2006 November Report of the Auditor General of Canada

Funding for existing programs

1.27 The central agencies (the Treasury Board Secretariat, the Privy Council Office, and the Department of Finance) should ensure that ongoing programs and reference levels are reviewed systematically to assess whether these programs and their funding is still relevant, and whether they still represent value-for-money.
(1.18–1.26)

Designing and implementing a process of systematic review of existing programs is one of the priority areas of concern of the government. The government has committed to the following:

• programs should focus on results and value-for-money,
• programs must be consistent with federal responsibilities, and
• programs that no longer serve the purpose for which they were created should be eliminated.

1.34 The Treasury Board Secretariat should collect and use comprehensive information on program costs and performance to perform its spending oversight responsibilities.
(1.28–1.33)

The Treasury Board Secretariat agrees with the recommendation: Accurate, timely, relevant, and reliable financial and non-financial information, on programs objectives and results, is critical to all functions of an effective Expenditure Management System. The Secretariat also recognizes that financial information must be integrated with performance information. Indeed, that is the purpose of the Management, Resources, and Results Structure Policy that the Treasury Board put in place April 2005. In addition, the Federal Accountability Act proposes to improve performance information through the strengthening of the evaluation function in departments in respect of grants and contributions.

New or enriched spending initiatives

1.52 The central agencies (the Treasury Board Secretariat, the Department of Finance, and the Privy Council Office) should ensure that they have complete and accurate information that

• supports the review and approval of new spending initiatives, and
• allows new spending initiatives to be assessed against existing programs to determine whether funding should be reallocated.
  (1.35–1.51)

The Privy Council Office, the Department of Finance, and the Treasury Board Secretariat agree with the recommendation: Accurate, timely, relevant, and reliable financial and non-financial information on programs objectives and results is critical to all functions of an effective Expenditure Management System. Cabinet documents and supporting processes should provide the cost and results information needed for all aspects of decision-making and allow for the integration of decisions on allocation and reallocation across existing and new proposals.

1.53 The central agencies (the Treasury Board Secretariat, the Department of Finance, and the Privy Council Office) should also clarify their roles—particularly the Treasury Board Secretariat's role and its ability to challenge and influence funding decisions more effectively—in the Expenditure Management System.
(1.35–1.51)

The central agencies agree that clarity of roles and responsibilities is essential.

1.64 The central agencies (the Treasury Board Secretariat, the Department of Finance, and the Privy Council Office) should review how they determine and recommend funding of programs with long-term financial requirements. The funding for these programs should be as predictable as possible and aligned to program requirements.
(1.54–1.63)

Enhancing the information in Cabinet documents so that it better supports the decision-making process is a key objective of the new Expenditure Management System. Improved information, including comprehensive costing information, as well as rigorous exploration of the benefits and risks associated with identified options, are key to enabling sound decisions. Clear initial funding decisions, based on comprehensive information in memoranda to Cabinet, should lead to clear alignment between program funding and objectives.

There are many instances where the government may decide not to provide funding on an ongoing basis. The need and objectives themselves may be time-limited or innovative programming approaches may be used that must be assessed to ensure the program is achieving the desired objectives. Responsible and accountable stewardship of taxpayers' dollars requires the continual reassessment of the value of existing programs and the ongoing search for new, more cost-effective ways to deliver government programs that achieve results for Canadians and maximize value-for-money. The need for continuous reassessment must be balanced with the need for stability and predictability for sound program management.

1.69 The Treasury Board Secretariat should track the conditions that the Treasury Board attaches to its spending decisions to determine whether those conditions are all being met.
(1.65–1.68)

The Treasury Board Secretariat currently tracks all financial conditions. This functionality, along with improvements to the tracking of non-financial conditions, will be built into the new Expenditure Management Information System.

The government recognizes that a new ongoing approach is needed to manage overall spending to ensure, as stated in Budget 2006, "...all government programs are effective and efficient, are focused on results, provide value for taxpayers' money and are aligned with the government's priorities and responsibilities." The issues raised by the Office of the Auditor General in this report are generally consistent with those that the government believes a new expenditure management system should address.

The new Expenditure Management System (EMS) will entrench responsible spending. It will require that all new and existing programs go through a systematic and rigorous examination. This will ensure that the government only approves funds that are actually needed to achieve measurable results in a way that is effective, and provides value-for-money on behalf of Canadians.

The EMS renewal is a critical building block for government-wide, results-based management and a stronger accountability regime. Important steps in the renewal process have already been taken, such as the  Federal Accountability Act and the Management, Resources, and Results Structure Policy, but further work remains.