon.

    Now I'd like to ask Mr. McLaughlin to give you an overview of the subsections on resources, outputs, and operational processes in section three of our report on plans and priorities. Then we will be happy to answer any questions the committee may have.

    The Chair: Thank you, Ms. Fraser.

    Mr. McLaughlin, we'll now turn to you.

[Translation]

    Mr. Michael McLaughlin (Deputy Auditor General, Office of the Auditor General ): Thank you, Mr. Chairman.

    I will refer to our Report on Plans and Priorities itself and page numbers and will refer to the numbers in the French version as well so everyone can follow.

    I would like to start by highlighting some of the financial aspects of our Report. On page 14, we see the planned spending for 2001-02 to 2004-05, with 2001-02 being a forecast year that we just completed and 2002-03 the year we are entering that is under consideration.

    The first line provides the expenditure plan of the Office. As mentioned by the Auditor General, we received a 15% increase ($8 million) to our base budget for 2002-03. This increase is not reflected for 2003-04 and 2004-05 in the exhibit.

    With Public Works and Government Services Canada, we are renovating the current office space for the employees of our Ottawa office. The cost for furniture, fixtures, and equipment is estimated at $3.5 million, and the Treasury Board has provided $3 million of this amount through special funding.

    We are also showing a forecasted lapse of $2 million for 2001-02 and a carry-forward of the same amount for 2002-03. This represents spending that was originally planned for work to be done in 2001-02 and has been deferred to 2002-03.

    The costs of services received without charge of $8.8 million include the accommodation charges allocated by Public Works and Government Services Canada and the insurance premiums paid by the Treasury Board Secretariat for employees benefits.

    The net cost of our program is planned at $78.6 million and the number of full-time equivalents at 570.

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[English]

    Exhibit 3.4 on page 14, page 15 in French, provides the planned spending by components of our business line for 2001-2002 and 2002-2003. The figures are presented on a fully loaded cost basis. All the costs incurred directly by the office are factored into the costing of office products.

    The exhibit is different from last year's. This year's figures are based on the net cost of the program, while last year's were based on the gross program spending. Essentially, we are now including the cost of services provided without charge.

    There are two significant variations between the two fiscal years in special examinations of crown corporations and in professional practice.

    Planned spending for special examinations is expected to double, from $2.1 million to $4.2 million. This is explained by the fact that in 2001-2002 we were near the end of the third cycle of special examinations. In 2002-2003 we will complete the last special examination of the third cycle and carry out the first eight special examinations of the fourth cycle.

    The other component with a significant variation is professional practice. The office is committed to continuous improvement to strengthen our professional practices. We are planning to increase spending in this area by $2.3 million. This was made possible through the increase in funding for 2002-2003. A large portion of the increased spending will go towards the advancing audit practices project that focuses on adapting and fine-tuning our methodology and electronic tool sets. We are acquiring electronic planning and audit tool sets, training, and methodology, and have worked with staff to prepare for the necessary audit practice changes that will result. This project should benefit both our financial audit and value-for-money audit products.

    Planned spending on the other product lines, value-for-money audits, financial audits of the financial statements of the Government of Canada, annual audits of crown corporations, territories, and other entities, and assessment of agency performance reports are essentially the same as last year.

    Table 5.2 on page 27, page 29 in French, shows $0.8 million in “non-respendable” revenue. This comes from charging UNESCO and ICAO for the audit work we do there. This work is done following our elections by member states of the respective organizations and supported by an order in council indicating this is in Canada's interest.

    Mr. Chairman, we pay close attention to planning and managing the cost, timeliness, and results of audits. We continue to refine our budgeting and planning process in order to use our resources effectively and efficiently. We set up budgets for all our audits. Similar to last year, we will publish the budgets, with actual resources used, later in our departmental performance report.

    We plan to conduct an employee satisfaction survey in 2002-2003. The survey will set a baseline in many areas of interest and concern to our employees, such as strategic leadership, people, products, and communications. We will use the survey results to measure and report our success and to improve office initiatives.

    Our major initiatives in human resources management for the office for 2002-2003 include renewing efforts to achieve a high level of bilingualism, training in new methodology, and balancing work and personal interest. As with other organizations, we are facing increased competition for people. We will be pursuing aggressive recruitment and retention strategies.

    We are excited about our planned initiatives to reinvest in our methodology, people, and tools. We want to ensure the office remains a centre of excellence in public sector management.

    Thank you, Mr. Chairman.

º  (1600)  

    The Chair: Thank you, Mr. McLaughlin.

    The clerk advises me that the estimates of the Office of the Auditor General, part III, plans and priorities, have been distributed to all members. It's the base document, facts, figures, and so on, of course, that we're going to be talking about today.

    Mr. Mayfield, you have eight minutes.

    Mr. Philip Mayfield (Cariboo--Chilcotin, Canadian Alliance): Thank you very much, Mr. Chairman.

    It's always interesting to come together and talk about the business of auditing and the Auditor General's department. Actually, the discussion began a few days ago in one of the papers, The Hill Times. I wanted to approach the Auditor General and her staff in talking about this perhaps independent and external view of the Auditor General's department and the work parliamentarians do.

    The article describes one of the country's leading experts on the federal government saying “It's unprofessional to expect MPs to keep track of $170 billion on annual spending”. I thought it was part of the job this committee was to do. Other parliamentarians and committees do much the same work.

    Ms. Fraser, is it unprofessional for me to assume the role of trying to keep track of government spending, as the article suggests?

    Ms. Sheila Fraser: Thank you, Mr. Chair.

    In response to Mr. Mayfield's question, I would hope that it is not unprofessional. I thought, actually, that this was one of the very important functions of parliamentarians. Now, I'm not sure exactly what the professor said. I have learned that journalists do not always report things totally with the same tone or sense that may have been reported to them. And I understand his criticism if he has the impression we are asking Parliament to go back to specific votes for specific projects, as was done many years ago, when you'd have a vote for the construction of a bridge. I think we all realize we are far past that. Things have evolved a lot over time, and that level of detail is probably no longer appropriate.

    The main issue, of course, that we were raising in the whole question of accountability is that parliamentarians should have the ability to question any expenditure made by government, and should be able to obtain that information. I'm not sure...the professor has not communicated with us, so we do not know what his point of view is other than to see it in the newspaper.

    Mr. Philip Mayfield: I take it you're a professional accountant and auditor. I've never made that claim for myself, but I do take interest in what you do, and I'm very interested in the reports. And on behalf of most of my constituents who are not accountants either, I take that seriously.

