PACC Committee Meeting

37th PARLIAMENT, 2nd SESSION

Standing Committee on Public Accounts

EVIDENCE

CONTENTS

Wednesday, April 2, 2003

¹

1555

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

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

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

º

1600

Ms. Sheila Fraser

º

1605

Mr. Steve Mahoney (Mississauga West, Lib.)

Ms. Sheila Fraser

The Chair

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

º

1610

Ms. Sheila Fraser

Mr. Philip Mayfield

Ms. Sheila Fraser

Mr. Philip Mayfield

Ms. Sheila Fraser

º

1615

Mr. Philip Mayfield

Ms. Sheila Fraser

The Chair

Mr. Odina Desrochers (Lotbinière—L'Érable, BQ)

Ms. Sheila Fraser

Mr. Odina Desrochers

Ms. Sheila Fraser

Mr. Odina Desrochers

Ms. Sheila Fraser

Mr. Odina Desrochers

Ms. Sheila Fraser

Mr. Odina Desrochers

Ms. Johanne Gélinas

º

1620

Mr. Odina Desrochers

Ms. Johanne Gélinas

Mr. Odina Desrochers

Ms. Johanne Gélinas

Mr. Odina Desrochers

Ms. Johanne Gélinas

Mr. Odina Desrochers

Ms. Sheila Fraser

Mr. Odina Desrochers

The Chair

Mr. Steve Mahoney

Ms. Sheila Fraser

Mr. Steve Mahoney

º

1625

Ms. Sheila Fraser

Mr. Steve Mahoney

Ms. Sheila Fraser

The Chair

Mr. Steve Mahoney

Ms. Sheila Fraser

º

1630

Mr. Steve Mahoney

Ms. Sheila Fraser

The Chair

Mr. Philip Mayfield

º

1635

Ms. Sheila Fraser

Mr. Philip Mayfield

Ms. Sheila Fraser

Mr. Philip Mayfield

The Chair

Mr. Philip Mayfield

The Chair

Mr. Odina Desrochers

Ms. Sheila Fraser

º

1640

Mr. Odina Desrochers

Ms. Sheila Fraser

Mr. Odina Desrochers

Ms. Johanne Gélinas

Mr. Odina Desrochers

Ms. Johanne Gélinas

Mr. Odina Desrochers

Ms. Johanne Gélinas

Mr. Odina Desrochers

Ms. Johanne Gélinas

Mr. Odina Desrochers

The Chair

Mr. Tony Tirabassi (Niagara Centre, Lib.)

Ms. Sheila Fraser

Mr. Tony Tirabassi

Ms. Sheila Fraser

º

1645

Mr. Tony Tirabassi

The Chair

Mr. John Finlay (Oxford, Lib.)

Ms. Sheila Fraser

Mr. John Finlay

Ms. Sheila Fraser

Ms. Mary Clennett (Comptroller, Office of the Auditor General of Canada)

Mr. John Finlay

Ms. Sheila Fraser

º

1650

The Chair

Ms. Sheila Fraser

The Chair

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

Ms. Sheila Fraser

Ms. Val Meredith

Ms. Sheila Fraser

Ms. Val Meredith

Ms. Sheila Fraser

º

1655

Ms. Val Meredith

Ms. Sheila Fraser

Ms. Val Meredith

The Chair

Mr. Shawn Murphy (Hillsborough, Lib.)

Ms. Sheila Fraser

Mr. Shawn Murphy

Ms. Sheila Fraser

Mr. Shawn Murphy

Ms. Sheila Fraser

»

1700

Mr. Shawn Murphy

Ms. Sheila Fraser

Mr. Shawn Murphy

Ms. Sheila Fraser

Mr. Shawn Murphy

Ms. Sheila Fraser

The Chair

Mr. Shawn Murphy

The Chair

Mr. Philip Mayfield

Ms. Sheila Fraser

»

1705

Mr. Philip Mayfield

Ms. Sheila Fraser

Mr. Philip Mayfield

Ms. Sheila Fraser

Mr. Philip Mayfield

Ms. Sheila Fraser

Mr. Philip Mayfield

Ms. Sheila Fraser

Mr. Philip Mayfield

The Chair

Ms. Sheila Fraser

The Chair

Ms. Sheila Fraser

The Chair

Ms. Sheila Fraser

»

1710

The Chair

Ms. Sheila Fraser

The Chair

Ms. Sheila Fraser

The Chair

Ms. Sheila Fraser

The Chair

Ms. Johanne Gélinas

The Chair

Ms. Sheila Fraser

The Chair

Ms. Sheila Fraser

The Chair

Ms. Johanne Gélinas

The Chair

Ms. Johanne Gélinas

»

1715

The Chair

Ms. Sheila Fraser

The Chair

Ms. Sheila Fraser

The Chair

Ms. Johanne Gélinas

The Chair

»

1720

Ms. Sheila Fraser

The Chair

Ms. Sheila Fraser

The Chair

Mr. Philip Mayfield

Ms. Sheila Fraser

Mr. Philip Mayfield

The Chair

»

1725

Ms. Sheila Fraser

The Chair

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CANADA

Standing Committee on Public Accounts

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NUMBER 023

l

2nd SESSION

l

37th PARLIAMENT

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EVIDENCE

Wednesday, April 2, 2003

[Recorded by Electronic Apparatus]

¹  (1555)  

[English]

    The Chair (Mr. John Williams (St. Albert, Canadian Alliance)): Good afternoon, everybody.

    Our orders today are, pursuant to Standing Order 81(4) and the order of reference dated Wednesday, February 26, 2002, main estimates 2003-2004, vote 20 under Finance, Office of the Auditor General.

    Our witnesses today are the Auditor General, Ms. Sheila Fraser, Johanne Gélinas, Commissioner of the Environment and Sustainable Development, Mr. David Rattray, Assistant Auditor General, and Mary Clennett, comptroller. Welcome, all.

    Your opening statement, please.

    Ms. Sheila Fraser (Auditor General of Canada, Office of the Auditor General of Canada): Thank you, Mr. Chair.

    I'm pleased to be here today and would like to thank you for the opportunity to discuss our performance report for 2001-2002 and our report on plans and priorities for 2003-2004. As you mentioned, I'm accompanied by the Commissioner of the Environment and Sustainable Development, Johanne Gélinas, as well as David Rattray, Assistant Auditor General responsible for our professional practices, and Mary Clennett, our comptroller.

    First I would like to deal with our performance report for 2001-02. The report contains a new introductory section, “Performance at a Glance”. Using a number of key indicators, it highlights our performance for the year. To increase transparency, we have added tables that set out our contracting activities, employee compensation, and travel expenses.

[Translation]

    In 2001, we surveyed parliamentarians on their expectations and their reactions to the work of the Office. We are using the results of this survey to measure how well we serve Parliament and to improve our operations. The survey gave us some positive indications of the relevance and usefulness of our work. It highlighted the need to both communicate with parliamentarians and follow up on our recommendations to the government more proactively. We intend to do a short survey of parliamentarians views periodically and a longer survey once every Parliament.

    Every second year, we survey Crown corporations and federal agencies as well as the international organizations where we perform financial audits. The next survey is planned for later this year and will include departments involved in preparing the government's summary financial statements. In 2003-2004, we also plan to begin surveying departments where we have conducted a value-for- money audit.

    Last year we introduced the Status Report, devoted entirely to assessing departments' progress in implementing our recommendations. Status Reports will be tabled in the future each spring, beginning this May. We hope they will highlight the very important work that departments undertake to remedy problems. I believe these Status Reports represent the final step in the auditing process that begins with our audit work, then reporting to Parliament, discussion of departments' action plans in this committee, implementation by the departments, and our assessment of their progress.

    We will continue to monitor the implementation of our recommendations annually. That information and the Status Reports on departments' progress will be useful indicators of my Office's performance.

