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Welcome to the ninth meeting of the Board of Internal Economy in the 43rd Parliament.

We will begin with the first item, the adoption of the previous meeting's minutes.

Are there any comments? Is this agreed to?

Okay, it has been agreed to.

We'll go on to item two, business arising from the previous meeting. Are there any items? No. That's good.

Now we'll go on to item three, the 2019-20 audited financial statements.

We're going to start with Daniel Paquette, the chief financial officer, who is accompanied by José Fernandez, the deputy chief financial officer; and from KPMG, Charly Thivierge-Lortie, audit senior manager, and Andrew Newman, audit partner.

Mr. Paquette, go ahead.

Thank you, Mr. Speaker.

I'm here today to present to you the audited financial statements for the House of Commons for the fiscal year ending March 31, 2020. These audited financial statements are prepared by the House administration and present only one of our financial reports that we bring to the board to help you in your role of oversight of House financial activities. They are a formal record of our House financial activities for the financial positions as they were as of March 31, 2020.

As part of the financial reporting cycle, you'll recall that last June I provided you with a year-end financial report for the fiscal year 2019-20. The purpose of the report was to present the detailed comparators between the spending and the spending authorities for 2019-20 with those of 2018-19.

Today we are looking at the 2019-20 audited financial statements. These audited financial statements are prepared using the accrual basis of accounting rather than the expenditure basis. This means that they reflect the effect of a transaction in an event in the period in which it occurs rather than in the period in which the appropriations are used. Some of the main differences you'll be noting as a result of this is that the net cost of operations include the services we've received without charge—that is, the cost of the buildings we occupy and the employer's share of the employee benefits. You will also note that the inclusion of a statement of financial positions includes inventory, capital assets and amortization, liabilities for employee benefits as well as the liabilities for vacation pay and compensatory leave.

The House of Commons financial statements were prepared in accordance with the Canadian public sector accounting standards. Also, as you'll hear in the next presentation, each year these financial statements are audited by an external independent auditor, currently KPMG.

This year, as for as long as we've had our financial statements audited, we've received an unqualified audit opinion. To me this is a testament to the efforts made by my team to ensure the systems and practices are in place to ensure reliable financial information is available for decision-making in all our financial reporting.

I would like to take a few minutes to talk about the highlights regarding financial statements.

The statement of financial position provides an overview of the House of Commons' asset and liability balances.

The assets, in the amount of $89 million on March 31, mainly consist of funding provided to the House to support its activities; receivables, which mainly consist of money to be collected from departments, agencies and other federal parliamentary institutions to which the House provides support; as well as capital assets, namely assets whose purchase price exceeds $10,000.

On March 31, 2020, the House's liability was $84 million. That mainly includes amounts payable to suppliers and employees' social benefits. The budget item that has changed the most is that of accounts payable and accrued liabilities. That increase is attributable to a longer period during which normal wages were incurred but unpaid, compared with the previous year. There is also the 2018-19 retroactive economic increase for employees, which was approved before March 31, but paid only the following year.

Let's now go to the statement of operations and the net financial position.

Our net operating costs have increased by about $10.5 million. Those costs fluctuate from year to year depending on various factors, such as different initiatives presented in the House of Commons administration's strategic plan 2019-22. As we mentioned in other reports, those initiatives include investments for computer and printing equipment renewal in constituency offices, additional resources for services for members as employers, and costs stemming from an election year.

I will not spend a lot of time explaining the different significant differences in the net operating costs, as they are the same as those we discussed in June, when we presented the financial report on the year-end results.

It should be noted that many of those differences are due to the fact that 2019-20 was an election year. That mainly led to an increase in wages and social benefits of the teams who supported the transition, as well as severance payments for members and their employees. There is also an increase under the budget item related to computer and office equipment owing to the computer equipment renewal done during an election. However, there is a decrease in travel costs, which come under the transportation and communications budget item.

Those financial statements will be published on the website today, following the meeting.

I will now yield the floor to the KPMG representatives, our auditor, so that they can present the result of their audit on those financial statements. I could answer questions after their presentation.

Andrew, I'll hand it over to you.

Thank you.

I am Andrew Newman, the independent external auditor of the House of Commons. I am pleased to introduce as well my colleague Charly Thivierge-Lortie, the senior manager responsible for the financial statements of the House of Commons.

Mr. Paquette has just presented the financial statements of the House for the year ended March 31, 2020. My role here today is to confirm my independent audit opinion on these financial statements, as well as to provide the members with a summary of our findings resulting from our audit.