    But there is another aspect to this, too. The article mentions providing audits on $170 billion--I'm not sure where that number really comes from--and that it's beyond the ability of you and your office. I would like to have your comments on whether you feel your office is competent to do this. Do you feel your office needs to be audited? Which of your reports or chapters would you agree were misguided and unprofessional, or “poorly researched and based on subjective analysis”? Was it the chapter concerning the billions of taxpayers' dollars spent without parliamentary approval and scrutiny, for example? I'd like to hear your comments on that, Mrs. Fraser, if you would please.

    Ms. Sheila Fraser: Thank you, Mr. Mayfield, for the opportunity to discuss this article. I must admit, there were comments in there that deeply offended me and the people in my office. If someone makes a criticism of the kind of work we're doing, challenges some of our conclusions, or has a difference of opinion with us, I guess that's part of the game. But to qualify us as being unprofessional deeply offends me.

    Just for the committee's information, the people in my office, all the professional staff working on audits, have either a professional accounting degree or, as a minimum, a master's degree. Many of my people have been in the office for a very long time and have a good knowledge of the departments they are auditing. I am a professional accountant. I have 30 years of experience.

    I think we are subject to various reviews in our financial audits. We obviously have to go through the reviews of the provincial institutes of chartered accountants. We've had a peer review done of our financial audit practice.

    The criticism, I think, is aimed more at our value-for-money work. I would just add that whenever we do our value-for-money work, we agree on the criteria of the audit with the department that is being audited. We review all of our findings and validate the facts with the department. We also review with them the tone of the report. We publish their response to our findings, and we hold committee meetings. I would have appreciated it if the professor had given me that courtesy.

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    Mr. Philip Mayfield: Another question from this article was whether “a bunch of accountants and consultants” are capable of preparing a case that the Department of National Defence is not ready to fight a war. Could you comment on that please, Mrs. Fraser?

    Ms. Sheila Fraser: My comment would be that we put together statistics, which we compiled. We have been before this committee on that audit, and standing committees. The department agreed with our conclusions. I think it was evidence-based, factual. There was no judgment in there. It was a question of facts. We pulled the information together because the department did not have it. So I guess we have a pretty serious difference of opinion with the professor as to our abilities to do this.

    Mr. Philip Mayfield: The article also states that only 20% of your office's budget goes towards financial audits. Is this true, and, if so, where does the other 80% go?

    Mrs. Sheila Fraser: In fact, I would say that it's probably closer to 50% of our budget. When we talk about value-for-money audits, many of them are also financia-based. But if we look at the strict financial--in the planned spending on page 14--about $22 million is strictly financial.

    Then, of course, special examinations are a statutory role that we have to carry out. The environmental and sustainable development monitoring activities are also a statutory responsibility, as are assessments of performance reports.

    There is $36 million planned for value-for-money audits. But even in there, some of it deals with the implementation of accrual accounting and the rest of it. So I would estimate that probably about half of our work is statutory, including financial work.

    Mr. Philip Mayfield: The person who made these comments is someone regarded as credible. In your personal opinion, do you think it would be worthwhile to have this person come to the committee and discuss with us his serious concerns about our work and your work?

    Ms. Sheila Fraser: I would have no objection. I think it would actually be quite a good idea to have him come and explain.

    If he has really serious concerns about our work, I wish he would tell us as well. If he could cite an example of where he thinks we have been lacking, we're open to that kind of criticism.

    If the committee would like to do that, I would be most interested in your hearing.

    Mr. Philip Mayfield: We should try to set it up.

    The Chair: That's correct, Mr. Mayfield. We're now going to move on.

[Translation]

    Mr. Asselin, you have eight minutes.

    Mr. Gérard Asselin (Charlevoix, BQ): Mr. Chairman, my question is for the Auditor General. First of all, I wish to congratulate you on the report you have submitted to the committee this afternoon. It suggests that there is going to be quite a bit of work going on in your Office. We can see that the Auditor General is doing her job well, and this is reassuring not only to the government, but to all parliamentarians, both those in opposition and those from the party in power. My question is also directed at the environment commissioner.

    Will the requirements of carrying out all your various mandates leave you with time to inform the House of Commons about special mandates, such as the contract awarded to Groupaction by Minister Alfonso Gagliano? Will there be a public inquiry and will there be follow-up? Will the Auditor General get to the bottom of this particular issue, and any others that may be added along the way?

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    Ms. Sheila Fraser: Thank you, Mr. Chairman.

    As you know, the minister asked me to investigate three contracts and I agreed to do so. Given that I have full authority to examine any contracts that I feel it necessary to examine, I will not necessarily be limiting myself to these three. But given the interest in them and the need to conduct the investigation fairly quickly, we anticipate, as I indicated in the letter to the minister, that we will be submitting our report to him in early May. The minister has undertaken to table it in the House of Commons. I do not normally comment on files being audited. I would therefore prefer not to say any more for now.

    Mr. Gérard Asselin: The work is ongoing.

    Ms. Sheila Fraser: We will wait for the results. The minister has assured me that the report will be made public and tabled in the House.

    Mr. Gérard Asselin: Might I ask another question, Mr. Chairman?

    The Chair: Yes.

    Mr. Gérard Asselin: It is for Ms. Gélinas. It says in the report that, in March 1995, the Minister of the Environment asked the House of Commons Standing Committee on the Environment and Sustainable Development to consider how an environmental auditor general could be established to ensure that the government carried out its actions in sustainable ways. The standing committee recommended the establishment of a commissioner of the environment and sustainable development.

    At the same time as it is refusing to sign the Kyoto accord, the government wants to create an environment commissioner for the purpose of assuming its responsibilities and implementing its policies vis-à-vis the environment. Is there not a credibility problem here?

    Ms. Johanne Gélinas: Thank you, Mr. Chairman.

    It is not up to me to comment on the government's decisions, particularly as they relate to climate change. But I will point out to you that there was a chapter in my report last year on the government's progress with respect to climate change.

    Basically, we said that progress was not as rapid as we had hoped in order to address the problem of the increase in greenhouse gases. This is an issue we are going to be following up on in the years to come. I will therefore be able to give you results in terms of the government's progress in this area.

    As we mention in our report, the government has made a commitment to respect the Kyoto accord and, until there is proof to the contrary, that is what we are saying in our report.

    Mr. Gérard Asselin: In the same report, you indicate that you will have to ensure that federal contaminated sites are identified and that corrective action is then taken.

    What will happen when you have to report that the federal government is the polluter and that some of its sites are polluted?

    Ms. Johanne Gélinas: The contaminated site audit now under way us basically looking at contaminated sites owned by the federal government. Audits were done in the past. We will report on the progress made. All that I can tell you right now is to stay tuned, because there will undoubtedly be a very interesting chapter in store for you.