[English]

    Now let me turn to our report on plans and priorities for 2003-2004. Last summer we finalized a new strategic plan for the office. The basis of the plan is a vision and a set of values to guide our work during my term. Our report on plans and priorities reflects this plan. Overall you will find that this report now focuses much more on our strategic outcomes. It is a shorter document, with links to more detailed information on our website. Before discussing the report, I would like to briefly summarize the scope of our work.

    Overall, we audit some 70 federal departments and agencies, 40 crown corporations, 10 departmental corporations, and 60 other entities, and we also conduct special audits. We are also auditors of the three territorial governments and 15 territorial agencies, as well as two United Nations agencies, including UNESCO. The audits we're obliged by statute to carry out each year represent approximately 40% of our work. In addition, we have an international program that helps to strengthen our legislative audit practice. We are an active member of INTOSAI, the International Organization of Supreme Audit Institutions, where we have assumed two responsibilities, chair of its working group on environmental auditing and chair of a subcommittee that addresses the crucial issue of auditors' independence.

    Now, Mr. Chair, with your permission, I would like to ask Johanne Gélinas to give you a brief on the activities and plans of her group.

[Translation]

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

    Last year, I described the topics addressed in my 2002 report: the federal government's management of toxic substances, federal contaminated sites, abandoned mines in the North, invasive species, and sustainable development strategies. Today I would like to remind you of the main conclusion of that report.

    In a nutshell, it was this: Canada today faces a new kind of deficit, an environmental and sustainable development deficit, that is not being managed as a priority and that continues to grow.

    If the government does not take swift action, our health, our environment, and our economic prosperity may suffer adverse effects. Failure to act will also raise questions about the government's credibility, given that over the past decade the government has made hundreds, if not thousands, of commitments to Canadians to making sustainable development a reality.

    This year, departments and agencies are reviewing their sustainable development strategies. I hope the strategies will become tools for change, as they were originally intended to be. Accordingly, I have prepared a document setting out my expectations to help departments produce more strategic documents.

    I also spoke to you last year about the petitions process, whereby any Canadian can put questions to a department and obtain a reply within 120 days, simply by sending a letter to the Commissioner. In the past we received just a few petitions, but now we get more than one a week. These petitions come from all parts of the country and deal with a variety of serious concerns. Through the petitions process, every Canadian can act as a watchdog in his or her region, promoting environmental protection and sustainable development. I encourage you as parliamentarians to use the petitions process and to promote it among your fellow citizens. This year I am starting an audit of action taken on some of the petitions, and I will be reporting to Parliament on this during the coming year.

    I will also conduct an audit on pesticide management, on sustainable transportation initiatives, and on sustainable development strategies.

    Thank you.  

º  (1600)  

    Ms. Sheila Fraser: Thank you, Johanne.

    In 2003-2004, we plan to publish five value-for-money audits: the first will be tabled next Tuesday, followed by the status report on follow-up work in May, the annual report of the commissioner of the environment and sustainable development in September, then my annual report in November, and our spring report at the end of March 2004. These reports together will contain more than 30 chapters.

    The work for these reports is well under way, but there is room for adjustment of our plans for the latter part of 2004. We would appreciate the committee's suggestions on issues we could consider in the subsequent audits, and I would be pleased to discuss any of the audits listed in the attachment to this statement.

    We have a rigorous process for selecting value-for-money audits and would be pleased to discuss this important aspect of our work with your committee.

[English]

    The quality of all of our work is of utmost importance to us. We adhere strictly to professional auditing standards and best practices. To ensure the continuing appropriateness and effectiveness of our audit quality management framework, we are committed to regular and ongoing external assessment. In 2003-2004 a multinational team of legislative auditors led by Great Britain's National Audit Office will conduct an external review of our value-for-money audit practice. The review will provide us with independent assurance that the office conducts value-for-money audits in accordance with legislative requirements and professional audit standards.

    The quality of our workplace is also of great importance to us. Our people are at the very heart of our effectiveness and our achievements. In 2002 we conducted a survey of employee satisfaction that identified areas for improvement. In 2003-2004 we will review recommendations for change made by an employee committee and will move forward with needed actions.

    I would now like to talk about our finances. In 2001-2002 our net cost of operations was $67 million, about $4 million more than in the year before. We spent more money on our audit of the Public Accounts of Canada, on special examinations of crown corporations, and on the refinement of our audit methodology. Pages 43 to 48 of our DPR provide more detailed explanations.

    The main estimates for the office for 2003-2004 are $66.5 million. In addition, the Treasury Board has approved the inclusion of $500,000 in the 2003-2004 supplementary estimates for planned spending to support our space renewal project, which was originally estimated at $3 million. Further, we expect to receive additional funds in the 2003-2004 supplementary estimates for salary increases, the result of either economic adjustments or new collective agreements, as well as the carrying forward of unspent funds from 2002-2003.

    As you may recall, in 2001-2002 the office received additional funding to ensure that we have enough resources to appropriately fund our value-for-money audits of departments and agencies and to invest in methodology, technology, and intellectual capital. The $8 million funding increase was approved in 2001 on the understanding that the Treasury Board Secretariat, in conjunction with my office, would undertake to establish a process for determining our future funding requirements that would respect the independence of the office while providing for a rightful challenge to our budget. I'm afraid very little progress has been made since I last spoke to you about this. As you may recall, when the Treasury Board Secretariat responded to this committee's eighth report in November 2001, it agreed that it would consult with us to reach agreement on the new process I have mentioned. We are concerned about the lack of progress and will be exploring other options, including models that are used by the National Audit Office in the United Kingdom, as well as some provincial auditors general. The budget for the NAO is recommended to the government for approval by an all-party parliamentary committee. Budgets for some provincial auditors general are approved by their public accounts committees. I would be pleased to discuss this with the committee today or at some future time when we have completed our research on this matter and have a specific proposal.

    In closing, I would like to inform committee members that this year the office marks the 125th anniversary of the appointment of the first independent Auditor General of Canada, and I hope you will be able to join me on May 14 at a celebration on the Hill hosted by the Speakers of the House and the Senate.

    Mr. Chair, if you will allow it, we have a small gift we would like to give to committee members, the research staff, and the parliamentary staff. We have small commemorative pins that have been designed for the 125th anniversary.

º  (1605)  

    Mr. Steve Mahoney (Mississauga West, Lib.): Are they more than $200? Because we have to declare them if they are.

    Ms. Sheila Fraser: I can assure you that they are not more than $200.

    Thank you, Mr. Chair. My colleagues and I would be pleased to answer your questions.

    The Chair: Thank you very much, Ms. Fraser.

    On behalf of the committee, we thank you for your kind consideration. It's very nice of you.

    You also note the May 14 celebration on the Hill hosted by the Speakers of the House and the Senate, and you're all obviously invited thereto.

    Finally, you talk about your budget and how you're working with that. I think perhaps you can let us know when your research is completed, because if you have problems, we would want to know about them. Please inform this committee when the negotiations have been finalized, and let us know if you're satisfied with them or if more needs to be done.

    Mr. Mayfield, you have eight minutes for the first round.

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

    Mrs. Fraser, when I came in and saw some boxes at the left hand of our clerk, I said, are you passing out awards today? And with a straight face, he said yes. I look forward to receiving that memento of my association with this committee and with the Auditors General, you and your predecessor. It has been a great pleasure, and I've enjoyed the frankness and collegiality in matters of mutual concern.

    You've raised some issues, and I want to pick up on those with you, Mrs. Fraser. I'm not sure how well equipped I am to discuss them, because I see you're hedging your bets a bit until your research is done, and I don't know nearly as much as you do even. But on page 8 of the plans and priorities for your department, you state:

The existing process for arriving at our funding level is not sufficiently independent and impartial to ensure that our budget is appropriate for meeting Parliament's expectations.

