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House of Commons Procedure and Practice

Second Edition, 2009

 
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The financial role of the House of Commons does not end with voting supply or authorizing measures to raise revenue. The House also acts as a “watchdog” to ensure that federal money is spent in the amounts and for the purposes authorized by Parliament.[481] This monitoring function (often described as “closing the loop”) is delegated largely to the Standing Committee on Public Accounts, which examines and reports on the Public Accounts of Canada, as well as on all reports of the Auditor General of Canada.[482]

*   The Public Accounts of Canada

Under the Financial Administration Act, the Receiver General[483] is responsible for ensuring that accounts are kept for each department and agency of the Government of Canada. These accounts must show all expenditures made under each appropriation, all government revenues, and all other payments into and out of the Consolidated Revenue Fund,[484] together with the assets and liabilities, the contingent liabilities of Canada and the related reserves that are deemed necessary to present a fair picture of the country’s financial position.[485] The accounts of each individual department and agency are rolled up into the Accounts of Canada.

Each year, the President of the Treasury Board tables a detailed report of the financial transactions of all government departments and agencies, entitled the Public Accounts of Canada. The report must be tabled[486] on or before December 31 following the end of the fiscal year to which the accounts apply; or, if the House is not sitting, on any of the first 15 subsequent sitting days.[487] As a matter of tradition only, the Public Accounts are addressed to the Governor General.

The fundamental purpose of the Public Accounts of Canada is to provide information to Parliament, and thus to the public, which will enable them to understand and evaluate the financial position and transactions of the government. Two constitutional principles underlie the public accounting system: that duties and revenues accruing to the Government of Canada form one Consolidated Revenue Fund, and that the balance of the Fund after certain prior charges is appropriated by the Parliament of Canada for the public service.[488]

Responsibility for the form and content of the Public Accounts of Canada rests with the President of the Treasury Board[489] and the Minister of Finance.[490] The financial statements are prepared under the joint direction of the President of the Treasury Board, the Minister of Finance and the Receiver General for Canada.[491] By law, the Accounts must include, for the fiscal year to which they apply, a statement of all the government’s financial transactions; a statement of all expenditures and revenues; a statement of the assets and direct and contingent liabilities of Canada; the Auditor General’s opinion on the Accounts, pursuant to the Auditor General Act; and whatever other accounts and information the President of the Treasury Board and the Minister of Finance deem necessary to represent fairly the financial position of Canada at the close of the year.[492]

Since 2004, the Public Accounts of Canada have been divided into three volumes. Volume I presents the financial statements of Canada on which the Auditor General has expressed an opinion and provided observations; an analysis of the financial statements and a 10‑year comparison of financial information; analyses of revenues and expenses, and of asset and liability accounts; and a variety of government‑wide summaries of revenues, expenditures, loans and investments. Volume II presents the financial operations of the government, segregated by Ministry, while Volume III provides additional information and analyses, such as the financial statements for revolving funds, transfer payments and public debt charges.[493]

Until 1993, the third volume of the Public Accounts contained financial information on Crown corporations. That volume has been replaced by the Annual Report to Parliament: Crown Corporations and Other Corporate Interests of Canada, a consolidated report on the businesses and activities of all parent Crown corporations and other corporate interests of the Government of Canada.[494] The Annual Report is prepared by the Treasury Board Secretariat for the President of the Treasury Board, who tables it in the House.[495]

*   The Auditor General of Canada

The Auditor General of Canada is an officer of Parliament, appointed by the Governor in Council under the Auditor General Act, to audit the accounts of Canada and investigate the financial affairs of the federal government.[496] The Auditor General holds office for a period of 10 years, or until the age of 65, whichever comes first. The term is not renewable. The position was first established in the Audit Act, 1878.[497] That legislation was replaced in 1886 and in 1931 by the Consolidated Revenue and Audit Act,[498] which, in turn, was repealed by the Financial Administration Act, 1951.[499] Initially, the Auditor General was responsible only for auditing expenditures; before they were made (pre‑payment audit) and after they were made (post‑payment audit). In 1977, Parliament enacted the current Auditor General Act which broadened the Auditor General’s mandate beyond attesting to the accuracy of the government’s financial statements, to examining how well the government managed its financial affairs.[500]

In 2006, Parliament adopted the Federal Accountability Act, which gives the Auditor General of Canada the authority to audit recipients of funding from the federal government.[501] The Auditor General now has the authority to audit recipients of most federal grants and contributions to determine whether obligations under the funding agreement have been complied with, whether money has been used with due regard to economy and efficiency, whether satisfactory procedures to measure and report on the effectiveness of activities are in place, whether accounts and essential records have been properly maintained, and whether due regard has been given to the environmental effects of expenditures.

