:
Okay. We don't want to entertain any debate. In fact, no further action need be taken on this, up to and including my ruling as to whether it's in order. But I have allowed you an opportunity to place it. That notice of motion is now before us, and we'll deal with that going forward.
If there are no other further interjections then, I will move us to the main purpose of our meeting today. Hearing none, I will assume that I have the support of the committee to move forward.
Therefore, may I first of all welcome Mr. Michael Ferguson, who is the nominee for the position of Auditor General of Canada. Welcome to our committee, sir.
I did have a chance to have a couple of words with you ahead of time.
I want to let the committee members know that I expressed to Mr. Ferguson that while questioning may indeed be tense and tough from time to time, there are lines of fairness. If he's concerned those lines are being crossed, he can raise them as a concern with me, or he may look to me to get an indication of whether or not he has to comply with what's been put forward or whether he needs to continue in that particular vein. I just want to make sure that Mr. Ferguson understands that it's not the whole world against him here, and that he has rights too as a citizen. I wanted to say that publicly so if colleagues had any concerns about the way I was going to approach this, you can raise them with me now.
Hearing none, Mr. Ferguson, again, welcome, sir. I know you have opening comments, and I will turn the floor over to you to make those comments. You now have the floor, sir.
:
Good afternoon and thank you, Mr. Chairman.
I am very honoured to be here today as the nominee to be the next Auditor General of Canada. The role of Auditor General of Canada is a very significant one in the accountability structure of Canadian democracy.
My name has been put before you after a lengthy selection process conducted by the government but I want to assure this committee that having been Auditor General in New Brunswick for five years, I fully understand that the position is that of an agent of Parliament. Despite the fact that the selection initiative legally lies with the Government of Canada, both Houses of Parliament must approve the appointment.
If my appointment is approved, my allegiance will be to Parliament and to the ethics required by my profession as a chartered accountant. I firmly believe that this position can only be performed in a completely independent and objective matter.
Parliament gives the government the authority to execute certain functions and provide the government with the budget appropriations to do so. The Auditor General's primary task is to provide Parliament with information that it can use in fulfilling its oversight responsibility.
Let me begin by saying that I am well aware of the importance of your committee as the primary interface between the Office of the Auditor General and the House of Commons.
Parliament established the office and position of the Auditor General in statute and has laid out in statute the Auditor General's powers, duties, and functions. Under the act, the Auditor General's primary task is to examine the financial accounts of the government, and through your committee, to provide Parliament with information it can use in fulfilling its responsibility to hold the government to account.
In the past I have attended joint national meetings of auditors general and public accounts committees. My impression from these meetings has always been that the federal Public Accounts Committee has been one of the most effective of public accounts committees in the country. It is very important for the Office of the Auditor General and the Public Accounts Committee to have an effective working relationship.
I hope that the discussion we will have today will help to establish your trust in me, a trust that we will jointly require in order that our work together can bring about the results Canadians expect from the Auditor General's Office and from this committee.
[English]
The Auditor General provides information, gathered through a rigorous and objective process, to Parliament so that Parliament in turn can hold government accountable for its delivery of services to Canadians. The Auditor General also provides insight into how the government can provide those services efficiently and with due regard to economy. The Auditor General helps to ensure that sound accounting practices are followed in the government's financial statements and that robust financial controls are in place across government to ensure the responsible use of public funds. It's important that the findings and recommendations of the Auditor General be evidence-based rather than expressive of opinions or emotions. It is not the auditor's function to debate policy.
My definition of the success of this role would be consistent with the strategic outcome and expected results that have been itemized in performance reports issued by the Office of the Auditor General of Canada in the past; that is, contributing to a well-managed and accountable government for Canadians by helping to keep Parliament well informed and engaged. This is achieved by performing work that is relevant to members of Parliament, the citizens of the country, and other stakeholders of the office.
The Office of the Auditor General of Canada has experienced many well-noted achievements in the past. I especially want to acknowledge the superb work accomplished by Ms. Sheila Fraser during her term as Auditor General. It is not easy to follow someone of her standing in this role. She conducted herself with dignity, integrity, professionalism, and excellence. My goal will be to build on her excellent work, just as Ms. Fraser was able to build on the exemplary contribution made in the position by Monsieur Denis Desautels. There is a tradition of excellence in the office, and I commit to striving to uphold the standards set by these two remarkable public servants.
