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1988 Report of the Auditor General of Canada

The Office's Organization, Process and Initiatives

21.1 The preceding chapters in this Report present a number of the Office's products - the results of its audit work. This chapter describes additional products, special initiatives and particular aspects of the way the Office works. Its intention is not to describe all the projects undertaken in the Office during the year but to highlight for Members of Parliament the major and significant developments within the organization since the publication of the last Report.

21.2 Just as the Office scrutinizes the federal government's departments and programs, it also examines and evaluates its own programs and operations with the goal of increasing the productivity of its staff and the quality of its audit work. Several initiatives this year are aimed at this goal. After the report of the Study on the Cost Effectiveness of the Audit Work of the Office described in the 1987 Report, the Office was reorganized so as to produce higher quality audits without an increase in resources. Groups within the Audit Operations Branch were rearranged, and both the mandate and resourcing levels of the Professional Practices Group and the Planning and Co-ordination Unit were expanded to reflect a heightened emphasis on these functions. The development and upgrading of audit methods through computerization were again significant. In addition, a core training curriculum was developed and put into practice, and the work of the branches reviewed by Program Evaluation and Internal Audit.

21.3 Internationally, the Office continues to make an important contribution. At the forefront of both comprehensive auditing and computer audit technology, the Office has provided assistance this year to several countries and groups of countries such as the regional groups of the International Organization of Supreme Audit Institutions (INTOSAI).

21.4 Within the Office, innovations and improvements have also been made in the areas of official languages, employment equity, recruiting audit trainees and video presentations of annual Report chapters.

21.5 These initiatives are described in more detail in the following pages.

Mandate, Auditing and Reporting

21.6 Mandate. The legislative mandate for the activities of the Auditor General is in the Auditor General Act, 1977, and the Financial Administration Act and its 1984 amendments.

21.7 Auditing. Each year the Office conducts audits in all departments and agencies to enable the Auditor General to express an opinion on the summary financial statements of the Government of Canada. Annual audits also assess departmental and agency compliance with legislative authority.

21.8 The Auditor General also conducts value-for-money audits in departments and agencies to fulfil the reporting requirements of section 7(2) of the Auditor General Act. Cases are reported where departments or agencies have made expenditures without due regard to economy and efficiency, or where satisfactory procedures have not been established to measure and report the effectiveness of programs. The Office has designed a program of audits that allows for each major entity to be given regular attention in value-for-money audits. This may take the form of an entity-focussed, program-focussed or government-wide audit. An entity-focussed audit is the broad-based comprehensive audit that examines all major value-for-money issues facing the entity. A program-focussed audit will examine the major issues facing a program within the entity, with an emphasis on results. Government-wide audits are conducted when it is feasible and appropriate to examine issues common to a number of departments. For the major departments, the Office has found that it is not cost effective to audit and report on a large number of complex programs and issues in the same year. In effect we have divided these departments into auditable units.

21.9 Reporting. Throughout the audit process, findings are discussed with management in the entities being audited. Matters that the Auditor General identifies as being of concern to Members of Parliament are brought together in the annual Report. An opinion - together with any reservations the Auditor General may have - is given on the Public Accounts of Canada and included in Volume I of the Public Accounts. Audits and special examinations in Crown corporations are reported to the board of directors of the corporation.

Reorganization

21.10 Exhibit 21.1 is an overview of the organizational structure of the Office, showing the functions of its three branches.

Exhibit not available

21.11 The Office has been reorganized over the past year to meet the Auditor General's concern that it function with the greatest effectiveness, efficiency and economy possible. The results of the Study on the Cost Effectiveness of the Audit Work of the Office, which he commissioned last year, provided the impetus. (For highlights of the study's recommendations and management's responses, see paragraphs 21.14, 21.15 and Exhibit 21.2.)