As auditor of the Public Accounts of Canada, the Auditor General examines the government’s financial statements to ensure that the information is presented fairly, in accordance with stated accounting policies, and on a basis consistent with the previous accounting year. Additional responsibilities for special examinations of Crown corporations are set out in the Financial Administration Act.[502] The Auditor General is empowered to undertake whatever examinations and inquiries are deemed necessary to produce the reports required under the terms of the Auditor General Act.[503]

The Office of the Auditor General carries out three types of audits―attest audits, compliance audits and performance audits on value for money. Attest auditing verifies that the government is keeping proper accounts and records and that it is presenting its overall financial information fairly.[504] Compliance auditing ensures that the government collects and spends only those amounts of money authorized by Parliament and only for the purposes approved by Parliament. Finally, performance auditing assesses whether or not government programs were run with due regard for economy, efficiency and their environmental effects. The audits also assure Parliament that the government has the means in place to measure the effectiveness of its programs, where it is reasonable and appropriate to do so.[505] Since 1995, the Office also has been responsible for evaluating the extent to which department activities meet their environmental and sustainable development objectives.[506]

Where such an assignment does not interfere with the primary responsibilities of the office, the Auditor General may also be asked by the Governor in Council to inquire into and report on any matter related to the financial affairs of Canada or to public property, or to inquire into and report on any person or organization that is seeking or has received financial aid from the Government of Canada.[507]

Auditor General Reports

The Auditor General must report annually to the House of Commons, drawing the House’s attention to any cases where:

*       accounts have not been properly maintained or money not properly accounted for;

*       the accounting procedures used are insufficient to safeguard the collection and spending of public money;

*       money has been spent without due regard for economy and efficiency, or other than for the purposes appropriated by Parliament; or

*       appropriate procedures to measure and report program effectiveness have not been implemented.[508]

The Auditor General Act requires that each annual report be submitted to the Speaker of the House of Commons on or before December 31 in the year to which the report relates and that, upon receipt of the report, the Speaker tables it forthwith. If the House is not sitting at that time, the annual report is tabled on any of the next 15 sitting days of the House.[509] At the request of the Auditor General, the Speaker has frequently agreed to table the report in the House at a predetermined time, usually just before Statements by Members, although there is no requirement that it be tabled at that time.[510] Once tabled, the report is automatically referred to the Standing Committee on Public Accounts.[511] Prior to the tabling of the report in the House, the Auditor General typically gives a briefing on its contents to members of the Standing Committee on Public Accounts, at an in camera session. In addition, the Chair of the Committee will normally invite Members to a “lock‑up”,[512] during which they may examine the report to be tabled later in the day and be briefed in advance by officials. A lock‑up for the media is also normally arranged.

Changes to the Act introduced in 1994 authorized the Auditor General to make up to three reports each year over and above the annual report, any special report on matters of pressing importance or urgency, or any special report on the funding of the Auditor General’s Office.[513] Where such an additional report is to be tabled, the Speaker must be advised in writing of the subject matter and the report itself is submitted to the Speaker 30 days after the notice is sent, or after any longer period which may be specified in the notice.[514] The Speaker is required to table the report forthwith or, if the House is not sitting, on any of the next 15 sitting days of the House.

Since the enactment of the 1994 provisions, the Auditor General’s annual report has been submitted to the House of Commons in several volumes. The first, a status report, is usually tabled in the winter and follows up on progress made by the government in responding to recommendations contained in previous performance audits. The second report is tabled in the spring, and the third in the fall.[515] Each report contains individually numbered chapters[516] reporting on the various performance audits (formerly known as value-for-money audits) of departments and agencies. Alongside the Auditor General’s chapters there may also be chapters from the Commissioner of the Environment and Sustainable Development. The final volume tabled continues to be known as the “annual” report and contains “Matters of Special Importance” from the Auditor General as well as the “Commissioner’s Perspective”.

*   The Standing Committee on Public Accounts

Under the Standing Orders, all reports of the Auditor General, as well as the Public Accounts of Canada, are deemed permanently referred to the Standing Committee on Public Accounts as soon as they are tabled in the House.[517] Since 1987, the Committee has also been responsible for scrutinizing the annual estimates of the Office of the Auditor General.

