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1981 Report of the Auditor General of Canada

The Department

Background

7.1 The Department of Consumer and Corporate Affairs (CCA) was established in 1967 by the Consumer and Corporate Affairs Act (now R.S.C. 1970, c. C-27 ). Under the Act, various programs governing and regulating the market-place were brought together from the Departments of Justice; Health and Welfare; Agriculture; and Industry, Trade and Commerce. In addition, all the functions of the Department of the Registrar General were transferred to Consumer and Corporate Affairs.

7.2 The objective of CCA, as set out in the 1980-81 Estimates, is "to promote the integrity and viability of the market system in Canada." CCA is the only department in the federal government with a specific mandate to represent the interests of consumers. The Estimates also state four sub-objectives of the Department:

- to protect and promote the interest of consumers by working toward a fair, safe and efficient marketplace;

- to facilitate the orderly conduct of business and the private development and production of capital;

- to maintain free and open competitive conditions in the market economy, to eliminate certain practices in restraint of trade and afford protection against false and misleading advertising; and

- to encourage innovation by protecting the rights of inventors.

Organization

(Exhibit not available)

7.4 In addition, the Department includes the Office of the Registrar General which is divided into the Conflict of Interest unit, responsible for implementing major aspects of government policy on conflict of interest, and the Registration Division, responsible for registering and issuing commissions and documents under the Public Officers and Seals Act.

7.5 The Restrictive Trade Practices Commission is an independent agency which authorizes formal evidence gathering by the Director of Investigation and Research (ADM, Bureau of Competition Policy) for inquiries under the Combines Investigation Act. The Commission also receives statements of evidence from the Director of Investigation and Research, holds hearings and reports its findings and recommendations to the Minister of Consumer and Corporate Affairs and to the public.

7.6 Bureau of Corporate Affairs. The Bureau of Corporate Affairs is made up of six branches, reporting to the Assistant Deputy Minister for Corporate Affairs. The Superintendent of Bankruptcy, who is also the Director of the Bankruptcy Branch, is responsible for the overall administration of the bankruptcy system in Canada, including the supervision of private sector trustees in bankruptcy.

7.7 The Corporation Branch administers the Canada Business Corporations Act (CBCA) and other federal corporation laws, which provide a framework for the organization and conduct of business activity through the corporate structure. In addition, the Branch is responsible for the protection of investors and creditors through the enforcement of statutory disclosure requirements, and the dissemination to the public of corporate information filed with the Branch, such as financial statements, inside shareholder trading reports and corporate takeover bids.

7.8 The intellectual property branches, which are Patents, Trade Marks and Copyright and Industrial Design, examine and grant patent rights and register trade marks, copyrights and industrial designs upon application. The Research and International Affairs Branch is responsible for legislative revision, including the associated economic and legal research, in the intellectual property and national corporate legislation areas. The Research and International Affairs Branch also monitors and participates in various international intellectual property conventions.

7.9 Except for the Bankruptcy Branch, which operates in offices throughout Canada, the majority of Bureau staff is located at the Department's head office in Hull.

7.10 Bureau of Competition Policy. The provisions of the Combines Investigation Act are applied by the Director of Investigation and Research, the Restrictive Trade Practices Commission (RTPC) and the courts. The Act seeks to eliminate certain practices in restraint of trade, misleading advertising and deceptive marketing practices. It also seeks to overcome the adverse effects of corporate concentration, to assist in maintaining effective competition.

7.11 The Assistant Deputy Minister of the Bureau, as the Director of Investigation and Research, must initiate an inquiry under the Act when, through a complaint or otherwise, he has reason to believe that there has been a violation of the Act or that grounds exist for the Commission to make a remedial order on a specified reviewable matter. Less often, the Director receives a formal application for an inquiry from six persons in the form of a statutory declaration, and there is provision for the Minister to direct that an inquiry be undertaken. In carrying out these inquiries, the Director, with the approval of the RTPC, has wide powers of search and seizure and authority to compel witnesses to provide evidence under oath. The Director may discontinue an inquiry, remit the evidence obtained to the Attorney General of Canada for such action as the latter may decide to take, or pursue the matter before the RTPC.

7.12 Under the guidance of the Director, the Bureau conducts its investigative activities through six branches: Manufacturing, Resources, Services, Regulated Sector, Marketing Practices, and Research and International Relations.

7.13 Bureau of Consumer Affairs. The Bureau of Consumer Affairs is responsible for ensuring that the interests of consumers are represented in all government activities that affect the marketplace and is involved in developing and administering programs for consumer protection and information. Approximately 80 per cent of Bureau personnel are employed in regional and district offices.

7.14 The Bureau conducts its activities through six branches, including the Management Services Branch, which provides the Bureau with assistance in planning and control, finance, personnel and administration. The Research and Evaluation Branch carries out background research on a variety of consumer-related issues, as well as providing research support and policy advice from the consumer's point of view.

7.15 The Legal Metrology Branch examines and approves weighing devices and electricity and gas meters used for trade in Canada. It also provides a field inspection program to ensure continued accuracy of such devices. The Consumer Products Branch, through the development of policies and inspection programs for a wide range of food and non-food products, is responsible for preventing fraud and deception and ensuring that consumers have accurate and necessary information on the advertising and labelling of such items as food products, textiles and precious metals.

7.16 The Product Safety Branch develops policies and field inspection programs to identify hazards in consumer products and ensures that dangerous products are removed from the market. The Branch also provides protection for consumers by establishing standards for the control of hazardous products and setting information and labelling requirements. The Consumer Services Branch provides information and consumer assistance through its programs for dealing with complaints and inquiries, and provides funding for consumer groups and advocacy.

Resources

Environment

7.20 The many activities of CCA often require a balancing of opposing interests among various parties including federal government departments, provincial governments, international agencies and groups in the private sector. For example, the interests of creditors and bankrupt debtors are by their nature conflicting, as can be those of consumers and the corporate community. Accordingly, it is essential that program objectives and priorities are clearly established and internally consistent and that program activities are adequately co-ordinated.

7.21 The Department's orientation is primarily regulatory in nature. CCA is responsible, or shares responsibility with other departments, for the administration of some 60 Acts and more than 170 sets of regulations. Over the past ten years, the Department has devoted considerable effort to legislative revision; for example, in such areas as bankruptcy, patents, combines investigation, business incorporations, and electricity and gas inspection. However, it is a long and uncertain process from proposal to ultimate passage of legislation. This uncertainty can make it difficult to plan accurately for resource requirements and levels of service.

7.22 Because of the diversity of its operations, the conflicting nature of different interests involved, and the broad range of consumers and corporations affected by its activities, the Department often finds itself at the centre of controversy and in the public eye. Given this environment, an essential element for good management control is the provision of adequate mechanisms to gather and report accurate, reliable, timely and useful information concerning the conduct and results of the Department's various operations and the consistency with which its policies are being applied.

