Opening Statement to the Senate Standing Committee on Foreign Affairs and International Trade

Management of Fees in Selected Departments and Agencies

(Chapter 1—March 2008 Report of the Auditor General)

Passport Services—Passport Canada

(Chapter 5—March 2009 Status Report of the Auditor General)

2 May 2012

Clyde MacLellan
Assistant Auditor General

Honourable Senators, thank you for this opportunity to appear before you today. I am accompanied by Wendy Loschiuk, Assistant Auditor General, who is responsible for our audits of Passport Canada. We are very pleased that your Committee is taking on this study on passport fees.

Although we have not done recent audit work on this particular issue, there are some past audit findings that may be useful to your discussions. Our 2008 audit looked at consular fees (fees that are included within the overall cost of an adult passport), whereas our 2009 audit looked at how Passport Canada copes with increases in demand.

Let me begin with our May 2008 Report chapter, Management of Fees in Selected Departments and Agencies, in which we audited the management of 13 government fees established by 6 federal organizations, including Foreign Affairs and International Trade Canada. We looked at how that Department

  • established its consular services fee;
  • determined the amount to be charged for the fee; and
  • measured, monitored, and reported on the performance of the fee-related activities.

We found that the Department allocated to the consular services fee costs for activities beyond those outlined in the original approval of the fee. These included costs for activities performed on behalf of Passport Canada and on behalf of Citizenship and Immigration Canada. We noticed that more was collected in consular fees than the cost of providing the related services, putting the Department at risk of appearing to have not determined the charge for the fee on a cost-recovery basis, as was required by its legislation.

To that effect, we recommended that Foreign Affairs and International Trade Canada review the allocation of costs and activities to the consular services fee to ensure that these remain consistent with the authorization for the fee and exclude the costs of services on behalf of other organizations that are not part of the consular services fee.

In our March 2009 Report chapter, we reported on Passport Services. At that time we noted that Passport Canada had recently launched a new forecasting model for calculating the expected demand for passports, so that it can set its budget and adjust its production capacity. With this forecast, the Agency can estimate revenue by multiplying the number of passport applications to expect by the user fees charged, and can estimate the expenditures it would incur to provide the required services. Because of problems it experienced with the old model, where demand was significantly underestimated, the Agency developed a new model that it believed would give more accurate forecasts of the number of passport applications to expect. We did not audit this new model and have not revisited Passport Services, so we cannot comment on its accuracy in predicting demand.

Your Committee may wish to ask officials of Foreign Affairs and International Trade Canada and of Passport Canada for detailed information of the forecasting model and of the costing components of the passport fee¾namely, the consular services fee.

Madam Chair, your Committee’s review of the government’s proposal is an important step in ensuring that the amount charged for a passport is related to the cost and value of the service provided.

Honourable Senators, this concludes my opening statement. We would be pleased to answer the Committee’s questions.