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Results: 1 - 15 of 65
Jerome Berthelette
View Jerome Berthelette Profile
Jerome Berthelette
2012-10-29 15:34
Good afternoon, Mr. Chairman
I would like to thank you for inviting the office to speak about Bill C-27, an Act to Enhance the Financial Accountability and Transparency of First Nations.
With me is Ronnie Campbell, Assistant Auditor General, who was formerly responsible for first nations' audits.
Since 2000, the office has tabled 16 chapters that address first nations and Inuit issues directly, and another 15 chapters that deal with issues of importance to first nations people.
In 1996, we tabled a study entitled “Study of accountability practices from the perspective of first nations”. We noted that the relationship between the first nations and the federal government had evolved from direct service delivery by the department to service delivery by first nations. As a result of this evolution, the issue of accountability presented difficulties for both parties. In particular, the accountability of that government to Parliament became more complicated as departments were no longer directly responsible for the delivery of programs at the community level.
At that time, we met with first nations and were told that they were willing to explore ways to ensure that the information needs of Parliament were met, and they stressed the importance of internal accountability. From their perspective, accountability is non-hierarchical and is based on shared objectives.They stated that the reporting framework was of limited value to them, was onerous, and did little to enhance accountability to the community.
In 2002, based in part on what we had learned from the 1996 study, we proposed our definition of accountability: a relationship based on obligations to demonstrate, review, and take responsibility for performance, both the results achieved in light of agreed expectations and the means used. We defined five principles that support an effective accountability relationship: clear roles and responsibilities; clear performance expectations; balanced expectations and capacities; credible reporting; and reasonable review and adjustment.
We noted that delivery of programs through partners creates new and complex accountability relationships. In these arrangements, accountability is shared. With respect to reporting, we suggested the need to be clear about the measurement strategy as well as the required information and how it is to be collected, verified, and analyzed, and by whom and when.
In this work, we also stated that transparency is the sustaining element of accountability; transparency implies that one can see clearly into the activities of government. Transparency and accountability mean stronger institutions and more credible government.
Also in 2002, we tabled a study on first nations reporting. We stated that reporting needs to provide meaningful information to first nations and to the federal government and that fundamental change was required to reduce the burden on first nations.
In 2011, we identified four structural impediments that limit the delivery of public services to the first nations and hinder improvements in living conditions on reserves: lack of clarity about service levels; lack of a legislative base; lack of an appropriate funding mechanism; and lack of organizations to support local service delivery.
We strongly support the principles of accountability and transparency. We hope this background on accountability will be useful to the committee as it reviews the proposed legislation.
Mr. Chair, we do not feel that our office can comment on the merits of Bill C-27. That being said, we would like to make a few remarks on some technical aspects of the bill.
First, subclause 5(1), on how first nations are to maintain their accounts, contains the expression “generally accepted accounting principles” and a reference to the Canadian Institute of Chartered Accountants handbooks. There are currently no accounting standards in Canada that explicitly mention first nations. Although the handbooks referred to in subclause 5(1) are generally pertinent to the activities of first nations governments, they have not been designed or amended to take those particularities of the first nations situation into account.
Second, under subclause 5(2), when auditing the accounts of first nations having transactions that do not easily fit a particular standard, the auditors must assess the acceptability of the accounting framework, including the reasonableness of the accounting policies adopted by these first nations. Different auditors may come to different conclusions for similar transactions.
Third, in clause 6, the requirement for an audited or reviewed schedule of remuneration is unique. This information is normally provided as a note to the financial statements or as supplemental information in an annual report. There are no accounting standards made applicable to the preparation of this schedule of remuneration or to the auditor's report or review engagement report. Also, it is not clear who would decide, and on what basis, whether the schedule is to be audited or reviewed. This ambiguity increases the risk of confusion and inconsistent practices.
Finally, the definition of remuneration in clause 2 combines both salary and reimbursement of expenses. When other levels of government report salary and reimbursement of expenses, they do so separately. Among other things, this ensures a clear distinction between official salaries and wages and the reimbursement of travel and other expenses. For example, at the federal level, there are separate disclosure requirements for salaries and for travel and hospitality expenses.
