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Nancy Cheng
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Nancy Cheng
2015-05-13 15:32
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Thank you, Mr. Chair.
Thank you for this opportunity to discuss “Report 2, Required Reporting by Federal Organizations” of the Spring 2015 Reports of the Auditor General of Canada.
Joining me at the table are John Affleck, principal, and Colin Meredith, director, who were responsible for the audit.
This audit focused on recurring reporting requirements set out by the Treasury Board, by the Public Service Commission of Canada, and by statute. We undertook this audit to respond to long-standing concerns about the burden these reporting requirements create for federal departments, federal agencies, and crown corporations.
The overall objective of the audit was to determine whether selected reporting requirements for federal organizations efficiently support accountability and transparency, and generate information used for decision making in policy development and program management. Overall, we found that reporting intended to support accountability and transparency was serving its intended purposes.
We also found that clear purposes and timelines had been established for the selected reporting requirements, and that central agencies had provided guidance and support to help federal organizations meet them.
However, with respect to the efficiency of required reporting, we found that neither the Treasury Board of Canada Secretariat nor the Public Service Commission of Canada had determined the level of effort or costs involved in meeting the requirements we examined. ln our view, determining level of effort and costs would lead to a greater understanding of the resource implications of these requirements, and would allow them to be adjusted accordingly.
Furthermore, we found that the secretariat has not maintained a comprehensive inventory and schedule of the 60 recurring reporting requirements stemming from its policies, directives, and standards. Such a tool would both help the secretariat address the burden of Treasury Board reporting requirements and help reporting organizations efficiently prepare the required reports.
The secretariat made some accommodations for the sizes and mandates of reporting organizations when reporting requirements were first established and during subsequent reviews. However, we found that most Treasury Board reporting requirements applied equally to all organizations regardless of their size or mandate. For example, the Canadian Polar Commission, a small organization with 11 staff members, was required to prepare 25 annual or quarterly reports.
We noted that the efficiency and value of quarterly financial reports could be improved to better support accountability to Parliament. We identified only one routine use of the information in quarterly financial reports. The Office of the Parliamentary Budget Officer used the information in preparing assessments of in-year spending for parliamentarians.
Six of the eight reports that we examined were intended to support accountability and transparency. We observed that federal organizations were preparing these six reports. However, they were not meeting the remaining two reporting requirements, which were intended to support their internal decision-making.
We noted that 20% of departmental investment plans had not been completed as required. We also found that about half of the departmental security plans that were due by June 2012 had not been finalized at the time of our audit. A departmental security plan is intended to support internal decision-making by providing an integrated view of an organization's security requirements.
In addition, we found that the secretariat did not take full advantage of the opportunity to use the information in the departmental security plans. For example, although the secretariat reviewed the plans it received and used them to support its policy review, it did not use the information to identify broader government security issues.
In the report, we made six recommendations aimed at improving the efficiency and usefulness of required reporting. The secretariat and the commission have agreed with our recommendations.
Mr. Chair, this concludes my opening remarks. We would be pleased to answer questions that this committee may have.
Thank you.
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Nancy Cheng
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Nancy Cheng
2015-05-13 16:28
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Mr. Chair, we counted about 60 such recurring report requirements. There are ad hoc requests as well, so we're not counting ATIP requests or parliamentary requests in terms of information needed from departments and agencies. Working with the Treasury Board Secretariat, because they didn't actually have a complete inventory, we sat down with analysts to try to figure out what was the quantum there. On a recurring basis, there are about 60 of them.
At the outset, we would not have had a complete list to choose them from, nor were we trying to be representative in the selection. We wanted a bit of a combination of different natures. One for transparency, which seems like a good one, is the proactive disclosure of contracts. Larger contracts often should be subjected to public scrutiny, so information like that is put out there and people can see it for transparency purposes. Weighing that with some that would support accountability requirements and some that might be also for internal purposes as well, we wanted to have both the Treasury Board and the Public Service Commission, so that's why the staffing accountability report was chosen.
There wasn't a particular magic formula that we used, but we wanted a combination of different types of audit reports to choose from.
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John G. Williams
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John G. Williams
2012-04-02 16:36
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Mr. Chairman, I thank you for the invitation to appear before the Standing Committee on Government Operations and Estimates today to present on the estimates process by which Parliament reviews the estimates, or funds, requested by the government.