    Ms. Sheila Fraser: Mr. Chairman, may I add a comment?

    I think that the commissioner's project is an interesting one. She is working very closely with the groups of accountants working on the Public Accounts of Canada. You know that with accrual accounting, the government must treat contaminated sites and all the costs of restoration as liabilities. The group of accountants is working with the commissioner's group to identify sites and any liabilities associated with them, which would eventually, we hope, be included in the government's financial statements.

º  (1615)  

    Mr. Gérard Asselin: On the North Shore, specifically in Sept-Îles, the federal government used a substance to de-ice the airport runways. In so doing, it contaminated the water table of its infrastructure, which is the airport. The entire beaches area of Sept-îles was contaminated.

    Do you recognize the federal government's responsibility in this matter? Would you agree that the polluter pays principle should apply?

    Ms. Johanne Gélinas: The polluter pays principle has been endorsed by the government. I therefore assume that it is applied.

    Mr. Gérard Asselin: It should practice what it preaches.

    Ms. Johanne Gélinas: The site you mention is one of the sites for which the federal government is responsible, but there are many others. This chapter will attempt to give an idea of the scope of the problem and show how the federal government is managing it at the present time.

    Mr. Gérard Asselin: Thank you, Mr. Chairman.

[English]

    The Chair: Merci beaucoup, Monsieur Asselin.

    Ms. Phinney, you have eight minutes please.

    Ms. Beth Phinney: Thank you, Mr. Chairman.

    I have a lot of questions, and it's probably because I'm not an accountant nor an auditor.

    Mr. John Bryden: You're not a professor either, which is good.

    Ms. Beth Phinney: No, I'm not a professor either, and if I were I'm sure I wouldn't write comments like that.

    A few years ago we were talking about plain English. I think that was the expression we were talking about quite a bit because people couldn't read the reports. When you report to us, and the majority of the people in this room are not auditors or accountants, do you make any attempt to make this understandable to us and to the public, the majority of whom are also not accountants?

    Ms. Sheila Fraser: We have tried in the last year to move in our reports to using plain language. Our staff have had courses in plain language. We have an editorial staff who have also taken courses in it. I recognize that we probably have some way to go. Professionals tend to use their own jargon. We are trying to make an effort to get there, but we are in general trying to write shorter reports, clearer reports. But I do recognize that we tend to get into our own jargon sometimes.

    Ms. Beth Phinney: Thank you. When you say you're trying to write shorter reports, do you have in your mandate how many reports you can write a year? I'm asking this because I'm looking at your budget. You went from 55, 68, 78.6, then it seems to go down, but I'll ask for an explanation for that later. Could you decide that you're going to do 79 in the next year; that you're going to do 153 reports and have to triple your staff in order to do these reports, or to do less effective reporting? Who decides that?

    Ms. Sheila Fraser: We are limited, obviously, by the budget we have. The budget we have is determined, if you will, through a negotiation with the Treasury Board Secretariat, which is one of the issues we could perhaps discuss.

    Ms. Beth Phinney: Could you repeat that? Did you determine what you're going to study with negotiations with the Treasury Board?

    Ms. Sheila Fraser: We negotiate our budget through the Treasury Board Secretariat.

    Ms. Beth Phinney: The budget. I thought you were talking about what you're going to study.

    Ms. Sheila Fraser: More than half of our budget is statutory work. We have no choice but to audit the financial statements of crown corporations. This is an obligation on our part.

    The value-for-money work is discretionary. We can decide to do more or less within our budget constraints. I think we are probably close to an optimum level now, because we also have to look at the ability of parliamentary committees such as this to be able to deal with our work. So we're not proposing that we do more audits than we do currently.

    Ms. Beth Phinney: Before you brought your report to us did you have somebody else audit it?

º  (1620)  

    Ms. Sheila Fraser: This report is not really audited. It's submitted to the Treasury Board Secretariat, who review it.

    Ms. Beth Phinney: Do you have anybody who audits what you do, to make sure that you write up the books right?

    Ms. Sheila Fraser: Yes. This is a report on plans, so it's difficult to audit a report on plans other than to assure that the budgets and the form are correct and that we give all the information the Treasury Board Secretariat requires.

    When we come to our departmental performance report, we do have an audit. We have audited financial statements in our departmental performance report.

    Ms. Beth Phinney: Audited by an outside firm?

    Ms. Sheila Fraser: Yes, by an independent firm. This is the first time, and other than the Office of the Superintendent of Financial Institutions, we are the only government agency that does that.

    We had, as I mentioned, a peer review of our financial attest practice. We have audits inspections done by professional institutes for qualification and we are proposing to have an external review done of our office within the next couple of years.

    Ms. Beth Phinney: I can remember one committee when we were studying copyright. There were very few copyright experts in the country. They're lawyers usually, but there are very few of them, and when the committee studied it we had an expert on copyright law come in and advise the committee. We met each week before the witnesses came in and talked about it.

    I'm wondering, when we're auditing you, when we're checking or studying your estimates, if we would be advised to have somebody in here who would advise us on how we should be looking at your report.

    A voice: What about researchers?

    Ms. Beth Phinney: They're not auditors either.

    The Chair: We used to follow a procedure where, prior to studying a report and having a public hearing on a chapter, a member from the Office of the Auditor General would go through the report in camera, in essence off the record. We don't do that any more.

    Ms. Beth Phinney: That's not the same thing.

    The Chair: That's not the same as what you're talking about, but if you feel that prior to this annual meeting to study the Auditor General's estimates we should have an in camera meeting with somebody to go through the plans and priorities document, we can discuss that in the steering committee.

    Ms. Beth Phinney: I was just wondering what the Auditor General's opinion was of that.

    Ms. Sheila Fraser: I actually would think it would probably be helpful and a healthy process to do that. I think the better informed the committee is the better the challenge is, and I think if one of our values is to lead by example and if we're suggesting that you challenge departments, we should also be challenged.

    Ms. Beth Phinney: Because if we're better trained to study you, your department would be better trained to study all the comments you bring forward about the other departments.

    Do I have a little bit more time?

    The Chair: You have almost four minutes left.

    Ms. Beth Phinney: I see the budget, as I mentioned before, going from $55 million to $68 million. And then there's the one you were mentioning before on page 14, $68.8 million up to $78.6 million, and then it drops down to $64 million. I can't imagine when you get to $64 million I'm sure it's going to--I mean $90 million--

    The Chair: You're looking at paragraph 3.4, I believe, are you?