Mr. Chair, this completes my opening remarks. We would be glad to answer any questions the committee members may have.
View Jonathan Genest-Jourdain Profile
NDP (QC)
In your opening statement, you mentioned the specific context of first nations and the reason for which bookkeeping, that is to say the Canadian Institute of Chartered Accountants' handbooks, was difficult to apply to the first nations' context.
Could you please tell us about the realities and the context that differ for first nations, and the reason for which it is difficult for these communities to make use of these Canadian Institute of Chartered Accountants' handbooks?
Jerome Berthelette
View Jerome Berthelette Profile
Jerome Berthelette
2012-10-29 16:12
I will begin by saying that applying the PSAB would be good for the community, since first nations are also governments. Therefore, the policies or guidelines found in the handbook may be applied to first nations.
Forgive me, I have forgotten the second part of your question.
View Brian Jean Profile
CPC (AB)
Daniel MacDonald
View Daniel MacDonald Profile
Daniel MacDonald
2012-05-17 16:27
We have a regular estimates cycle for the allocation on the transfer now, and we'll continue to do so in the future, which reviews the calculation of the years to follow.
View Dean Del Mastro Profile
Cons. Ind. (ON)
Okay. Very good.
So Mr. Richard Tardif was hired as vice-president of finance, and I understand he signed off on your audited statements every year between 2006 and 2011. He was subsequently charged in September 2011 with practising illegally as a chartered accountant and was fined $15,000.
Why didn't you undertake some due diligence to actually ensure that your chartered accountant was in fact licensed?
Claude Benoit
View Claude Benoit Profile
Claude Benoit
2012-05-10 11:20
When we hired him, we looked at the results of Richard Tardif in similar positions. We were convinced he was the best candidate. After all, Richard Tardif had worked as an accountant for the Office of the Auditor General of Canada, for Telefilm Canada, which is a major Canadian crown corporation, and for the Société de la Place des Arts, which is a major Quebec crown corporation. So we did not feel we needed to verify his accounting designations.
View Charlie Angus Profile
NDP (ON)
I guess it is normal for people to come in and go out, but what's not normal is for the Auditor General to be investigating.
We have seen in media reports that there are questions of abuse of power, psychological harassment of one former senior staffer who left, and questions about financial controls.
We understand—and I really want to clarify this—that the man you hired to sign off on the financial controls had no authority to do this.
Was this a case of fraud? How is it that a man who has no academic qualifications to do the job gets hired to sign off on the finances of a crown corporation?
Claude Benoit
View Claude Benoit Profile
Claude Benoit
2012-05-10 11:45
To answer your question, I'll say that we hired one person we had confidence in. We acted on the basis of that confidence. I repeat that that person had a very impressive CV with respect to the service provided at the Office of the Auditor General of Canada, at Telefilm Canada and at the Société de la Place des Arts de Montréal. These are three very credible, very well-managed Crown corporations. This person's CV showed adequate training for the two titles, CA and CMA. This person had already held two positions as a CA and CMA.
View Brad Butt Profile
CPC (ON)
Okay, but as a member of the audit committee, can you tell me whether the issue of the former CFO, who is under question about whether or not he had proper credentials as a CA, was ever brought to the attention of the audit committee? Did the audit committee ever ask this individual whether he was still a member in good standing of the Canadian Institute of Chartered Accountants?
Gerry Weiner
View Gerry Weiner Profile
Hon. Gerry Weiner
2012-05-10 12:56
Mr. Chair, when those facts were revealed to the members of the audit committee, in particular, we acted expeditiously. We ordered an immediate investigation. We called, first, a board meeting with 12 hours' notice. We called in investigators. We had a forensic auditor come in at once.
Without trying to get into the specifics of the case, I'm proud of how effectively and quickly the members of the audit committee and the rest of the board acted to make sure we resolved the issue, which we weren't satisfied with.
That's as good as we could get when we were advised. When it was determined there was a problem, we acted immediately, as any good health care professional would do, and we excised it. We went on to the future from there.
View Jean Rousseau Profile
NDP (QC)
Perfect.
My next question is for Mr. Banack.
