Auditor General’s Opening Statement

Fall 2010 Report Press Conference—26 October 2010

Good afternoon. I am pleased to present my 2010 Fall Report, which will be tabled in the House of Commons this afternoon.

This Report covers a broad range of programs and activities that are important to Parliament and have an impact—whether direct or indirect—on the lives of Canadians.

We audit significant areas and report what we find. In this Report, I am pleased that many of our findings are positive.

Canada’s Economic Action Plan

We are reporting today on the first of two audits of Canada’s Economic Action Plan. This first audit took place while the Plan was being rolled out. It focused on how programs were designed and projects were approved.

Our second audit, which will be reported in Fall 2011, will look at whether the approved projects were completed as intended.

The Economic Action Plan is a huge undertaking, involving some $47 billion in federal money and a further $14 billion from the provinces and territories, within a two-year time frame.

Departments and central agencies worked hard to accelerate their selection and approval processes and put in place the appropriate controls. We are pleased to see the important role that internal audit played.

Management and Control in Small Entities

In 2007, we began a program of auditing the management practices of small federal entities.

This year, we looked at the Canadian Forces Housing Agency, the Canadian Pari-Mutuel Agency, and the Pension Appeals Board.

We are pleased to report that management practices in the areas we examined are sound.

Service Delivery

The federal government delivers a broad range of services that have a direct impact on the well-being of Canadians. To achieve and maintain high-quality service, organizations must define service standards, monitor performance, and take action to improve when they identify service issues.

We are pleased to note that the Canada Revenue Agency and Human Resources and Skills Development Canada have set service standards and are using them to improve service delivery.

Citizenship and Immigration Canada has been working since 2007 to improve its service delivery. However, it has established service standards for very few of its major programs.

We encourage Citizenship and Immigration to complete the work it has begun towards a comprehensive set of standards for its services.

Managing Conflict of Interest

Today’s Report also looks at the way conflict of interest is managed in the public service.

We found that the Treasury Board of Canada Secretariat has yet to put in place the new policy required under the Public Servants Disclosure Protection Act of 2007 and provide related guidance.

Avoiding situations that could lead to a conflict of interest is key to maintaining the public’s confidence in an impartial and objective public service. Public servants need to be able to recognize potential conflicts and know how to deal with them.

Departments need to do a better job of determining the areas where they are most exposed to conflict of interest, and of taking the required action when conflicts are identified.

Regulating and Supervising Large Banks

We also looked at how the federal government regulates and supervises Canada’s six largest banks. We found that the Department of Finance and the Office of the Superintendent of Financial Institutions have appropriate practices in place.

Banks play a key role in just about every economic transaction and are major sources of credit. Canada’s economic well-being depends on the health and stability of its banking system.

Experts have linked Canada’s relative success during the recent global economic downturn to its approach to regulating and supervising banks. Rapid changes in financial markets present an ongoing challenge.

Acquisition of Military Helicopters

Chapter 6 of my Report presents the findings of our audit on the acquisition of the Chinook and Cyclone military helicopters. We understand that acquiring complex military equipment like these helicopters presents unique challenges. Nonetheless, the results of this audit are troubling.

National Defence did not follow its own rules in managing and overseeing the acquisition projects. We identified several gaps with respect to the completeness of information presented to decision-makers as well as approvals and oversight by senior boards at key decision points.

We found that National Defence and Public Works and Government Services Canada generally complied with the policies and regulations regarding contract management with respect to the acquisition of the Cyclone helicopter. However, this was not the case with the advance contract award notice used by Public Works and Government Services Canada to procure the Chinook helicopter. As a result, it is our conclusion that the contract award process was not fair, open and transparent to potential suppliers. Public Works and Government Services Canada disagrees with this conclusion.

We also found that National Defence underestimated and understated the complexity and developmental nature of the helicopters it intended to buy. The substantial modifications to the basic models, resulted in significant cost increases and project delays.

After lengthy delays and significant cost increases, National Defence still has not completely estimated what it will cost to operate these helicopters. Without this costing information and sufficient funds, National Defence may have to curtail planned training and operations. This is cause for concern.

Registered Charities

Let’s turn now to the chapter on registered charities. We examined how the Canada Revenue Agency encourages registered charities to comply with the Income Tax Act. Canadians donate billions of dollars to Canada’s 85,000 registered charities each year. We are pleased to note that the Agency is doing a good job of administering the Income Tax Act as it relates to these charities.

Facilitating the Flow of Imported Commercial Goods

Turning to the Canada Border Services Agency, we found that the Agency’s practices facilitate the flow of imported commercial goods into Canada. This is important when you consider that Canada imported over $440 billion in commercial goods in 2008.

The Agency is now working to ensure that it has the information it needs to effectively assess risks and collect the revenues owed by importers. It is important that it complete its plans and strategies to achieve this objective.

Animal Diseases

The last chapter of this Report looks at whether the Canadian Food Inspection Agency has planned for and responded to animal disease emergencies.

Animal disease outbreaks are particularly costly in terms of lost production—not to mention the threat to animal health, and in certain cases, human health. The Agency must be ready to act quickly when such emergencies arise.

We are pleased to note that the Agency has learned from its past experience and has put a lot of effort into improving its capacity to respond to emergencies. We encourage it to complete the remaining work it has identified.

Thank you. I am now prepared to answer any questions you may have.