    Ms. Beth Phinney: It's 3.3 on page 14; it's $68 million to $78.6 million, then it goes down to $64.3 million. I'm surethat between those two times it will go back up again, but regardless of that, what's the main reason for going from $55 million to $68 million to $78.6 million? Is there any department in the government that takes a 25% increase from 2001-2002 to 2002-2003? And this is out of the main estimates. You've asked for a 25% increase.

    Ms. Sheila Fraser: I'd like to take us through this a little bit. The difficulty with these kinds of reports is that we really only present the authorities that have been given to us to date, the moneys that have been voted to us.

    We started with a budget of $55 million, then we received additional funding of $9.3 million, which was in part $6 million in additional.... We asked for 15%. Rather than getting $8 million this year, we got $6 million. Then we had increases for salary adjustments and all the rest of it, which are kind of a normal thing.

    Mr. Michael McLaughlin: And there was a carry-forward.

    Ms. Sheila Fraser: Yes, there was also a carry-forward from the previous year. So that's what's in that $9.3 million, which brings us up to $65 million.

    We often receive these authorities not at the beginning of the year, but partway through the year. Most of our expenditure is people, so we can't ramp it all up until we get the authority. We expect to have a lapse, or unspent money that we can carry forward this year, of $2 million. That brings our actual spending to $62.9 million, and then we have services without charge.

    If we go to the next year, what in fact the government has done is given us an additional authority of $8 million. Then there are the additional salary costs, so that brings us to $65.6 million.

    We have a special funding of $3 million for this space renovation. We're redoing all our offices. That brings us to $68.6 million. Then we carry forward the $2 million from the previous year. Basically, our money should be $68.6, our authority. We expect to have $2 million that we won't spend this year, which we will spend next year.

º  (1625)  

    Ms. Beth Phinney: Yes, but $78.6 million is not a....

    Ms. Sheila Fraser: Then we add in the services without charge--rent, employee benefits. Because our number of people is increasing, the employee benefits increase, and there's a paper charge for that. We don't actually have to pay cash for that.

    Ms. Beth Phinney: Why is it going down then from $78.6 million to $68 million?

    Ms. Sheila Fraser: What happens in the next year is that our authorities, our additional funding of $8 million, has only been approved to the end of 2002-2003. So our authorities fall back to $57.6 million, which is really the $55.6 million of the first year plus an increase in some salaries that has been approved. That's the process we are in now. We've asked that this $8 million become permanent.

    There was to be a review mechanism set up as to how the budget of the office would be determined. My predecessor indicated he was uncomfortable with the way we had to go through Treasury Board Secretariat to basically negotiate funding. At times it took us over a year to get a yes or a no, and we're sort of in the same situation again. So if that $8 million is approved, it would be the $65.6 million that continues.

    I hope that makes it a little bit clearer.

    The Chair: I hope that answers it all, Ms. Phinney, because you're out of time.

    Ms. Beth Phinney: Oh, yes.

    The Chair: Ms. Meredith. We're on the second round, so it's four minutes.

    Ms. Val Meredith (South Surrey--White Rock--Langley, Canadian Alliance): Thank you, Mr. Chair.

    I have a couple of questions. One, the Treasury Board has a guideline for internal audits. Does your department or your commission have these internal audits that are expected of other departments?

    Ms. Sheila Fraser: Yes. In fact, we do have an audit committee, which has an external person chairing it, so it is not simply people from within the department.

    In the past we had a group that would do internal audits within the office, but it was a very small group. In most cases we will give out contracts to have people come in to audit. The last one we did was on our contracting. The results of that audit are on our website.

    Ms. Val Meredith: Do these outside audits come up with recommendations of how you can do things more efficiently, better, etc.?

    Ms. Sheila Fraser: Yes. I'd perhaps ask Mr. McLaughlin to talk about the last one we did.

    Mr. Michael McLaughlin: We actually had a fairly good result from the last audit. They found that the procedures we used for contracting were quite good. The recommendations were very technical in terms of how we should proceed with getting contractors on our availability lists and making sure that when contracts came in, we challenged the contracts more thoroughly before we signed them so that amended contracts didn't go beyond the sole-source limitations as provided by government contract regulations. So there were very technical kinds of things.

    Ms. Val Meredith: On that issue of contract availability, how many available contractors would you have on your list, and how do you select them? What is the process for picking a few people who are available for contract purposes?

    Mr. Michael McLaughlin: Most of our contracts are less than $25,000.

    We will announce the larger contracts through Public Works using the MERX system. So any contractor who would like to bid would be able to see this through the Public Works system.

    For the smaller contracts, we maintain an inventory of contractors, and the contractors have access to this to be able to maintain an up-to-date profile. If they send in their profile, we will look at them. Then when we had a contract, we would ask the person who wanted the contract to go through our inventory of contractors and come up with at least three that could be invited to bid on it.

    Ms. Val Meredith: This inventory you carry is open. If I have an accounting firm and I want to be part of the process, I merely send in the information and I become part of that inventory.

º  (1630)  

    Mr. Michael McLaughlin: That's exactly the way it works.

    Ms. Val Meredith: Thank you.

    Do you find there is--I'm trying to think of a nice way of putting it--a problem with a government you are auditing having control of how much money they're going to give you each year? In other words, do you ever feel there might come a time when the government might not appreciate the results of your efforts and would decide to cut your budget to prevent you from doing the more in-depth audit? Do you ever feel that might be an issue? Have you come across that kind of feeling? You said it took a year for them to respond in kind. Is that part of the problem?

    Ms. Sheila Fraser: My predecessor raised the potentially difficult situation that our funding has to go through the Treasury Board Secretariat. He also indicated, though, that until now this system has worked.

    I have not seen any indication of budgets being cut. I think there was an indication that we requested additional funds and we just got them. The process at times is very long, and it can be very frustrating, but I don't think that is unique to us, quite frankly.

    We would like to see another system developed. We are in discussions with the Treasury Board Secretariat. We presented certain mechanisms that are used in other countries, for instance in Great Britain, where the funding requests from the National Audit Office go through parliamentary committees. There seems to be some hesitation or lack of enthusiasm for that, so they are to come back with another proposal.

    It's just that the process is very long. I must admit that I have a certain frustration when I can't start the year knowing ahead of time what my budget is, because we have a lot of projects underway. It's all dependent on people. If I have to cut my funding next year by $8 million, that means there are people who will have to leave the office or projects that will have to be stopped. I would like to know sooner than April 1 if that's going to happen. It's a matter of being able to plan a little further ahead.

    The Chair: Thank you, Ms. Meredith.

