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The
Government of Canada would like to thank the Standing Committee on Public
Accounts for its 14th Report, concerning Chapter 2 of the December
2008 Report of the Auditor General of Canada on the Governance of Small Federal
Entities. The Government has thoroughly reviewed and given careful
consideration to the findings and recommendations contained in this report, and
hereby presents its response.
The
Committee’s report also addresses the issue of departmental “action plans in
response to OAG audits”. The report notes that the Committee has recently
sought to “formalize” its expectations around the provision of action plans,
and to this end adopted the following motion on March 5, 2009:
That all departments and agencies of the federal
government that have been subject to a performance audit by the Office of the
Auditor General of Canada provide a detailed action plan to address the audit
findings and recommendations – including specific actions, timelines for their
completion and responsible individuals – to the Public Accounts Committee and
the Office of the Auditor General of Canada within six months of the audit being
tabled in the House of Commons; and that departments and agencies that are
invited to appear before the Public Accounts Committee to discuss the findings
of an audit should, when feasible, provide an action plan to the Committee
prior to the hearing.
The
Government agrees that the Committee should have the necessary information in
order to conduct its business. The Government will continue to be responsive
to the Committee’s requests for information and to take all reasonable steps to
ensure that the Committee has the information needed when conducting hearings.
However, the motion as passed raises concerns.
As
the Committee has been communicating the motion to departments and agencies as
an “order”, the motion could be seen as compelling departments to take specific
actions. The Committee notes in its report, “neither the [Office of the
Auditor General] nor the Committee has the authority to force departments to
act”, recognizing that the constitutional responsibility for the management and
direction of departments and agencies rests with the executive.
Furthermore,
the motion does not limit itself to Auditor General recommendations that have
been accepted by the Government or that are to be reviewed during a Committee
hearing, but rather seeks actions plans on all audit findings. When this
is considered in light of the 826 recommendations issued by the Auditor
General during the period 2002 to 2009, the potential could exist for a
significant increase in the reporting burden. The additional reporting burden
could also have a substantial impact on small entities.
The
Government agrees that requests for information in the conduct of the
Committee’s hearings are consistent with the mandate of the Committee. Thus,
Government departments and agencies will continue to provide the Committee with
all appropriate information when called to appear before the Committee.
RECOMMENDATION 1
That
the Treasury Board of Canada Secretariat provide the Public Accounts Committee
with an action plan by 30 September 2009 of how it intends to implement the
recommendations contained in Chapter 2 of the Auditor General’s December 2008
Report.
The
management response to Chapter 2 of the Auditor General’s December 2008 Report
provided by the Privy Council Office and the Treasury Board Secretariat
includes a full description of the measures taken or intended by the Government
with respect to each of the chapter’s four recommendations. The following
provides updated information with respect to these measures:
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Recommendation
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Updated
response
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2.37 The Privy Council Office and the Treasury
Board of Canada Secretariat should improve their guidance on portfolio
coordination, ensuring that expectations are clearly set out and communicated
to portfolio departments and entities.
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The Treasury Board of Canada Secretariat (TBS) shares the
Auditor General’s view concerning the importance of effective portfolio
coordination. Since 2003, the Management Accountability Framework has
been the principal tool by which the TBS has assessed portfolio coordination,
outlined its expectations, and engaged with departments and agencies to
improve portfolio coordination practices. TBS, in consultation with
portfolio departments, has been working on a guide that offers
practical guidance on portfolio coordination. Specifically, the guide is intended to support the Secretariat's annual assessment of
portfolio coordination through the Management Accountability Framework
(MAF).
In its management response, TBS agreed with the OAG’s
recommendation that additional portfolio coordination guidance should be
provided and committed to continue efforts to ensure that principles-based
expectations are clearly set out and communicated to portfolio departments
and entities.
The Privy Council Office provided expanded guidance on the
principles of portfolio coordination to deputies and heads of portfolio
entities in 2009 as part of general distribution of material related to
machinery and governance matters.
TBS has continued working on its guide for portfolio deputy
ministers and their departments, titled “Portfolio Coordination: MAF
Expectations and Best Practices” and consultations with portfolio
departments and central agencies are on-going. Once consultations have
been completed and the necessary approvals received, TBS will publish and
distribute the guide.
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2.45 The Treasury Board of Canada Secretariat
should ensure that the Management Accountability Framework assessment of
financial management and control in small entities relies upon sufficient and
appropriate information.
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A number of steps have been taken to strengthen financial
management and control within the federal government.