Audit Scope

7.24 In the Bureau of Corporate Affairs, we concentrated on the Bankruptcy, Corporations, and Patents Branches which together account for 84 per cent of Bureau staff, 82 per cent of expenditures and 81 per cent of revenue from Bureau activities. In the Bureau of Competition Policy, we examined the management controls in the Combines Investigation branches and the Marketing Practices Branch.

7.25 In the Bureau of Consumer Affairs, our examination was limited to a review of the progress made in addressing the effectiveness evaluation weaknesses identified in the Study of Procedures in Cost Effectiveness (SPICE), reported in our 1978 Report. These weaknesses were in the Bureau's regulatory activities, which account for 67 per cent of its expenditures and 80 per cent of its personnel.

7.26 In the Personnel Branch, our examination included a review of the progress made by the Department in addressing recommendations from our 1978 payroll costs management study.

7.27 We were able to review the approved IMPAC Action Plan for CCA during the final stages of our comprehensive audit and have taken management's planned corrective action into consideration in reporting the findings and recommendations arising from our audit.

7.28 Finally, we identified some features of the Department's programs that we believe should be highlighted in the revised Estimates so that Members of Parliament can better assess the Department's requests for resources, allocation of resources, and accomplishments from the use of resources.

Summary of Audit Observations

7.30 At its inception in 1967, the Department's structure was a conglomeration of independent activities. Since then it has evolved into a multi-divisional department with a single parliamentary appropriation. The Department has been faced with such influences as increasing and conflicting consumer and corporate needs and demands, the impact of rapidly advancing technology, frequent turnover of senior management, government imposed resource restraints and increased pressure for accountability.

7.31 The strategic direction and guidelines provided by senior management to the Bureau and Branch managers for preparation of multi-year and current-year operational plans were both comprehensive and timely. However, the quality of the planning information developed at the Bureau and Branch levels varied. In some cases, it was so incomplete that it was susceptible to misinterpretation. In others, it required only minor improvements. For example, in several activities, a clear definition of program clientele and their needs had not been identified or taken into account, the costs and benefits of alternative strategies had not been assessed, and the effects of overlapping or conflicting activities within the federal government or in the private sector had not been identified or analysed.

7.32 For many of the Department's program objectives, management had failed to specify what was to be achieved in a way that would provide a basis for accountability for the use of public funds. Further, the validity and reliability of some of the effectiveness measures that were in place required improvement.

7.33 Some of the systems of performance measurement, particularly in the Bankruptcy and Corporations Branches, failed to take into account the quality and level of service provided, as well as the different work content of various activities and, in some cases, the reduction in work content. As part of the IMPAC action plan, the Department has begun a multi-year project to revise these performance measurement systems.

7.34 The Department was aware of its weaknesses and deficiencies and had made efforts to overcome them. For example, there was a marked improvement in the quality of the work of the internal audit group and in its effectiveness as a management tool. Similarly, financial management and controls in the Department were generally adequate, and those weaknesses that had been previously identified were being corrected satisfactorily.

7.35 In the Bureau of Corporate Affairs, Bankruptcy Branch management did not make good use of the findings resulting from the auditing and monitoring of individual private sector trustees to identify opportunities for improvement in the bankruptcy system as a whole. Also, in our view, the procedures that the Branch had in place for collecting and internally reporting information on the costs of administering bankruptcies did not facilitate monitoring of and accounting for the overall performance of the bankruptcy system.

7.36 In 1979, the Bankruptcy Branch began to reassess and redesign its enforcement strategy for detecting fraud and abuse. However, at the time of our audit, the Branch had still not clearly defined or documented the abuses which it intended to combat.

7.37 The Corporations Branch, which is required under the Canada Business Corporations Act (CBCA) to disseminate to the public information on corporate activity, had no reliable data concerning who received or used the information, how they used it, or what value it had. The Branch had not assessed the availability of this type of information from other sources. In addition, because of the imprecise definition of the environment within which the Branch operates, the extent to which disclosure requirements of the CBCA were achieved could not be assessed. These difficulties have resulted in the lack of a firm basis for making important operational decisions. The Director of the Corporations Branch has the authority to grant exemptions, under certain circumstances, from the filing requirements of the CBCA. However, the Branch had not clearly specified or documented exemption criteria to be used in reviewing applications for exemptions. Further, there was no documented system to ensure that exemption criteria were being applied consistently. The Branch had established a number of case precedents; however, effective use of these appeared to depend on the memories of key personnel.

7.38 The Patents Branch, in response to management initiatives and internal audit recommendations, has conducted a comprehensive review of management controls related to both the quality and efficiency of its operations. It has recognized the nature of its difficulties and is taking corrective action to improve the quality of these controls.

7.39 In the Bureau of Competition Policy, whenever the Director of Investigation and Research has reason to believe that violations of the Act have occurred, he must commence an investigation, and it is the Bureau's responsibility to assign priorities and allocate resources among various inquiries. However, no clear guidelines had been developed to assist managers in making such decisions. As a result, there was no assurance that key factors were considered. This situation increased the risk that investigative resources might not be used cost-effectively. Over 40 per cent of investigations had not been completed by the target of 18 months and some were behind by as much as 43 months.

7.40 In the Bureau of Consumer Affairs, our follow-up work indicated that operating objectives had been translated into measurable terms. In addition, the Product Safety and Consumer Products Branches had made some progress toward developing reliable measures of program effectiveness in reducing economic loss to buyers and sellers. The Legal Metrology Branch, however, had not done so.

7.41 Our review of the Personnel Branch indicated also that, with a few exceptions, action had been taken to correct the deficiencies identified in our 1978 payroll costs management study. We found, however, that there was no basis for ensuring that human resource plans reflected the needs of the operational managers. In the training area, the budgeting process caused delays of a year or more before individual training needs were met.

Observations and Recommendations

Planning

7.44 During the previous year, senior management had made significant improvements in the departmental planning process to provide information to the Bureaux concerning ministerial and departmental priorities and strategies, assumptions about legislative changes, opportunities, risks, and funding levels, and guidelines for preparing operational plans. In our opinion, this information was adequate for planning purposes. For example, the Strategic Overview prepared for 1982-83 and guidelines for preparing multi-year and current-year operational plans were both comprehensive and timely.

7.45 However, the quality of the plans prepared at the Bureau and Branch levels varied. In some cases, they were so incomplete, as to be susceptible to misinterpretation. In others, they only required minor improvements. In particular, information on program environment and the analysis of such information were generally inadequate. For example:

- There was not always a clear identification of intended clients or recipients or their needs in the Bankruptcy Debtor Service and Corporations Compliance programs.

- Problem areas and the nature, magnitude and location of the problems to be addressed in Product Safety and Competition Policy programs had not been determined.

- Costs, benefits and implications of alternative strategies for program delivery had not been sufficiently analysed. There was no evidence that quality, level of service and security had been assessed in Patents, Electricity and Gas, Corporations and Trade Marks programs where delegation of authority to the private sector had been considered.