Since 1958, the Committee has been chaired by a Member of the Official Opposition, while the parties are represented on it in proportion to their voting strength in the House.[518] The Committee’s main functions are to ensure that public money is spent for the purposes authorized by Parliament, that extravagance and waste are minimized and that sound financial practices are encouraged in estimating and contracting, and in administration generally.[519] The Committee does not concern itself with the appropriateness of government policy; rather, it focusses on the economy and efficiency of its administration. The Committee regularly reports its findings to the House. The reports typically state conclusions and recommendations on matters pertaining to the improvement of managerial and financial practices and controls of government departments, agencies and Crown corporations.[520]



[481] As early as 1341, Edward III had conceded the principle that grants to the Crown should be audited to ensure they were spent for the purposes intended (Driedger, p. 30).

[482] Standing Order 108(3)(g). See Royal Commission on Financial Management and Accountability, Final Report, Ottawa: Minister of Supply and Services Canada, March 1979, especially Part V, “Accountability to Parliament: Closing the Loop”, pp. 369‑419. See also Chapter 20, “Committees”.

[483] The Minister of Public Works and Government Services Canada also serves as Receiver General for Canada (Department of Public Works and Government Services Act, S.C. 1996, c. 16, s. 3(3)).

[484] Financial Administration Act, R.S. 1985, c. F‑11, s. 63(1).

[485] Financial Administration Act, R.S. 1985, c. F‑11, s. 63(2).

[486] The Public Accounts of Canada are usually filed with the Clerk of the House and the tabling is recorded in the Journals. See, for example, Journals, September 28, 2000, p. 2011; October 21, 2004, p. 132; October 29, 2004, p. 172 (erratum); October 17, 2007, pp. 17‑8; December 1, 2008, p. 59. However, the report has also been tabled by a Minister directly on the floor of the House. See, for example, Journals, October 31, 1978, p. 94; December 11, 1979, p. 336; September 28, 2006, pp. 469‑70, Debates, p. 3347. For further information on the tabling of documents, see Chapter 10, “The Daily Program”.

[487] Financial Administration Act, R.S. 1985, c. F‑11, s. 64(1).

[488] Constitution Act, 1867, R.S. 1985, Appendix II, No. 5, ss. 102‑6. See also “Preface to the Financial Statements of the Government of Canada”, Public Accounts of Canada, 2007, p. 2.2.

[489] The Treasury Board is a committee of Cabinet chaired by the Minister designated as the President of the Treasury Board. There are five other Ministers on the Board, including the Minister of Finance. The Treasury Board is responsible for the management of the public service, including administrative policy and financial management practices. The Treasury Board also acts as the federal employer and represents the government in all matters respecting the federal workforce (McMenemy, pp. 392‑3). As the administrative arm of the Treasury Board, the Secretariat has a dual mandate: to support the Treasury Board as a committee of Ministers and to fulfil the statutory responsibilities of a central government agency. Its executive head is designated as the Secretary of the Treasury Board. From 1993 to 2003, the Secretary of the Treasury Board also bore the title of Comptroller General of Canada. In 2004, the position of Comptroller General of Canada was created and the Office of the Comptroller General became a separate entity within Treasury Board Secretariat. The Comptroller General is responsible for standards of financial controls, reporting systems and program evaluation of federal departments and agencies (McMenemy, p. 69).

[490] Financial Administration Act, R.S. 1985, c. F‑11, s. 64(2).

[491] “Statement of Responsibility”, Public Accounts of Canada, 2007, p. 2.3.

[492] Financial Administration Act, R.S. 1985, c. F‑11, s. 64(2); Auditor General Act, R.S. 1985, c. A‑17, s. 6.

[493] “Introduction to the Public Accounts of Canada: Format of the Public Accounts of Canada”, Public Accounts of Canada, 2007, Vol. I.

[494] A Crown corporation is an organization with the structure of a private‑sector enterprise but which is established by legislation and is owned by the Crown. Although they report to the legislature through a designated Minister, Crown corporations are not subject to direct ministerial control (McMenemy, pp. 93‑4).

[495] Financial Administration Act, R.S. 1985, c. F‑11, ss. 151 and 152. Like the Public Accounts of Canada, this report is usually filed with the Clerk of the House and the tabling is recorded in the Journals. See, for example, Journals, December 16, 1999, p. 831; December 13, 2002, p. 311; June 12, 2003, p. 928 (revision), January 28, 2008, p. 345.

[496] McMenemy, pp. 9‑10. An officer of Parliament is an appointed official who is responsible to Parliament for carrying out duties assigned by statute. For terms of appointment and tenure of office, see the Auditor General Act, R.S. 1985, c. A‑17, s. 3.

[497] An Act to provide for the better auditing of the Public Accounts, S.C. 1878, c. 7, ss. 11 to 56.