The complete suite of financial management policies is being
reviewed and renewed with the objective of streamlining the “web of rules”
while at the same time ensuring clarity and strengthening financial
management. Effective April 1st, 2009 a new Policy on Financial
Management Governance and a Policy on Internal Control have been
approved. These Policies clarify roles, responsibilities and
accountabilities of Deputy Heads and Chief Financial Officers (CFO) in the
area of financial management and control. The new policy on Financial
Governance and its associated guidelines on CFO qualifications clarify the
responsibilities and expectations for senior financial officers across
government.
A number of changes were made in the 2007 MAF assessments to
improve the information available and the assessment methodology. A survey
questionnaire was introduced to receive feedback from all departments on how
they applied certain key financial management policies. This information was
used to supplement the results on internal audit and OAG audits for the first
indicator on financial management policy compliance. Other indicators were also
expanded to include such things as capacity building and innovation in
financial management. These indicators were further enhanced in the 2008 MAF
assessments.
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2.60 The Treasury Board of Canada Secretariat
and the Canada Public Service Agency should incorporate into their plans
measures that adequately address the reporting burden in small entities,
including expected outcomes, timelines, and performance indicators.
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As
indicated in its management response to the audit report, the Treasury Board
Secretariat is committed to reducing the reporting requirements for all
departments and agencies, including small entities. TBS is undertaking
various measures to mitigate the reporting burden, taking into consideration
risk, departmental performance and the need for effective oversight.
Policy Suite Renewal
As
of end of FY 2008-09 over 50% of the original 180 TB policies have been
rescinded through Policy Suite Renewal. This has reduced the number of
policy related reporting requirements by 27%.
To
sustain these reductions, TBS with advice from the ADM Advisory Committee on
Consolidating Government Reporting, is developing reporting principles to
help guide policy makers in improving the efficiency, clarity and relevance
of reporting requirements in TB policy instruments. The principles will
provide a lens through which policy centers can assess whether reporting
requirements should apply equally to all departments and agencies, taking
into consideration organizational risk and capacity. The principles are
expected to be finalized during Winter 2009.
Management Accountability Framework (MAF)
An
evaluation of the Management Accountability Framework was completed in 2009
which made recommendations to ensure MAF remains effective, efficient and
relevant to support management performance and capacity in federal
departments and agencies. A new streamlined approach is being introduced
that supports the Management Agenda and is more attuned and responsive to the
needs, capacities and challenges of individual federal organizations. The
approach will help reduce reporting burden by moving from a ‘one size fits
all’ approach to one that is risk-based and is uniquely tailored to
departments, taking into account, for example, performance and past history.
It will reduce the amount of resources required to provide evidence and
undertake assessments, while maintaining the integrity and relevance of MAF
results. This will result in a 30% reduction in the number of documents
submitted for the next round of MAF evaluations. Over the course of
2 years, it is estimated that there will be a 65% reduction in the
number of documents.
In consultation
with small federal entities, further efforts were made to tailor MAF to meet
their circumstances. The current three-year cycle with respect to the
assessment of small agencies will be maintained. In addition, areas of
management that are not materially relevant to the organization’s mandate and
business will not be assessed. The approach is expected to result in a
reduced reporting burden for small entities; determination of the actual
reduction in reporting burden will be undertaken at the conclusion of the
next MAF cycle in spring 2010.
Policy on Evaluation
The 2009 Policy on Evaluation makes a clear distinction
between large and small departments. By doing this, the Policy acknowledges
that the two must be treated differently, most notably in their expectation
of reporting. The new Policy states that small departments and agencies (as
defined by Annex A of the Policy) do not have to follow the majority of the
requirements of the Policy at this time. The most notable requirements that
are deferred for small departments and agencies include:
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the coverage requirement to evaluate all direct program spending
over and above those programs subject to the legislative requirement of
section 42.1 of the Financial Administration Act:
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Deputy head responsibility to determine coverage as deemed
appropriate to the needs of the department or agency;
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the competency requirements for heads of evaluation;
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the requirement for establishing a departmental evaluation
committee; and
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the requirement for developing an annual departmental evaluation
plan.
Performance Reporting
The
new formats for Departmental Performance Reports make them more concise,
results-focused and effective. This should decrease the level of effort
required by small entities to produce these performance reports. The 2009-10
Reports on Plans and Priorities which were tabled in March 2009 were
presented in the new format. The 2008-09 Departmental Performance Reports
will be presented in the new concise format.
Small Departments and Agencies Networks
TBS
policy centers continue to consult small entities through existing
mechanisms, such as the Small Agency Administrators Network (SAAN) to address
a range of issues, including reporting burden. The following are some
initiatives TBS is undertaking to reduce reporting, after consulting with
SAAN:
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Examining
alternative approaches to classify and define micro and small organizations
in order to decrease the reporting required under the Management Resources
and Results Structure Policy.
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Examining
more flexible approaches for small and micro-agencies with few investments in
assets or acquired services in seeking Treasury Board approval under the new
Policy on Investment Planning.