Exhibit not available

21.12 The major changes in the organization are the following:

    - The number of audit groups has been reduced from 15 to 12.
    - Functional specialists have been integrated into the audit groups.
    - The Winnipeg, Regina, Edmonton and Vancouver regions have been combined to form one western region, headed by an Assistant Auditor General.
    - The Halifax and Montreal regions have been combined to form an eastern region, also headed by an Assistant Auditor General.
    - A separate audit group, whose responsibility is planning and co-ordinating for the Audit Operations Branch, has been established under the direction of a senior principal. This group is responsible for strategic and operational planning, and also for the human resource planning for the Branch. The intent in combining these functions is to ensure that human resource implications are examined in the context of all operational planning activities and to support staff and management in efforts to fulfil their responsibilities for career development and human resource management. The group will work closely with Personnel and Professional Development to ensure that human resource needs in Audit Operations are being effectively met (see also paragraphs 21.16 to 21.21).
    - The Methodology Development Group has been provided with a new mandate and resources so that the methodology development for Audit Operations can be accelerated and enhanced (see also paragraphs 21.22 to 21.25).
21.13 The intention, in reorganizing, was to increase productivity and the quality of audits without increasing the Office's resources. In fact, the 1988-89 Estimates show planned person-years of 619, a reduction of 40 from the 1987-88 plan. During the past year, in addition to its regular program of audits, Audit Operations has completed 2 special examinations and begun work on 15 more. Integrating functional specialists with the entity groups has improved the quality of the various phases of audit work, including final reports, without increasing staff.

Study on the Cost Effectiveness of the Audit Work of the Office

21.14 In December 1986, the Auditor General commissioned a study on the cost effectiveness of the OAG's audit work. It was conducted by Stevenson Kellogg Ernst and Whinney, Management Consultants, under the direction of Kenneth G. Belbeck and members of the Auditor General's senior staff. Its objectives were to make the comprehensive auditing activities of the Office more cost effective, and to improve the general performance of the Office. Audit Operations Branch was the focus of the study; only the activities that directly affect audit work - Career and Professional Development, Professional Practices, and Program Evaluation and Internal Audit - were considered for the other branches.

21.15 The highlights of the reported observations and recommendations, and management's responses, are summarized under the main subject headings in Exhibit 21.2.

Exhibit not available

Planning and Co-ordination Unit

21.16 As part of this year's reorganization, the role of the Planning and Co-ordination Unit (PCU) was expanded. Under the direction of a senior principal, the Unit reports to the Deputy Auditors General (DAGs) of Audit Operations, and is responsible for strategic, operational and human resource planning and the co-ordination of the Branch.

21.17 Strategic planning. The Unit prepares two strategic planning documents - the Environmental Assessment, and Priorities for Improvement, Audit Operations. The Assessment is produced annually and identifies the major opportunities and constraints facing the Office in the foreseeable future. It provides the background to the priorities document. The priorities document gives guidance to the audit groups in establishing plans for the next fiscal year and identifies significant major management issues facing the Branch.

21.18 Operational planning. Each of the Audit Operations groups headed by an Assistant Auditor General (AAG groups) is responsible for its own planning and the implementation of its plans. The PCU co-ordinates to ensure that the plans are consistent and that inter-group and inter-branch issues are considered. It consolidates the individual group plans into the Branch plan and provides advice to the DAGs on the plans. The AAG groups prepare a multi-year plan of the value-for-money audits and special examinations they expect to undertake. The group plans are summarized for the Executive Committee. The Unit then organizes challenge review sessions at which the DAGs discuss the budget details with the AAGs and the Principals. These lead to resource allocation decisions by the DAGs.

21.19 Throughout the year the PCU is actively involved in monitoring the implementation of the plans and recommending resources to meet the needs of the Branch.

21.20 Human resource planning. Because human resources make up 85 percent of the Office's resources, assignment to audit teams and the overall placement of people in the Office are most important. The Unit works closely with Personnel and Professional Development to attract, train and retain Audit Operations staff. Assignment planning and career counselling are of critical importance. Special needs for auditors outside the Branch must be considered; in particular the Professional Development and Practices Group needs people with audit experience to work in training and methodology development and to support the Office's international projects.

