I have a very brief opening statement and a bit of a presentation. I think it was circulated. I think I can do it within about eight or 10 minutes.
Mr. Chair, we are pleased to have this opportunity to present an overview of the mandate of the Office of the Auditor General of Canada.
With me today are Andrew Hayes, deputy auditor general and interim commissioner of the environment and sustainable development; Karen Hogan, assistant auditor general responsible for financial audits; and Martin Dompierre, assistant auditor general responsible for performance audits.
The Office of the Auditor General of Canada supports Parliament and territorial legislatures by providing independent and objective information, advice and assurance about government financial statements and the management of government programs. The commissioner of the environment and sustainable development supports the Auditor General in carrying out the parts of our mandate that relate to the environment and sustainable development.
We conduct all of our audits in accordance with Canadian Auditing Standards. Our audits and our system of quality control are subject to internal practice reviews and to independent external reviews to provide assurance that you can rely on the quality of our work.
ln this regard, we have recently provided your committee with the results of an international peer review on the work of our office. That review was commissioned by the late auditor general, Michael Ferguson, and was led by the Office of the Auditor General of South Africa.
We are pleased to inform you that the review team found that our office adhered to relevant legislation and professional standards in the execution of its mandate and that our system of quality control was suitably designed and effectively implemented.
In addition, our office helps to advance legislative audit methodology and accounting and auditing standards, and we work nationally and internationally to build audit capacity and to promote better-managed and accountable public sector institutions.
Let me now turn to the presentation of our office's mandate and products. We provided you with a presentation for your reference, and I will now speak about some key elements.
Traditionally, the office submits four reports to Parliament annually. In the fall and spring, the Commissioner and the Auditor General each present a report.
The Auditor General's authority is granted by Parliament. Various pieces of legislation define our powers and responsibilities, including the Auditor General Act and the Financial Administration Act.
For the office's budget, the main estimates total $88.2 million for the current year, for 580 full-time equivalents. The office's staff includes accountants, engineers, lawyers, information technology professionals, environmental specialists, and economists. In addition to the Ottawa office, we also have an office in Vancouver, one in Edmonton, one in Montreal and one in Halifax.
On page 6, you can see that the Auditor General is appointed for 10 years and can be removed only for cause by the Governor in Council on address of the Senate and the House of Commons. The Auditor General chooses what, when and how to audit and has access to any government information required to do the job. All of those elements help to safeguard our independence.
On page 7, listed are our activities: doing financial audits, performance audits and special examinations of Crown corporations. We also review the government's sustainable development strategies and manage the environmental petitions process.
On page 8, in regard to the financial audits, they include the annual audits of the summary financial statements of the Government of Canada and the three territories. They also include annual audits of Crown corporations and other entities at the federal and territorial levels.
On page 9, regarding performance audits, in these audits we assess whether government programs are being managed with due regard to economy, efficiency and the environment and have measures in place to determine effectiveness. We examine management practices, controls and reporting systems and compare them to the government's own policies and best practices. We may comment on policy implementation but not on the policy itself.
On page 10, briefly, we list special exams. It's a type of performance audit. This is something that we do at least every 10 years for each parent Crown corporation.
I'm now going to go to page 13, which is about the external oversight of the office. Obviously there is this committee, which holds hearings on our departmental plan and our departmental results reports. There's an external auditor appointed by the Treasury Board to audit our financial statements, and that report is tabled in the House of Commons. We have an audit committee, and all voting members are external, including the chair.
The OAG is subject to external reviews by provincial accounting institutes. As I mentioned in the opening statement, every 10 years there is an international peer review conducted at the request of the Auditor General.
In conclusion, Mr. Chair, we are looking forward to working with your committee, and we are happy to answer any questions you may have.
Thank you for the presentation. It must have been a really tough year personally and through your department, so congratulations on the great work that you continue to do, faced with the challenges you've been faced with.
Mr. Sylvain Ricard: Thank you.
Mr. Lloyd Longfield: I'm really interested in the role of the commissioner of the environment and sustainable development, and the history of that role and how it interacts with the department.
I sit on the environment committee as well. There's a cross between these two committees for me. Also, Guelph is very interested in environment and sustainable development and auditing our progress in that area.