[498] An Act respecting the Public Revenue, the raising of loans authorized by Parliament, and the auditing of the Public Accounts, R.S. 1886, c. 29, ss. 21 to 59; The Consolidated Revenue and Audit Act, 1931, S.C. 1931, c. 27.

[499] An Act to Provide for the Financial Administration of the Government of Canada, the Audit of the Public Accounts and the Financial Control of Crown Corporations, S.C. 1951, c. 12, ss. 65 to 75.

[500] R.S. 1985, c. A‑17, ss. 7(2)(b) to (e). In 1995, a point of order was raised in the House about the receivability of the Auditor General’s annual report on the grounds that the Auditor General had exceeded his mandate under the Auditor General Act by including “politically biased statements” about the role of Parliament in relation to the national debt (Debates, October 18, 1995, pp. 15530‑2). Speaker Parent responded that he had no authority in regard to matters of law, and therefore could neither interpret whether what was contained in the report was in conformity with the criteria set out under the Act nor, consequently, rule the report out of order (Debates, October 25, 1995, pp. 15812‑3).

[501] An Act providing for Conflict of Interest Rules, Restrictions on Election Financing and Measures Respecting Administrative Transparency, Oversight and Accountability, S.C. 2006, c. 9, ss. 301 to 305. In this regard, the Act responded to Recommendation 24 made by the Standing Committee on Public Accounts in its Ninth Report entitled “Chapters 3 (The Sponsorship Program), 4 (Advertising Activities) and 5 (Management of Public Opinion Research) of the November 2003 Report of the Auditor General of Canada”, presented to the House on April 7, 2005 (Journals, p. 594). During its hearings on the Sponsorship Program, the Committee was frustrated by the fact that the Auditor General of Canada, unlike several provincial auditors general, did not have legislative authority to audit entities outside government that were in receipt of public funds.

[502] R.S. 1985, c. F‑11, ss. 134(1) to (3). In addition to annual financial audits of those Crown corporations for which the Office is responsible, the Auditor General may carry out special examinations which evaluate whether the systems and practices of Crown corporations provide reasonable assurance that assets are safeguarded, resources are managed economically and efficiently, and operations are carried out effectively (Office of the Auditor General of Canada, 2006-07 Estimates, Performance Report, www.tbs-sct.gc.ca, 2007, p. 6).

[503] R.S. 1985, c. A‑17, ss. 5 and 6; Financial Administration Act, R.S. 1985, c. F‑11, s. 64.

[504] Office of the Auditor General of Canada, 2006-07 Estimates, Performance Report, p. 6. See, for example, “Report of the Auditor General on the Financial Statements of the Government of Canada”, Public Accounts of Canada, 2007, p. 2.4.

[505] Office of the Auditor General of Canada, 2006-07 Estimates, Performance Report, p. 6.

[506] Auditor General Act, R.S. 1985, c. A‑17, s. 21.1. See also the Act to amend the Auditor General Act, S.C. 1995, c. 43, which established the position of Commissioner of the Environment and Sustainable Development within the Office of the Auditor General of Canada (“Creation of the Position of Commissioner of the Environment and Sustainable Development”, Office of the Auditor General, News Release, December 15, 1995).

[507] Auditor General Act, R.S. 1985, c. A‑17, s. 11. Such authority would be required for the Auditor General to undertake an audit assignment which did not otherwise fall within the statutory authority of the Office. The authority under section 11 is conferred by way of an Order in Council.

[508] Auditor General Act, R.S. 1985, c. A‑17, s. 7(2).

[509] Auditor General Act, R.S. 1985, c. A‑17, s. 7(3).

[510] Statements by Members take place Monday through Thursday at 2:00 p.m., and Friday at 11:00 a.m. (Standing Order 30(5)). See, for example, Journals, November 23, 2004, p. 245; November 28, 2006, p. 820; October 30, 2007, p. 112.

[511] Standing Order 108(3)(g).

[512] A lock‑up is a closed‑door or in camera information session immediately prior to the presentation of a major initiative, such as a budget or the Auditor General’s annual report. Because the information in the Report is confidential until presented to the House, no copy may be removed from the lock‑up before it has been tabled. While Members are free to leave the lock‑up at any time, they must agree not to give interviews on or divulge the contents of the Report prior to tabling. Members’ research staff are usually allowed to attend the lock‑up; however, they must be sponsored by a specific Member and must remain in the room until the Report has been tabled. On November 27, 1978, a Member contended that the conditions for participating in the lock‑up violated his parliamentary privileges (Debates, November 27, 1978, pp. 1514‑7). The Speaker stated then, and consistently since, that lock‑ups are not a requirement for Members to participate in parliamentary proceedings either in the Chamber or in committee; access or lack of access to a lock‑up cannot constitute grounds for a question of privilege. See Speaker Jerome’s ruling, Debates, November 27, 1978, pp. 1518‑9; Speaker Sauvé’s rulings, Debates, February 25, 1981, p. 7670; February 26, 1981, p. 7714 ; Speaker Parent’s ruling, Debates, March 6, 1997, p. 8693. However, Members may not be prevented from leaving a lock‑up room. See Speaker Jerome’s ruling, Debates, November 27, 1978, p. 1515.