- The impact of legislative and policy changes on work procedures, program delivery, quality and level of service and resource requirements had not been adequately or systematically analysed.

- The aims and effects of overlapping or conflicting programs and activities in the federal government or the private sector had not been compared and analysed so that appropriate coordination of efforts could be established.

7.46 The Department should ensure that branch managers identify, analyze and use information on environmental and other factors relating to their programs in developing branch plans and priorities.

Performance Measurement

7.48 For certain programs, output measures were not representative of the work performed. For example, the number of new incorporations, which the Corporations Branch uses as a measure of output, is the work of the Incorporation Division, which accounts for 53 per cent of total person-years within the Branch. The Bankruptcy Branch uses the number of bankruptcy cases as a measure of output; however, no allowances were made for the different work content of commercial and consumer bankruptcies. Consumer bankruptcies require only about a third the labour input that goes into commercial bankruptcies. These output measures also made no allowance for the fact that some of the work, such as name searches for incorporations and trustee functions for consumer bankruptcy cases, had been assumed by the private sector, thereby reducing the demands on the Department's workforce. As a result, actual increases in efficiency have not been as great as those reported.

7.49 The Department requires each Bureau to report quarterly to the Deputy Minister on performance results as well as planned and actual expenditures. We found that these reports, in some cases, were unwieldy, incomplete and did not provide explanations of changes in performance or, for reasons outlined previously, did not contain adequate measures of performance for review by senior management.

7.50 In its review of performance measurement systems, the Department should ensure that the output measures reflect the different work content of all activities and take into account major changes in work procedures.

7.51 The Department should refine the form and content of Bureau quarterly reports to ensure that information is presented in a more concise manner with meaningful explanations of changes in performance.

Effectiveness Evaluation

7.53 The Department is in the process of establishing a program evaluation function in accordance with the guidelines set out by the Office of the Comptroller General. The responsibility for program evaluation, including regulatory review, has been assigned to the Director General, Co-ordination. A departmental program evaluation policy has been drafted and approved by the management committee, but had not been promulgated by the scheduled date of April 1981. The development of a program evaluation plan was scheduled to be completed by September 1981.

7.54 Some effectiveness measurement and related studies have been done by the research branches of the Bureaux, the Department's internal audit group, or by external agencies such as the Economic Council of Canada. Based on certain of these studies, some potential changes are being considered. These are aimed at improving compliance and program impact, facilitating enforcement and enhancing the cost-effectiveness of administration. Many of these changes would require revisions in legislation and regulations. Accordingly, the Department has made proposals for changes in legislation in such areas as bankruptcy, combines investigation, patents, and electricity and gas meter inspection. In addition, the Department has embarked on a four-year review of all the regulations it administers to find opportunities to simplify them and determine whether all are serving the purposes for which they were originally designed.

7.55 Many CCA program objectives were not specific enough to permit measuring the degree to which they were being achieved. Thus, the objectives did not provide a clear basis for holding the Department accountable for the use of public funds allocated for this purpose. In addition, there is a problem in determining the extent to which the achievement of an objective can be attributed to any one program or even to any one department. For example, the Patent Branch's objective is "to encourage invention, innovation and creativity in Canada", and the Consumer Affairs Bureau's objective is "to foster the consumer's right to safety, to information and fair dealing, and to be heard". Achieving these and other objectives requires co-operation and co-ordination with many other government departments and agencies, as well as private sector organizations. Consequently, it is difficult to determine what portion of the achievement of objectives can be attributed to CCA programs.

7.56 The Department should ensure that its objectives are translated into operational terms that will facilitate measurement, where feasible, of the extent to which departmental programs contribute to these objectives.

7.57 The validity and reliability of some of the effectiveness measures in place needed to be improved. For example, for the Debtor Service program, the Bankruptcy Branch used as a measure the actual number of insolvent consumer debtors who have been provided with relief and rehabilitation, compared to the estimated number of insolvent consumer debtors who should have been rehabilitated. The estimated number of these debtors is not reliable because the Branch had no criteria for determining which applicants for bankruptcy should be provided with relief and rehabilitation and which should not. We believe that it is important to have a more realistic estimate of the number of insolvent consumer debtors not only for effectiveness measurement, but also for determining the most appropriate level of service and deciding on resource allocations.

7.58 The Weights and Measures Division of the Legal Metrology Branch used the number of errors detected in weighing devices as a measure of the effectiveness of their inspection services. While this type of yardstick measures the number of errors detected, it does not measure their significance in terms of economic loss to consumers and the business community. Consequently, the usefulness of these indicators to measure results and to improve program effectiveness has been limited.

7.59 Poor data bases have been a major constraint to developing satisfactory measures of effectiveness for some programs such as Patents, Bankruptcy and Competition Policy. Constraints of this kind highlight the need to assess CCA programs to determine those for which effectiveness measurement and evaluation can be reasonably implemented and cost-justified.

7.60 Management of some programs, including Consumer Products and Patents, have taken steps to improve the quality of the effectiveness indicators and the data base used in measuring the effectiveness of their programs.

7.61 As part of the implementation of the program evaluation plan, once it is developed and approved, the Department should undertake evaluation assessments aimed at identifying those program components for which evaluation studies can be reasonably implemented and cost-justified.

Internal Audit

7.63 The Director of Operations Review is responsible for a staff of nine professionals and two administrative employees. The 1980-81 authorized budget for internal audit was $464,000, including professional fees for audit work done by outside consultants. In addition, provision is made for the secondment of other departmental personnel from time to time. The Operations Review group is responsible for compliance reviews of financial, administrative, personnel and other functions, including determining the extent of compliance with prescribed policies and procedures. In addition, the group is responsible for operations reviews of the Department's management and administrative processes, from the determination of policies and objectives through to the conduct of operations. Operations reviews also include appraisals of whether satisfactory procedures to measure effectiveness exist.

7.64 As part of a government-wide study in 1978, our Office reviewed the internal audit function in the Department. The purpose of the study was to assess the extent to which government received value for money spent on internal audit activities. The study identified several weaknesses and concluded that the internal audit function was not adequate to provide an independent and systematic examination of the Department. In September 1979, the Office of the Comptroller General began an IMPAC survey in CCA to identify, among other things, the current state of management practices in internal audit, to support the development of an action plan for the correction of the identified deficiencies and to monitor implementation of the plan.

7.65 In our examination of the internal audit function, we reviewed our 1978 findings and the Comptroller General's findings to determine the extent to which the group had addressed and corrected deficiencies.

7.66 The Department had made considerable progress toward implementing all our major recommendations and overcoming weaknesses identified by the Comptroller General on the issues of organizational independence, mandate and audit practices. The organization and reporting arrangement of the Operations Review group provide a satisfactory degree of independence and objectivity in its reviews of all operations in the Department.