Could you maybe just speak to the history of that role and the importance of the role to the OAG?
The commissioner role was established in the Auditor General Act in 1995. Since that time, I would say that we have regularly presented reports to Parliament on environmental and sustainable development matters. In the early years, the reports were largely about environmental matters. Recently, we have shifted our focus to the sustainable development area, and that is in part because of the richness of the criteria that the sustainable development goals, the 2030 agenda for sustainable development, provide to us and the departments for action.
As the interim commissioner, my reports are referred automatically to the environment committee, which, I think, you're also on. But there will be topics that we will bring forward in the context of sustainable development that may be of interest to this committee as well.
We have a report coming out in May, where we are going to be looking at the transportation of dangerous goods. Obviously, that is a significant area, considering Canada's history. There have been some horrible disasters, Lac-Mégantic, for example. There have been some recent rail spills.
I would say, as we get into the sustainable development aspect, which focuses on the economy, environment and social elements together, there may be topics of interest for this committee.
I appreciate the six minutes allotted in a formal way. It's still very introductory for me.
I'm just picking up on the two comments that I heard. One was the reduction in the number of audits, and then there was the obvious question around the budget. It seems to be pretty simple, to me, that the department is under-resourced, so we hope to see the independent, predictable, ongoing operational funding that you've identified as required to provide oversights.
The question I would have is.... I don't even know if you can answer the question, so I won't ask it because it's probably not fair, or at least I won't ask it in this format. However, if you want, just comment perhaps in a very high-level way in terms of how you were audited by this international peer review. There's a work plan that's put out. I don't know if you want to comment on the recommendations that were put forward there and what steps, if any, you've taken to address some of those recommendations.
It seemed good to me. I'm not very fluent in auditor language yet, but it seemed it was pretty good. Maybe if you want to take your time to toot your own horn on that, you have probably about four minutes.
Rather than inventing, I'm going to use the wording of the report to start. As a starting point in terms of auditor's vocabulary, as I mentioned in the opening statement, the peer review team found that the OAG adhered to relevant legislation and professional standards in the execution of its mandate and that our system of quality control was suitably designed and effectively implemented.
What that means in plain auditor's language—we call that a clean opinion. It means that we got a report confirming not just the design of our way of doing business but how it was implemented, meaning that in the real audit—pulling out some of the files they looked at—they found that we were doing the work in line with the design and that the design was appropriate, given the type of business we are in.
Obviously it is a major undertaking to go through such a review. The result of it is that you have an organization that is proud of its good work. That is something that is being requested once per 10 years, once per an AG mandate. It's too bad that the former auditor general could not be here to speak about the good results himself, but clearly the organization is very pleased with that and it is reassuring for senior management in the organization to receive such a message.
To play along the same rules we suggest others should play by.... As you saw, even though it was a clean opinion, there were some suggestions. Back in September, we quickly prepared an action plan to deal with those suggestions. As you saw in the action plan, there is a timeline. There is accountability. We are taking seriously the follow-up of that. We updated the action plan in February, so the executive committee in the office will regularly get updates on the progress of it.
This is the first time I've been able to interject and speak on this committee. It's a new committee for me, after I was on the finance committee in the prior session of Parliament for the full duration.
It is, for me, an interesting committee, because you look at the way government operates and how government finances are set. We have a budget that comes out on an annual basis with some updates that occur when necessary, usually in a fall economic update. Then you have the estimates, which are basically government spending money or implementing policy from the budget and budget legislation. Then you have—to my understanding—the Auditor General, who looks at the programs that the government operates and comes back and provides valuable information to parliamentarians, and not only to parliamentarians but also to Canadians from coast to coast to coast.
I thank you for your work and for looking at programs that government delivers in various ways to Canadians and the departments that fall under the government purview.
You mentioned an independent funding mechanism, which has been requested, and you can clarify my remarks if I've strayed off. Is that the case in other jurisdictions? Is there an independent funding mechanism in place where there is an auditor general or a comptroller—if I can use that term—in other jurisdictions? Is that in place in other areas?
I want to comment, maybe, or to ask some questions building upon some of the other questions that have come up.