21.21 The PCU co-ordinates various activities related to human resource management and Branch administration to ensure that a consistent approach is being followed.

Methodology Development

21.22 During the past year, the Office has placed renewed emphasis on the way it develops, tests and disseminates its audit process and procedures - methodology. A number of factors influenced the decision to do so, including:

    - recognition of the need to capture the lessons learned in almost 10 years of comprehensive auditing (this need was confirmed by the recommendations of the Study on the Cost Effectiveness of the Audit Work of the Office - see paragraphs 21.14, 21.15 and Exhibit 21.2); and
    - a desire to shape the future evolution of comprehensive auditing so that it continues to meet the expectations of legislators and reflect changes in government accountability and management structures.
Exhibit not available

21.23 To implement this decision, a number of key steps have been taken. The Methodology Development Committee has been restructured as a small decision making, user-oriented committee. It will provide high level direction, oversight and support. The Committee is chaired by Auditor General Ken Dye with Deputy Auditor General Ed Rowe acting as alternate Chairman. Membership includes Raymond Dubois and Larry Meyers - Deputy Auditors General of Audit Operations - two Assistant Auditors General and two senior Principals. The Committee is supported by the Professional Practices Group under Assistant Auditor General Yvan Gaudette.

21.24 To date, the Committee has established a methodology development plan and priorities and an operational framework (see Exhibit 21.3). The operational framework has the following objectives for methodology development over the next three to five years:

    - to better articulate and explain what represents good accountability and due regard;
    - to reflect practical experience in our methodology and communicate the evolution that has taken place in practice;
    - to advance the evolution of comprehensive auditing to reflect changes in government accountability and management structures; and
    - to find ways to reduce audit costs.
Exhibit not available

21.25 In pursuit of these objectives, the Committee has identified the following priority areas for development. Terms of reference and work plans have been approved, or are in process, for

    - updating the Office's Comprehensive Auditing Manual to reflect current practice;
    - methodology for special examinations;
    - developing and testing guidance on scoping of departmental and agency value-for-money audits;
    - computerization of the audit process; and
    - completion or revision of certain guides dealing with application of the comprehensive auditing concept in specific situations.

Financial Resources

21.26 Parliamentarians now have available to them, in Part III of the Estimates of the Government of Canada, the detailed resource requirements of the Office of the Auditor General.

21.27 Exhibit 21.4 provides an overview of appropriations and expenditures by activity.

Exhibit not available

Information Technology

21.28 1987-88 was the final year of the three-year special EDP initiative outlined in the Office's 1984-85 Estimates. The period has been one of intense activity and change as the Office has geared up to meet the challenge of technology. The number of personal computers has grown to 550 from the 23 in the Office in 1984. Computer programs were used to access financial data on government mainframes at that time, and both the word processing and graphics units were state-of-the-art.

21.29 The first step in the three-year initiative was to prepare a plan. Its first objective was to help audit staff understand the risks and control techniques which apply to the hundreds of mainframe computer systems used in government. A second objective was to harness technology to enable auditors to work better and reduce audit costs.

21.30 Some of the milestones have been reported in the 1986 and 1987 Reports. The Auditor Trainee program each year provides selected line auditors with a one-year intensive upgrading in computer controls and techniques before they return to regular audit duties. Interactive Data Extraction and Analysis (IDEA), which helps auditors to use microcomputers as powerful analytical tools, has now been adopted not only in the Office but throughout the world. The move to laptop computers has enabled auditors to apply technology directly at client locations. And electronic communications have been developed.

21.31 Today in the Office there are some 550 microcomputers - one for almost every staff member. Approximately 320 of these are laptops. There are several significant developments, in addition to those mentioned above, which have changed the nature and practice of audits, communications and administration in the office. Both in Audit Operations and in the other branches, advantages of technology have been exploited aggressively.

21.32 Text retrieval. Text retrieval techniques have been brought to the auditor's laptop computer to permit the searching of large quantities of text such as statutes, regulations and reports quickly and efficiently.