As far as my personal experience is concerned, I served five years as comptroller and the past year as Deputy Minister of Finance and secretary to the Board of Management inside the New Brunswick government. I also served five years, between 2005 and 2010, as the auditor general for the province, reporting to the New Brunswick legislature. I believe this experience gives me insight into how government operates from the inside, as well as experience in objectively auditing government. I am not new to the government auditing world.
In order for this committee to be comfortable with how I will approach the role, I am fortunate to have been the auditor general of New Brunswick for five years, so my approach and performance is a matter of public record. I am also in my third term serving on the Public Sector Accounting Board, the organization that establishes accounting standards for Canadian governments. And I served one year as president of the New Brunswick Institute of Chartered Accountants.
[Translation]
I am not unknown to the Office of the Auditor General of Canada. I have worked with some of the staff of the Office in the past when I was Auditor General of New Brunswick. I have also worked with the current interim Auditor General, John Wiersema, in other professional capacities in particular on the Public Sector Accounting Board.
I am confident that if appointed I will have the good fortune of joining an organization that is widely respected, and that from my vantage point appears to be very well run. I would not expect to have to make significant changes to the operations of the office. In fact from an operational perspective I believe that my main task will simply be to stay the course.
I have already referred to two of the most important values for the Office of the Auditor General, which are independence and objectivity. The Auditor General must act with independence and objectivity through the protections and mechanisms provided for in the Auditor General Act.
As a chartered accountant, integrity, due care, objectivity and independence are also expected of me as professional requirements in the execution of any work I perform.
I now want to recognize one challenge that my candidacy presents—which is that I am not yet bilingual. I am from a bilingual province where the equality of both official languages is always a top of mind consideration in policy making. However, I have not yet personally attained proficiency in the French language. I understand that in order to be properly respectful of Parliament and the citizens of Canada that I will need to improve my French language capability. I am committed to doing so, I already have been assessed and I am already in the process of upgrading my skills in the language.
I would like to close my comments by simply reiterating that as Auditor General one must be diligent in the protection of the independence and objectivity of the position, and I completely understand that the position is an agent of Parliament.
I am here today to answer your questions. I want to provide you with the information that you need about me to properly consider my nomination. I sincerely hope that when we are finished, you will be in a position to approve my appointment.
Thank you, Chair, I am now ready to take your questions.
And thank you, Mr. Ferguson, for coming here today. As you can see, there is no shortage of interest in your nomination and your presence here today.
Mr. Ferguson, Canadians expect their Auditor General to be the most qualified individual for the job, someone who has a proven track record of independence, merit, fiscal responsibility, and fortitude. We know that you are well respected in New Brunswick for your abilities, but the Auditor General of Canada has a much bigger role.
Quite simply, why do you believe you were nominated for this important position?
:
Thank you, Mr. Chair, for that question.
Fundamentally I think what I bring to the table is a well-rounded set of experiences. In the human resource world there is a concept referred to as 360-degree feedback. If you look at my history in the province of New Brunswick you will see that I went from a position of being a comptroller in the province of New Brunswick, which is a position that receives recommendations from the auditor general's office and has to implement them, to then being the auditor general for five years and having to be in a position to make recommendations that I felt would be and could be implemented, to now the position of Deputy Minister of Finance, whereby I am in the position of having to try to implement some of the recommendations that I myself made.
So my experience is broad. I spent five years as auditor general of New Brunswick, and as I said in my opening comments, my performance in that role is a matter of public record.
I do not have a lot of experience with the federal government or with federal departments from the inside, but in New Brunswick there are many points of contact with the federal government. The perspective that I bring to the federal government is that of a stakeholder and of having observed many topics and many points of interest between one of the federal government's main stakeholders, that being a province, and the federal government itself.
:
Thank you very much, Mr. Chairman, and to Mr. Ferguson for being with us today.
I went through your CV, and I think it's an incredible CV in terms of the breadth of commitment and also the knowledge that you have.