7.67 Our review of the internal audit work indicated that management controls over the compliance and operations reviews were satisfactory, that the work was well planned and executed, and that the format of reports provided for adequate disclosure of audit scope and results. In addition, we found that work had been carried out and documented in compliance with generally accepted standards and that the reporting process had been amended to provide for faster publication of final reports.

7.68 The Consumer and Corporate Affairs Audit Committee was formed after 1978 and is composed of the members of the Departmental Management Committee chaired by the Deputy Minister. The Committee is responsible for reviewing internal audit plans, reports and implementation of recommendations.

7.69 In our opinion, the Operations Review group was an example of a good comprehensive internal auditing function and appeared to be serving as an effective control for departmental management. In addition, we believe that this Office can place a high degree of reliance on the work of the group.

Financial Management and Control

7.71 In addition to our current review of financial management controls, we followed up the recommendations outstanding from our 1975 Financial Management and Control Study on the Department and found that all of them had been addressed satisfactorily. We concluded that financial management controls, including those over expenditures and revenue, were generally adequate; however, there were some weaknesses in the financial information system and in management reports. For example, financial and operational planning and control reports were not integrated to provide senior management with the information to compare actual program progress against plans. The Department was aware of these weaknesses and had developed an action plan to implement improvements.

Bureau of Corporate Affairs

Bankruptcy Branch

7.74 The total number of bankruptcies in 1980 was 27,620, of which 6,595 were business bankruptcies and the remainder were individual consumer bankruptcies. Total assets and liabilities liquidated under the Bankruptcy Act amounted to $434 million and $1,198 million respectively. The Branch was responsible for the licensing and overall supervision of the work of 506 individual trustees and 53 corporate trustees, all from the private sector.

7.75 We reviewed the suitability of the information base used by the Branch to control the quality and costs of estate administration and to combat offenses against and abuses of the credit system. In addition, we reviewed the procedures used to measure and report on the efficiency of Branch operations.

7.76 Quality of bankruptcy administration. The duties of the trustee-in-bankruptcy relate to the often tangled affairs of debtors and normally include receipt and review of claims against bankrupts, preparation of inventories of assets, sales of assets and distribution of the proceeds. They can also include reviewing pre-bankruptcy transactions, operating a debtor's business on a short-term basis, attaching income or assets acquired after bankruptcy for the benefit of creditors, and making recommendations to the courts concerning timing or other conditions of discharge of bankrupts. The effectiveness of the bankruptcy system depends heavily on the quality of the trustees' exercise of their professional responsibilities.

7.77 Within the framework of the Bankruptcy Act and Rules, trustees are directed by inspectors appointed by the creditors. In addition, the Superintendent of Bankruptcy is generally responsible for supervising the administration of bankruptcies. Since the mid-1960s, the Superintendent has taken important steps to strengthen the qualifications and performance of trustees by raising licensing standards, encouraging a national professional association, and ensuring closer day-to-day liaison with trustees.

7.78 In addition, there have been substantial changes in the Bankruptcy Branch's review of the quality of bankrupt estate administration. Instead of maintaining detailed scrutiny of documents relating to the administration of each estate, the Branch now conducts in-depth financial and operational audits of each trustee's practice every three to four years, and district offices have special monitoring programs for new trustees and others whose work requires attention in specific areas.

7.79 Although these new surveillance techniques are more cost-effective than previous methods for identifying and correcting individual problems in estate administration, the results of the Branch's auditing and monitoring of trustees have not been consolidated and analysed to identify the nature and extent of any major weaknesses in the bankruptcy system as a whole.

7.80 Even though the Superintendent and his key officers receive a certain amount of formal and informal information about the quality of bankrupt estate administration, we believe that summarizing and analyzing the findings of the auditing and monitoring of individual trustees' performance would result in a number of improvements to the management process. For example:

- permanent records of system performance could be maintained, reducing reliance on the memories of individuals;

- potentially serious or recurring problems could be identified to aid in setting Branch priorities on trustee audits and monitoring;

- weaknesses in estate administration could more reliably be linked to specific district offices, thereby pinpointing the need for corrective action; and

- overall quality of bankrupt estate administration could be reported to senior departmental management.

7.82 Costs of estate administration. The costs of administering estates in bankruptcy consist primarily of trustees' fees and expenses which are paid out of the realization of estate assets. The primary responsibility for controlling these costs rests with the creditors, and the courts are responsible for reviewing and approving the estate accounts rendered by trustees, including bills submitted for fees and expenses.

7.83 The Superintendent's objective of ensuring maximum returns to creditors includes a concern for the efficient administration of bankruptcies and reasonableness of trustees' fees and expenses. The Superintendent advises on the suitability of the bankruptcy law and procedures, the form in which trustees' accounts are to be presented, the level of solicitors' fees below which the courts need not review the bills of costs, and the tariff schedules applicable to trustees.

7.84 The official tariff of trustees' fees for business bankruptcies was set in the Bankruptcy Act of 1949, based on 7.5 per cent of the realizations from the sale of assets after distributions to secured creditors, or such other amount as may be allowed by the court. In 1973, the Superintendent established the consumer bankruptcy tariff at $500. These tariffs are generally regarded as outdated and are exceeded by a wide margin. In recent years, the ratio of trustees' fees and expenses to realizations has increased considerably.

7.85 Although the Branch lacked specific data to explain this increase, the Superintendent considers that a major factor in the growth of this ratio is the general strengthening of the position of secured creditors in business bankruptcies through the more frequent use of broader and more valid security instruments, resulting in less unsecured assets available for distribution. Liquidation of the assets covered by such instruments generally occurs with the appointment of a trustee to act as a receiver on behalf of a secured creditor and before formal bankruptcy proceedings are begun. Thus unsecured assets, on which the trustee tariff of 7.5 per cent was based, have become a much smaller portion of the total assets of a bankrupt than they were at the time the tariff was originally established. We understand that proposed changes to the Bankruptcy Act, bringing these receiverships and liquidations, in addition to formal bankruptcies, under the Superintendent's purview, would enable him to obtain reliable information on the volume, value and costs of all liquidations.

7.86 The Bankruptcy Branch did not have reliable information in its records on which to base tariff recommendations. For consumer bankruptcies this was due in part to inconsistencies in the way trustees and district offices reported costs when proceeds from the sale of assets were insufficient to cover trustee billings, resulting in an upward bias in reported costs, although the extent of the distortion was not known. We noted that this situation also resulted in an overstatement of the actual realizations in consumer bankruptcies.

7.87 In evaluating existing and alternative ways of administering bankruptcies, the Branch did not obtain information on trustees' fees, as distinct from expenses, and summarize and analyze these together with the internal costs of the Branch for all bankruptcies. Thus, in our opinion, the procedures in place for collecting and reporting information on estate administration costs did not facilitate monitoring of and accounting for overall system performance.

7.88 We recognize that the subject of fees and expenses is a difficult and sensitive one and that excessive zeal in attempting to reduce costs below a reasonable level could jeopardize the continued interest of trustees in bankruptcy estate administration. Bankruptcy Branch management has informed us that it will continue to discuss the costs issue with the courts, to review the tariff for bankruptcies, and to develop a more detailed format for the presentation of accounts.