In your statement today you mention this again, and I'd like you to expand upon that. Can you anticipate any problems with an all-party committee? As I think about a committee that does have some partisan problems once in a while, I'm wondering how you see dealing with the issue you've raised with this committee?

º  (1610)  

    Ms. Sheila Fraser: I'd like to start off by saying the present mechanism has not resulted in significant problems for the office. We have been able to negotiate with the Treasury Board Secretariat. But the fact is that we do negotiate with the department we audit, and it could affect the independence of the office and there is the situation of a conflict of interest. We very much view our role as working for Parliament. We think parliamentarians should be the ones who determine if our budget is appropriate or not. I recognize, like you, that there will always be perhaps a political dimension to a parliamentary committee, but we work for parliamentarians, so I think they should be the ones who have, if you will, the say as to the scope of the activities and the amount of the budget we have, and we can explain to them the type of work we would like to carry out. Because the potential exists always now that in going to a department, negotiating, if you will, with the government, we could be pressured to reduce audit scope or things like that. So the potential is there to be in a conflict situation. If that did occur, we would obviously come back to this committee and raise the issue.

    We really think the funding of the office, and I would perhaps even be so bold as to say all the officers of Parliament, should have a mechanism where their funding is established in some way through a parliamentary committee.

    Mr. Philip Mayfield: One of the concerns I would have in that--and you've raised the issue yourself--is with someone properly challenging budgets you present. I think that's healthy in every instance. I regret that the challenge is perhaps not met as directly as you'd like by Treasury Board. Perhaps that's the problem.

    I'm just trying to think how the committee has dealt with your proposals in the past. This committee hasn't really done a lot of challenging of you, as I recall. How would this committee prepare itself to really come to grips with the issues that are important, to see that you are properly funded, so we don't have to worry about trips to wherever Auditors General like to go? How would this committee properly prepare itself to effectively challenge your budget and to give both of us a clear idea, you and your staff and the committee, that we've really looked at this, that it's based on hard fact, on essential need, so both of us come away from the meeting with at least some satisfaction of doing a good job? I don't know how I would prepare for that.

    Ms. Sheila Fraser: I agree with you, but I just would like to go back. We do have a challenge function now from the Treasury Board Secretariat. I think our comptroller would probably say quite a challenge function. The difficulty, of course, comes when we get into discussions of specific audits or scopes. We really think it's inappropriate for us to be talking to a government department about the scope of the work we want to carry out. I know there have been suggestions raised of having an independent consultant look at the office. I think there are various avenues through which the information could be provided to a parliamentary committee to ensure that they have the information that they need to make an informed review of our estimates.

    Mr. Philip Mayfield: You've mentioned the British model, and I presume that's of more than passing interest to you, where they have a committee that goes to work. Do you have anything to say or any instruction to offer on how that committee operates in relation to their auditor general?

    Ms. Sheila Fraser: A commission has been established: the chairperson of the Committee of the Public Accounts, the leader of the House of Commons, who would be like our government House leader, and seven other MPs appointed by the House, none of whom is a minister. Each year the comptroller and auditor general of the United Kingdom prepares an estimate of the expenses. The commission examines the expenses, and then that commission lays this before the House with any modifications they see fit.

    We'll have to do some more research with them. If they have any other review that is done by the commission, how the commission actually performs the review, we can get that information and provide it to the committee.

º  (1615)  

    Mr. Philip Mayfield: Would there be enough value to warrant the expense of our committee's meeting with the British committee to try to understand what their model is? Maybe it would be in Newfoundland or Iceland or somewhere halfway between?

    Ms. Sheila Fraser: I think it could be very interesting. In fact, we will have representatives of the comptroller and auditor general here in May. But as for exchanges, I would just point out that the Commissioner of the Environment went with the environment committee last week to the committee in Great Britain and talked about the work that was done in Canada and how the process was here. Exchanges like that would I think be interesting. It's obviously up to the committee to see if it would be pertinent or not.

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

    Monsieur Desrochers.

[Translation]

    Mr. Odina Desrochers (Lotbinière—L'Érable, BQ): Thank you very much, Mr. Chairman, Ms. Fraser and Ms. Gélinas.

    Ms. Fraser, you said that for fiscal year 2001-2002, the net cost of your operations was $67 million, which is $4 million more than for the previous fiscal year. Without including 2003 or 2004, can you tell us whether the special investigations which you were asked to carry out, such as the one regarding Groupaction, were paid out of the overall budget, or whether Treasury Board gave you additional money?

    Ms. Sheila Fraser: We did not receive any additional funding for inquiries. We were asked to do several things, including statutory work, like for the new Canadian Air Transportation Security Authority, and we did not receive any additional funding. We put in such a request two years ago. At the time, we were given additional funding, but nothing since then.

    Mr. Odina Desrochers: So what you are saying is that, despite the new security environment, which changed in the fall of 2001, and despite the sponsorship's affair, your budget was not increased. So you are forced to cut back in certain areas or choose which mandates you and your officials will carry out.

    Ms. Sheila Fraser: Indeed, we have a set budget, and when situations arise with regard to requests or special studies, we have to cancel or postpone other projects. Over the last year, this happened several times. We had to do a series of statutory accounting audits. I think that next year's budget alone for these recurring audits, for which we did not receive any additional funding, is about $800,000.

    Mr. Odina Desrochers: Since there is so much happening in today's world and that on top of all that you are regularly given special mandates, have you negotiated an increase to your budget with Treasury Board? Does Treasury Board seem willing to give you more resources and money so that you can do your job effectively?

    Ms. Sheila Fraser: In fact, we are planning on going back to Treasury Board with a request for additional funding, but we are just in the process of preparing our case and supporting arguments, as well as assessing how much we need. In short, we are still at a very preliminary stage in the preparation of our request.

    Mr. Odina Desrochers: So it would be too early to ask you how much...

    Ms. Sheila Fraser: Yes, it is too early, even more so because we still have not even begun talking with the secretariat.

    Mr. Odina Desrochers: Thank you, Ms. Fraser.

    Now let me put some questions to Ms. Gélinas.

    Once again, you have spoken from the heart. You said that there's much talk about environment, but that concrete actions are late in coming. You also told us that a petitions process is underway and that currently petitions are coming in at the rate of one a week. Could you tell us, without going into details, what kind of petitions are sent to your Office and if many of them come from Quebec?

    Ms. Johanne Gélinas: It varies a great deal, and as many come from Quebec as from other regions of Canada. In some cases, we must verify the federal mandate with regard to a given file; forest management in Quebec is an example of this. Some petitioners ask us to determine the exact legal or environmental responsibility of the federal government in certain situations.

    Sometimes there are also very specific questions about what a department is doing regarding a specific file. For instance, last year, we received a petition that dealt with the federal government's position with regard to GMOs. In cases like that, instead of getting a specific answer from a department, we get a collective answer from the government machinery as a whole.

    Basically, there are all kinds of issues, and in the vast majority of cases, the questions are very specific, clearly targeted and very well documented; and the answers, in most cases, are of the same quality.

º  (1620)  

    Mr. Odina Desrochers: Does your Office answer these questions or do you send them to the departments involved?

    Ms. Johanne Gélinas: First let me clarify that the petitions we are talking about are not lists of signatures. This potentially confusing term simply means a request made by a Canadian residing in Canada.

    We are intermediaries. We look at the request and ensure that the departments involved receive a copy of the petition, that they respect the time lines--the Auditor General Act provides for statutory timelines --and that the answer is sent to the petitioner. After this, we can publish this information, not only in our annual report but also, since last October, on the Auditor General of Canada's website. Moreover, we have begun doing follow-ups on some specific commitments made by departments when answering petitions.

    Mr. Odina Desrochers: You said that you set up this process to try to establish a greater connection between citizens and your organization. When people send you petitions, are they using this new avenue because they did not get the answers they wanted when they made their requests directly to the departments?

