Public Accounts Committee on Oct. 21st, 2010

[The Chair, Liberal, Joe Volpe]

Mr. Young.

[Terence Young, Conservative, Oakville, ON]

Thank you, Mr. Chair.

I have a question for Mr. Ralston. We know that we have high standards compared to other governments worldwide. We have financial management and clean audits. We know on the other hand that Enron, when it was in business, probably had a lot of people doing a lot of financial reports and audits. They showed up looking pretty good until they found out the cupboard was bare.

So it's obviously about more than financial reporting and audits. It has to be the kind of people you hire. It has to be the quality of internal oversight. It has to be, in fact, the oversight of Parliament, I think, that's important.

So on the marginal benefit that you refer to in spending over $300 million in auditing every department every year, I just want to be clear on what I'm saying and what you're saying. You're confident that it's not necessary to spend that much money or more to audit every department every year, because there won't be enough benefit to the public in assuring that the systems have integrity.

[James Ralston]

On the cost, as I think my colleague pointed out, much of that sum was for a certain amount of upfront work to bring us to a certain state. That work was being done in the departments. That work has gone on, so some amount out of that total would have been expended for those purposes by now.

I'm really focusing today on what is going to be the most effective way to continue to keep the pressure on for departments to constantly look at their internal controls and improve them. We think the public disclosure route outlined in the policy on internal control will do that.

You also made reference to the corporate scandals. I want to point out that one of the lessons learned there was that corporations need to have active audit committees. One of the reasons why we now have a policy that requires audit committees for individual departments, with external members to bring that outside oversight, is a response to those very concerns.

[The Chair, Liberal, Joe Volpe]

Thank you, Mr. Young.

Mr. D'Amours.

[Jean-Claude D'Amours, Liberal, Madawaska—Restigouche, NB]

Mr. Chair, as you asked a question similar to mine, and as I want to avoid any appearance of unfairness, I will skip my turn. That should please everybody.

[Navdeep Bains, Liberal, Mississauga—Brampton South, ON]

That is unbelievable!

[The Chair, Liberal, Joe Volpe]

Thank you, Mr. D'Amours. It's very nice of you to support the chair every now and then.

Mr. Dreeshen, do you want to do the same thing?

[Voices]

Oh, oh!

[Earl Dreeshen, Conservative, Red Deer, AB]

I'd love to be able to that--maybe next week.

In the report, one of the things that was spoken of was the quality of the people that you have in the department. It was spoken of as one of Canada's top employers. When we start to look at that, I think we then can perhaps assess how significant the manpower and the time are that are being spent on these audits.

There are a couple of other things I want to speak to regarding the improvement of “resource allocation and project management”. That was on page 9 of the report we had. I was wondering what steps have been taken to better allocate the staff you have as far as your audit projects are concerned.

[John Wiersema]

Thank you, Mr. Chairman.

I believe the member is referring to a statement in our departmental performance report.

[Earl Dreeshen, Conservative, Red Deer, AB]

Yes.

[John Wiersema]

Unfortunately, I didn't bring that with me today, but I believe the statement you are referring to is in reference to efforts in the office to improve project management, or how we manage audit projects. We have been undertaking quite a number of initiatives to do that.

In terms of the specific quote you referred to, it is on the allocation of resources to projects. We have a staff scheduling system that we have been working on where we're increasingly trying to manage all the auditors in the office on an office-wide basis. We assign them to the appropriate audits based on their skills and experience, matching up the needs of the audits with the skills and experience in the office. That is working reasonably well right now.

It also enables us to identify any gaps in resourcing of audits or excess capacity staff that are under-assigned. That is overseen by a small central group in the office to make sure that we're deploying our auditors to audits in the most effective way.

[Earl Dreeshen, Conservative, Red Deer, AB]

My next question has to do with performance targets.