7.89 The Bankruptcy Branch should ensure that its records of trustees' fees and expenses are accurate and utilize this information to assess the appropriateness of the current tariff and, if warranted, propose revisions.

7.90 Preventing fraud and abuse. A major responsibility of the Bankruptcy Branch is to protect the credit system and bankruptcy proceedings from fraud and other abuses. The Branch's detection efforts include examining debtors under oath, contacting creditors, debtors' employees, trustees and others, and reviewing books and records. The Branch no longer engages directly in full-scale criminal investigations; these are carried out by the RCMP on behalf of the Superintendent.

7.91 In 1974, the Branch developed a method for selecting bankruptcies for investigations of possible fraud and abuse, and for determining which techniques to use and how much staff time to devote to each case. The method was developed without a solid base of information, such as the probability of fraud in various categories of bankruptcies, the size of such frauds, and the cost-effectiveness of alternative ways of detecting them.

7.92 We found that, although several reviews of this enforcement strategy had been initiated since 1974, the Branch had not clearly defined the abuses which it intended to combat or determined whether its investigations had been effective.

7.93 In June 1979, the Branch began to reassess and redesign its enforcement strategy for detecting fraud and abuse with the intention of making some changes in policy. For example, detection previously began with the examination of debtors under oath, supplemented by other steps as appropriate. Under the new policy, contact with creditors is the basic detection technique, with other steps to follow, depending on the circumstances. Examinations under oath are used in only 10 per cent of consumer bankruptcies and approximately 50 per cent of commercial cases.

7.94 The Bankruptcy Branch should identify abuses to be prevented and their magnitude, and establish the priority for addressing them.

7.95 Efficiency. The Bankruptcy Branch has taken a number of steps to reduce its labour costs. For example, the administration of consumer bankruptcies has been turned over to the private sector and the Branch's role now consists mainly of processing initial documentation and referring cases to private sector trustees for administration. In addition, operations such as the monitoring of the quality of bankruptcy administration have been streamlined.

7.96 Using its efficiency measurement system, the Branch has reported steady increases in productivity, averaging about 22 per cent a year between 1976-77 and 1980-81. We found that the measurement system tended to exaggerate increases in efficiency.

7.97 The Branch uses either a consumer or business bankruptcy filed as its unit of output and measures efficiency by the person-hours and dollar cost required to process a bankruptcy. We found that the number of bankruptcies did not properly reflect the workload of the Branch. This output measure did not allow for differences in work content or the changes in the mix of cases that made up the Branch workload. Branch management informed us that a consumer bankruptcy requires only about one-third the time needed to process a business bankruptcy and also that the proportion of consumer bankruptcies increased from about half the total in 1971 to about three-quarters in 1980. The efficiency measures did not take this change into account by weighing the outputs for the relative amount of effort that goes into each type of bankruptcy. Furthermore, the measure made no allowance for the major reduction in work content of cases that resulted from turning portions of the work over to the private sector. Consequently, these measures did not provide a reliable indication of how efficiently the Branch was operating.

7.98 At the district office level, the Bankruptcy Branch operational plans indicated that unit time and cost standards for such operations as registration of files, referrals to trustees and detection activities had been developed. However, the performance measurement system did not routinely monitor results against these standards. This hampered early identification of areas requiring corrective action.

7.99 In addition, although the Branch measured the quality of its Debtor Service program by the amount of time taken to refer an insolvent debtor to a trustee, it did not measure the quality of the Branch's output as a whole.

7.100 The Bankruptcy Branch should ensure that its performance measurement system utilizes wits of output that are representative of the total Branch workload and provides for regular comparisons of results against standards or plans.

Corporations Branch

7.102 We concentrated our audit work in the Compliance Division on the management systems used to plan, control and evaluate the corporate disclosure activity and the issuance of CBCA exemptions. In addition, we reviewed the procedures used to measure and report the efficiency of Corporations Branch operations, particularly the use of historical trends for planning and accountability purposes.

7.103 Corporate disclosure. The CBCA is a complex piece of legislation, requiring corporate managers to meet a number of obligations to investors, government, other specific groups, and to the public generally. One of these obligations is to disclose information to the Branch on corporate activity, such as financial results and inside shareholder trading.

7.104 There are more than 80,000 companies incorporated under the CBCA and it is thus difficult to ensure full compliance with the law. The Department relies largely on the self-enforcing aspects of the Act; that is, aggrieved parties such as minority shareholders may initiate complaint action with the Department or through the courts. With regard to the Act's disclosure requirements, the Branch performs an active role such as conducting informal inquiries into corporate misconduct; however, we found that the Branch lacked certain basic management information needed to develop an appropriate management system for planning, controlling and evaluating its activities.

7.105 The Branch had no reliable data concerning who received or used the corporate information that it disclosed, how they used it, or what value it had to its users. Neither had the Branch clearly defined who should receive this information. Further, the Branch had no method of assessing the availability of corporate information from other sources, of the disclosure requirements imposed under provincial legislation or of the extent of compliance enforcement at the provincial level. Because of this imprecise definition of the environment within which the Branch operates, the extent to which the disclosure requirements of the CBCA are achieved could not be assessed. The Branch's capacity to recommend appropriate legislative and regulatory changes, for either disclosure or enforcement purposes, has not been developed. Further, the Branch's direct contribution to corporate disclosure cannot be determined, and efforts to establish enforcement priorities and to plan personnel requirements cannot be based on reliable empirical data.

7.106 These difficulties, in turn, have resulted in the lack of a firm basis for making important operational decisions. For example, a sound environmental assessment would improve the Branch's ability to decide which indicators to use in measuring compliance, what level of compliance is cost-justified, how active the information verification and dissemination functions should be, and what would constitute an appropriate number and level of staff to achieve specified goals.

7.107 To determine Branch priorities and personnel needs and to provide a basis for developing appropriate management systems for planning, controlling and evaluating its activities, the Corporations Branch should:

- clearly identify the users of corporate information supplied by the Branch and the nature of their needs;

- determine the availability of corporate information from sources other than the Branch; and

- determine the degree of non-compliance with all disclosure and filing requirements under the CBCA.

7.109 Within the framework of the CBCA and its regulations, the Director has some latitude in determining the circumstances under which exemptions or partial exemptions are warranted. This discretion is broader in respect to certain requirements, such as financial disclosure, than it is for others. We examined the extent to which the Branch had established criteria and review procedures for making exemption decisions.

7.110 We found that one official policy statement on CBCA exemptions had been published and related to the need for insider shareholders to file trading reports. Except for this policy statement, another released in draft form and the regulations themselves, the Branch had not clearly specified or documented the exemption criteria to be used in reviewing applications for exemption. Further, there was no documented system in place to ensure that those exemptions criteria that did exist were being applied consistently.