Our audit opinion is attached to the financial statements presented by Mr. Paquette. Our audit was performed under Canadian generally accepted auditing standards, which are the professional standards followed for all financial statement audits in Canada. The financial statements are prepared using public sector accounting standards, which are the standards used by all governments in Canada and are issued by the Public Sector Accounting Board of Canada, on which I have had the privilege to serve for the past 12 years, including six years as vice-chair.

Our audit opinion, which is on the first page of our auditor's report, states:In our opinion, the accompanying financial statements present fairly, in all material respects, the financial position of the [House of Commons] as at March 31, 2020, and its results of operations, its accumulated surplus and its cash flows for the year then ended in accordance with Canadian public sector accounting standards.

Our auditor's report is signed “KPMG LLP” and dated August 11, 2020.

Members, this is a clean, unmodified audit opinion that members of Parliament should expect their financial management team to achieve. We have also provided to the members of the board an audit findings report. In summary, our financial statement audit was fundamentally completed as planned. The pandemic required that our detailed audit procedures be performed in a virtual, secure environment, and that was achieved. I do want to thank the House of Commons administration team for their additional efforts and commitment to the audit process to make a virtual audit not only possible but relatively smooth.

During our audit, we did not identify any audit adjustments in the amounts recorded in the books and records and reported in the House financial statements. What this means is that the financial reports prepared by management prior to the audit did not change as a result of our audit. During our audit, we also did not identify any internal control deficiencies that we determined to be significant deficiencies in internal control over financial reporting. We have provided recommendations for improvements to management with respect to certain payroll processes, primarily around the documentation of the performance of certain procedures. Management agreed with our recommendations and are currently working to implement those improvements. We will review their progress during our 2021 financial statement audit.

Members, in short, this is a positive audit report. I would like to thank House management once again for their diligent participation in the audit process, and thank this board for finding the time in your busy agenda for the financial statements and audit results to be presented. This is an important aspect of governance for all organizations, particularly in the public forum that you work in every day.

I would welcome questions, if the members have any.

Thank you.

Are there any questions?

Seeing none, we'll move on to the next section—

Excuse me, Mr. Chair.

Mr. Julian, please go ahead. I'm sorry, I didn't see you.

I raised my hand, and then I used the “raise hand” function. We're still dealing with the new virtual environment, which is really my question.

I think it's reassuring that you didn't find any deficiencies in the audit, and no adjustments. What I'm interested in hearing a little bit more about is how you were able to achieve a full audit in a virtual, secure environment. Of course, the information needed to be secure. This is quite a different environment for this kind of audit procedure. I think it would be interesting to have a brief summary, I guess, of some of the measures that needed to be taken to perform an audit in this kind of environment.

I presume that is for me.

Yes.

The world certainly changed for auditors in all sorts of financial audit statements when the pandemic hit in mid-March, and audits went from on-site services to virtual services, really across the board and across Canada. As a firm, KPMG had put in the protocols around working virtually and having our teams fundamentally work from home.

From an aspect of security of information, we worked very diligently with your team, and certainly Mr. Paquette can speak to the security aspects of information from their side. From our side, KPMG in Ottawa is a secure federal government office. We are audited by PSPC not only on an annual but also an ad hoc basis with regard to that, including our IT systems and our ways to communicate between offices. We use that. We had that security already pre-defined and we use it to transfer information between the House and KPMG to protect it appropriately.

We will now go to Mr. Richards.

Thank you.

I wonder, Mr. Newman, if you could just explain to us this issue that was related to the payroll documentation and maybe just what that concern was. You or maybe the administration would need to give us this, but what is being done to remedy the situation there?

Thank you for the question. I welcome this opportunity to assure the members that the issue isn't around people being paid the wrong amount or that employees were being improperly paid or anything. It revolves around the documentation of certain reviews and approvals within the employee file itself.

We identified this as we changed our approach a little bit with regard to the Phoenix pay system and went from what is called a “substantive approach”, where we picked a sample and looked at it, and moved to a controls-based approach, where we looked at the controls around the House to really assess why the House was getting pretty good results around employees' pay.

We looked at the controls and the processes. In that, we identified, again, recommendations for improvements. These aren't significant control deficiencies around consistency and documentation of the performance of procedures within the employee file. It's not that the procedures were not performed. It was just documenting them in the employee file so that when auditors like us come in there is evidence that those procedures were completed.

Okay.