As I noted when we had discussions on this earlier, when we talk about being on time and on budget, one of the footnotes we have is that being on budget means that the actual hours to complete an audit did not exceed the budgeted hours by more than 15%. Then there's the discussion of that being allowed when you're taking a look at other people's books.

I just wonder if some of this allocation that you've been talking about has improved this and whether you're able to take a look at different types of performance expectations to bring the per cent down to where it's realistic or to try to bring that 15% overage down to a more realistic level.

[John Wiersema]

Thank you, Mr. Chairman.

It's unfortunate that the Auditor General is not here today, because she would enjoy responding to that question.

We've built in the 15% potential overrun before we consider an audit to be over budget. The reason for this is that we put the quality of our audits first. Quality is job one. We do not want staff cutting corners on audits and sacrificing quality.

On any audit, there will be unexpected events. You'll find something you didn't expect to find, or you'll have a difficult discussion with management, and those unexpected events weren't budgeted for. We want the staff to do the job properly, and we have built in that 15% potential overrun before we consider it, so that we encourage staff to not sacrifice on quality.

Our performance, I believe, is improving. We have made it a corporate priority to improve our on-budget performance. We're not exactly where we want to be. I believe our target now is 80% for all of our audits across the board. We're getting closer. We continue to strive to work toward achieving that target.

[Earl Dreeshen, Conservative, Red Deer, AB]

Thank you very much.

[The Chair, Liberal, Joe Volpe]

Thank you, Mr. Wiersema, Mr. Ralston, and Mr. Matthews.

We had only scheduled about an hour and we are about seven minutes over. I thank you for your patience. Clearly there are other questions that we could ask and we probably will ask. I know that you're always going to be available to our call, Mr. Ralston and Mr. Matthews, and I know that Mr. Wiersema will be as well.

Thank you very much, gentlemen.

I'm going to suspend the meeting for an extra minute while our witnesses depart from the room and then we'll just carry on. Is that okay?

[The Chair, Liberal, Joe Volpe]

Colleagues, we're just quickly going to pass around now a copy of the agenda that we might have adopted earlier on. We've already dealt with number one, which was of course the items associated with the way that we spread our time around.

The second item is information that you've already received; that is for the meeting, as you'll see per the scheduled tabling on the attached agenda, for next week. On the 26th, there is confidential preview. You've already received the information.

Most of you are really practised in the art of actually going to those meetings. We'll have a brief reminder that the Auditor General's people are going to marshal people in and out. We are expected to respect the confidence until the report is tabled in the House. We don't need to remind anybody of that, but some of the staff may need to be made aware just so we don't have any unfortunate misunderstandings.

As per my indication earlier, and again as per the practice, you can have staff here. They need to be authorized. Unless they walk in with you, they need to have a letter giving your permission. They're going to be sitting in a room right up until two o'clock, okay? I know it's an uncomfortable thing to say to people, but if there are any biological breaks required by staff, they are allowed to do it...supervised, right?

[Voices]

Oh, oh!

[The Chair, Liberal, Joe Volpe]

Monsieur D'Amours.

[Jean-Claude D'Amours, Liberal, Madawaska—Restigouche, NB]

Mr. Chair, I would just like to know if using BlackBerries and cell phones will be allowed in the room. Will they trust us about that?

[Meili Faille, Bloc, Vaudreuil—Soulanges, QC]

I can answer Mr. D'Amours' question.

[The Chair, Liberal, Joe Volpe]

Madame Faille.

[Meili Faille, Bloc, Vaudreuil—Soulanges, QC]

Yes, MPs are allowed to use their BlackBerries, but their staff is not. Research people present in the room would have their computers with them, and so on, but they will not be connected to the network. Do you understand? They will not be allowed to use Internet keys.

[Jean-Claude D'Amours, Liberal, Madawaska—Restigouche, NB]

That answers my question. Thank you.

[The Chair, Liberal, Joe Volpe]

The people who will be monitoring that will be people from the Auditor General's Office. They'll make sure that takes place. There is no infringement of--