7.111 The Branch had established a number of useful case precedents covering most types of exemptions; however, effective use of these appeared to depend on key personnel staying with the Branch. A set of proposed policy papers on a number of exemption types was prepared in early 1980, but these had not been refined or formally adopted. In addition, we were informed that documentation of the decision-making process had begun but, because of workload pressures, the task had not been completed.

7.112 In our opinion, the absence of well documented decision criteria and review procedures increases the risk that the quality of the exemptions process could suffer. We recognize that the exercise of judgement and discretion will always be required in reviewing exemption applications. It would not be possible or even desirable to specify all the conditions that shape decisions in unique circumstances. Nevertheless, some provincial securities commissions have been successful in clarifying the criteria to be used in comparable exemptions processes.

7.113 The Corporations Branch should document exemption criteria and the procedures for the review of exemption applications and monitor their use.

7.114 Efficiency. For reporting to senior management, the Corporations Branch calculates its efficiency by relating total Branch resources expended to the number of new incorporations handled by the Incorporations Division. However, only 53 per cent of total Branch person-years are employed in that Division; 47 per cent are employed in the Compliance Division ensuring compliance with various laws governing incorporations. In recent years, the nature and work content of new incorporations handled in the Incorporation Division has changed because the corporation name-search activity has largely been turned over to the private sector.

7.115 Although the Branch's monthly operational reports showed the number of outputs produced by both Divisions, the efficiency of the whole Branch was calculated only on the outputs produced by the Incorporation Division. Thus, Branch management is not in a position to make sound judgements about the productivity of the Branch and there is also a danger that operational plans will be based on inadequate workload data.

7.116 To improve its efficiency measurement procedures, the Corporations Branch should ensure that all key Branch outputs are represented in efficiency calculations and that major changes in the work procedures and work content are taken into account.

Patents Branch

7.118 In 1980-81, the Branch operated with a budget of $8.9 million and 362 person-years, and estimated fee revenue amounting to $12 million. The Branch processes between 26,000 and 30,000 patent applications each year. Fees are charged for most of its services, and the revenue collected more than covers the Branch's direct costs of operation.

7.119 We examined the suitability of the management controls used by the Patents Branch to ensure the quality of patent examination and classification. In addition, we reviewed the procedures used to measure and report on the efficiency of its operations and on the Branch's effectiveness in achieving its objectives.

7.120 Quality control. In addition to its administration and support staff, the Patents Branch employs 116 engineers, physicists and chemists in the examination of patent applications. Another 19 professionals maintain a complex patent classification system with over 34,000 sub-classes. To a great extent, the quality of the Branch's output depends on the suitability of the classification system for searches of existing technology and on the skill of examiners in making complicated technical and legal judgements.

7.121 Patent applications are examined to determine if the subject matter is patentable, if the invention disclosed is new and useful, and if sufficient inventive ingenuity is evident. Branch managers point out that most of the applications appear to make claims that are broader than are justified. Another difficulty is that, to be patentable, inventions must involve advances that are not obvious to persons skilled in the relevant technology. In areas of disagreement, the role of the examiner is to deal with the applicant or his agent to achieve appropriate amendments to the application. The examiner tries to ensure that the applicant secures a valid patent and that the rights of the applicant are properly balanced with the interests of other patent holders and the public.

7.122 At the time of our audit, both the Department's internal audit group and the Patents Branch had identified certain quality control weaknesses in the Branch's operations. Since mid-1980, the Patents Branch has made substantial progress in establishing improved quality control systems. A comprehensive review of quality-related management controls has been conducted, and major steps have been taken to monitor and raise the quality of Branch work processes and output. We are satisfied that the Patents Branch has recognized the nature of the deficiencies in its systems and has taken constructive action to resolve them.

7.123 Efficiency. When the Branch's performance measurement system indicated a 7.4 per cent efficiency decline in 1979-80 attributable to an international decline in patent applications, management took steps to redress the situation by resource reduction through consolidating activities, reduction of search and examination time, and placing more reliance on outside proven sources including work that had been done by patent examiners in the United States. In addition, the Branch participated with the private sector in developing a computerized search and retrieval information system. The Branch reported a 1.6 per cent efficiency improvement in 1980-81 and has set a target of 15 per cent improvement for 1981-82. However, we found that the Branch's performance measurement and reporting system did not provide reliable information on efficiency.

7.124 Efficiency is measured by the number of person-hours used to process a patent application and allow or abandon it. Applications may be abandoned because the subject matter is unpatentable or because the applicant failed to respond to Branch communications. An abandonment may require significantly more or less time than an allowance. The mix of the two types of disposals may vary and the measurement system did not take into account the relative work contents of these two outputs. Also, even though recent changes in procedure have reduced examination work content, the historical standard used for efficiency measurement had not been adjusted accordingly.

7.125 Processing and disposal of applications accounted for less than half the total Branch person-years. The volume of other activities, such as classification, documentation, appeals, licensing, and disclosure and information services, did not always vary in direct proportion with the volume of disposals. The measurement system did not provide performance information on these other activities, the majority of which are routine. Although inputs into these activities were monitored, outputs were not, and productivity standards were not established against which to compare actual results. In addition, the efficiency measurement standards used in planning and monitoring the examination activity made no reference to quality.

7.126 These weaknesses in the Branch's measurement system limited management's ability to establish overall Branch plans based on full consideration of the contribution that each of the major activities made. In addition, managers could not readily identify particular operational components that adversely influenced the Branch's productivity for review and corrective action. Management recognized these deficiencies and has begun to implement a new information system to address them. The Branch also plans to establish a quality assurance program in 1981-82 to monitor examination results and develop standards and measures of performance with a view to generally upgrading overall quality of examination output. The Branch was also addressing other issues that affect performance, such as the impact of impending retirements and the lengthy training period needed to replace those retiring.

7.127 In implementing its new management information system, the Patents Branch should ensure that:

- performance measurement of all major operational activities is included;

- quality standards, when fully developed, are used in planning and monitoring Branch productivity; and

- productivity measurement takes into account changes in the examination work content and in the mix of various Branch outputs.

7.129 The Bureau has also experienced data constraints in the measurement of this objective. The Bureau's Research Branch has conducted ad hoc research studies to provide a basis for making assessments of the impact of the program, but has had to contend with unavailability of pertinent data on patents. Therefore, it channelled its efforts to meet these data needs; for example, by establishing PATDAT, a patent data system, in collaboration with Statistics Canada. The Branch is also proposing changes in the patent legislation to provide the necessary authorization for collection of relevant information on the working of patents. This will include, for example, information on whether a patent is being worked commercially in Canada, by whom, under what conditions, and for what time period, and, if the patent has been licensed, when, to whom, and under what conditions.

7.130 During our audit, Branch management completed the first phase of a study of the Patents Office in which it reviewed the objectives of the Branch. The review did not translate the Branch's ultimate objective into specific measurable terms. Further work on review of the objectives is planned by the Branch when the proposed changes in patent legislation are passed.