You mentioned that you made recommendations for improvement. How do those recommendations get brought forward and what is done to follow up on those recommendations to make sure they are being put in place?

Absolutely. Those recommendations are brought forward in a formal letter from us to management, and management has agreed with all of our recommendations. I want to emphasize that.

Management gets an opportunity, obviously, to work at and implement those recommendations, and they have committed to do so. Then, when we come back to do our audit for 2020-21, we will look to make sure our recommendations have been appropriately implemented and that those issues have been resolved. If not, it would be accelerated into a significant deficiency and the comptroller of this committee would see it next year.

Thank you.

Very good. Are there any further questions?

Okay. That being established, maybe we'll move on.

Thank you, Mr. Paquette, Mr. Fernandez, Monsieur Newman and Madame Thivierge-Lortie.

I understand that it is normal and good governance practice for independent auditors to have a discussion in camera with board members, without management present, regarding the preparation of the year-end audited financial statements.

I would therefore like to propose to the board members that we hold a short in camera session without the House administration officials to allow board members to have this discussion. Do I have the acceptance of members to proceed to in camera? Yes? Okay.

Thank you. What we will do is take a short break to transition into in camera. At this time, I will ask the House administration officials to exit the room, both in person and virtually. Once this discussion is complete, those in person will be summoned back into the room and those virtually will receive an email summoning them to rejoin the room as well.

[Proceedings continue in camera]

Now that everyone's here and we're all connected, let's get started.

Before starting, I want to welcome our new members.

Mr. Richards, welcome.

Welcome, Mr. Deltell.

We'll go through the previous minutes. Are there any changes to be made? Is everything good and acceptable?

It's ready to go.

We'll go on to item 2, business arising from previous minutes. Is there anything coming up from business?

Mr. LeBlanc, can you hear me?

Yes.

Comb your hair, would you?

My problem, Mr. Rodriguez, is I don't have 10 bottles of hairspray like you. This being Mr. Deltell's first meeting, we should tell him that, in Quebec, it's the Economic Development Agency of Canada for the Regions of Quebec that pays for hairspray, since it's considered an innovation.

It's too bad he doesn't have his mask on. I'm talking about Mr. LeBlanc, not Mr. Deltell. Let's carry on.

You walked right into that, Mr. Chair.

Mr. LeBlanc, we're moving on.

Item 3 is ratification of a walkaround. Everybody had a chance to vote.

Was everyone able to vote all right? There didn't seem to be any problems.

Now we have a report....

To the Conservatives, you have two new members.

Mr. Richards, can I get your attention for a second?

For the Conservatives, you have two new people. Do you have an official spokesman whom you would like to name to replace Mr. Strahl?

I think I reluctantly agreed to be the spokesman.

Thank you.

Mr. Richards will be the official spokesman for the Conservative Party.

Now we're on to number 4. We have a presentation by Mr. Stanton from the working group on the Centre Block.

Go ahead, Mr. Stanton.

Good morning, Mr. Chair. Thank you.

Fellow members, good morning.

I'm here today as chair of the working group on the long term vision and plan, or LTVP, to update the board on the work that's been done since our last meeting and to seek endorsement of our recommendation regarding parliamentarians' involvement in the jury for the architectural design competition being organized by Public Services and Procurement Canada, or PSPC, for the redevelopment of Block 2.

Before I discuss the recommendation regarding Block 2, I'd like to provide a brief update on our last meeting, which was held on August 13.

First, PSPC presented its public engagement strategy for the LTVP, encompassing the development and launch of a public survey. The working group is in overall agreement on the proposed strategy to engage Canadians on Parliament and asked PSPC to get back to the group with more detailed information.

Second, the House of Commons administration presented high-level options for the Parliament Welcome Centre entrance and answered questions. Stakeholders will need to review the options in detail, and the working group will continue to be involved in the review before making a recommendation to the board.

Next is the third item we dealt with. We heard from the House with respect to updates and had some schematic designs and proposals for the chamber, lobbies and galleries in Centre Block. PSPC answered some questions around that. There will be further discussions at our next meeting with regard to lobbies and galleries. Once we've had a chance to look at those a little further, we'll be back to the board with some recommendations and something more detailed for you to look at.

As a final point before I get into the issue of Block 2, all members of the working group have now received complete detailed briefings on the schematic designs for the entirety of Centre Block and the welcome centre. We're looking forward to having further discussions on how the parliamentary requirements fit into all that. I would say that after two meetings, we're making some great progress and we're anticipating getting back together later this month. After we see what comes from that, we'll have some further things for you to discuss.