Do you think that the way things are done in our agricultural industry must be modernized, especially when it comes to business management and accounting? I am mostly referring to family farms. Should we separate producers' management and accounting systems and use collective management in certain sectors?
Humphrey Banack
View Humphrey Banack Profile
Humphrey Banack
2011-12-15 17:04
Collective accounting, as I best understand this.... It's very important for us to look at each individual farm as it stands on its own. Each farmer's decisions, as he goes forward through the years, are important to that operation.
If we come to a point in time where we make collective decisions across the board.... Everyone has to make their own decisions. Sometimes, it's whether to manage risk through private programs, whether it's to just rely on the base, on the bottom-end program.... If we go to a collective way of operating, we're going to have a hard time maintaining that individual spirit that's absolutely important to businesses in agriculture.
Arden Schneckenburger
View Arden Schneckenburger Profile
Arden Schneckenburger
2011-12-13 15:47
Good afternoon. My name is Arden Schneckenburger, and I farm in eastern Ontario at Morrisburg, which is approximately 65 kilometres south of here. I farm with my wife, Rhonda, my son, Warren, and several employees. My parents are of German descent and ours is a second-generation farm.
I would like to thank the agriculture committee for giving me, a producer, an opportunity to give input on the BRM portion of Growing Forward 2.
Cedar Lodge Farms is a cash crop, beef feedlot, and small grain elevator business. We are a diversified farm, as are many farms in eastern Ontario. Ontario in general has a more diverse agriculture base and has more multi-enterprise farms than do many of the other regions of the country.
I have been farming since the early 1980s and over the years have seen a number of BRM programs developed and implemented by the provincial government or the federal government, as well as tripartite producer provincial-federal programs. I have been active in the past as a director on several farm organizations, dealing with everything from cattle to grains, and have worked on the development of various programs.
What I like about the Growing Forward methodology of programs is the belief that no one program stands alone. Marketing, trade, international rules, business risk management, market development, and research and innovation are all key in the long-term competitiveness of Canadian farms domestically, within North America, and globally.
BRM programs have been around for most of my farming career to address issues from high interest rates to market fluctuations. In Ontario, these are referred to as safety nets. Ad hoc programs, which were unpredictable and unbankable, have given way to a more structured suite of BRMs, most recently through Growing Forward 1. This suite of programs is more predictable and bankable and deemed to be less trade distorting. The programs are now up for discussion, and through some tweaking they can help Canadian farmers manage major market shifts and make us more level in global competitiveness.
There need to be tweaks around issues that are out of farmer control, such as non-tariff trade barriers, politics around issues such as BSE, border openings, COOL, etc. These are beyond our control and should not punish us with our margins.
The agriculture farm industry needs basic suites of programs to provide support at a level that is not trade distorting and that is affordable to both producers and governments alike.
Ontario farmers are concerned that not all regions are getting fair treatment and dollars under BRM programs at this time. With Ontario's diversified farmers, fewer dollars are coming to Ontario than to other regions through programs such as AgriStability, AgriInvest, and AgriRecovery. My farm, for example, did not receive any AgriStability money even though my beef feedlot suffered the same losses as feedlot-only farms did, but my other enterprises kept me above my threshold. This put me at an economic disadvantage compared to other farmers in my province.
I agreed with many of the base assumptions of Growing Forward 1, and I believe any ongoing program should have many of the following principles. It should be non-market distorting within Canada and with our trading partners. It should be equitable across all of Canada. It should be easy for farmers to do the paperwork for it and for governments to provide it. Programs have to be cost-effective to governments and producers and should react on a timely basis. They should be as bankable and predictable as possible, should work for both young or beginning farmers and established farmers, and should not punish multi-enterprise farms. Non-farmer-controlled actions by trading partners should not affect margins. Programming should be flexible; for example, there should be AgriInsurance in all regions, but it should be different in Ontario than it is in Saskatchewan. Large enterprises should be separated to address Ontario's more diverse agriculture. There should be flexibility of withdrawal for management purposes, i.e., for AgriInvest, in which the producer decides. BRM programs should be aided by Growing Forward initiatives for market development, trade, innovation, and research.
Help us to compete in the future by providing these things rather than just money for business risk management.