[Translation]

    Mr. Asselin, you have four minutes.

    Mr. Gérard Asselin: Thank you, Mr. Chairman.

    I want to talk about the staff hired by the auditor general and the environment commissioner.

    You say that you are trying to have the highest rate of bilingualism possible. Things are fine for the existing staff but, in the case of staff you are hiring, are you trying to hold strictly to the Official Languages Act so that most, if not all, of your employees are able to speak both languages?

    Ms. Sheila Fraser: Thank you, Mr. Chairman.

    I will admit that not all of our employees can speak both languages. I would like to see us get to that point one day. But we also have offices outside Ottawa and even outside Montreal; we have offices in the west. There are very specific language requirements for each region and level. In the case of bilingual imperative positions, we must give people we are hiring an opportunity to become bilingual within a certain period of time.

    Sometimes, we indicate that bilingualism is imperative immediately but, in the case of other positions designated bilingual imperative, we must give candidates an opportunity to become bilingual within a certain period of time, provide training, etc. Right now, we are reviewing the classifications of all our positions and employees, as well as the effort being made to ensure that our employees become bilingual.

    Mr. Gérard Asselin: So that you have the co-operation of those whose position does not require them to be bilingual immediately, but after a certain period of time, and so that you are not stuck with a problem, would it be possible to make it a condition of hiring that a person must be bilingual to become a permanent employee?

º  (1635)  

    Ms. Sheila Fraser: It is a condition of hiring, and we are beginning to require that those doing the hiring make clear to candidates who have passed the entrance exam what training is necessary, and when it is scheduled, and that they arrange for it to take place as soon as possible. Our managerial employee is responsible for ensuring that a candidate can meet this condition.

    Mr. Gérard Asselin: I am one of those parliamentarians who relies heavily on the reports of the auditor general and the environment commissioner. They are indispensable for ensuring the transparency of the government's decisions and policies concerning how our constituents' dollars are spent.

    I know that the public accounts committee, like the finance committee, will go over your recommendations with a fine tooth comb. They will see whether your recommendations have had positive results from year to year and whether the government has taken your recommendations into account. There are two committees who will probably cover this from A to Z. If it is possible, I would like the report and recommendations to be set out by sector of activity. If I am the transportation critic, I have my little bible, I have the recommendations made by the auditor general or the environment commissioner, and my job is to see whether the government is taking account of these recommendations in committees, in bills, in what needs changing.

    If it is a hefty tome, there is a strong risk that it will not be used, or that it will end up adorning an MP's office bookcase. If the idea is that it become a work tool for daily use, it would be a good idea for the recommendations of the auditor general and of the environment commissioner to include a breakdown by sector of activity.

    Ms. Sheila Fraser: Mr. Chairman, I find Mr. Asselin's suggestion very relevant. As I mentioned, we are suggesting a new approach for the follow-ups to our audits. We are suggesting that there be more emphasis on these follow-ups and that departments which make progress be given more credit. People often say that we are always uncovering the same things and that nothing changes. In fact, many departments have taken things seriously and have implemented corrective action. In this report, we could see how they can be identified by sector.

    I would also like to mention that whenever we publish a report and an audit which we believe to be of interest to a particular committee, other than the public accounts committee, we write to the committee chair to draw his or her attention to the report and offer to meet with the committee for follow-up.

[English]

    The Chair: Merci beaucoup, Monsieur Asselin.

    Mr. Shepherd, please, for four minutes.

    Mr. Alex Shepherd (Durham, Lib.): We live in a communications world--I think you would believe that to be the case--and your reports have progressively, from day one and beyond, become more and more sensational in the press. You can't control the way the press interprets what you say, but I sometimes wonder to a certain degree if it isn't some of the things that we say that creates this appetite for sensationalism.

    You and I had some discussion about these foundations. It wasn't about your comments about the foundations per se, but the fact that it was repetitive. In other words, we keep repeating the same things over and over again, but the people out there in the real world don't know that. So in reality, it's another $7 billion and another $7 billion.

    If Mr. Monty of BCE has a problem with Teleglobe, he's going to write it off once, and it's going to be gone. The perception will be that Mr. Monty made some mistakes at Teleglobe and then it will be all gone, and Mr. Monty has paid the price and that's a separate issue.

    You state as one of your long-term objectives, your plans and priorities, public confidence in government institutions. Yet I would say today the result is just the reverse.

º  (1640)  

    Ms. Sheila Fraser: I am very sensitive to that, in fact. I think at times I agree fully, our reports are used to undermine government and to undermine Parliament. I am concerned by that.

    When I give interviews or speeches, I do try to say how important Parliament is, how dedicated parliamentarians are, how hard-working they are, and often at what personal sacrifice they are here. And the same thing for the public service. In fact I was just at a chamber of commerce group today, and I said to them, you know, if the audit reports of your companies were posted on a website, I'm not sure that they would be a whole lot better than the government's.

    So it's the question of the media and the sensationalism, but we do have a role to play, and we try to be balanced in our reports. If you look at our reports, you will see that we do highlight many improvements that have been made and good practices. Unfortunately, those are not picked up by the media.

    Mr. Alex Shepherd: Going back to this value-for-money audit, comparing yourself to the private sector, they don't do this kind of thing, generally speaking. The object of the exercise is the bottom line, financial integrity and all that good stuff. So we have a judgmental thing that's involved here.

    In other words, the Auditor General says, you know, we sent a whole bunch of cheques to dead people. Well, that's pretty sensational. The reality is, when they come to see us, we find, yes, it's true, but it was a very small group of people, and for those who were genuinely outside the loop, the money was sent back. But that isn't what people believe. People believe that the government sent all kinds of cheques to dead people and that somehow these dead people cashed them. That's what people believe.

    The Chair: Maybe the opposition should carry some responsibility there.

    Mr. Alex Shepherd: Is there a better way for you to write your reports so that they don't lead to that misconception?

    Ms. Sheila Fraser: If I could just add, Mr. Chair, Mr. Shepherd has implied that our audits are judgmental. I would say, if you look in all of our audits, there are audit criteria that we audit, too. We don't just decide what we think is right or wrong management practice. The departments concerned agree with us on those criteria before we start the audit. So we say we would expect to see this or that, and they agree that it is a reasonable expectation of management practice. In many cases, we will go to their guidelines.

    As to how we write the reports, I agree with you that we probably tend to focus more on the negative and the areas of improvement. I think audits tend to do that.

    Mr. Alex Shepherd: I have one last little question. Do your external auditors do value-for-money audits on you?

    Ms. Sheila Fraser: No.