I'm looking at what your premier has said:
He's outstanding, he's a leader, and quite frankly that's one of the reasons why he became deputy minister of finance in New Brunswick. It's certainly a difficult time in the province's history. I value the integrity and credibility of the man and the quality of the work he completed when he was auditor general in New Brunswick.
I don't think those words would come lightly from any leader of any province or from any leader of a country. I'm going to focus, Mr. Ferguson, on what you've done, to help us understand how some of the things are going to lead to what you are nominated to do.
Knowing that you are the former auditor general of New Brunswick and were also the comptroller general in New Brunswick, I wonder whether you could help us understand a little about those positions provincially, their functions, and how they are similar to and how they may differ from the positions federally.
The comptroller in New Brunswick is responsible for the preparation of the province's financial statements, the operation of the province's financial information system, and the operation of internal audit activities for the province as a whole. I think those types of functions are consistent among comptrollers throughout the country and consistent with the comptroller's office in the federal government, particularly on the internal audit side and in terms of making accounting policies for the government to follow.
As I said, one of the biggest responsibilities, actually, of the comptroller in New Brunswick is operating the province's financial information system, particularly in its general ledger and accounts payable system, which is a large and complex system that operates for the entire government.
That gave me a certain amount of experience in the world of information technology and of having to implement accounting systems. Auditors, whether they're internal auditors or auditors general, have to do audits of information systems as well, so as I say, I have some background in information systems and in having to implement information systems.
That's fundamentally what the role of the comptroller was in the province of New Brunswick. Particularly for such matters as policy setting and internal audit, it is very consistent with the comptroller general position for the federal government.
:
Thank you, Mr. Chairman.
I would like to thank Mr. Ferguson for being here with us today.
I think that everyone acknowledges the fine reputation of your future office, the legacy of Ms. Fraser. She has provided exceptional service, to Quebeckers in particular. I'm thinking among others of the revelations in connection with the sponsorship scandal, probably one of the better-known issues, especially in Quebec, to come out of her work as Auditor General.
This file involved francophones, for the most part. I understand that translation services are available, but in the final analysis, you have to be able to study those files and understand what is going on, in particular the interaction between people. You have to be able to verify the work. You have to have a good understanding of French.
How could you work on a file of that scope, one that involved Quebec in particular, if one were to come before you?
I think I would describe my approach as one of being fair, of trying to make sure I understood the issues in the particular audit, and of making sure that the auditors recognized that when making a recommendation, the recommendation needs to be something that can be implemented. I would always challenge the auditors, when they were making a recommendation, by asking, if you were on the receiving end of that recommendation, how would you implement it?
My technical approach wasn't different from anybody else's. I feel that I was fair in the approach. I delivered the tough messages when the tough messages needed to be delivered. And as I say, I think my performance is a matter of public record. I feel very good about the support I have right now in New Brunswick and the very nice things that a number of people in New Brunswick have been saying about me and about my performance when I was auditor general. That again is a matter of public record. People have said that I conducted myself in those five years with integrity, and I am very proud of that.
I am also very proud of the output we produced in that time period. Now that I am back inside the provincial government as Deputy Minister of Finance, it has been quite heartening to see the number of times that departments are coming forward with changes to their programs or changes to what they are doing and are referring back to reports of the auditor general from the time when I was auditor general.
:
Thank you very much, Mr. Chairman.
Thank you so much for being here today and for giving us the opportunity to get to know you a little bit better, and for having given us purpose to study your CV, which in my view is very impressive. I'm a chartered accountant myself, and I really appreciate the comments you have made, and I truly appreciate that your value to the crown will be greater because you have worked on both sides of the equation. That's something we can be grateful for benefiting from.
I want to ask you some questions with an international focus. I'm very proud that we in Canada are so well regarded as a model, not only within the accounting profession, but when it comes to accountability in government. We have an incredibly open system. We allow the Auditor General to freely examine whatever he or she chooses to investigate and then to report publicly on those findings. Certainly we as government have improved things based on Auditor General findings in the past.
How do you see the role of the Auditor General—your role, je l'espère—in setting an example for other countries in the world in regard to that openness, that accountability piece?