    Ms. Johanne Gélinas: We did not check that, but in fact, some petitioners, after having made a request, say that they are not satisfied with the answer or that they did not get any answer to their request. What really matters is that we know that the process, under our management, ensures that Canadians will get an answer within 120 days.

    Mr. Odina Desrochers: Ms. Gélinas, are you able to manage your budget envelope adequately or do you, like Ms. Fraser, have to deal with special mandates that you get at the last minute?

    Ms. Johanne Gélinas: We always end up working within the limits of the budget envelope, whether we like it or not. Certainly, we would like to have some more funds so we could do more.

    On the other hand, let me add that more and more, within the Auditor General's Office, the commissioner's group is collaborating with other teams. In some cases,we are involved in an audit dealing with an environmental issue, for instance in fisheries or in biotechnology. We are providing more and more resources to other groups. Such groups did not always do environmental audits, strictly speaking, but, in some cases, their audits include an environmental component. So I am also being called upon more and more often, even within the Office.

    Mr. Odina Desrochers: Do you have a separate envelope from that of Ms. Fraser, or are both organizations coming instead under the same umbrella?

    Ms. Sheila Fraser: The commissioner belongs to the Office, and the envelope is meant for the Office as a whole.

    Mr. Odina Desrochers: Thank you.

[English]

    The Chair: Merci beaucoup, Monsieur Desrochers.

    Mr. Mahoney.

    Mr. Steve Mahoney: Thank you, Mr. Chairman.

    To the Auditor General, you report basically four times a year to this Parliament, which is a relatively new practice. It generally was once a year. In another life I was a provincial MPP, and our auditor reported once a year. Is it a much more proactive situation here in Canada than in, say, Britain or Ontario or other provinces?

    Ms. Sheila Fraser: Practice varies quite a bit. There are some, I believe, who still only report once a year. There are others, though, who report when ready and have no limit on the number of reports. If you look, for instance, at the UK, they can report at any time.

    Mr. Steve Mahoney: That would obviously have a major impact on your budget. The more you report, it would seem to me, the more money you need.

º  (1625)  

    Ms. Sheila Fraser: I'm not sure. I know there are some people in our office who would probably argue that reporting when ready would be better, but I think having four tabling dates imposes a rigour and gets products delivered.

    Mr. Steve Mahoney: On the issue of budget approval, since your office obviously needs to maintain independence, would it be more appropriately done by some body other than this committee, such as the internal economy committee of Parliament? Whether we admit it or not, there's always the possibility that we all get a little too cozy and a little too close--every week you bring us gifts, and we'll vote for your budget.

    Ms. Sheila Fraser: That's why we like the UK model, which is the commission, so it's not necessarily the public accounts committee. I think thought also has to be given to the government operations committee, because they also have a mandate to review estimates. So there might be a possibility to involve that committee in some way, or the chair of that committee. I think there are different options, but I would agree that we would probably favour a commission kind of approach.

    The Chair: I believe it's within the mandate of the new estimates committee to look at the estimates process.

    Mr. Steve Mahoney: Could I ask about the process of what we do? You've published a pretty impressive list in your plans here of what you intend to do, which would obviously take a lot of time, and therefore a lot of money. One of the things I think we all want to do is say to the public that as a result of the work of the Auditor General, they can have confidence that there is a watchdog--I notice you say you're referred to as a watchdog, when it's Parliament that should be the watchdog, and I think that's appropriate. Are you concerned at all that when your reports come out, the focus tends to be on a minority of the issues, usually just the negative ones, be it in the media or with the opposition?

    I don't say that critically, because I've been where the opposition is in Ontario, and it was pretty nasty from time to time. It is a very adversarial position. Not to debate the issue of your report on the gun control situation, the numbers that were thrown around, as I pointed out in some of my questions to you that day, were grossly exaggerated and continued to be used in that regard. So how do we deal with that without expecting you to come out and correct parliamentarians? I don't think that's your role. I don't think your reports--and it's got nothing to do with you or your reports--the way we use them and abuse them in the parliamentary system, provide any level of confidence to the public. In the news media on the days of your reports the headlines are just about all the problems and how bad it is. The public gets a terrible sense of discouragement from the reports. So it's not achieving our goal.

    Ms. Sheila Fraser: I agree, and I am concerned about the impression that could be left with the public by our reports. First, I think we all have to recognize that audit, by its nature, tends to focus on areas for improvement, and I will admit that we do tend to give more coverage to those areas than the areas where progress has been made. We do try very hard in our reports to be balanced. If you look at any report, you will see us mention good practices and progress that has been made. Unfortunately, that is not what gets the headlines.

    I try to explain, in speaking engagements, the role we have, that in fact, the role of the office is very much to help strengthen and support institutions in an open democracy, and that we should actually be very proud of living in a country where you can have open criticism and suggestions for improvement from an auditor general on a frequent basis. That being said, I recognize, as Mr. Mahoney has mentioned, that at times our reports are taken out of context or words are put in my mouth that were not said. I don't know if there's anything I can do about that. I think it's up to the political process to deal with that.

º  (1630)  

    Mr. Steve Mahoney: One of the learning experiences from the issue of gun control was the realization that you establish these advisory committees. I didn't know this, even though I'd been on this committee for many years prior to coming back on. The point that I was making and still have some concern over is how we identify these people, qualify these people. If you're doing an audit for value of the gun registry, for example, if someone is there with a bias, one way or the other, I think that's inappropriate. We're not necessarily talking about whether or not the policy of the government is the correct policy, we're talking about whether or not it's being implemented in a value-for-money way, in an appropriate way. Without rehashing that issue, I'd like to know what process you use and what you look for. If you're doing value-for-money, it would seem to me it should be someone who is more focused on the financial aspects of the issue than on the political aspects.

    Ms. Sheila Fraser: Advisory committees have existed for a very long time in the office. They may go back actually to the beginning of the value-for-money work, so it would be 25 years of practice. These people are consultative, they do not form part of the team. They are a committee to give advice and insight, if you will, on a particular issue to the Assistant Auditor General or the Auditor General, and at times the teams can work with them and ask them questions. Generally, they will come to two, perhaps three, meetings, where we will discuss the scope of the audit and the kinds of issues we want to look at. There's always a second meeting, where we go through findings with them. We use them largely to make sure we've identified the right issues and are being realistic in what we are suggesting. We try to pick people who are experts in the area. We have many who are, for instance, former deputy ministers, former government officials, people who are knowledgeable and have worked in the area. To be quite honest with you, while you say we shouldn't pick people who are biased, I think a lot of people are partial one way or another on issues, and it is good for us to hear that discussion. It would be totally inappropriate for us to comment on policy, but you can have people who have very different views about the application and the problems people may be encountering. It is healthy for us to see that, and it has been a very valuable tool. In fact, sometimes departments will even suggest people to us who we use on advisory committees.

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

    Mr. Mayfield. We're now on round two, so it'll be four minutes.

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

    I'd like to begin where I left off the last time, with the issue of how the Auditor General's budget can be appropriately established. With our conversation, Ms. Fraser, about the British model, I think of the role of British MPs compared with the role of Canadian MPs, and they certainly are not the same roles. It seems to me that British MPs do have more independence. It would really be great if a parliamentary committee such as this one were fully supportive of what you were doing and cooperating in looking at this budget, but I don't believe this committee, particularly with the government always having a majority, would have the same independence as even the Treasury Board. Maybe the Treasury Board is not as independent as I would like it to be or think it is, but I would have difficulty trusting the independence of this committee in dealing with an important issue like the budget with you and your staff. I'm wondering if you've given some thought to the lack of independence this committee might have in dealing with that issue with you, Ms. Fraser.

º  (1635)  

    Ms. Sheila Fraser: No, we haven't specifically looked at that issue. I would just repeat that we feel, as we do work for parliamentarians, they should be the ones we deal with for our funding. In trying to develop a proposal, we would probably consult with certain members of this committee, and perhaps other MPs, so that might be an issue we could discuss with them.