7.131 Because the Branch is primarily a patent or limited-monopoly granting agency, its intermediate objective of protecting the rights of inventors and owners of patents can be evaluated. Granting proper or good quality patents provides limited monopoly rights and protection to the owners of patents, and measuring achievement of this objective can be approached through measuring quality of patents granted. Quality of patent output has been informally monitored by such measures as number of patents that go to court, number of appeals, and number of complaints. The Branch has indicated that it plans to establish a quality assurance program and data base for assessing program impact in 1981-82 to monitor and upgrade patent quality.

7.132 We found, however, that the achievement of the objective of protecting the rights of inventors through granting limited monopoly patents may be in conflict with the objective of encouraging invention and innovation in Canada. Given that about 95 per cent of all patents are issued to foreigners, the monopoly power conferred to foreign individuals could lead to suppression rather than exploitation of patented technology, thereby restraining innovation in Canada. For example, a foreign patentee may not be capable of developing his invention and may even object to its use. Thus, there is a need to decide on the most appropriate trade-off between these potentially conflicting objectives.

7.133 During its review of objectives, the Patents Branch should ensure that criteria are developed to determine the most appropriate trade-off between potentially conflicting objectives.

7.134 In conjunction with its review of objectives, the Patents Branch should try to determine, within cost-effective limits, ways of measuring the impact of the Patents Program.

Bureau of Competition policy

Combines Investigation

7.137 Measurement of the Bureau's success in meeting its objective is complicated by the fact that other programs, including Patents, research and development across government and grants for research and development activities, contribute to the fostering of the innovation and change aspect of the objective. There is, therefore, a need for the Bureau to define the ways in which it can contribute to this part of its objective and measure its success in doing so.

7.138 To assess program effectiveness, Bureau management has used a number of internal and external studies. In addition, it has used proxy measures such as the amount of concentration in specific industries, price, prosecution success rate, and types of offenses and length of detection period to evaluate informally the effectiveness of the program and its enforcement component. These measures, taken separately, did not provide a measure of the extent to which the Bureau promotes competition. At the time of our audit, systematic analyses of these measures, along with such other factors as the nature of the industry, technology and location, had not formally been carried out on a regular basis.

7.139 We noted, too, that responsibility for effectiveness evaluation was shared by the two deputy directors, and their respective roles had not been clearly delineated, thereby leading to confusion of roles and lack of accountability for program evaluation.

7.140 The Bureau of Competition Policy should translate its objectives into operational terms and use these as a basis for ranking and conducting inquiries and for evaluating the Bureau's success in meeting them. It should clearly assign responsibility for effectiveness measurement and reporting.

7.141 Planning and control. The Bureau has recently implemented new management techniques to strengthen the planning and control of inquiry activities. Planning has been improved by the use of formal investigative plans called impact statements which address important inquiry issues, requirements for evidence, tasks to be performed and estimated resource requirements. Impact statements were first introduced in late 1979 and have since been fully integrated into the inquiry process with each preliminary investigation.

7.142 At 31 March 1981, over 40 per cent of the formal inquiries under way were in excess of the Bureau's 18-month target age limit by an average of 18 months and some by as much as 43 months. Because the value of evidence gathered diminishes over time, such delays reduce the ultimate effect of the inquiries. To overcome this problem, the Bureau was implementing a new monthly reporting system intended to enable management to identify delinquent cases and the reasons for delay, and to take appropriate corrective action.

7.143 A major reason for the delays was the practice of moving officers to different inquiries in accordance with shifting case priorities. Although the Director has little discretion in selecting cases for inquiry, the assigning of priorities and allocation of resources among inquiries are within the Bureau's discretion and decisions, such as whether to proceed with a certain case, whether to postpone one in favour of another, and whether to devote more resources to a case must be made regularly. However, no clear guidelines had been developed to assist managers in making such decisions. As a result, there was no assurance that all relevant factors were considered consistently and systematically. This situation increased the risk that scarce investigative resources were not being used cost-effectively.

7.144 Although we recognize that there may be difficulties in establishing firm guidelines, a more formal process for decision-making on the selection and continuation of inquiries could improve the quality of such decisions and contribute to the reduction of the current backlog of cases. A 1979 report commissioned by the Bureau recommended that a checklist of factors be addressed before an inquiry is started so that all relevant factors are considered before decisions on inquiry selection are made. These recommendations had not been implemented.

7.145 To help ensure that investigative resources are allocated cost-effectively, the Bureau of Competition Policy should develop clear guidelines for assigning priorities and allocating resources among inquiries, including a checklist of factors to be addressed before an inquiry is started.

Marketing Practices Branch

7.147 The Department's internal audit group completed a review of the Marketing Practices Branch in April 1980. The major issues identified by the study were the need to clarify the Branch's objectives, making them more precise, and to consider the appropriateness of the Branch's case selection procedures as a means of gaining the full benefit of its enforcement activities. The report's recommendations have been addressed by the Branch and managers have developed an enforcement strategy for case selection that identifies priority or problem areas. An enforcement strategies task force has been established, and specific target areas are now identified in work plans.

7.148 In the area of efficiency, we found that the Branch had refined its method of efficiency measurement as a result of recommendations contained in the internal audit report. However, we found that, in the method of measuring efficiency, Branch management was giving equal weight to complaints examined, completed investigations and information visits, when in fact the time required to perform these tasks varied. In addition, the Branch had not developed work standards for each type of activity. As a result of these deficiencies, fluctuations in the reported efficiency of operations could not be assessed.

7.149 The Marketing Practices Branch should develop work standards for complaints examined, investigation completed and information visits completed, and should use them in measuring the efficiency of its operations.

Bureau of Consumer Affairs

7.151 In 1978, we reported that the objectives and sub-objectives of the regulatory branches were generally clear, although most were not documented or formally approved. We also reported that, although the majority of sub-objectives were stated in measurable terms, the objectives in the Consumer Products Branch and the Weights and Measures Division of the Legal Metrology Branch were not. Our current audit revealed that the Weights and Measures Division and the Consumer Products Branch had translated their objectives into measurable terms.

7.152 The SPICE report indicated that the Bureau had been unable to develop and use reliable indicators of its program's effectiveness in reducing the economic loss to buyers and sellers resulting from inaccurate meters and weighing devices and misrepresented products, notwithstanding management's attempts to develop and use several such indicators. We found that the measures in the Weights and Measures Division and the Electricity and Gas Division remained unchanged. Further, the Weights and Measures Division has been relying on a manual system after discontinuing its computerized information system because of inaccurate and unreliable data and untimely reports. However, the Branch had approved plans for 1981-82 to determine information requirements of its divisions and develop appropriate systems to meet them.

7.153 The Consumer Products Branch had developed a revised measure of effectiveness called Dollars at Risk, which is the economic loss to consumers arising from product misrepresentation cases discovered through inspection surveys. The Branch was also developing a new computerized system, for completion in 1981-82, to collect and report data on program effectiveness.