:
I believe that the Auditor General of Canada has very much established a leadership position over the last number of years under Ms. Fraser's leadership in terms of its reputation across the world for excellence in performance audits and excellence in financial audits. I think Canada also has a reputation for having very excellent accounting standards for governments, as established by the Public Sector Accounting Board.
So I don't think Canada takes a back seat to anybody, whether it be in terms of the quality of financial statements, the quality of accounting standards, or the quality of the audit work that is done. And I think it's very important for Canada to continue to deliver that message.
For me, as Auditor General, one of the most important parts of that is the recognition that we have an independent accounting standard-setter, that being the Public Sector Accounting Board, and it is absolutely imperative that each and every government comply with the accounting standards set by that board so that everyone has confidence that the financial statements are prepared appropriately and that auditors audit to that set of standards.
Again, I think Canada doesn't take a back seat to anybody and that the federal Auditor General's office very much has a leadership role to play.
:
Thank you very much, Mr. Chair.
The lengthy notice of motion that I presented at the start, that I inflicted on the members here in the room and on the people watching on television, can be summarized easily. When we arrived in the House, after the May 2 election, 14 chapters of the report of the previous Auditor General had not yet been considered fully by this committee. The previous committee had done some work on seven of those chapters and they only needed to be presented again to get the government's response. For three of those chapters, we simply needed to wait for the committee to adopt the report to present them and get a response from the government. The committee still had work to do on three of them. There is also the matter of the 2010 Public Accounts of Canada report that has not yet been addressed by the committee.
I won't ask you for your opinion on the topics at hand, even though some of them were important. Among other things, we're talking about the cost overrun in the purchase of military helicopters. We're talking about the issue of the Public Sector Integrity Commissioner who had been fairly controversial. So there are important issues. I won't ask you for your opinion on those matters.
But I will ask you this. If you are appointed Auditor General and you need to present reports that may address important issues, what do you think the impact would be of seeing one of your reports ignored by this committee? I'm not talking about your work, but the quality of the government's response to those recommendations that wouldn't be considered by this committee?
:
I guess, again, I'd have to know the situation better to give you a full response.
Certainly, the role of the Auditor General, as I understand it, is to present reports, make recommendations, and bring those recommendations forward. Then, as I understand it also, the Auditor General's office does do some work in terms of following up on some of those recommendations, to see whether government has implemented them.
Sometimes, in my own experience, if the New Brunswick government hadn't implemented some recommendations we felt needed to be implemented, we might go back and do a follow-up audit on the same area, for example.
Certainly, the role of the Auditor General is to bring the report forward, make the recommendations, and bring the report to this committee, so that this committee can then use those reports to ask questions of the government and to help hold the government accountable.
Mr. Ferguson, thank you for being here. I read your CV and was very impressed. The selection process for the next Auditor General of Canada has been a very thorough, national search, and I want to congratulate you on being nominated for this position.
Regrettably, there have been some who have prejudged your suitability for this position and even before you were here today said they will not be supporting you. As I said, I find that regrettable.
I'd like to focus on the selection criteria that was established. There were 28 points, and one of those was language skills. I too need to improve my French, but yours is far better than mine. I'd like to focus on those 28 points, so I'm just going to go through them quickly, and you can make comments on whether you see yourself as being suitable.
From the briefing and CV, it appears to me you are very qualified and very capable of doing audits, and would do a good job for this country, but the selection criteria begins with your having a degree from a recognized university, preferably from a university specializing in accounting. Do you have that?
:
Thank you. Time has expired.
That ends the rotation of questions.
Yes, I see you, Mr. Caron, but I have some things to say first.
With regard to the next steps, as I mentioned at the outset, it's entirely optional what this committee does. You've made the one decision to hold this hearing. There is now a decision to be made as to whether we will report to the House that we have had such a hearing. The second part of that is would there be a recommendation contained in there, and what would that recommendation be.
I remind committee that the rules provide that we have up to 30 calendar days in which to study this. If we haven't reported to the House within those 30 days, we will have forfeited that right. We will be deemed to have chosen not to report to the House and the opinion of this committee will be silent throughout the process. That is entirely legitimate and entirely within the purview of this committee to decide.
Are we clear on what our options are? Are there any questions about procedure?