    Mr. Philip Mayfield: You mention the difficulty in pushing the issue with Treasury Board. Are you personally satisfied with the budget as it has come to be out of your discussions with Treasury Board?

    Ms. Sheila Fraser: Yes and no. We did get the funding increase we had asked for, but after a very long and laborious process. We made a commitment to try to find a mechanism, and two years later we're nowhere on that one. We will be going back with requests for additional funding. My guess, if history repeats itself, is that it will again be a long, laborious process. I think it should be better. We are not in a perilous situation. The funding last year was fine. I think, going forward, though, we need to have a better mechanism for dealing with funding requests, especially when we are faced with additional work, new requests. We have a whole series of financial audits for new entities that are created, and there's no funding that comes with that. So we have to find a way to have a review process. I'm not saying, every time there is a new appointment, we should get a cheque in the mail, but I think there has to be a process established for the review of this on a more regular basis. It shouldn't always have to be that we go back and start quibbling. I think it's a process that really needs to be looked at, but we will be going back for additional funds this year.

    Mr. Philip Mayfield: I'd like to change gears and go on to the next step, but I'm asking you, Mr. Chairman, if I have to come back again.

    The Chair: You'll have to come back--you're down to five seconds.

    Mr. Philip Mayfield: That'll be fine. Thank you very much.

[Translation]

    The Chair: Mr. Desrochers, you have four minutes.

    Mr. Odina Desrochers: Thank you, Mr. Chairman.

    Ms. Fraser, in your statement, number 25, you say that in 2001-2002 fiscal year the cost of operations was $ 67 million. You also state that the Main Estimates for the Office for 2003-2004 are $66.5 million. So the statu quo remains, and nothing has changed although, in the meantime, you have been given additional mandates.

    I also notice, as I read your text, that you held consultations and that you even studied the United Kingdom model. Considering your needs and the mandates you must carry out now, is this budget, compared to what is practised in other provinces or countries, proportional to the quantity of work you have to do?

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

    I must mention that the figures you mentioned are appropriations—

º  (1640)  

[English]

    Mr. Odina Desrochers: You can speak English.

    Ms. Sheila Fraser: Main estimates

[Translation]

    We are expecting supplementary estimates for salary increases. Compared to last year, there will be an increase.

    We have information about expenditures by provinces and other countries, but I hesitate to use these as comparisons, because our mandates are very different. In the United Kingdom, for instance, they do audits for every schoos and every hospital. Their mandate also oblige them to follow the dollars, as it were. They can even go so far as to audit subsidies and things like that. In the United States, about 90% of the work done by the General Accounting Office is conducted by Congress or is done in response to requests made by Congress.

    In countries like New Zealand and Australia, audits are even contracted out to the private sector. This has nothing at all to do with our model. In my opinion, we have to be careful when making comparisons.

    Mr. Odina Desrochers: I would like to put the same question to Ms. Gélinas. Based on the consultations you held with other provinces or countries, would you say that the Canadian government is giving your work the merit it deserves?

    Ms. Johanne Gélinas: I am privileged that I can say that my position is unique in the world; consequently, it is difficult to make comparisons. In my opinion, creating a position like mine was a very courageous move by the government at that time. Consequently, when I have the opportunity to travel abroad, I try to convince other countries to adopt a model similar to ours.

    Mr. Odina Desrochers: You are promoting your position.

    Ms. Johanne Gélinas: Although there is still much work left to do, we can say that we are leaders in the field of sustainable development. Creating this position, and obliging departments to produce sustainable development strategies as well as a petitions process have no equivalent anywhere in the world. This is only found in Canada.

    Mr. Odina Desrochers: Do you have provincial counterparts?

    Ms. Johanne Gélinas: In Ontario, there is an environment commissioner's position. Although it also carry out investigations, its functions are very different from mine. Elsewhere in Canada, in the provinces, there is no environmental commissioner. Quebec is looking into the possibility of creating such a position, but nothing concrete as yet come about.

    Mr. Odina Desrochers: Is your work anything like what the BAPE is doing?

    Ms. Johanne Gélinas: No.

    Mr. Odina Desrochers: I have finished, Mr. Chairman. Thank you very much.

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

[English]

    Mr. Tirabassi, four minutes.

    Mr. Tony Tirabassi (Niagara Centre, Lib.): Thank you, Mr. Chair.

    I'd like to welcome the witnesses appearing before the committee again today.

    Ms. Fraser, you stated the scope of your auditing process: 70 federal departments, 40 crown corporations, 10 departmental corporations, and 60 other entities. Then you go into the territorial agencies and the others. It seems quite involved. How do you determine the priorities of your office at any given time that you're about to submit a report? Is there any formal input by Parliament or parliamentarians in helping you determine what your focus is going to be?

    Ms. Sheila Fraser: We have a statutory role as auditor, so we have to audit the financial statements of all of these entities. That is an annual obligation. In many cases there are deadlines that have to be met, so that is work that has to be done no matter what. Where there is more discretion is in the value-for-money work, in the reports we table in Parliament. It is in meetings like this or in other meetings with members of Parliament that we ask for suggestions on issues we should be looking at. When we come before the committee with a report, there might be mention of a follow-up or things like that, so we try to take that into account when we do our planning. As I mentioned, we are now doing about 30 of those audits a year. I would say that three or four years ago we were doing closer to 40. We have actually been cutting back the number of reports and audits we have been doing, largely because of additional statutory work that has been coming into the office. There's a risk assessment too to see what areas we think we should be looking at, what is coming on the legislative agenda, what are areas where we think we can contribute to parliamentarians, and then we try to pick the audits we should be doing.

    Mr. Tony Tirabassi: When you've done initial reports, how do you determine what kicks in the priority for a more immediate follow-up?

    Ms. Sheila Fraser: Much will depend on the action plan departments have developed or if they have developed one. Some will depend on whether there are any parliamentary reviews going on, for instance. Some of it, to be quite honest, will depend on the availability of the staff and the skills they have and, again, a risk assessment of the areas we think we need to go back on. We were going to do a follow-up, for instance, on human resources modernization. Given the new bill that's coming in, we have deferred that. And we are trying to give more time in many cases. There was a standard policy before on following up after two years. We will be in many cases lengthening that delay to allow departments the time they need to implement actions to correct the problems we've identified. So we will be probably moving more to three, four, perhaps even five years. We go back through the audits and see where we think we need to go back and take a look.

º  (1645)  

    Mr. Tony Tirabassi: Thank you.

    Thank you, Mr. Chair.

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

    Mr. Finlay, four minutes.

    Mr. John Finlay (Oxford, Lib.): Thank you, Mr. Chairman.

    Welcome again, Auditor.

    I'm looking at what you read to us, and there are just a couple of questions here. In paragraph 25 you say, “In 2001-2002 our net cost of operations was $67 million, about $4 million more than the year before”, which I figure is about a 6% to 7% increase, and then you say, “We spent more money on our audit”, and so on. Is that what the $4 million was spent on?

    Ms. Sheila Fraser: The increase in spending, the $4 million, was largely on these three items, public accounts, special examinations, and audit methodology.

    Mr. John Finlay: In paragraph 26 you say that for this year the main estimates are $66.5 million, which is a split between what you spent and what you were awarded last year, as I read the figures, and then you say, “In addition, the Treasury Board has approved the inclusion of $500,000 in the 2003-2004 supplementary estimates for planned spending to support our space renewal project, which was originally estimated at $3 million.” Does that mean it's only going to be half a million now?

    Ms. Sheila Fraser: We will be spending an extra $500,000. This is the refit of the office we're in at 240 Sparks in Ottawa. Public Works is redoing the four floors we occupy. Two are done, two are under way, and this was largely for furniture and other things.

    Our comptroller may wish to add a few comments.

