PACP Committee Report

Government Response to the nineteenth Report of the Standing Committee on Public Accounts

Review of the Roles and Responsibilities of the Treasury Board Secretariat

Responses détaillées aux recommandations

Recommendation 1

Disagreements over accounting treatments between the Comptroller General of Canada and Deputy Heads be communicated in writing to the Auditor General of Canada, the Secretary of the Treasury Board, and the President of the Treasury Board.

Response

As noted in the government’s response to the Ninth Report of the Standing Committee on Public Accounts (39-1), policy proposals under consideration in the area of financial information and reporting would require the Chief Financial Officer of a department to seek advice in writing from the Comptroller General of Canada in cases where it could be reasonably expected that an accounting treatment of a transaction could lead to a material misstatement, an inappropriate application of authorities or a qualification in the external audit report. Should the Comptroller General of Canada not agree with the proposed accounting treatment, this disagreement would be communicated in writing to the Deputy Head, the Secretary of the Treasury Board and the President of the Treasury Board.  Should the disagreement remain unresolved, it would be reported to the Auditor General.

Deputy Heads, as accounting officers under the Financial Administration Act, would make the final determination of an accounting treatment in the departmental accounts as they are responsible for signing these accounts.

Recommendation 2

All Senior Financial Officers within the Government of Canada have a professional accounting designation by 31 March 2009.

Response

The Policy on Responsibilities and Organization for Comptrollership, approved in 1996, has the following requirements related to Senior Financial Officers:

“Deputy heads must designate a Senior Financial Officer (SFO).  The Senior Financial Officer must have a direct reporting relationship to the deputy head.  Depending on the size of the organization, the Senior Financial Officer may delegate his or her authority for key financial responsibilities to a Senior Full-time Financial Officer (SFFO).”

In the case of the largest 23 departments, all have designated Senior Full-Time Financial Officers who typically have a university degree in an accounting related field (e.g., business, commerce, etc.), an accounting designation or both.  In most cases, these individuals are experienced financial managers having spent their careers in financial management.

The Government of Canada is considering a proposal to implement a Chief Financial Officer (CFO) model, which would require the CFO to have both a university degree and an accounting designation.

Part of this proposal would include a transition or phase-in period as there are many experienced and competent SFOs without an accounting designation that play valuable roles in their organizations.  The Government, with the advice of the Comptroller General, is continuing to assess the appropriate qualifications for these positions and the best staffing approach.

Recommendation 3

The Office of the Comptroller General provides the Public Accounts Committee with its plans for horizontal audits and audits of small departments and agencies by 31 December 2007.

Response

The new Policy on Internal Audit came into effect on April 1, 2006 to be phased in over a three-year period.  The Office of the Comptroller General (OCG), within the Treasury Board Secretariat (the Secretariat), is currently in the process of completing the first two horizontal audits, one of which deals with small departments and agencies.   As well, work is continuing on the development of a three-year horizontal audit plan.  The plan will take into account lessons learned once the first two horizontal audits are completed.  The Secretariat will provide the Committee with an audit plan once it is finalized and prior to December 31, 2007.

Recommendation 4

Audits conducted by the Office of the Comptroller General be made public as soon as they are completed.

Response

The Secretariat agrees with the Committee’s recommendation, and notes that this is consistent with the Secretariat’s current practice. The Policy on Internal Audit requires all departments to make completed audit reports publicly available in a timely manner.  The reports must be made accessible to the public with minimal formality, and posted on the Internet in both official languages, while respecting the Access to Information Act and Privacy Act.  This requirement applies equally to the Secretariat.  Accordingly, completed audit reports prepared by the Secretariat will continue to be made available to the public in compliance with policy requirements.

Recommendation 5

The Treasury Board Secretariat provide the Public Accounts Committee with its plan for the renewal of its policy suite by 31 December 2007, and that the Secretariat provide a detailed account of its progress against this plan in its departmental performance report.

Response

The Policy Suite Renewal initiative continues to be advanced by the Secretariat and the Canada Public Service Agency (Agency) to support enhanced accountability and management excellence in the federal public service.  To deliver on the Federal Accountability Action Plan commitment to reduce the number of policies by at least 50%, the Secretariat and the Agency are continuing to review the current suite of Treasury Board policies in order to clarify the management responsibilities and accountabilities of Ministers and deputy heads, and to create an integrated, streamlined and consolidated policy infrastructure.

The Secretariat’s plans for Policy Suite Renewal for 2007-08 are detailed in its 2007-2008 Report on Plans and Priorities.

Progress on the Policy Suite Renewal initiative is on schedule.  To date, Treasury Board has approved five policy frameworks and fifteen renewed policies.  The review of all other Treasury Board policies is ongoing and is at varying stages of maturity.

The Secretariat plans to complete the renewal of most of its policies by the end of the fiscal year 2007-08.  The renewal of associated policy instruments (directives, standards and guidelines) will be carried out through 2008-09 with final completion in 2009-10. 

Renewal of a number of human resources management policies is being carried out by the Agency.  The renewal of some of these policies is linked to the larger Public Service Renewal initiative and will be completed consistent with the Public Service Renewal Action Plan.  The Agency is targeting the end of 2007-08 for completion of the renewal of most of these policies.  The Agency’s 2007-2008 Report on Plans and Priorities sets out the specific plans and timelines for the renewal of these policies.

The Secretariat and the Agency will continue to report on the progress of policy renewal efforts in their respective departmental performance reports.

Recommendation 6

All Treasury Board policies be revised by December 2007 to include appropriate and meaningful consequences for failure to comply with the requirements of the policy.