Monsieur Bélanger.
:
Very well, I'll accept that as a motion.
I'm being “clarified”--that's why we have clerks--that apparently the government can move before the 30 days has expired. There is no guarantee that if the committee took time beyond today, assuming nothing happened in the House while we were here, the opinion would be part of the consideration. I have no idea what the government plans are, but apparently they have that right.
I just don't want members to think, as I had, that the 30 days holds up the process until it has expired or we have responded. That is not the case. Apparently the government does maintain the right to move this in front of the House at any time.
I didn't hear any further clarifications. I think I dealt with them all.
I heard a suggestion for next steps, that there be another round of questions.
Is that a full round?
First of all, I want to say that today is the first time I've met Mr. Ferguson. It's the first time I have had a chance to talk with him, both in English as well as French, and as somebody who has learned French—an anglophone myself—I can tell you that Mr. Ferguson definitely is not a beginner.
I am very impressed with your progress to date, and in fact I am quite surprised at your progress to date. If this continues, I have no doubt you will very soon be very conversant in the French language.
Now I would like to read a quote to the committee, which I have in front of me:
But however stern he might be, he was always fair and always principled. And you can't argue with his main message to any government of the day - that government must be as open and transparent as possible when dealing with taxpayers' money.
Mr. Chair, this is a quote from the New Brunswick Liberal leader, Victor Boudreau, and he is of course referring to our nominated candidate for Auditor General, Mr. Ferguson.
This is yet another of the long list of testimonials of people, from all different parties, who have worked with Mr. Ferguson and who have glowing things to say about him.
Earlier, my colleague, Mr. Warawa, also started to go through the long list of criteria for this position, and it became very clear and evident that Mr. Ferguson qualifies under all of the criteria. The one issue is regarding his language proficiency, and I think that has been already dealt with ad nauseam today.
Mr. Ferguson, during your time as Auditor General of New Brunswick, you ran an office of 22 people, with an annual budget of $1.8 million. Can you please elaborate on how you increased your individual productivity to add value to the taxpayers of New Brunswick?
[English]
Thank you so much, Mr. Chair.
We were just getting started on a good conversation last time about the professional development that you had the privilege of sharing when you went to Tanzania, and it made me think about the importance of professional development for your team. I just want to make that question a little broader, because your comments about having to be strategic are so appreciated. This government is delivering accountability at an unprecedented level, and it's what we want to accomplish; when we hear that somebody—such as yourself—has actually been strategic and achieved a significant amount, it really matters.
What I want to find out is how you engage your staff, because, pro rata, it's almost as small as your former staff, based on the incremental resources and programs that you will be auditing. How do you engage your staff to get the best possible creativity out of them and—much as you were saying—lead by example, engaging your team? This is a very particular business, and you need people to be very creative when they're looking; it's not about you saying you're going to go and audit this. People have to be creative. How do you enhance that? How do you enable your team to be the best they can? Obviously, I mean within the context of professionalism of the accounting profession.
:
The only way I can answer that is to say I certainly encourage that type of thinking—the creative thinking, looking for different solutions to a particular issue. I think that's important, and I try to encourage that, usually through engaging in meetings and having discussions with staff about a particular issue, and trying to help them explore the situation. But fundamentally, the creativity of people comes out when they are simply given the opportunity to use their own creativity—when they are encouraged to look at the issue from a different perspective.
That's why I say, in the audit world, one of the things that I would challenge auditors on is if they have a recommendation, how would they actually implement the recommendation? They have to think of it from the point of view of somebody who is on the receiving end of the recommendation as well.
Too often, as auditors, we can take the easy way out and say, “The government should spend more money on....” That is just too easy a recommendation. It is simply a matter of trying to open up that discussion and giving people the room to explore their own creativity.
You mentioned professional development. In the New Brunswick auditor general's office, we went through a couple years of budget reductions. One thing I told the legislative administrative committee was, “Yes, we will take the budget reductions, but we are not reducing training,” because to have a well-run, well-functioning audit office, you have to have people who are current, up-to-date, and understand what the rules around auditing are. I always felt that the right amount of focused training had to be done and you couldn't reduce that as part of a budget exercise.