7.154 At the time of SPICE, management of the Product Safety Branch did not have an accurate picture of the nature and extent of the problem of keeping hazardous products off the market in Canada, even though it was monitoring accident data from the United States to identify potential problems. We found that Branch management was developing, for implementation in 1981-82, a system to be known as Product Accident Alert Canada to acquire, analyze and report information for use in establishing priorities and evaluating the effectiveness of its activities. The proposed system is intended to provide quarterly reports on specific categories of accidents based on information collected.

Payroll Costs Management

7.156 Our audit of the Personnel Branch included a follow-up of the recommendations made to the Department on human resource planning and training as a result of our government-wide audit, reported in the 1979 Report, and a review of the human resource information system implemented since.

7.157 Human resource planning. Every organization should have some form of plan for meeting its human resource requirements, including identification of future needs to accomplish its objectives. We found that, with one exception, corrective action had been taken on weaknesses which we identified in our study of human resource planning in CCA. Procedures for human resource planning had been developed, documented and implemented. Program objectives had been annually reviewed and updated. We found, however, that there was no basis for ensuring that human resource plans adequately reflected operational needs.

7.158 The Department should develop procedures to ensure that human resource plans adequately reflect operational needs.

7.159 Training. In response to our earlier recommendations, the Department had taken appropriate action to meet training needs. The Department had developed and implemented a planning process for training, and procedures for controlling most training costs and budgets. Training results were evaluated well and responsibility for co-ordinating training had been clearly established. However, we found that individuals' training needs were not being met until funds had been provided in the following year's budget, resulting in delays of a year or more before training was taken. Therefore, the total training cycle, including evaluation of results, could take more than two years.

7.160 The Department should improve co-ordination of training plans and the budgeting process to prevent delays in training needs being fulfilled.

7.161 Human resource information systems. We found that the human resource information system implemented did not meet all of the criteria set out in our 1979 annual Report. The system was being used primarily by the Personnel Directorate; it was not relied on by line managers, who had developed their own manual systems. This situation existed because the Personnel Branch had not adequately identified the needs of all potential users of the system.

7.162 The Department should establish the current and future needs of its managers for personnel information and adapt the human resource information system to meet their needs.

Information for Parliament

7.164 This section outlines some features of the Consumer and Corporate Affairs program which, in our view, should be highlighted in the revised Estimates so that Members of Parliament can better assess the Department's requests for resources, allocation of resources and accomplishments from the use of resources. The observations are included also to give the Department an opportunity to assess the readiness of their management information systems to provide better information for Parliament.

7.165 Legal mandate and responsibilities. The department is responsible, in whole or in part, for some 60 Acts and more than 170 sets of regulations. Listing the major Acts and sets of regulations as well as proposed changes in legislation that are before the House would enable Members of Parliament to appreciate the legislative and regulatory context in which the Department works. The services available to the public should also be described.

7.166 Program objectives and effectiveness. The Department recently embarked on a four-year review of opportunities to simplify its regulations and to determine whether objectives are being met. A brief summary of the Department's plans for this review along with some key milestones would be useful to Members of Parliament, who would be interested in the progress of the study and any long-term expenditure implications arising from it.

7.167 More work is required to develop specific objectives or results expected of each program so that they can be related to the resources requested. Where feasible, clear objectives and measurable targets for the Estimates year should be provided in the Estimates to create a specific basis for subsequent accountability in terms of results achieved.

7.168 Organization for program delivery. Disclosure of organizational relationships is a key feature of the revised Estimates of CCA because, as well as the Deputy Minister, there are other order-in-council appointments in the Department, for example, the Director of Investigation and Research. In addition, the Estimates should describe the relationship of the Department to the Restrictive Trade Practices Commission, as well as to the several other departments whose ministers share responsibility with the Minister of Consumer and Corporate Affairs for specific statutes, such as the Canada Dairy Products Act or the Fish Inspection Act. It should be made as clear as possible who is accountable for what.

7.169 Resource justification. The Estimates should include reference to factors that influence the need for resources. A substantial part of the Department's resources are needed to deal with repetitive matters like inspections, patent applications and bankruptcies. The resources needed for these operations should be explained in terms of the number of inspections by type, the average cost per inspection and the frequency of inspection. The quality and level of service to be provided with a given level of resources should also be defined. Some of this information is already available in the Department, but, as noted earlier in the chapter, there are still major inadequacies.

7.170 Revenue. In total, Consumer and Corporate Affairs recovers about one-third of its expenditures as receipts credited to the Consolidated Revenue Fund. The revenues for some particular functions, such as Patents and Corporations Branches, exceed direct expenditures. The revised Estimates should disclose the basis for these charges; for example, whether the fee for a patent application is intended to cover the costs of processing that application. Whenever fees are set to cover expenditures, they should be disclosed in the activity section of the new Estimates along with resource justification. Information on fee schedules set on some other basis should be displayed as supplementary information in the revised Estimates.

Summary of Recommendation and Department's Comments

Planning

Recommendation

Department's Comment

Performance Measurement

Recommendation

Department's Comment

Recommendation

Department's Comment

Effectiveness Evaluation

Recommendation

Department's Comment

Recommendation

Bureau of Corporate Affairs

Bankruptcy Branch

Recommendation

Department's Comment

Recommendation

Department's Comment

Recommendation

Department's Comment

Recommendation

Department's Comment

Corporations Branch

Recommendation

- clearly identify the users of corporate information supplied by the Branch and the nature of their needs;

Department's Comment

Recommendation

- determine the availability of corporate information from sources other than the Branch; and

Department's Comment

Recommendation

- determine the degree of non-compliance with the disclosure and filing requirements under the CBCA.

Department's Comment

Recommendation

Department's Comment

Recommendation

Department's Comment

Patents Branch

Recommendation

- performance measurement of all major operational activities is included;

Department's Comment

Recommendation

- quality standards, when fully developed, are used in planning and monitoring Branch productivity; and

Department's Comment

As quality standards are developed, these will be used in planning and monitoring productivity throughout the Office. It is intended that the Quality Assurance Unit should be in a position to begin establishing and controlling quality standards by April 1982. At that time, the establishment of quality standards will be used in conjunction with efficiency measurement standards in the planning and monitoring of the examination activity. One of the tasks which the Quality Assurance Branch will undertake during 1982-83 is the analysis of the relative work content involved in obtaining a disposal through abandonment compared with that of a disposal obtained through allowance.

Recommendation

- productivity measurement takes into account changes in the examination work content and in the mix of various Branch outputs.

Department's Comment

Recommendation

Department's Comment

Recommendation

Department's Comment

Bureau of Competition Policy

Recommendation

Department's Comment

Recommendation

Department's Comment

Recommendation

Department's Comment

Payroll Costs Management

Recommendation

Department's Comment

Recommendation

Department's Comment

Recommendation

Department's Comment