It is an honour for me to be here. This is the nation’s House, where the nation’s business is transacted, and it is a pleasure to be invited to appear before you.
In a democracy, the people have every right to expect that their taxes are used in a manner that is acceptable to the people. The House of Commons has the responsibility to represent the wishes and desires of the people and to ensure, by way of approval of the estimates, that government spending is prudent and in the best interests of the people. Since nothing happens without spending, it makes the approval of the business of supply the most important role of the House of Commons.
Control of the public purse by Parliament has its origins in the Magna Carta signed by King John in 1215, when the king agreed to accept the “common counsel of our realm” when levying and assessing an aid or a scutage—scutage being what we call taxes today. Parliament has had control of the public purse down through the ages, and it's still very much at the core of our democratic government.
Today, Standing Order 80 clearly indicates that the House of Commons still retains that authority by stating: “All aids and supplies granted to the Sovereign by the Parliament of Canada are the sole gift of the House of Commons”.
That puts it in perspective, Mr. Chairman. The government has no money except that which is given by the House of Commons.
For the fiscal year ended March 31, 2011, according to the financial statements audited by the Auditor General, the government spent $270.5 billion dollars, granted by the House of Commons by way of approval of supply.
That volume of spending poses a quandary for the members of Parliament. Given that amount and the complexity of proposed spending by the government, how are members supposed to be able to scrutinize it properly? If you want to look at the detail, the mountain of paper would be so big that you would not know where to start. If you want a manageable amount of paper, the overview contains so little detail that there are no apparent questions to ask.
In addition to that, of course, the government considers the estimates to be a matter of confidence. What backbencher wants to carry the responsibility of triggering an election?
It doesn't stop there. Let us suppose that a parliamentary committee recommended a reduction in the estimates. First, it can only be debated and voted on a supply day. Should it pass and the estimates be reduced, the government could consider it a loss of confidence and trigger an election.
However, even without a supply day vote, a reduction recommended by a committee would cause the President of the Treasury Board to introduce a motion to restore or reinstate the original amount if the proposed reduction was not acceptable to the government. The vote on the motion to restore or reinstate the government’s request for funds is a vote on an opposed item, and the adoption of this motion overrides the committee’s recommended reduction, which means nothing will happen.
In June 1995, the Standing Committee on Procedure and House Affairs created a subcommittee on the business of supply, and I was privileged to sit on that committee. The report, of which I believe you all have copies, is I think the best and most comprehensive report on the business of supply in Canada in modern times.
I would like, Mr. Chairman, to acknowledge Mr. Brian O’Neal of the Library of Parliament, who was the principal researcher for the subcommittee and whose great work contributed immensely to the quality of the report.
In addition to placing the business of supply in an historical perspective, the recommendations of the report can be broken down into six areas: one, the creation of an estimates committee with overarching authority on the business of supply; two, the confidence convention and the business of supply; three, granting committees the capacity to reallocate up to 5% within the department under review; four, long-term cyclical reviews of statutory spending, which we call program spending; five, review of crown corporations that do not report through a minister; and six, a review of tax expenditures and loan guarantees.
The subcommittee, Mr. Chairman, reported back to the Standing Committee on Procedure and House Affairs with this report, which was adopted by the Standing Committee on Procedure and House Affairs in late 1996 or early 1997. The report was subsequently tabled in the House of Commons, but the House was dissolved for an election in April 1997 and the report died on the order paper. I was unable to have it resurrected by the Standing Committee on Procedure and House Affairs in the subsequent Parliament, therefore I tabled a private member’s motion to adopt the report.
The private member’s motion was adopted by the House, but since the subcommittee report had not been tabled in that Parliament, the motion was advisory rather than an order of the House, and no action was taken.
However, if you look at Standing Order 108(3)(c), you will see that the first recommendation of the subcommittee—that there be an estimates committee—has already taken place. That is why you are here today sitting as the government operations and estimates committee.
I believe it was in 2002 when I became aware there were to be changes to the committee mandates. I therefore lobbied for the creation of the estimates committee with a mandate according to the subcommittee report, and here you are.
If you study the mandate of the estimates committee in Standing Order 108(3)(c), you will see that it is virtually identical to recommendations of the subcommittee, so that part of the work has been done. As far as I am aware, however, the estimates committee has yet to make full use of the mandate in the Standing Orders to pick up on the business of supply or examine government spending that is outside the estimates. I believe that approximately 30% of total government spending is voted on through the estimates. The rest is statutory expenditures authorized as program spending in legislation by the House of Commons.