[513] Auditor General Act, R.S. 1985, c. A‑17, ss. 7(1), 8(1) and 19(2). The authority to submit several reports was conferred by way of An Act to amend the Auditor General Act (reports), S.C. 1994, c. 32. The Office of the Auditor General views the authority for additional reports as an opportunity to improve the timeliness and relevance of the information it provides to Parliament, thus promoting accountability. Efforts are made by the Auditor General to plan the tabling of reports in accordance with the calendar of the House of Commons.

[514] Auditor General Act, R.S. 1985, c. A‑17, s. 7(5). In the event of the prorogation or dissolution of Parliament during the notice period, the Auditor General must withdraw the notice in question and submit a new one to extend the reporting date of his or her report.

[515] See, for example, the 2005 report, Journals, February 15, 2005, p. 432; April 5, 2005, p. 580; November 22, 2005, p. 1306; the 2007 report, Journals, February 13, 2007, p. 996; May 1, 2007, p. 1300; October 30, 2007, p. 112. In 2006, the general elections delayed the tabling of the February volume, with the result that the winter and spring volumes were tabled in May as Volume 1. Volume 2 was tabled in November (Journals, May 16, 2006, p. 179; November 28, 2006, p. 820).

[516] Chapters are numbered sequentially by year, not by volume.

[517] Standing Order 108(3)(g). See also Chapter 20, “Committees”.

[518] A commitment to having a Member of the Official Opposition chair the Standing Committee on Public Accounts was made in the 1958 Throne Speech (Debates, May 12, 1958, p. 6). See the remarks by Prime Minister John Diefenbaker (Debates, May 13, 1958, p. 34). See also Ward, pp. 218‑9. This practice was codified in November 2002. The Standing Orders now require that the first Vice‑Chair of the Committee be a Member of the government party, and that the second Vice Chair be a member of an opposition party other than the Official Opposition (Standing Order 106(2)). See Journals, November 5, 2002, pp. 162‑4. See also the Eighth Report of the Standing Committee on Procedure and House Affairs, presented to the House and concurred in on October 22, 2004 (Journals, p. 136).

[519] Concerns about the effectiveness of Parliament in examining government programs and discharging its financial accountability role have been expressed most recently in the Sixth Report of the Standing Committee on Government Operations and Estimates, entitled “Meaningful Scrutiny: Practical Improvements to the Estimates Process”, presented to the House on September 25, 2003 (Journals, pp. 1039‑40), in which the Committee lamented that “committees continue to provide relatively cursory attention to the main spending estimates and explanatory reports provided by government departments each year”. The Commission of Inquiry into the Sponsorship Program and Advertising Activities echoed these concerns in its Phase 2 report (Restoring Accountability: Recommendations, Ottawa: Public Works and Government Services Canada, 2006, pp. 75‑80, 117‑9), when it recommended that the government broaden the staff resources for the Standing Committee on Public Accounts, to enhance the ability of the members to fulfil the distinctive, frequently technical, demands created by its special role. To foster this kind of approach and to make sure its members have the necessary skills and experience, the Commission also recommended that members stay with the Public Accounts Committee throughout the duration of an entire Parliament.

[520] See, for example, the Twenty-Fourth Report of the Standing Committee on Public Accounts entitled “Chapter 10 of the December 2002 Report of the Auditor General of Canada (Department of Justice—Costs of Implementing the Canadian Firearms Program)”, presented to the House on October 30, 2003 (Journals, p. 1209); the Tenth Report of the Committee entitled “Governance in the Public Service of Canada: Ministerial and Deputy Ministerial Accountability”, presented to the House on May 10, 2005 (Journals, p. 725); the Second Report of the Committee entitled “Restoring the honour of the RCMP: Addressing Problems in the Administration of the RCMP’s Pension and Insurance Plans”, presented to the House on December 10, 2007 (Journals, p. 283); the Fourth Report of the Committee entitled “The Expenditure Management System at the Government Centre and the Expenditure Management System in Departments”, presented to the House on February 25, 2008 (Journals, p. 460).

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