Opening Statement to the Standing Senate Committee on National Finance

Bill C-38, an Act to implement certain provisions of the budget

12 June 2012

Michael Ferguson, FCA
Auditor General of Canada

Mr. Chair, thank you for inviting me here to discuss the portions of Bill C-38, which impact my Office. With me today is Lyn Sachs, Assistant Auditor General of Corporate Services and Chief Financial Officer.

As you are aware, the amendments eliminate the requirement for the Auditor General to undertake annual financial audits of certain entities and to assess the performance reports of three agencies.

I think it may be useful for your Committee if I provide some background information on how these changes came to be proposed.

In July 2011, Officers of Parliament received letters from their respective Ministers encouraging them to adhere to the spirit and intent of the government’s Strategic and Operational Review―government’s initiative to achieve fiscal savings of at least $4 billion by the 2014–2015 fiscal year.

In response to this request, we carried out a thorough and comprehensive review of the Office. We have analyzed all of our legislative audit practices with a view to concentrating our efforts where they will best serve Parliament and territorial legislatures. We have used this review as an opportunity to assess how our resources are best deployed.

We proposed reductions in our audit work predominantly affecting our financial audit practice. The legislative changes would focus our financial audits on the areas of greater risk. Furthermore, the changes would also enable us to achieve greater consistency in our audit effort across federal organizations.

We proposed to reduce the number of financial audits we conduct by 17. Most of these are department-like organizations. There is no rationale for conducting financial audits of these organizations when we don’t conduct such audits of departments. This is also consistent with the government’s decision not to proceed with audited departmental financial statements. Those organizations with significant public funds would still be subject to examination as part of our annual audit of the Summary Financial Statements of the Government of Canada.

We proposed to continue our work as the financial auditor of the majority of Crown corporations and of Officers of Parliament, recognizing their unique responsibilities and accountability relationships.

We also proposed to discontinue our assessments of the performance reports of Parks Canada, the Canadian Food Inspection Agency, and the Canada Revenue Agency. We were required by legislation to do this work when these agencies were created; however, we are not required to do similar work on performance reports of any other government organization. The Office of the Auditor General believes in the importance of high-quality performance information for Parliament from all federal organizations. Therefore, we will continue to include performance reporting as a topic for consideration in our performance audit practice.

We have received support for these changes from the Treasury Board Secretariat and they are now reflected in the Government’s Budget Implementation Act.

Mr. Chair, in closing, I would like to say that as a result of our Strategic and Operating Review, we are proposing no reductions to our performance audit work. Through these audits we examine the efficiency, economy, and environmental impact of all major federal government departments, agencies, and other organizations and they constitute the basis for our interaction with Parliament.

Honourable Senators, I appreciate this opportunity to discuss the amendments in the proposed legislation and would be happy to answer any questions you may have.