21.33 Communications. The Office now has some 324 users of electronic mail, which is a routine means of communicating both at headquarters and between audit sites anywhere in Canada or throughout the world. Electronic bulletin boards have been established which allow auditors to exchange documents for information or for comment and review.

21.34 ReportRead: Those involved in writing chapters for the annual Report, together with the Auditor General and Deputy and Assistant Auditors General and other reviewers of chapters, are now able to access the Report electronically as it develops - in the Office, at home or on the road. ReportRead, which links into individuals' microcomputers, has eliminated much of the photocopying and distribution of hard copies of the chapters and is greatly facilitating the process of review.

21.35 Electronic briefcase. The Office has developed and tested a new micro-based system, AUDITPRO, which enables auditors to complete an entire assignment using the computer. Many types of software can be linked to AUDITPRO, and auditors can create and keep track of an entire audit file electronically. This system is expected to save hundreds of audit hours and result in significant quality and effectiveness improvements over the next few years.

21.36 Public Accounts audit system. This micro-based system allows auditors to independently prepare consolidated financial statements for the Government of Canada within days after the underlying detail has been made available. It is used both to check the accuracy of the Public Accounts presented to the Office for audit and to keep track of the hundreds of adjustments made to the Accounts before they are finally published.

21.37 Administration and financial control. During the past few months, a prototype of an on-line financial and operational control system has been completed. It allows managers to obtain up-to-date information on costs and trends for all the work conducted by the Office. The system presents results on a screen, both numerically and graphically. It is designed to respond to questions as they arise rather than to produce quantities of computer printout, which are hard to decipher.

Core Training Curriculum

21.38 In May 1987, the Audit Operations Task Force on Knowledge and Skills published a report which has become an important instrument in human resource planning. The Professional Development and Practices Group has developed a curriculum of courses to provide training for auditors in most of the core knowledge and skills requirements it identified.

21.39 The Task Force Report and Training Curriculum are both important means of ensuring that we have highly qualified professional staff who produce audits of the highest standards.

Program Evaluation and Internal Audit

21.40 The Program Evaluation and Internal Audit Group has three principal objectives. Through program evaluation, it assesses the effectiveness of the Office's audit activities in support of the scrutiny role of the House of Commons. Through post-audit quality review, it assesses whether the Office selects only matters of significance for audit, and audits these in a professional and cost-effective manner. Through internal audit, it assesses whether important management practices and procedures throughout the Office reflect due regard for value for money.

21.41 The following is a summary of the work carried out by the Program Evaluation and Internal Audit (PEIA) Group during the past year.

21.42 Program evaluation. An evaluation is under way which involves asking for the views of the principal audiences for the Office's annual Report. PEIA is contacting Members of the House of Commons and the Senate, ministers and their deputies, heads of Crown corporations and a cross section of journalists, looking for assurance that the Office is reporting the right issues and reporting on them right. The project also includes a follow-up of PEIA's 1985 evaluation of the annual reporting process (paragraphs 15.81 to 15.88 of the 1985 Report).

21.43 Post-Audit Quality Review (PAQR). Post-audit quality reviews are performed annually on a sample of the Office's audit work.

21.44 Departmental comprehensive audits. The 1987 Report described the PAQR assessment of the shift from systems-based audit approaches to those based more on program results. There were variations, but a general shift toward results-based auditing was evident, and some positive characteristics of those audits were noted.

21.45 The recommendations contained in that report have sparked lively and productive debate within the Office about what issues should or should not be included in a value-for-money audit. The Methodology Development Committee is paying particular attention to resolving this problem, as it is now completing revisions to the Comprehensive Auditing Manual.

21.46 Work is under way on studies of:

    - the use that is being made of Audit Advisory Committees in the Office, and
    - the reliance that the Office should be placing on the internal audit groups in "client" departments and agencies, and in Crown corporations.
The results of these studies will be reported in 1989.