    Ms. Mary Clennett (Comptroller, Office of the Auditor General of Canada): It's mainly for furniture. It's based on an estimate that would have been made about two years ago, and things now have changed, and the estimates can be off by about 15% to 20% inherently.

    Mr. John Finlay: It's like remodelling your bathroom, I guess.

    Then you say you expect some additional funds, “the result of either economic adjustments or new collective agreements, as well as the carrying forward of unspent funds from 2002-2003.”

    Ms. Sheila Fraser: When we start off the year, if there are economic adjustments to salaries or we sign a new collective agreement, which we will be doing, because our collective agreement ended yesterday, any increase has to come through the supplementary estimates. Though we might have an estimate of how much it could be, this doesn't appear in the main estimates.

    In addition to that, at the end of the year there are always unspent funds, because we can never go over our vote. It's impossible to come in spending exactly what you have budgeted, so you always have an unspent amount, and any government department is allowed to carry forward up to 5%. That also goes through the supplementary estimates. So we are expecting this year that we will have unspent funds. A large part of it is due to this refit, because Public Works has taken longer. It was all supposed to be done by now, but we're actually only starting the two floors, so all the budgets for furniture are going to be carried forward into the next year.

º  (1650)  

    The Chair: Thank you, Mr. Finlay.

    It's a pity we didn't know about that when we had Public Works here last week. We could have asked them why they're running so far behind.

    Ms. Sheila Fraser: It's working, it's fine.

    The Chair: Don't rock the boat, you're saying.

    Ms. Meredith, four minutes.

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

    I apologize for my lateness, but I was required in the House for a speech on budget implementation. Because I'm late, I don't know whether this has been asked before, but during our hearings--I forget what the issue was, probably gun registration--somebody brought up lay individuals who sit to help you review your audit. How are these people chosen, and do you have one of these committees for all the audits you do?

    Ms. Sheila Fraser: This is a standard part of our value-for-money practice. An advisory committee is actually required for every audit we do, and every special examination of a crown corporation as well. We are the ones who select the people. As I mentioned, they are advisory, they are not part of the audit team. They do not do any audit work per se, but are there to give us their opinions on the issues. We use them very much at the beginning, when we're planning, to make sure we have identified the right issues to look at. As we are in the completion of the audit, we review the findings and our reports with them to make sure we are realistic in what we're saying people should be doing and have given importance to the right issues. So we try to pick people who know the area well and have had experience in it. We have many former deputy ministers or senior people of government. We have people from various areas, professors. We were doing a whole series of special examinations on museums, and we had someone who had run the museum system in France with us. We have people who come from the U.S. to help us in certain areas.

    Ms. Val Meredith: Do you pay their expenses or a per diem? Are they part of your estimates?

    Ms. Sheila Fraser: They are consultants, so we pay their expenses and a per diem based on their qualifications and our rates for consultants. They are paid for the work they do for us.

    Ms. Val Meredith: Is it only in value-for-money audits that you use them, or do you use them in other types of audits as well, such as a program audit?

    Ms. Sheila Fraser: For all the audits in the reports we table in the House of Commons there would be an advisory committee. We also do what we call special examinations, which are like value-for-money audits of crown corporations. We do those once every five years, and we use advisory committees there. We also have in the office senior panels. One is on technical accounting issues, so we have representatives from many of the major accounting firms and various other people, and they advise us, generally on the public accounts audit, when we have accounting issues or technical issues we have to deal with. Johanne has an advisory committee on environmental issues, I have a committee on aboriginal issues, and I also have a senior committee of advisors, and we bring more the strategic issues to them.

º  (1655)  

    Ms. Val Meredith: So these are advisors who are on staff in your department you would bring in all the time, or are they also consultants?

    Ms. Sheila Fraser: These are consultants we bring in, in many cases for one or two meetings a year, very senior people, people who have a lot of insight into government. For instance, the panel of senior advisors has included Ray Hnatyshyn. Monique Bégin, David Smith from the CICA, Lorna Marsden from York University, Gordon Ritchie. They're people who have very different opinions on issues, which is healthy for us, and they actually give very good advice to us on some of the strategic issues we're dealing with.

    Ms. Val Meredith: Thank you.

    The Chair: It's nice of the government to listen to advice they got from the other side of House at times too, isn't it?

    Mr. Murphy, four minutes.

    Mr. Shawn Murphy (Hillsborough, Lib.): Thank you, Mr. Chairman.

    I want to pursue some of the HR issues and challenges you face. I assume everything is done perfectly in the department.

    Ms. Sheila Fraser: I wish.

    Mr. Shawn Murphy: You indicated in your report that you have 560 full-time equivalents. I assume your personnel take a large portion of your budget, and I can envisage the qualifications most of your personnel would have. Do you have a problem right now in filling positions or not? Perhaps you could elaborate on how you go about that.

    Ms. Sheila Fraser: For the professional staff, the audit staff, we require either a professional accounting degree or a master's degree. That is the minimum qualification, and many of our people have actually much higher qualifications--we have doctorates. We have the status of separate employer, so we can conduct our own recruiting and hiring practices. We have been very successful, I would say, in the last year. We've had quite a blitz in recruiting. I don't know how many people we brought into the office, but I think it's probably close to 30, net, though we hired maybe 75 people, because there's a lot of turnover in certain areas.

    We do have difficulty with certain profiles. We've tried to increase the number of people, for instance, with IT backgrounds, because we're doing more work on controls in major systems in government. We have had some success in filling those positions, but it is still a challenge, because there aren't a lot of those people. We have a challenge getting more senior people, CGAs or CMAs, professional accountants, again because there is a shortage generally in the market.

    I think, overall, we are doing pretty well. We have revamped our recruiting program. We're targeting specific universities more and actually going out. I've been out to several universities, as has Johanne, trying to become a little more visible, and I think we've been pretty successful in that.

    Mr. Shawn Murphy: You say you have a high turnover rate. Is your turnover higher than what you normally see in other departments?

    Ms. Sheila Fraser: I don't know how to compare us with other departments. When I came in from the private sector, I laughed, because people were talking about how high the turnover was, and I think it was 5% or 6%, I said, this isn't turnover compared to an accounting firm. It was nothing. We have a lot of people who leave to go to government. Because of the additional funding put into internal audit and the focus on financial accounting in government, we have many people who are lured away into government and many departments. The revenue agency, for example, has many of our former staff members working there, which I don't think is necessarily a problem. If we have good people, we hate to see them go, but if they are going to help government.... I actually met one deputy minister on the street, and he was going on about how great one of our former staff members was in setting up his internal audit shops. So I guess we're doing our bit to help them through things.

»  (1700)  

    Mr. Shawn Murphy: I take it from what you're saying that you have openings, you advertise for the openings, and you fill them in the conventional manner, but you also do recruiting at the entry level from universities.

    Ms. Sheila Fraser: We have a student in training program, if you will, so people who, for instance, are going through for the CA program write their exams and do their training period with us, qualify with us. We can have articling students, so we do have many students coming in after they've completed their degrees. We also bring in people who have completed masters' degrees at the entry level, and then we'll train them. That was for several years reduced when the freeze was on in government, and we started to have difficulty because we didn't have enough people at the more junior levels. We've ramped that up, and we're probably hiring at least 20 to 25 more per year at the entry level. When we have to do targeted searches for specific skills, we will at times use headhunters, but all of our positions are posted, through the Public Service Commission, on our website. Last year we did full page ads in certain newspapers.

    Mr. Shawn Murphy: Are you bound by the geographical radius the rest of the public service is under?

    Ms. Sheila Fraser: I don't think we are.

    Mr. Shawn Murphy: You'd accept an application from somebody who lived outside the Ottawa area?

    Ms. Sheila Fraser: Of course. We get most of our people from outside Ottawa. We have regional offices across the country, and they do recruiting in those areas. Many of our students, for instance, have been coming from the Maritimes, from New Brunswick.