Here are a few of my thoughts on the BRM suite of programs and how they can be slightly tweaked. AgriInvest, as I stated earlier, is the top 15% of your reference margin. It's farmer managed and well received. I agree with Mr. Gowland that we should look at putting a higher amount in the program, like 2% of net sales, which would raise the program cap from $22,500 to $30,000. It's quite predictable and it's fairly easy to administer for both producer and AAFC.
AgriInsurance in Ontario is a well-received program. We have very good crop insurance in the province. It's well received because farmers know it's an ongoing and changing program. Every year the farm organizations and the Ontario government work out tweaks to the program. Even though it's part of the Growing Forward suite of programs, it is still changed every year. That's what we like about it; it gives some flexibility.
As for AgriStability, Ontario farmers are beginning to have more and more issues with whole-farm coverage on larger multi-enterprise farms due to a lower likelihood of payments, as compared to single-enterprise farms. There should be some consideration of not punishing farms that are trying to self-insure themselves by being diversified rather than being farms with single entities. One of the ways you could maybe do this is by allowing larger enterprises, such as those with a minimum of $250,000 to $400,000 in gross sales, to stand alone. So if you have $1 million in cash crop sales and $500,000 in cattle sales, you have the two entities separate.
The issue of consequences and negative margins caused by circumstances outside of a farmer's management control must be addressed. Take, for example, BSE. Beef farmers, never in their wildest imaginations, thought it would take many years to have all of our borders open again. I applaud the government for its commitment to work with farmers and industry to open borders. Having said that, I believe reference margins should be adjusted for what I call political interference by our trading partners in trying to keep us out.
Another area that you can perhaps look at is changing reference margins to the Olympic average versus the three years that we have in the middle right now.
The AgriRecovery program is the least predictable and bankable of all the programs. We need a program like this, which is rapid to respond in the case of a catastrophe. We saw that with the weather we had out west in the last couple of years. Again, it works best for single-enterprise farms, thus if you look at the dollars spent on this program in Ontario over the last three or four years, it's been very low.
The advance payments program is $100,000 interest free, and it's well received by many farmers. One issue is that many of the larger farmers are not using the program because of the multi-enterprise aspect. In Ontario you're allowed to get advanced payment on a number of different commodities, be it cattle or crops, but you can't get it for each one. Again, I would look at something where, if you have a major enterprise of several hundred thousand plus, you'd be allowed to get it for both.
Ontario non-supply-managed groups have been working on other BRM programs to address income. They believe this rounds out the BRM portfolio. Much lobbying is under way, and work still needs to be done in other provinces to get this national.
On my farm, I use pretty well all of the available BRM programs to help stabilize my farm and prevent sudden income loss or shifts. I use them as an insurance, along with marketing programs for my cattle and crops, to help me stay profitable and viable. Ideally, the market would provide and no safety nets would be needed. However, this is not realistic.
Governments can further help us by putting continued resources in the other planks of the Growing Forward 2 program, specifically market development, trade, research, and innovation.
Thank you very much.
Jim Gowland
View Jim Gowland Profile
Jim Gowland
2011-12-13 15:59
From a grains and oilseeds perspective, that's all we do. I can empathize with Mr. Schneckenburger on a multi-entity type of situation. I would concur that our bookkeeping and our way of being able to count stuff in larger operations are basically not a big deal. Even within crops specific to our grains operation, we keep a pretty good handle on what the production is, what kind of pricing we've got, what our marketing was on that type of stuff, and what kinds of dollars have been brought in with those programs—and we assess the expenses to those too.
It depends on how technical you want to get, but you can split it down to whatever you want if you are dedicated to that purpose. So I think that yes, it can be done.
Basically, with an AgriStability program in our operation, we keep paying our premiums every year to it. The good news is that we've been fairly profitable and successful over the years. But we've had a couple of years where we ask if we can move some numbers around because that's still something that can be done, and you still don't even come close to it. So as far as AgriStability goes in a grains and oilseeds operation, yes, certainly we've been building reference margins up over the last number of years because of increased revenues out of crops. But again, I'm not going to depend on that program to look at cyclical downturns for us; I won't depend on it.
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