    Mr. Alex Shepherd: Why not?

    Mrs. Sheila Fraser: We have at the moment only a financial audit. As I mentioned, we want to go through an external audit, which will be--

    Mr. Alex Shepherd: Since we believe so heavily in value-for-money audits, why wouldn't we instruct our external auditors to perform that on us?

    Ms. Sheila Fraser: The external auditor has received a mandate, actually from the Treasury Board Secretariat, only to audit the financial statements. I must say it has been a bit of a struggle to get them to agree to audit the statements and not just the plates for the public accounts.

    We would like to have an independent objective audit of our value-for-money practice. I would like to see other legislative auditors involved in that, because I really think it takes somebody who knows the business to do it. I would hope that this committee would also be involved in some way in doing that review.

    The Chair: Thank you, Mr. Shepherd.

    Mr. Bryden, please, four minutes.

    Mr. John Bryden (Ancaster--Dundas--Flamborough--Aldershot, Lib.): I can't resist commenting and following up on the line of conversation here. From my background as a journalist, I have quite a different take on the line of questioning my colleague was putting forward.

    I can assure you it's within my experience that if you weren't negative, if there were not a diet of negativity coming out of the Auditor General's office, public confidence would be tremendously eroded. One of the qualities of having an open democracy is the fact that this type of negativity does occur. The public would experience a great sense of doubt--because it knows government doesn't operate perfectly--if there weren't a steady diet of criticism such as that provided by you, and I think there would be a much greater lack of confidence than there is from time to time.

    It always happens when there is the flavour of the day in criticism of government, which--rightfully--the opposition tries to exploit. I think this is the opposition's role. It's a correct role, and the opposition should carry on. But we must not, in any sense.... I would not want you to go away from here thinking in any way that you should be concerned about how your reports are going to be perceived, whether they're a little too negative, a little too positive, or whatever else. I think you just go about your task.

º  (1645)  

    Ms. Sheila Fraser: Well, thank you, Mr. Bryden.

    Perhaps I could just add that we do review the reports with the departments for the tone. If the departments feel we are being unreasonable in the way we have characterized something, we will change our language.

    And as I've often said, I don't work for the media.

    Mr. John Bryden: I'd like to just leave that, if I may.

    This is an opportunity, though, for someone like me, a backbench MP, to propose areas of interest that you might like to look at. One of the things that has worried me for many years about the operation of government is the way government departments use NGOs, give grants and contributions to NGOs, in order to get services done for society.

    I would ask you whether or not there's been a systematic examination of the rules for evaluation of those NGOs by the various government departments. Have we looked at whether or not there is consistency across government departments in determining whether an NGO is actually qualified in terms of ability and transparency to perform the service that is being asked of it by the government grant or contribution?

    Ms. Sheila Fraser: I think Mr. Bryden has raised an interesting question.

    To my knowledge, we have not looked at that specifically. We did a very large audit, as you know, of grants and contributions. In certain departments there was use of NGOs, and we would have asked what sort of evaluation was done on those specific programs. But to my knowledge, there is no overall program. It would be an interesting issue to look into.

    Mr. John Bryden: I may narrow it by example just a bit.

    For instance, CIDA often uses NGOs, and I trust CIDA to try to do the right thing. But I have a particular interest in charities and non-profit organizations. I've studied them for some time. And I find a disconnect between the questions that CIDA asked of one particular charity that I have in mind, and what that charity is not doing elsewhere, or what criticisms.... I'm not sure whether CIDA actually asks or has the means of determining whether there is management integrity in the operation of that particular NGO it's dealing with.

    You could apply that to Health Canada. Heritage Canada is another classic place.

    I point out very quickly, Mr. Chairman, there's the other problem that non-profit organizations are not transparent in law whatsoever. So I would really be interested in the Auditor General's take on how we are getting value for money when we deal with and give money to organizations that are not independently transparent, or not auditable.

    Would you like to comment?

    Ms. Sheila Fraser: I think that's actually a very interesting example.

    I know we had certain cases of NGOs working when we did the audit in the Department of Citizenship and Immigration. We asked how they evaluated the money that had been spent, and the performance. We didn't look, I don't think, much beyond that. But we could certainly take that under advisement for a future audit in grants.

    The Chair: Thank you, Mr. Bryden.

    Mr. Mayfield, please, four minutes.

    Mr. Philip Mayfield: Thank you very much, Mr. Chairman.

    I'd like to ask the Auditor General about personnel. Last year there was some discussion about this. I believe, Mrs. Fraser, you mentioned that your staff have been very focused on delivering a product, and that the office can't continue that momentum. We've already started to see some signs of burnout with people under great pressure, working long hours to produce the products. The office can't sustain that. Has the additional funding reversed that pressure you described last year?

    Ms. Sheila Fraser: Yes, the additional funding has enabled us to increase our staff complement. Perhaps even more importantly, we have been able to increase our training budgets for professional development and new methodologies and techniques for auditing.

    We have an ongoing challenge in recruiting. We are in a difficult labour market, and many other people are trying to recruit the same people. We have increased significantly our recruiting activities to try to bring more people in. We're also looking more at retention strategies. When we complete this first survey of our employees in the next month or so, we will be developing other action plans, depending on what comes out of that survey.

º  (1650)  

    Mr. Philip Mayfield: I'd just like to zero in on your comments a little further, if I may.

    In your report you indicate that your office is competing with the internal audit and financial comptrollership communities to attract people with the same skills and talent. How are you doing?

    Ms. Sheila Fraser: We're actually doing pretty well at the entry level, bringing in recent graduates. It's more of a challenge for us to bring in more experienced financial auditors and VFM auditors. That's due to many reasons. There's a high demand for those people. This is also a result of years when the number of students going through the accounting programs was significantly reduced. The firms reduced their hirings, and there are simply fewer professional accountants on the market. It is an ongoing challenge for us. We probably have a shortfall of about 10% of our staff.

    Mr. Philip Mayfield: Are you able to provide the salaries and incentives you need to attract people?

    Ms. Sheila Fraser: I'm not sure. There are things we can do. We are recruiting more actively. We are going out to more universities, and making those kinds of efforts.

    One of our difficulties is there just aren't very many people available at the level we would like. Like many other government departments--and, I would venture, many companies--during difficult economic times, recruiting was reduced significantly. We have a gap in our personnel, so we have fewer people than we would like at certain levels.

    We are also, at the same time, looking at how we distribute the work and whether we can delegate a little more work down and change some of the ways we work, to be more efficient. We are in the process of doing a salary survey comparing our salary scales to government and the private sector. At most levels, except perhaps the very senior levels, we are competitive.