    The Chair: That should warm your heart, Mr. Murphy.

    Mr. Shawn Murphy: I'm not from New Brunswick.

    The Chair: The Maritimes.

    Mr. Mayfield.

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

    Ms. Fraser, in the plans and priorities, page 18, it says:

In the area of accountability to Parliament, we will conduct an audit of ethics and will report as well on issues arising from our annual audit of the Public Accounts of Canada.... Our audits will cover a broad range of issues...

There's a list there, and a bit beyond that there's another ambitious list of issues that would be, in my mind, considered policy-oriented, ethics, for example. Ethics in government is a pretty loose term, depending on which party is using that term. I was listening with some interest to Madame Gélinas, and I was particularly struck by her travelling to other countries to convince other governments. That strikes me as going beyond holding our government to account, whether it's comparing performance to mandate or value for money spent. How do you prevent your department from becoming activist, rather than being a department that is there to hold the government to account on behalf of Parliament? In relation to Ms. Gélinas' comments, it strikes me that we have an environment department and a minister who sets the policy, and it wouldn't surprise me to hear him using that language, but I was particularly struck by what seemed to be an activist role. Also, I'd like to know how you think of ethics. Are you moulding the ethical pattern, or are you reviewing it and calling to account? You have someone who is qualified in environment. Do you have an ethicist in your department too?

    Ms. Sheila Fraser: There is always a great deal of discussion about areas of policy, and it is clear to us that we should not question policy. If I could just talk a minute about the ethics chapter, in 2000 the office did a review of ethics, but more the implementation of guidelines in ethics, the ethics policies that existed. What we are going to look at this year is what progress has been made on that initiative, because it was a large initiative, and we also want to see if there are any new areas that should be addressed. We're still at the very early stages of this audit, but one thing, I think, is the whole question of accountabilities. It will be more of a discussion and a raising of issues. We will not be proposing a policy, but I think it behoves us, if we see issues in our audits, to raise those with both the public service and parliamentarians for consideration.

»  (1705)  

    Mr. Philip Mayfield: How do you respond, Mrs. Fraser, to Ms. Gélinas' statement that she goes to other countries to convince other governments?

    Ms. Sheila Fraser: I'm not sure it was convincing other governments.

    Mr. Philip Mayfield: I think those three words were hers.

    Ms. Sheila Fraser: But the committee in that case was studying the possibility, so it was to explain how we do it here. There was a policy decision to create a Commissioner of the Environment with certain legislative and statutory responsibilities, one of which is to audit sustainable development strategies, another to manage petitions. So it's a question of explaining the role of the commissioner, and while we are supposed to remain unbiased, we are not impartial. We are partial to good financial management, we are partial to good environmental stewardship, good ethical behaviour. So there are values that we do try to promote in our work.

    Mr. Philip Mayfield: Do you compete with other departments to do that?

    Ms. Sheila Fraser: We do have a role of audit, they have the role of managing, and we have to be clear that we shouldn't be trespassing into it, but there are areas where we can work jointly with government. We are working, for instance, with the Treasury Board Secretariat on joint projects, and I think there are roles we can play, as with the study we did last December on a new definition for accountability, which was more for discussion.

    Mr. Philip Mayfield: We began the conversation on your having sufficient budget, and I guess as we talk about challenges, it's not only the money you need, but others are going to judge whether it's appropriate for you to spend it in that regard. I think this is an issue here. If I were on that committee, I would be examining you and your department much more closely about how appropriate it is when you are taking upon yourself, it would seem to me, the role of another department, whether it's a worthy cause or not, because it falls beyond those two classic areas of responsibility you remind us of quite appropriately, value for money and honouring the mandate.

    Ms. Sheila Fraser: The one element where I think we really can contribute is that we often have a much broader view than any specific department, so when we look at our audit work in many departments, we can raise issues that are government-wide. If parliamentarians think it was inappropriate that we were into some of the areas, they should tell us. We are working for parliamentarians, so if there are ever areas you think it's inappropriate for us to be in, I would hope they will be raised with us.

    Mr. Philip Mayfield: Thank you, Mrs. Fraser. Thank you, Mrs. Gélinas.

    The Chair: Thank you, Mr. Mayfield.

    I always ask a direct question, Madam Fraser. Do you have enough money in your budget to do the job you want to do?

    Ms. Sheila Fraser: As I mentioned earlier, Mr. Chair, we will be preparing a submission to the Treasury Board Secretariat and building a business case for additional funding. I would not say it is as critical as it was, say, two years ago, when we asked for an increase of 15%, but we do need additional funds.

    The Chair: And if that matter is not resolved satisfactorily, you'll advise the public accounts committee.

    Ms. Sheila Fraser: We will.

    The Chair: Okay.

    Back to the pay equity cases that were hanging around some time ago, has that matter been resolved? What's the scoop on that?

    Ms. Sheila Fraser: Those cases are before the courts. There has been very little, if any, action taken, and we will have to just follow the course of time. There's nothing we can do in the meantime.

»  (1710)  

    The Chair: And you're accepting the position that the Treasury Board is doing it on your behalf?

    Ms. Sheila Fraser: Yes. We're obviously named in this suit, which has several separate employers as well. A complaint has been launched as well before the Human Rights Commission. We'll have to see how that evolves, but I suspect it will take some time.

    The Chair: Again, if you feel that you need to advise the public accounts committee, please feel free to do so.

    Ms. Sheila Fraser: We will.

    The Chair: In the report on plans and priorities, on page 14, you've got a couple of graphs, one of which is “Parliamentarians agreeing that the Office had a positive impact on their committee work (survey done every two years)”. You had close to 60% of parliamentarians on your side, and you hope to get that up closer to 80%. How are you coming along on that?

    Ms. Sheila Fraser: We will have to see next year, when we will conduct the next survey.

    I should mention too that an executive summary of the survey was to be sent to all the people who participated in it. Unfortunately, there have been delays in translation, but you should be receiving it soon. We will make sure anybody who is now a member of the public accounts committee, but was not at the time of the survey also receives a copy of that summary.

    The Chair: Your question, Madame Gélinas, was a little bit different, the graph showing “Members of the Committee on Environment and Sustainable Development agreeing that the findings of the Commissioner had a positive influence on their work”. In 2001-2002 you were just over 40%, and your target is 60%. You've got a very small survey, just the committee, versus Madam Fraser's survey of all parliamentarians. Do you have any comment on that?

    Ms. Johanne Gélinas: It was obvious when I joined the Office of the Auditor General that my position was not well known. We have made a lot of effort over the last year to have discussions with parliamentarians. I'm really hoping next time we will present you with statistics to show that we have reached the target.

    The Chair: In the chart on page 15, “Recommendations endorsed by the Standing Committee on Public Accounts”, you've got some mixed support: in 1999-2000 just over 50%, in 2000-2001 closer to 80%, then we've fallen back for 2001-2002, with just about 50%. Have you any comments on that, Ms. Fraser?

    Ms. Sheila Fraser: We look for explicit endorsement, and it depends sometimes on the way the report is phrased. The report might be generally supportive, but if it doesn't specifically endorse our recommendations, we don't include it in there.

    The Chair: Does it also reflect the number of chapters the committee looked at. If we didn't look at as many chapters as a percentage, would our percentage of endorsements fall down?

    Ms. Sheila Fraser: No, that would be the number endorsed in the reports. What could be a question is when the reports actually come. If reports come after a cut-off date, that could affect the percentage as well.

    The Chair: Okay.

    Madame Gélinas, you said “Canada faces a new kind of deficit, an environmental and sustainable development deficit, that it is not being managed as a priority and that continues to grow.” What can we do?

    Ms. Johanne Gélinas: Start walking the talk, I guess.

    The Chair: Okay.