Mr. Sorbara asked you about an independent mechanism, which as a committee we did discuss in the previous Parliament. There was cross-party support, I think. Certainly, I supported the idea of a different method by which the Auditor General's budget could be set, other than by going cap in hand and making a funding request.
As for how we got here, yes, it seemingly was not a problem until 2017. Even in 2011, with the deficit reduction act, which was optional for the Office of the Auditor General, the Auditor General of the day chose to accept and participate in the deficit reduction act. The Auditor General at the time thought it was the right thing to do to support the objective of the government of the day.
At that time, the Auditor General told the committee, which was chaired by our esteemed former colleague David Christopherson—and David reminded us of this repeatedly in the last Parliament—that it was going to hurt, but that they could do it, that they would participate and, yes, they had the resources to do what they needed to do.
What changed between then and 2017? I'm not even really interested in litigating that at committee. The point is that we need to have a way that your office can get the resources it needs to do its job without seeming like any other department that goes before Finance and Treasury Board and says, “Here are the things we would like to do and here is the budget we need.” The government of day has to say, “Well, you're competing with all these other interests. Here's what you're asking for, but we're not going to give you all of it—we're going to give you some.”
An independent officer of Parliament can't operate in that environment. An independent officer of Parliament, one who is as critical as the Auditor General, has to know that he has the resources. When you appeared at committee in the last Parliament, your response in the negative in answer to what is a standard question asked by every chair—“Do you have the resources to do your job?”—was unprecedented. It's a real problem.
It doesn't help Canadians for anybody to get into point-scoring or anything on this issue. I completely agree that we need to have an independent mechanism by which your office is resourced properly, and I'm very glad to hear that there's already discussion with PCO. I hope that this can just quietly happen and we can it put aside and not worry about whether or not you have enough money.
This brings me to the present context, where it's even more uncomfortable, Monsieur Ricard, in that you are appearing before us as the interim Auditor General. I understand that a permanent Auditor General for the next 10 years will have to be named within the next few weeks at the latest, I think. I'm not even certain what deadlines we're under. It is not fair to you or to anybody who holds your office, especially under an “interim” tag, to have to be involved in a budget submission that the has to juggle among other competing priorities.
I don't know if I even have a question here. This is a rant and a recitation of some of the history. I'll ask you to comment on any of these points in whatever time I have left.
Three or four figures come to mind because we have several fields of activity. Each year, we do about 90 financial statement audits and about 14 performance audits. We used to do about 25 of those audits a year before. Also, I think Ms. Hogan mentioned earlier that we do three to five special examinations per year.
Therefore, with the exception of performance audits, the number of our other audits has actually remained quite stable for a fair number of years.
Five or six ad hoc financial audit mandates were added, including Trans Mountain, a health agency in one of the territories, and the Infrastructure Bank of Canada. These mandates were given to us with no additional funding, however, which contributed to the pressure we felt.
However, beyond the number of our mandates, the increase in expenses within an organization increases our workload. Although the number of organizations does not change, the increase in their expenses automatically affects our work.
I take the point that it's more nuanced than perhaps just suggesting how the funding has changed. I can't speak for my colleagues, but I'd be interested in knowing how that has changed, so perhaps that's something we could ask for at some point.
I want to move on to the comment from my colleague Mr. Kelly. In his remarks, he talked about how we got here. He very eloquently talked about not getting into partisan politics, and I certainly appreciate that. However, I think it's important to note, for the record, that there was $6.5 million cut under the Harper government, which equated to 60 employees.
We talked about the independence piece, and I think that's very important. There is no doubt—Canadians aren't going to suggest you shouldn't have independent means of funding—but it goes back to who watches the watcher, so to speak.
Our Crown corporations have to be accountable to someone, so for my benefit, having not been here in the last Parliament, would that independent funding provision that you're suggesting include your entire budget, or would it be a certain base amount, and then you would come back and explain why—because government programs are expanding or because you want to go in certain directions?
Of course there is a statutory piece that guarantees a basic income right now of $10.2 million, and I appreciate that this is far below what your average estimates would be per year, but is that a sign-off for all your funding, or is it just a certain base to ensure that you have that moving forward?