Response

Through the Policy Renewal process, each renewed policy will contain specific consequences in accordance with the Foundation Framework for Treasury Board Policies which sets out key principles and structure for renewed policies.  The Foundation Framework also stipulates that all renewed policies must contain a section on consequences for non-compliance and provide generic examples of measures that could be taken to enforce compliance. Most policies are expected to be renewed by March 2008 and every renewed policy will include specific consequences.

The deputy head or equivalent of each government organization is responsible for overseeing the implementation of and compliance with Treasury Board policies within their organization.  Deputy heads or equivalents have the primary responsibility for monitoring policy compliance on a risk-basis through systems of internal control and internal audit as well as taking appropriate corrective measures, including disciplinary or other consequences for individuals. 

Treasury Board, with the assistance of the Secretariat and the Agency, have made significant investments over the past few years to bolster the capacity of internal audit and strengthen other functional communities such as human resources and information technology.

As committed to in the Federal Accountability Action Plan and in the 2007-2008 Report on Plans and Priorities, the Treasury Board Secretariat is developing a compliance framework, including monitoring mechanisms, to help strengthen compliance with legislation and policies.  Implementation of the measures committed to in the Federal Accountability Act and Action Plan are designed to enhance accountability and transparency in government in order to bolster public trust and confidence in government institutions.

Further, a committee of deputy ministers, chaired by the Secretary of the Treasury Board, has been established to ensure that responses to non-compliance are fair and consistent across government and that best practices are adopted.

Progress in implementing these measures will continue to be reported in the Secretariat’s 2007-2008 Departmental Performance Report.

Recommendation 7

The Treasury Board Secretariat provide the Public Accounts Committee the results of the review of the Financial Management Framework by 30 September 2007.

Response

The President of the Treasury Board will provide a copy of the results of the review to the Standing Committee on Public Accounts as soon as the Committee has been reconstituted and the Chair has been named.  The DM Committee that was tasked with conducting the review, have made a set of recommendations to strengthen financial management in the government.  The results of this review are being considered in the finalization and implementation strategy of the financial management policy suite, as part of the overall Policy Suite Renewal initiative being conducted by the Treasury Board Secretariat.   This requires a review of departmental readiness, appropriate sequencing and phasing in of requirements, and determining the support needed in order for departments to meet any potential new standards.

Recommendation 8

The Treasury Board Secretariat provide the Public Accounts Committee with a detailed action plan for the implementation of the recommendations of the Independent Blue Ribbon Panel on Grant and Contribution Programs by 30 September 2007. That the Treasury Board Secretariat reports progress on this action plan in its departmental performance report.

Response

The Government of Canada continues to treat the report of the Blue Ribbon Panel as a priority as evidenced by the commitment in Budget 2007 and the Treasury Board Secretariat’s 2007-2008 Report on Plans and Priorities. In addition, work is continuing on the renewal of the Policy on Transfer Payments taking into consideration the recommendations of the Blue Ribbon Panel.  The Secretariat is currently working with selected departments to undertake analysis in an effort to develop and finalize the Government’s action plan. These efforts are expected to conclude by the end of the 2007-2008 fiscal year at which point the Treasury Board Secretariat would be pleased to present the complete details of the plan to the Standing Committee on Public Accounts. The Secretariat will also report on the progress on this action plan in its 2007-2008 Departmental Performance Report.

Recommendation 9

The Treasury Board Secretariat engage in active monitoring of departmental compliance with Treasury Board financial management policies and report on the results of this monitoring in its annual departmental performance report.

Response

As with other policies, deputy heads and their equivalents are responsible for implementing and ensuring compliance with financial management policies in their organizations.  This includes primary responsibility for monitoring policy compliance on a risk-basis through systems of internal control and internal audit.

The Treasury Board oversees policy compliance, maintenance of internal control systems and, based on a risk assessment, certain departmental transactions. In performing this oversight role, it relies on a number of sources, such as departmental audits, program evaluations, departmental performance reports, Treasury Board submissions, reports submitted to Treasury Board pursuant to policy requirements, reports from the Office of the Auditor General, the Public Accounts of Canada and on discussions with departmental officials at all levels.

The results of these monitoring activities are incorporated in the departmental Management Accountability Framework (MAF) assessments undertaken by the Secretariat and the Agency each year.  Departmental MAF assessments, commencing with the 2005-2006 assessments, are posted on the Secretariat’s website.  Each department also has the opportunity to report on its MAF assessment and management priorities through its Report on Plans and Priorities and Departmental Performance Report.

As noted in the response to Recommendation 6, the Secretariat is developing a compliance framework and consolidated monitoring system for all Treasury Board policies, including those related to financial management.

Recommendation 10

The Management Accountability Framework assessments done by the Treasury Board Secretariat be made publicly available as soon as they are completed, beginning with the third round. That, if the Treasury Board Secretariat is not able to do this, reasons be provided to the Public Accounts Committee by 30 September 2007.

Response

The government agrees with the recommendation that the Management Accountability Framework assessments be made publicly available as soon as they are completed, beginning with the third round. 

All assessments will be made available on the Treasury Board Secretariat’s public website.  Round III assessments for the 2005-2006 fiscal year were posted on May 29, 2007, and the Round IV 2006-2007 assessments will be posted as soon as possible.

Recommendation 11

Assuming satisfactory performance, deputy ministers be appointed to a department for a three to five year term.

Response

The appointment of deputy ministers is based on the operational and policy needs of the government.  Stability and continuity are very important, but flexibility is also necessary to ensure these needs can be met.  A review of deputy ministerial assignments over the twelve years from 1993 to 2005 indicates that deputy ministers served on average 3.3 years per assignment during that time.  A similar review over each twelve year period from 1994 to 2006 and 1995 to 2007 indicates that deputy ministers served on average 3.0 years per assignment during those times. These calculations cover all deputy ministers and reflect the full length of their tenure in completed assignments during the periods indicated above.