    Ms. Johanne Gélinas: That conclusion was based mainly on, the audit we did, but take the example of federal contaminated sites in this country. We have talked about a $2.5 billion cost to deal with those environmental liabilities. So when we're talking about a sustainable development deficit, what we're saying is that there's no way we can manage this issue in the next ten years, it will take 25 to 30 years. We are passing the burden to our children. This is totally against the principle of sustainable development. We're talking here about managing problems of the past, we're not talking at all about new, emerging problems. We can think about invasive species, biodiversity protection, we can look at some environmental health issues. So just to deal with past problems may take decades, and we haven't started to look at the emerging ones. Mr. Manley also said, when he presented the budget, the government has to deal with the environmental deficit. I think we have a lot of evidence that we have a deficit that needs to be dealt with on the environmental side and on the sustainable development side.

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    The Chair: Now that we're moving to accrual accounting and these are largely identifiable costs, is this intended to be reflected as a liability on the financial statements of the Government of Canada? Will that be what we see from here on in?

    Ms. Sheila Fraser: There will be a liability for environmental costs. However, it will be for sites that are known, for which an evaluation has been done, and for which the government assumes a responsibility. There could be many sites for which there is a potential liability, but it hasn't been quantified. But there will be an amount booked on the financial statements of the government.

    The Chair: So where the specific issue has been identified and a reasonable quantification made of the cost, that will be included as a liability. I think of the financial statements as they are today and land claims, and you have an amount as a note to the financial statement, an estimated amount, but your best guess. Can we expect that there would be a similar type of note for environmental liabilities that we have a reasonable idea are out there?

    Ms. Sheila Fraser: There could be a note explaining how the liability has been calculated. I doubt that the government would be able to put any kind of quantum on the sites for which a liability hasn't been recorded, because they would not know how much the money is. You'd go through the whole analysis until you decide what you are actually going to do with some of these sites. I think the first question is, is the government responsible for some of these sites? What is the action that's going to be taken? Then how much is it going to cost? Once you've done all those things, it should be booked as a liability. In the case of the aboriginal claims, where there is a suit and an amount has been put into a law suit or the determination of a claim, that's the amount we're reporting as a contingent liability, but we don't have a way to get that number for the sites that haven't been evaluated yet.

    The Chair: Since it's not easy or appropriate within accounting definitions to come up with a number, even for a note to the financial statement, would it be appropriate, Madame Gélinas, to have a chapter in your report giving a global assessment of our past errors and what it's going to take and how long it could take to rectify the problem, as a warning to us today and future generations that we should be better stewards and managers of our environment?

    Ms. Johanne Gélinas: This is what I've tried to do, but I cannot come with an overall picture once a year. I move step by step, looking at some of the critical issues, the more risky ones, and what we're planning to do is come back in 2007 with another evaluation of the deficit in some way. We're going to try to follow the deficit we have defined this year, figuring out five years from now how much improvement the federal government has made.

    The Chair: To see if we're making progress, if the deficit is getting larger or smaller. That was the debate we had less than 10 years ago on the financial side, and it's certainly very much an issue on the environmental side.

    Do you ever find that you have a conflict between yourselves, Madam Fraser, as the Auditor General of Canada, and Madame Gélinas, as the Commissioner of the Environment and Sustainable Development, that when you're looking at value-for-money audits, you have to look at the environmental side as well as the financial side, because it's all under your office? How do you resolve the differentiation of responsibilities and any potential conflicts you have, where Madame Gélinas wants to go in one direction and you feel we should be going in another direction?

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    Ms. Sheila Fraser: The commissioner has certain statutory obligations that have to be fulfilled, the audit of sustainable development strategies, petitions, and at the time of the creation of the commissioner, the office made a commitment to have a certain amount of funds and a certain level of effort devoted to environmental audit. The commissioner develops her plan, and we sit as an executive group and develop the whole plan for the office. We do try very much to link the work I would have in my reports with the commissioner's work and to work very much collaboratively. For instance, this year there's been a large focus on international issues in Johanne's report, and we will be coming out in September 2004 with the report on EDC's environmental framework.

    The Chair: EDC?

    Ms. Sheila Fraser: The Export Development Corporation. In 2001 we were asked by government to audit that, and we've been asked to go back and re-audit it.

    So we try to link as much as we can to the subject areas and support each other. As Madame Gélinas mentioned earlier, her team is very much involved with the other audit teams in looking at issues. For instance, even though biotechnology will be reported on in one of my reports, her team has been very heavily involved in that. There's a lot of exchange back and forth in the office, and we really feel that on many issues environment should be an integral part of the audits we do and that there's not a conflict per se.

    The Chair: Okay.

    Mr. Mayfield, do you have a short question?

    Mr. Philip Mayfield: Yes, I do.

    You may have answered it in part with the chair's last question, Ms. Fraser. There's quite a list of areas there, and it's more than just auditing a department's performance that I'm looking at--at least, that's my perception today. I'm wondering how you and your staff prioritize and decide which of these areas you're going to move into and which you're going to be stepping back from and leaving to another time.

    Ms. Sheila Fraser: We changed our methodology about three years ago to focus much more on risk. For each department we do a planning exercise, where we identify, in conjunction with the department, the risks they have to the achievement of their objectives. Then we look at those various areas and put them through a filter to ask if they're areas we can audit. It could clearly be an area of policy. Do we have any expertise or anything we can bring to this area? There may be issues we really shouldn't be looking at or don't have the expertise to deal with. Then we look to see if we're covering any of these issues off in our financial audits. What is left comprises possibilities for a value-for-money audit. We do the plan then for about five years out for each department.

    We haven't completed them all, but we've done almost all the major ones. We look at the major issues going forward, then we sit around and have a one-day or two-day session, where we determine the number of audits we can do, the areas we think are higher priority, and we try, if we can, to link subjects together. We will plan our audits out. We'll be starting soon the planning process for late 2004-2005. It takes us about a year or 15 months to do an audit, so we have a very long horizon. We will know three years out, pretty much. Next year, obviously, is firm, but after that it can change. A lot can change too with events that happen, different priorities. If we're aware, for instance, of some legislative review that might be coming. With the legislative review that's coming on money laundering, we thought it might be useful to have a piece come in just before that. And some plans can change, as can our own staff mix, the people we have in different areas.

    We try to do it with some precision, but plans always change. It's largely risk-based.

    Mr. Philip Mayfield: Thank you very much.

    The Chair: In closing, I would like to thank again the Auditor General and the Commissioner of the Environment and Sustainable Development for the work they do. We are in a democracy, and a democracy means a government has to be held accountable. We, as parliamentarians, are the people whose job it is to hold government accountable, but we can't have 300 people going through the books of the Government of Canada, we'd all be tripping over each other, and therefore we rely on our officer of Parliament, Ms. Sheila Fraser, and her staff, who have been serving Parliament for coming up on 125 years, you and your predecessors. Canada was one of the first countries in the world to appoint an independent office of the auditor general 125 years ago, and it has stood us in good stead. On behalf of the committee, on behalf of all parliamentarians, I'd like to thank you both and all your staff for the hard work you do and the dedication you have, not just to the Parliament of Canada, but to the citizens of Canada. As you know, your constituency is the citizenry of Canada, who rely on Parliament and its officers to hold the government accountable. We thank you for a job well done.

    Do you have any closing comments?

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    Ms. Sheila Fraser: No. I would like to thank you for your interest in the work of the office. If any members have issues they would like to suggest we look at, we would very much appreciate getting those suggestions. I do hope you will be able to join us on the Hill on May 14. As a little note of history, at the time of Confederation there was an auditor general, but the Auditor General was also the Secretary of the Treasury Board and the Deputy Minister of Finance, and anybody who knows anything about auditing knows that wasn't very good.

    The Chair: Okay.

    I do like to report the estimates of the Auditor General to the House, but we do not have quorum at the moment. So when we do have quorum, I will be asking whether vote 20 will carry, which means I report your estimates to the House unchanged.

    The meeting is adjourned.