21.47 Crown corporations, other entities and the Public Accounts of Canada. During the year, PEIA reviewed the audits of 8 Crown corporations and other entities and 10 Public Accounts audits. The review noted compliance with generally accepted auditing standards and with those of the Office. During 1988-89 the PEIA Group will identify exemplary cases of audit teams significantly improving their audit efficiency and describe how they did it.

21.48 Internal Audit. In the previous two years all major administrative, personnel and financial management systems of the Office were examined. A respite seemed appropriate this year to allow time for the Office to consider and implement the recommendations made.

The International Scene

21.49 Because of the reputation of the Office as a leader in comprehensive and legislative auditing, and in computer assisted auditing, it is often called upon to share its expertise with other countries, especially developing countries and others which are seeking to strengthen their capacities in governmental auditing. Several projects undertaken in 1987 exemplify the contribution the Office has made on the international scene.

The XIIIth Conference of Commonwealth Auditors General

21.50 The Office of the Auditor General hosted the XIIIth Conference of Commonwealth Auditors General which took place from 28 September to 2 October 1987 in Ottawa. This was the first time the triennial conference had been held in Canada. Essentially a forum for exchanging ideas, experiences and trends in auditing, it has no established mandate but is vital for reinforcing the principles of independent legislative auditing.

21.51 The title of the conference was Advancing Accountability: Practice, Perception and Predictions. As conference chairman, Ken Dye welcomed the delegates to the opening session and outlined the following agenda for the week: the role of the Auditor General in public accountability; the role of the public accounts committee in advancing accountability; planning and managing resources in a changing environment; training strategies for sharing knowledge and experience; developments in computer auditing; audit of capital projects and social programs; and improving financial information for parliamentarians.

21.52 All delegates participated in high-level discussions pertaining to legislative auditing - from such fundamentals as the need for the independence of the auditor to be defined by statute all the way to the latest developments in information technology.

21.53 The Ottawa conference had the greatest number of participants in the history of the Conference of Commonwealth Auditors General. The 71 delegates from 44 countries came from diverse backgrounds. Many represented industrialized nations with established audit offices and active public accounts committees (PACs). Other delegates came from small developing countries where there are difficulties in recruiting and maintaining skilled auditors, and problems arise because their PACs meet too infrequently. However, throughout the sessions, emphasis on common principles proved far more important than any dissimilarities.

The International Audit Office Assistance Program

21.54 Since 1980, a fellowship program funded by the Canadian International Development Agency and administered by the Canadian Comprehensive Auditing Foundation continues to bring senior auditors from developing countries to work and study in the Office of the Auditor General. In 1987-88, seven international fellows were funded from the following countries: Colombia, Indonesia, Korea, Mexico, Morocco, Sri Lanka, and Tunisia. Two other fellows, one from Hong Kong and one from Singapore, were funded by their own countries.

21.55 The fellows spend one year with the OAG, assisting in a variety of audit areas and enhancing their knowledge and understanding of public sector accounting and auditing, especially the value-for-money segment. As well as gaining practical experience by working with audit teams, they also participate in a number of professional development activities. The knowledge and experience they gain assists them in improving their audit work when they return to their home environment.

Sino-Canadian Auditor Training Project

21.56 Since 1982, the Office of the Auditor General has been involved in an international effort, first with the United Nations and then with the Canadian International Development Agency (CIDA), to assist the People's Republic of China in developing the legislative audit function required by its new constitution.

21.57 The main objective of the first phase of the project carried out for CIDA was to train Chinese auditors in the concepts, methods and skills practised in Canada. A secondary objective was to train a core of qualified audit instructors who could establish an appropriate training capability in the Audit Administration of the People's Republic of China (AA/PRC).

21.58 The first phase of the project will be completed by December 1988. It is expected that all the major planned outputs will either be achieved or exceeded and that the project will be delivered within budget. The OAG will have provided, as an agent of CIDA during that time, the necessary professional, technical, and administrative support to fulfil both project objectives.

