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Opening Statement to the Standing Committee on Environment and Sustainable Development

8 February 2007

Sheila Fraser, FCA
Auditor General of Canada

Thank you, Mr. Chair for the opportunity to speak to the motion that is currently before the Committee.

As I indicated in my letter to the Committee on Monday, policy advocacy and legislative audit are incompatible. This is a recognized principle in the auditing profession and it is based on a standard that governs all auditors in Canada. This principle is also widely observed by legislative audit offices in many other countries.

The same issue also arose in 1994 and 1995 when discussions about the creation of a Commissioner of the Environment began. At that time, my predecessor, Denis Desautels, indicated to the Environment and Sustainable Development Committee:

"In Canada, it's generally accepted that legislative auditors avoid observing on high level policy and they concentrate their comments on implementation of that policy. Therefore, responsibility for such matters as review of the appropriateness of policy and arbitrating environmental disputes should not be given to my Office as this could quickly and seriously jeopardize the Auditor General's traditional independence, objectivity and credibility. There would be similar risks for a separate environmental auditor general if he or she were given audit responsibilities along with these other duties."

The then Auditor General also explained to the Committee how the Office had in fact been conducting environmental audits since the early 1990's using the same rigorous audit methodology that was being applied to all other audit work in the Office.

Nonetheless, in its May 1994 report, the Committee recommended that the Office of the Commissioner be established separate from the Office of the Auditor General, with access powers similar to those of the Auditor General, but with broader responsibilities: specifically, policy evaluation, advocacy of sustainable development and the evaluation of sustainable development practices and technologies. The Committee also encouraged the Office of the Auditor General to continue and expand on its environmental audit role.

The government, in its response to the Committee's report, explained that not all functions as proposed by the Committee could be undertaken by a single body, and that the various roles, as envisioned by the Committee, could be "undertaken more effectively and efficiently working through existing institutions and mechanisms, new government initiatives, and the proposed new Commissioner." It added that it was more efficient to have the Auditor General continue to play its audit role and that integrating the audit of environmental issues with the audit of economic and social issues would in fact reinforce sustainable development.

I believe that we have fulfilled that role. In fact, environmental aspects are considered in all of our work by all audit teams throughout the Office. For example, in our review of financial statements, we audit the government's liability for contaminated sites. When we audit crown corporations like Atomic Energy of Canada, the audit scope includes the environmental aspects. The Office has become a world leader in environmental auditing. Auditors from around the world have requested our advice and many of them haven taken courses on environmental auditing that we developed here in Canada.

Should Parliament decide to establish a new office, outside the Office of the Auditor General, with a focus on advocacy and providing advice to government, it is my view that environmental auditing should remain with my Office.

Mr. Chair, the issue is about expectations that are being placed on us that we cannot fulfill. I spoke about Bill C-288 last week. In that case, we were able to resolve the matter and the policy advisory role was transferred to another body. Bill C-377 is a more recent example. This is the reason I have brought all of this forward for your consideration.

That concludes my opening remarks, Mr. Chair. We would be pleased to answer any questions the Committee may have.