The only real issue on which we need to hear from you today is with respect to a design competition. What's happening here is that the PSPC briefed the working group on their approach to procuring an architectural design consultant team for the Block 2 new buildings, which will accommodate parliamentary space in the future.

Now, you may not know where Block 2 is. We didn't either. That's the space bound by Wellington Street, Sparks Street, Metcalfe Street and O'Connor Street. It's immediately across Wellington Street from Centre Block. Currently in the planning phase for this Block 2, PSPC is proceeding with a competitive process—it's a major undertaking—and launching an architectural design competition for that. It's a competition that will allow them to choose a team that has the right kind of capability and that is appropriate for a project of this scale and significance.

PSPC has also brought in the Royal Architectural Institute of Canada, RAIC, to oversee this competition process. I'm sure their role will be greatly valued. The institute and PSPC will together select an independent qualified professional jury for this competition process. The jury will look at all of the proposals submitted and will come down to first-, second- and third-place proposals. As part of that jury composition, the working group was pitched the idea of having parliamentarian participation in that jury process. We looked at three different scenarios as to how that might work. After some discussion, it was agreed that the working group recommend to you that in relation to this whole process, the chair of the working group—I, in this case—be designated as a juror representing the House of Commons in that jury process.

That's really what you have in front of you today. The idea was to make sure we have continuity with parliamentarian voices through the working group and into that process for Block 2. I'm therefore seeking your approval that in relation to this design competition for Block 2, the chair of the working group be designated as the juror representing the House of Commons.

I would be pleased to answer any questions you have and to provide more details on what I've just discussed.

Thank you.

Thank you.

I believe Mr. Julian has a question for Mr. Stanton. I'm starting a list, so let me know if you have a question.

Mr. Julian, you may go ahead.

Thank you, Mr. Chair.

Mr. Stanton, thank you very much for the report.

Of course, I'm in favour of designating the chair of the working group to sit on the jury.

The coronavirus has had an impact on a lot of projects across the country, so I'm wondering if there are any updated figures that you could give us or if you can let us know when you think the working group would be able to do that.

Thank you.

My question is very simple: Are there any updated budget figures around the overall projects?

Thank you, Mr. Julian.

I think we didn't get into budget elements with respect to Block 2. I will look to Michel Patrice. He may have some insights on it that he could share with us. At this point we were only taken up with the proposals around a design competition. As you may well know, this is part of a much more long-term.... So many of these parts of the long-term vision plan are so integrated that these things do come before us as a working group as well.

Michel, I wonder if you have any further insights that we could share with Mr. Julian on that question.

Michel has indicated that Mr. Gameiro would be—

Okay, go ahead, Rocque.

—best suited to answer that question. Rocque Gameiro, if you're online, you can take it from here.

It's Rob Wright here with PSPC. Maybe I'll jump [Inaudible—Editor] information.

With regard to costing of the Centre Block and Parliament's welcome centre, what we have done so far is to provide some cost estimates for different options around specific large components of the project.

If you remember the decisions around the chamber and different options around the chamber, we provided costing around different options for that, as well as different size options for the welcome centre. On some specific options around elements that the Senate of Canada is considering with regard to potential infills in the east courtyard, for example, we gave different costings around that. Those elements are now coming together, and as we move forward through the areas....

I'm sorry, Mr. Wright. Would you go back? I'm not sure if you muted yourself. It doesn't show that you're muted, but we lost your voice.

I apologize. Are you able to hear me okay now?

We hear you very faintly.

I'm not muted. If I really speak up here, is that any better?

It's still not loud enough. We can just barely hear your voice. I'm not sure what just happened there.

Well, I could hand it over to—

You're fine now; it's perfect. You can continue.

Okay, great.

We're coming at this in what I would call component parts. As we're moving through the decisions and the options that are being put forward to Parliament, those decisions are kind of big boulders that have a really material impact on the baseline cost for the Centre Block and the welcome centre. As we proceed through those this fall, we'll be able to come back with a baseline budget as well as a schedule. That will set us up in a really good situation.

As for the impacts of the COVID situation on the Centre Block, I think we've been able to absorb those really well. At the beginning of COVID in mid-March, we worked really hard to put in place what I would call best health and safety practices on the site. We worked with the Canadian Construction Association, and those became best practices for construction activity across the country.