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2.76 The Treasury Board of Canada Secretariat
should address the issues identified with respect to administrative shared
services in small entities.
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The
development of a service strategy that will include options for modernizing
the delivery of administrative services is progressing and the preliminary
phase has been completed. This phase included consultation and engagement
with senior executives to identify options to optimize the delivery of
administrative services, including shared services. The consultation and
engagement process included representation from small departments and
agencies and the issues with respect to administrative shared services were
discussed.
TBS
has launched an initiative to examine options to facilitate and support the
provisions of interdepartmental internal services. The initiative will
address three areas: legislative mandate for one department to provide
internal support services to other departments; financial authority to
collect and re-spend funds associated with providing the service; authority
to collect, use, and disclose personal information for other institutions in
a manner consistent with privacy requirements.
Representatives
of the Small Agencies’ Administrators Network (SAAN) have been active
contributors to the analysis of the options. Small entities’ needs represent
a central consideration in the design of the legislative options and TB
instruments.
TBS
is also actively working with SAAN and Heads of IT for small agencies (HoIT)
to ensure that small department and agency needs and opportunities for shared
services and streamlining of administrative systems are well aligned with the
IT MAF, IT Planning and other initiatives. Furthermore, TBS has conducted IT planning
workshops to ensure that IT strategic planning templates and expectations
accommodate the needs of small agencies. TBS and PWGSC also ensure that there
is small agency representation on al shared services governance councils and
working groups.
As
well, small agency representation is present within the GC Council of System
Cluster groups which serves as the main governance forum regarding corporate
administrative cluster groups within the government. Further work is required
to ensure that the corporate administrative business requirements of the
small agencies are articulated in the re-procurement of the current GC-wide
product suite for corporate administration.
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RECOMMENDATION 2
That
the Treasury Board of Canada Secretariat, in coordination with the Privy
Council Office, provide the Public Accounts Committee with a progress report by
31 December 2009 on what actions have been taken to address the recommendations
contained in Chapter 2 of the Auditor General’s December 2008 Report.
The
Treasury Board of Canada Secretariat, in coordination with the Privy Council
Office will provide the Committee by 31 December 2009 with any available new
information pertaining to the measures described above.
RECOMMENDATION 3
That
the Treasury Board of Canada Secretariat include specific elements in its
action plan (noted in recommendation 1) of how it will reduce the reporting
burden on small federal entities.
The
Government of Canada, like many other jurisdictions, recognizes that adjusting
and reducing reporting requirements and administrative processes in order to enable
risk management and allow for an increased focus on key controls, is critical
to delivering more efficient and effective services. Achieving this objective
requires the collective and on-going commitment of all government
organizations. As noted in Chapter 2 of the Auditor General’s December 2008
Report, reporting requirements emanate from different sources. These sources
include statutes, parliamentary procedures, parliamentary agents, individual
departmental practices as well as central agencies. The Treasury Board
Secretariat (TBS) will often collect required information from departments and
agencies for the purpose of public release or tabling in Parliament on behalf
of the Government. However these requirements are not necessarily within TBS
control.
The
Government invites the Committee to consider the List of Reports and Returns
prepared under Standing Order 153 of the House of Commons. The
responsible minister, working with the appropriate parliamentary committee,
will give full consideration to any recommendation the Committee may wish to
make for the elimination or reduced application to small entities of specific
reporting requirements. The Government also invites the Committee during its
study of the Public Accounts of Canada to explore eliminating the reporting of
certain information which may be duplicated by the proactive disclosure
requirements.
A whole-of-government approach is necessary to sustain results in
streamlining and simplifying government reporting. The 2008-09 Web of Rules Action
Plan represents the first multi-year government-wide concerted action to
scale back rules and reporting burdens. The Action Plan was spurred by the
Prime Minister’s Advisory Committee on the Public Service and has garnered
senior-level engagement across the Public Service. TBS, on behalf of the
Government, will be reporting back in the Fall on progress made
during 2008-09 and on the areas of focus for 2009-10.
The management response provided in Chapter 2 of the Auditor General’s December
2008 Report and updated above includes a list of specific measures undertaken
by the Treasury Board Secretariat and its portfolio organizations to reduce their reporting requirements on
departments and agencies, including small entities.
RECOMMENDATION 4
That
the Treasury Board of Canada Secretariat include specific elements in its
action plan (noted in recommendation 1) of what issues it will address with
respect to administrative shared services in small federal entities, how it
will address those issues, and when it expects to do so.
As
indicated by the management response provided in Chapter 2 of the Auditor
General’s December 2008 Report and updated above, the development of the Secretariat’s
service strategy has included participation by small entities. Further
discussions on their issue will include small federal entities.
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