21.59 Both the Canadian and Chinese governments view the first phase as a success. They are now considering a second phase. In addition to reinforcing the internal training carried out in Phase I, Phase II could address audit education at university and college levels as well as related research activities.

21.60 For the OAG, the project has provided audit staff with exposure to a different and fascinating culture and to different accounting and auditing concepts. It has served as an excellent training opportunity, especially for staff involved in the audit of Canadian international programs.

Other International Projects

21.61 Office staff have provided training, advice and assistance in the Republic of Cyprus, the Eastern Caribbean and NATO this past year. At the request of the United Nations, OAG staff members delivered courses in comprehensive auditing in Cyprus, provided advice to the Auditor General on the planning, implementation and reporting of performance audits, and installed our Interactive Data Extraction and Analysis software on the Cyprus Audit Office's computer. At the request of CIDA, two of the Office's senior staff members conducted a course in comprehensive auditing for 32 legislative auditors representing 8 member states of the Organization of the Eastern Caribbean States as part of the Eastern Caribbean Economic Management Program. At NATO, Deputy Auditor General Ed Rowe has been advising and assisting the Canadian Mission on the revision of the audit structure and process.

The INTOSAI Development Initiative

21.62 At the twelfth congress of the International Organization of Supreme Audit Institutions (INTOSAI), the proposal to establish formally the INTOSAI Development Initiative (IDI) was adopted. It had been proposed by the Auditor General of Canada to the Governing Board of INTOSAI in 1985 and accepted in principle.

21.63 The mission of IDI is to foster the advancement of public accounting and auditing, especially in developing nations. This is to be done through information exchange and training for audit practitioners and trainers of Supreme Audit Institutions (SAIs).

21.64 In its first two years, IDI has focussed on the internal training needs of SAIs, identified through regional training needs assessments by the IDI Advisory Committee and staff of participating countries. In 1987 these needs assessments were conducted in all INTOSAI regional groups and in the Caribbean.

21.65 Based on the results of the training needs identification, the focus in 1987 has been (and for the next two years will continue to be) on human resource management seminars for the executive officers of SAIs, training managers' workshops for those responsible for the training function in SAIs and audit workshops for various levels of audit staff.

21.66 Workshops in several disciplines have been piloted and delivered by IDI in various centres around the globe: a training needs analysis workshop in Kenya; training managers' workshops in Tanzania and in Kenya; human resource management workshops for heads and deputy heads of SAIs in the Philippines, Jordan and Gabon; an audit workshop in Thailand; and a micro-computing workshop in Copenhagen. Senior staff from the Office participated in the design and delivery of all these workshops.

21.67 In addition, IDI has produced the International Directory of Information for Audit Training, now available in English, French, Arabic and Spanish, with the German translation to be ready shortly. The Directory contains course designs and case study outlines provided by some 15 countries as well as a list of audit methodologies and a list of non-profit audit training institutions.

21.68 Funding for IDI is provided by CIDA, the United Nations Development Program, Royal Norwegian Ministry of Development Co-operation, United States Agency for International Development, Japan International Co-operation Agency and Commonwealth Secretariat.

21.69 The IDI Office was located in Canada's OAG for 1987 and 1988. The Auditor General of Canada is the President of the eight-member IDI Board, one of the Deputy Auditors General is Secretary-Treasurer, and an Assistant Auditor General is Executive Vice-President.

Official Languages in the OAG

21.70 The Office of the Auditor General strives to fully reflect in its day-to-day operations the three basic principles relating to language of service, language of work, and equitable representation of the two official language groups, which continue to guide the government's official languages policies in the public service. To this end, it maintains bilingual resources that allow it to communicate with members of the public in the official language of their choice, to conduct audits in English or French as required, and to provide employees with equal opportunities to perform their duties in the official language of their choice. Efforts are also made to maintain an equitable overall representation of the two official language groups in the Office.

21.71 Early in 1987 the Executive Committee approved an Official Languages Plan for 1987-88. It includes objectives and specific goals, with a schedule of planned activities and submission of a semi-annual report to the Executive Committee. The Commissioner of Official Languages recently noted that the OAG "has made considerable progress with respect to the overall management of its official languages program".