    The Chair: A very brief question.

    Mr. Philip Mayfield: You mentioned 10%. Could you put a real number on that?

    Ms. Sheila Fraser: We probably have a shortfall of about 50-some people right now. We expect to lose about another 15 or 20, so we're constantly looking for 60 to 70 people.

    The Chair: Thank you, Mr. Mayfield.

[Translation]

    Mr. Asselin, four minutes please.

    Mr. Gérard Asselin: I am going to come back to the work that the auditor general and the environment commissioner should be doing. I was saying earlier that your study of each of the departments was an indispensable tool for the government. It is part of your job, and your duty is to make recommendations to parliamentarians. Of course, parliamentarians can ignore them. If we want the work to be done by the auditor general or the environment commissioner—some very professional folks, I have no doubt—, extreme transparency is required. In addition, these individuals do not have to report to a political party, but to the government.

    If parliamentarians have the will to implement the recommendations and do the job we are supposed to do as elected representatives vis-à-vis the public service, the House of Commons and other institutions, we will be able to build voters' trust. I am sure you are aware that politicians stood in second last place in a public opinion poll, just ahead of used care salesmen.

    If we want people to trust us more, we must show them that we are doing our job as parliamentarians, that we are following up on the recommendations made by someone who is completely independent and professional. Only then will taxpayers' money be well administered, well managed and spent on the right things.

    That is the comment I wished to make, Mr. Chairman. I do not wish to please or upset the journalists. All I want the auditor general to do is give us recommendations, point us in a direction, and tell us what we are doing well and what we are not doing well. That is the point I wished to make.

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[English]

    The Chair: Would you like to respond to that, Mrs. Fraser?

[Translation]

    Ms. Sheila Fraser: Thank you, Mr. Chairman.

    I think that Mr. Asselin has clearly indicated how important it is that the auditor general's position be a neutral one, how important it is that he or she not be influenced or partisan, if we may use that term, that he or she be free to decide what issues to examine, bearing in mind, obviously, any recommendations which parliamentarians might make and their interest in certain topics.

    Mr. Gérard Asselin: Mr. Chairman, I am going to come back to something unfortunate. The auditor general does not have access to what is available. She has access to what public servants hand out in terms of grants, but she does not have access to what these same companies are giving the political parties. She cannot draw a parallel and that is unfortunate for her.

    Ms. Sheila Fraser: My role is really to look at the administration of public money, to determine whether public money is being properly administered according to the standards the government has set for itself.

    The Chair: Thank you very much, Mr. Asselin.

    Mr. Bertrand, you have four minutes.

    Mr. Robert Bertrand: I just have a few questions for Ms. Gélinas concerning federal contaminated sites. Does your list of such sites include the DEW line, the former sites of American radar stations?

    Ms. Johanne Gélinas: Yes, it is part of the audit.

    Mr. Robert Bertrand: Has there been any development in this area? I know that the Americans were there. Has anything been done to recover the associated costs?

    Ms. Johanne Gélinas: Mr. Chairman, I think that I am going to have to appeal to Mr. Bertrand's patience. I will be able to report on the particular case he has mentioned, among others, in my October report. We are finishing up the audit of contaminated sites.

    Mr. Robert Bertrand: I have one final question about northern abandoned mines. I know that several provinces have a fund. I believe it is called a recovery fund. For every tonne of mineral removed, a certain amount is set aside because the mine is going to shut down. All this is done to rectify the situation. Do the mines now open in the far north follow this procedure?

    Ms. Johanne Gélinas: I cannot speak to provincial regulations, Mr. Chairman, because they are not part of our audit. There is a similar process at the federal level, however. It is also one of the aspects we look at when auditing abandoned mines. This is some of the information which will be available to you next October.

    Mr. Robert Bertrand: Next October?

    Ms. Johanne Gélinas: Yes.

    Mr. Robert Bertrand: Thank you very much, Mr. Chairman.

    The Chair: Thank you very much, Mr. Bertrand.

[English]

    Ms. Phinney, please.

    Ms. Beth Phinney: I have a question, but first I'd just like to comment. I think there's a misconception by the opposition that we don't like what the Auditor General says or the reports coming out. I'd just like to mention that we on the government side also pay taxes, we also have constituents, and we're just as concerned as anybody else that the government should run smoothly. I just wanted to make that comment.

    It came up earlier where you mentioned that there are governments other places in the world who do the funding for their auditor general's office in a different way. Could you give us an outline of that, give us some suggestions?

    Ms. Sheila Fraser: We would be glad, actually, to share some of the research we have. There are many different mechanisms. I mentioned INTOSAI, which is an association of the audit institutions of the countries that belong to the United Nations, and we're of course a member of that. We tend to work more closely with the Westminster-type auditors general, so we work very closely with the National Audit Offices of the United Kingdom, Australia, and New Zealand. We have close contact as well with the United States, but the General Accounting Office is quite different in its role from us.

    The model we looked at was the one of the National Audit Office, where there is an Audit Commission set up, which is a sort of subcommittee, if you will, of Parliament. That committee reviews, I believe--Mr. McLaughlin can perhaps elaborate on it as well--the plans and the budget and makes a proposal for the budget.

»  (1700)  

    Mr. Michael McLaughlin: I'll just add a bit to that. The chair of the public accounts committee is an ex-officio member of the Audit Commission. There are other non-ministerial parliamentarians who are members of the commission. They review the estimates of the comptroller and auditor general of the NAO, and they have time to deal with them in some detail. They have research staff who are assigned for that, and they meet a couple of times a year.

    The end result is that they make a recommendation to the treasury as to what the budget for the comptroller and auditor general should be. Treasury does not then challenge the budget of the comptroller and auditor general. They can come back and talk to the commission, but they don't go to the comptroller and auditor general.

    Ms. Beth Phinney: Is it an all-party commission?

    Mr. Michael McLaughlin: It's an all-party commission.

    Ms. Beth Phinney: Are there any outsiders, or just MPs?

    Mr. Michael McLaughlin: As I understand it, there are just MPs.

    The Chair: Thank you, Ms. Phinney.

    Mr. Bryden wanted to ask a brief question.

    Mr. John Bryden: I have a hypothetical question.

    Many of the crown corporations and other agencies you audit are not covered by the Access to Information Act. If they were, would that lessen your burden in any way you can see?

    Ms. Sheila Fraser: I don't believe so. We have two statutory responsibilities, really. One is the financial audit, which I think would go on regardless of access. The other one is the special examination, and there is a requirement to do that once every five years. That could perhaps be modified somehow, though it is an opinion we give on the systems and practices of the crown corporations. I don't think it would change that mandate either.