With the new mandate, the estimates committee can now look and examine spending right across government. You will find in the subcommittee report—recommendations 35 to 39—a proposal for the estimates committee to examine statutory spending on a cyclical basis using the concept of program evaluation. All government programs should be evaluated at least once every ten years to: one, articulate the public policy objectives of the statutory program; two, decide whether or not these objectives are being met; three, whether or not the program is being effectively managed; and four, whether there are alternative means of meeting the same policy objectives.
These points are virtually identical to a private member’s bill that I had on the order paper for a number of years, which never made it to the House for debate. The point is that the estimates committee now has the authority under Standing Order 108(3)(c)(x) to examine statutory expenditures. To do so, it can ask the House to request that the government conduct program evaluations as outlined above to assist the committee in its work.
The estimates committee can also look at loan guarantees and tax expenditures that do not show up anywhere in the financial statements, and crown corporations that do not report to any other committee. These can represent huge sums of money and important public policy; therefore, the House needs some way to scrutinize them. That is the role of the estimates committee. The Public Service Commission, which is independent of government and therefore cannot report to the House through a minister, now reports directly to the House and is referred to the estimates committee.
The big item is the consideration of the estimates by Parliament. The most important function of Parliament—control of the public purse—is not even given a perfunctory examination. Many members of Parliament don’t understand the process, and therefore stay with more politically rewarding agendas. The big problems are how do you understand this mountain of paper; and if you did understand the paperwork and wanted to make a change, the Standing Orders and the confidence convention prevent you from doing so. Based on the premise that there is no gain for the pain, the estimates are left untouched and a mystery to many. Supply days are for political football with never a mention of supply.
When I arrived here in 1993, the last supply day in June used to be a full-day debate on the estimates, but even that was changed so that the debate on the estimates does not start until 6:30 p.m. and finishes at 10 o'clock. That's $270.5 billion dollars fully considered in three and a half hours. Pretty soon the House will be examining the estimates at the rate of $100 billion per hour, which really is a sad reflection on the state of our democracy.
If you read the report carefully, you will find that the subcommittee suggests a methodology by which House of Commons committees can recommend a reallocation of up to 5% within a department, and even reductions in the estimates without triggering the confidence convention. The report sets out a clear timetable for consideration of the estimates by the committees, and if a House committee recommends a change or a reduction, they must give their reasons for doing so. In response, the President of the Treasury Board can either accept or reject the committee's proposals.
If the Treasury Board accepts the committee's proposals, a modified royal recommendation can be tabled. However, if the committee recommendation is rejected, reasons must be given. This should lead to a reasoned debate in the House when the estimates are debated. It would be nice, of course, Mr. Chairman, if the Standing Orders were changed to allow more than three and a half hours of debate in the House.
Regardless of the issue, if you change the motivators, you will change the results. Supply days have become political, because MPs cannot change the endgame. If you allowed a process whereby estimates could be reduced, then I would hope that MPs would take the estimates more seriously and would hold a number of serious meetings on the issue with senior department officials.
Now, Mr. Chair, if I can change the topic slightly, I will talk about the plans and priorities documents themselves.
I sat on a committee that revamped the old part III documents into the plans and priorities documents, which presented the proposed spending for the coming year within future projections going out three years. This was something new.
The committee also recommended the introduction of departmental performance reports, tabled by the government in the fall. These two documents, plans and priorities in the spring, which are forward-looking, and the departmental performance reports, the DPRs, in the fall, which report past experience, should present the information in a similar manner, the plans and priorities having three years going forward and the DPRs having three years of historical information.
Unfortunately, Mr. Chairman, I saw these DPRs being what I called self-serving fluff, without real substance. I therefore wanted two DPRs selected at random each year for audit by the Auditor General. This way, we would know if the DPRs were really telling the story within the departments.
The Auditor General tabled a report in Parliament in 2007, I believe, explaining the methodology by which DPRs could be audited. Since I have been gone for a few years, I am not sure if the Auditor General has, in fact, audited some of these DPRs.
Mr. Chairman, the government operations and estimates committee has a wide-ranging mandate, and I hope this committee will utilize that mandate fully to make the examination of the estimates by Parliament a meaningful exercise.
It is why Parliament came into being, and control of the public purse remains its most important function.
I thank you, Mr. Chair.
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