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Opening Statement to the Standing Senate Committee on Legal and Constitutional Affairs

Bill C-2, an Act providing for conflict of interest rules, restrictions on election financing and measures respecting administrative transparency, oversight and accountability

27 September 2006

Sheila Fraser, FCA
Auditor General of Canada

Good afternoon, Mr. Chair and members of the Committee. We are pleased to be here and would like to thank you for the opportunity to discuss aspects of Bill C-2 that affect the Office of the Auditor General.

Accompanying me are John Wiersema, Deputy Auditor General and Jean Ste-Marie, Legal Advisor and Assistant Auditor General.

As legislative auditors, we provide objective information, advice, and assurance that parliamentarians can use to scrutinize government spending and performance. We appreciate the confidence in our work that is demonstrated in many of the provisions of Bill C-2.

Today, I would like to comment on four areas of the Bill that specifically affect our Office:

  • the expansion of our mandate,
  • access to information,
  • the process for appointing the Auditor General, and
  • immunity for agents of Parliament.

In June 2005, changes to the Auditor General Act addressed our concerns about audit access to foundations. We are now able to conduct performance audits in non-profit organizations that have received $100 million or more in a five-year period. Legislative amendments have also made us the auditors of three additional Crown corporations. We are now the auditors or joint auditors of all Crown corporations except the Bank of Canada and the Canada Pension Plan Investment Board. The current Bill would expand our mandate further, to what has been called "following the dollar" to any recipients of public funds who have received $1 million or more over five years in the form of grants, contributions, or loans.

First of all, let me say that I appreciate this confidence. Now, I would like to discuss some basic principles that underlie our intentions relating to this mandate:

  • It is management's job, in departments and Crown corporations, to ensure that grants, contributions and loans provided to individuals or institutions outside the federal government achieve their intended purposes. They do this by establishing the systems and procedures needed to ensure that these funds are used appropriately, including, where necessary, auditing the recipients of these funds.
  • Our role as the government's external auditor is to determine whether those systems and procedures are in place and how well they are working. We then report to Parliament on the adequacy of the systems, and we provide recommendations where improvement is needed.
  • We do not believe it is our role to routinely audit recipients of grants and contributions. As previously noted, this is the responsibility of the managers of those programs. Therefore, I expect that we would rarely exercise this option.

Since I expect to "follow the dollar" only in very rare and unusual circumstances, we are not seeking additional funding to carry out this expanded mandate.

Certain other witnesses before your Committee have raised concerns about the extension of our audit mandate as reflected in this Bill. One involved our ability to protect the confidentiality of commercial and other information of the new category of auditable recipients.

It is common practice for us to ensure the security and confidentiality of audit information of all kinds. We respect the security classifications or designations given to information by the entities that we audit, whether it is government information or information received from third parties.

We support the extended application of the Access to Information Act to our Office as set out in the Bill. We are pleased that the Bill excludes our audit papers from access to information requests, and view this exclusion as essential. Such an exclusion has been provided to the majority of legislative auditors, both in Canada and abroad in recognition of the functions they carry out. Without it, our ability to audit would be compromised as would our corresponding ability to provide a comprehensive and reliable product to Parliament.

In this area, I would like to address a number of issues raised by the Deputy Information Commissioner when he appeared before this Committee last week.

As a general comment, i t is important to remember that agents of Parliament were previously entirely exempt from the application of the Access to Information Act in recognition of their roles and functions. Although exempt, we have in the past voluntarily provided access to non-audit information, and we were among the first government agencies to voluntarily post our hospitality and travel expenses on our Office Web site.

The Deputy Information Commissioner was adamant that the provisions of Bill C-2 that exclude our audit papers from access to information requests go too far and reduce the accountability of government in some way. With respect, his position reflects a fundamental lack of understanding of the audit function. Our role is to enhance the accountability process by providing assurance to Parliamentarians on government finances and operations; all of our conclusions deemed significant are provided in public reports tabled in Parliament.

His position also reflects a lack of understanding of the potential harm that could result to our ability to conduct our audits if our audit records were subject to public disclosure. I believe that we would not receive the same level of candour and openness from the people we interview in our audits. As well, an audit involves a very painstaking process of validation of facts. The release of unvalidated information in our files would be harmful to us and, especially, the department or organization being audited.

For these reasons, we also support the exclusion of internal audit working papers from disclosure under the Access to Information Act. We reported in November 2004 that we found the current Access to Information Act to be negatively affecting the effectiveness of internal audit in departments and agencies.

We also take exception to the Deputy Information Commissioner's statement that the quality of our audit work can only be assured through the public access of journalists and others to our audit papers. This view does not recognize the many internal and external mechanisms we have to ensure that we maintain the highest professional standards and quality in our audit work.

In conclusion on this point, we support the extended application of the Access to Information Act to our Office and believe that the exclusions set out in the Bill represent an appropriate balance between the transparency of our non-audit information and the preservation of our ability to carry out our audit function.

We welcome a greater involvement of parliamentarians in the process for appointing the Auditor General. We also appreciate the extension to our Office of the same civil and criminal immunity in relation to matters arising in the performance of our statutory duties that are already enjoyed by other agents of Parliament and many provincial auditors general.

This concludes our comments on the aspects of Bill C-2 that directly concern our Office. As committee members are aware, there are many other parts of the Bill that involve policy issues, on which we do not comment.

We would be pleased to answer any questions Committee members may have.