    The Chair: I have a couple or three questions I'd like to ask.

    Mr. McGuire, you indicated you wanted to speak. I'll give you a brief question.

    Mr. Joe McGuire (Egmont, Lib.): Thank you, Mr. Chair.

    I'd like to follow up on the contaminated areas with Ms. Gélinas. Do you know if the Sydney tar ponds are on your list?

    Ms. Johanne Gélinas: The Sydney tar ponds are a case study we are looking at.

    Mr. Joe McGuire: You're looking at that? Are you looking at CFBs, Canadian Forces bases, that are now abandoned?

    Ms. Johanne Gélinas: We're looking at all major contaminated sites.

    Mr. Joe McGuire: On the invasive species, do you have a list of those you are studying?

    Ms. Johanne Gélinas: In fact, this year we're mostly looking at invasive aquatic species. This is an audit we are doing in collaboration with our counterpart, the General Accounting Office in the U.S. That's something we are doing. We did some work last year on the Great Lakes with respect to invasive aquatic species.

    Mr. Joe McGuire: Do you have a list of the species you are looking at right now?

    Ms. Johanne Gélinas: I can forward one to you.

    Mr. Joe McGuire: Thank you.

    The Chair: Thank you, Mr. McGuire.

    Mr. Mayfield.

    Mr. Philip Mayfield: This is just a point of verification for Madame Gélinas. Does your responsibility cover only federal sites and lands, or do you involve yourself in provincial sites that may drain into streams and water bodies?

    Ms. Johanne Gélinas: No, we're looking only at federal sites.

    The Chair: First, I would like to compliment the Office of the Auditor General for winning the prestigious Kandutsch Award from INTOSAI.

    Some hon. members: Hear, hear!

    The Chair: Perhaps you can briefly tell us why you won it.

    Ms. Sheila Fraser: The Kandutsch Award is an award from INTOSAI, which is, as I said before, the association of the auditor generals of all the 180-some countries that are members of the United Nations. The nominees are proposed by other audit institutions, and it is for their contribution to legislative auditing and to INTOSAI.

    Canada has done a great deal over the last 20 years. In fact, one of the big initiatives Canada started was the international development initiative, which gave training to legislative auditors around the world. We have just in fact transferred that responsibility to Norway after 15 years. I think there are 3,000 or 4,000 legislative auditors who had been trained through that initiative, so that was a very important project.

    Canada was also on the executive of INTOSAI for many years. The independence project we're working on, and many others. It was given at the congress--

»  (1705)  

    The Chair: And it was well deserved. Again, our congratulations on that and also on taking the chairs of these two subcommittees. I presume it is Madame Gélinas who is the chair of the environmental auditing subcommittee. On the crucial issue of auditor independence, I presume that's Ms. Fraser.

    I'd also like to compliment you on your new status report, which you say will focus on a few key issues of continuing interest to the department, and offer our opinion as to whether or not the department has made satisfactory progress. I would like you to take into consideration, when you're making that report....

    I compliment you on bringing that concept forward, but the recommendations of this committee to the government seem to kind of get lost. Ms. Phinney raised the issue that she wasn't satisfied with the report by the Human Rights Commission. After we make our report to Parliament, it tends to get lost a little bit. I would like you to think about including a summary, a report, or a comment on the recommendations of this committee to the government and how they respond to that.

    Ms. Sheila Fraser: Thank you, Mr. Chair. Actually, I know the question has been raised before. When we re-audit an issue, we always consider the recommendations of this committee on that specific issue.

    We are looking at the possibility of developing a database of your recommendations, as we have for our recommendations, and perhaps taking an issue area and seeing how departments have responded to that. I am hopeful that we will have something in our follow-up report for spring of 2003 that will deal, at least in part, with your concern.

    The Chair: These are questions I always ask. One, do you feel you have sufficient resources to do your job?

    Ms. Sheila Fraser: At the present moment, yes, I believe we have sufficient resources. I am also hopeful that we will resolve our ongoing permanent funding base. If we do not continue that additional funding, we will have difficulties.

    The Chair: Ms. Gélinas, do you feel you have sufficient funding for your mandate?

    Ms. Johanne Gélinas: Thank you for asking, Mr. Chair. I don't have any problem at the moment and I don't see any coming in the near future. My major challenge, though, is to raise the profile of the commissioner. I will be more than happy if you can help me do that.

    If I can do just a little bit of advertising, Mr. Chair, we have produced something in plain language. It's user friendly for Canadians. I will be more than happy to send copies to your riding, if you're interested, to make sure your constituents know a little bit more about who we are and what we do.

    The Chair: There's an initiative for everybody to pick up.

    I have another question for the Auditor General, as far as your independence is concerned. I know you have to get your money from the Treasury Board. I remember how your predecessor, Mr. Desautels, was concerned about the pay equity dispute, where you were automatically prevented from paying out, even though you wanted to. How is that issue being resolved? Has it been resolved?

    Ms. Sheila Fraser: No, Mr. Chair, that issue is still ongoing. There has been no further development in that issue.

    I would just add, on the human resource question, that as you know, there is a human resource modernization project underway. We have been consulted as to how the office would be affected if there are legislative changes. I think many of the issues we have raised in the past could hopefully be resolved through that process as well.

    The Chair: In closing, I think I speak on behalf of the whole committee when I convey to you and to your staff our appreciation for the work you do, as part of the accountability process of ensuring government is there to serve the people. I think the committee would say you do a fine job.

    Mr. Bryden.

    Mr. John Bryden: Before you hit the gavel, may I just say, speaking from the government side, no mercy.

    Some hon. members: Oh, oh!

    Mr. John Bryden: Thank you, Mr. Chair.

    The Chair: Thank you, Mr. Bryden.

    Please convey our appreciation to your staff.

    We have a quorum. Shall vote 20 under finance carry? That's the estimates of the Auditor General.

    FINANCE

    Office of the Auditor General

    Part III--Report on Plans and Priorities

    Vote 20--Program expenditures.....$68,567,000

    (Vote 20 agreed to)

    The Chair: Shall I report vote 20 under Finance to the House?

    Some hon. members: Agreed.

    The Chair: We're going to adjourn this part of the meeting and then we're going to move in camera to deal with the Downsview Park reports.

»  (1710)  

    Ms. Sheila Fraser: I would like to thank you all for the interest and the confidence you've shown in our work. I very much enjoy our hearings and look forward to continued cooperation with this committee.

    The Chair: Thank you. We look forward to a long and continued relationship.

    [Editor's Note: Proceedings continue in camera]