Audit Trainee Program

21.72 The Office of the Auditor General plays an important role in the accounting profession by training students preparing to become Chartered Accountants, Certified General Accountants, and Certified Management Accountants. The Office articles some 20 new students each year, providing them with the experience they need to obtain their accounting designations. In 1987-88 the Office hired university graduates from across Canada to work full-time in its various offices.

21.73 Selection of candidates for this full-time Audit Trainee Program has been facilitated through increased use of the co-operative study-work programs offered by some Canadian universities. After working for several four-month terms with the Office, students in these programs are considered for full-time employment as audit trainees.

21.74 In addition, the Auditor General takes advantage of Employment and Immigration's Career Oriented Summer Employment Program (COSEP) to select students to work in auditing. Summer students who are properly qualified and interested in permanent employment with the OAG are then recruited to work as full-time audit trainees after graduation.

21.75 The Office has recently published a brochure describing its audit trainee program, and continues in its search for the best candidates to work in this unique environment of legislative auditing.

Video Presentation of Annual Report Chapters

21.76 In 1986 the OAG produced a 10-minute videotape of one annual Report chapter - the Veterans' Affairs Portfolio - as a pilot project. As the members of the Public Accounts Committee and other Members of Parliament who saw it responded positively, the decision was made to produce seven videotape presentations of annual Report chapters in 1987. These set out findings from the Financial Management and Control Study, audits of the Departments of National Health and Welfare and National Defence - Materiel Support and three Special Audits, and the Auditor General's Opinion and Observations on the Financial Statements of the Government of Canada. The videotapes were made available to all Members of Parliament through the OASIS network and could be accessed easily at MPs' convenience. The Office, with co-operation from OASIS, is now assessing the effectiveness of this use of videotapes. Meanwhile, they have been in demand by departments, universities, provincial auditors general and other national audit offices.

Working Group on Employment Equity

21.77 In 1983 the Office of the Auditor General created a Working Group on the Employment of the Handicapped and adopted an official policy promoting the hiring of the handicapped. Actions were undertaken to reduce the barriers to employment identified in a study, to select suitably qualified handicapped persons and to facilitate their employment. Since 1983 the participation rate of handicapped persons in the Office has substantially increased. The Working Group was expanded this year to become the Working Group on Employment Equity, and its work will extend to equality of access to employment and opportunities in the Office for women, aboriginal peoples and visible minorities as well as the handicapped.

Costs Incurred in Preparing Reports of Audits and Special Examinations in Crown Corporations

21.78 Section 149(2) of Part XII of the Financial Administration Act (FAA) requires that, where the Auditor General of Canada is the auditor or examiner of a Crown corporation, the costs incurred in preparing any report under sections 139 and 143 shall be disclosed in his next annual Report and be paid out of the moneys appropriated for his Office.

21.79 The costs reported here pursuant to section 149(2) represent the full costs incurred by the Office in carrying out the audit and special examination work and preparing particular reports under section 139 or 143 of the FAA. These costs are reported here only when the work has been completed.

21.80 The total costs of Crown corporations work include costs incurred on work not specifically required under section 139 or 143; for example, work in relation to issuing prospectuses, advising on information and internal control systems, and helping to resolve accounting issues and to prepare financial statements. The costs incurred for this work are not reported in this chapter.

Annual Audits

21.81 Under section 139 of the FAA, each parent Crown corporation is required to have an annual auditor's report prepared, in respect of itself and its wholly-owned subsidiaries, on the financial statements and on any quantitative information that the Treasury Board requires to be audited. Also, the auditor must prepare such other reports as the Governor in Council may require.

21.82 Exhibit 21.5 shows the costs incurred in performing the completed audits and preparing the annual auditor's reports required by section 139 for those corporations and subsidiaries audited solely or jointly by the Auditor General of Canada. The costs refer to the completed annual audits for fiscal years ending on or before 31 March 1988.