I would say that we had to make a few adjustments, but it really has not impacted the schedule, as we've been able to move forward. From a cost perspective, that is probably the most important element on a project of this scale. Time is money, so being able to adhere to the schedule has benefited us very much from a budgetary perspective. We've been able to keep track and hit all of the milestones, and as we continue to work with the working group and the Senate LTVP subcommittee on these major decisions that will be recommended back to the Board of Internal Economy as well as to CIBA, that will position us to have a baseline budget and schedule.

Pardon me.

Would you like a follow-up on that, Mr. Julian?

When do you think you will be able to bring that to the BOIE?

As soon as the board makes some of these final determinations on the options, we will be able to come back with the budget.

It's important to note that there are thousands of decisions that form the scope for this project, but even a handful can swing the project price in hundreds of millions of dollars. It will be difficult to come back to you with a budget without having inputs on those decisions. They have a tremendous impact on the budget.

On the size of the Chamber, we have that. That was an important decision. On the size of the parliamentary welcome centre, we have that. That was an extremely important decision. There are probably another 10 to 15 critical decisions that will really allow us to have a base. There will be more decisions to come. Once we have those big boulder decisions behind us, we'll be able to establish that baseline budget. Our hope would be to move through that by the Christmastime period.

Mr. Stanton is next, and then Mr. Richards.

Thank you, Mr. Speaker.

I'm sorry that I missed that critical element of Mr. Julian's question pertaining to expenses. My sound actually gapped there for a few seconds. My apologies for not zoning in on the expenses related to Centre Block. It was not to Block 2. My apologies.

Very good. Now we'll go to Mr. Richards.

I had some questions similar to Mr. Julian's, but I'll add a couple of brief questions.

With regard to the recommendations in terms of the design for the chamber, etc., will those recommendations include various seating options? Will there be scenarios for various seating options? Will there be one that's brought forward? Will it have that kind of detail? Will seating options be included as part of those recommendations?

Mr. Richards, our first look at this was very preliminary. We looked at different options extending out to 2050. The notions around this planning, especially for galleries and space for members in the galleries in the House itself, are all impacted by the trajectory of population growth and therefore the growth in the number of parliamentarians as well, over literally decades. We just had a first look at that.

You may know that a while back the decision was taken to ensure that the footprint of the House of Commons chamber itself would not be changed. We're going to stay with the existing footprint that's there. Once the working group has had some further discussion on this, we will bring it back to the board with suggestions. We'll see what the working group decides, but we'll bring our best suggestions and we'll let the board take a look at it at that time.

Suffice it to say that as we go forward, the demands and requirements on this space are certainly going to increase.

I would like to follow up on that.

Is the understanding that you're going to bring forward one recommendation instead of a set of options? Is that the intention? I also understood that it was indicated in March that the board really wanted to see the chamber remain as close as it is to its current format. Perhaps you can answer both of those in concert.

Also, I'll just throw one more in and let you answer all three.

In terms of the galleries themselves, is there contemplation to ensuring they are more secure? Obviously, we've seen things dropped over, and things like that in the past. Is there thought being given to how those will look going forward?

On the last point on security, we didn't deal specifically with that point. I think it's certainly a valid one. We did look at some comparisons in terms of the size of the gallery in relation to the number of members in the chamber, and certainly Canada was blessed as we were in the old House of Commons, in Centre Block House of Commons. We had considerably higher numbers of gallery visitors than many other chambers in the Westminster system.

Going forward, certainly there will likely be impacts there. You're right about one of your three points, exactly right. The current footprint of the chambers in terms of the beautiful Gothic revival design and structure is all going to stay put. We have to work within the confines of that existing footprint.

As we look at accommodating more members, it has to be done in favour of a layout that will be in keeping with this board's direction around.... Of course, the ideal preference was to continue with the centre aisle and have government and opposition members opposing one another across that common aisle. That was a preference that has been expressed to our working group, and we'll certainly keep that in mind.

As to whether we'll have just one recommendation for you, I honestly don't feel comfortable speaking for the working group at this early stage. I'm taking a cue from your comments. I suggest that we might want to consider more than one. I'll certainly be guided by the working group and what we think is probably our best preference, but leave open.... I think this is an area that obviously needs vigorous discussion and consideration. We want to make sure we get this right.

Thank you.

Are there any other...?

Mr. Deltell, please go ahead.

Thank you, Mr. Chair.

Good morning, Mr. Stanton.

It's always nice to talk to you, in any circumstance, but this is a first for me.

I think I know the answer, but I'm wondering whether we could safely have a guided tour of the Centre Block to see the work under way.

Mr. Stanton, go ahead.