Exhibit not available

21.83 The costs reported do not include any costs for the audit of quantitative performance information, because no such audits have been requested by the Treasury Board for any of the corporations the Office audited. Similarly, there were no other reports required by the Governor in Council under section 139.

Special Examinations

21.84 Section 143 of the Financial Administration Act requires each parent Crown corporation named in Schedule C of the Act to cause a special examination to be carried out in respect of itself and, if applicable, its wholly-owned subsidiaries, at least once every five years. As the legislation came into effect on 1 September 1984, the first cycle of special examinations is to be completed by 1 September 1989.

21.85 The aim of these examinations is to determine whether, in the period under examination, the financial and management control and information systems and management practices of the corporation were maintained in a manner that provided reasonable assurance that:

    - assets were safeguarded and controlled;
    - financial, human and physical resources were managed economically and efficiently; and
    - operations were carried out effectively.
21.86 At the completion of a special examination, a report on the findings is submitted to the board of directors of the corporation. In the case of corporations named in Part I of Schedule C or their wholly-owned subsidiaries, the legislation provides for the examiner to draw matters to the attention of Parliament if necessary.

21.87 Where, in the examiner's opinion, the special examination report contains information that should be brought to the attention of Parliament, the examiner must, after consulting the board of directors and the appropriate minister, prepare a report on the information for inclusion in the corporation's next annual report. Where an auditor other than the Auditor General of Canada is the examiner, he or she must also consult with the Auditor General and furnish him with a copy of the report on these matters.

21.88 In 1987-88, two special examinations were completed. The costs of these examinations were:

Great Lakes Pilotage Authority

$137,300

National Capital Commission

597,800


A further 15 special examinations were in progress in Crown corporations that are audited by this Office. Costs of these will be reported in future years, as they are completed.

Advisers to the Auditor General

Membership of the Panel of Senior Advisers

Kenneth G. Belbeck, F.M.C., Stevenson Kellogg Ernst & Whinney

Gordon H. Cowperthwaite, F.C.A., Canadian Comprehensive Auditing Foundation

Alan J. Dilworth, F.C.A., Touche Ross & Co.

William A. Farlinger, F.C.A., Clarkson Gordon

Kenneth S. Gunning, F.C.A., Pannell Kerr MacGillivray

Ralph W. Karthein, C.A., IBM Canada Ltd.

Giles R. Meikle, F.C.A., Deloitte Haskins & Sells

Edward W. Netten, F.C.A., Price Waterhouse Management Consultants

Donald H. Page, F.C.G.A., Midland Doherty Ltd.

Kenneth R. Stevenson, F.C.A., Coopers & Lybrand

T. Robert Turnbull, F.C.A., Thorne Ernst & Whinney

W. Ross Walker, F.C.A., Peat Marwick

Membership of the Independent Advisory Committee to the Auditor General on Government Accounting and Auditing Standards

Morley P. Carscallen, F.C.A., Coopers & Lybrand

L. Denis Desautels, F.C.A., Clarkson Gordon

Kenneth M. Dye, F.C.A. (Chairman), Auditor General of Canada

James L. Goodfellow, F.C.A., Touche Ross & Co.

Douglas D. Graham, C.A., Pannell Kerr MacGillivray

John J. Kelly, C.A., Canadian Institute of Chartered Accountants

Ronald E. Kiggins, C.A., Peat Marwick

David Kirkwood, Canadian Mediterranean Institute

Henry E. McCandless, C.A. (Secretary) Office of the Auditor General of Canada

Ronald B. Robinson, F.M.C., Abt Associates of Canada

Lawrence S. Rosen, F.C.A., Ph.D., York University

Edward R. Rowe, C.A. (Vice-Chairman) Office of the Auditor General of Canada

Leonard Rutman, Ph.D., Price Waterhouse Management Consultants

William R. Sloan, F.C.A., Arthur Andersen & Co.

George F. Windsor, B. Eng., LL.B., Osler, Hoskin & Harcourt