1989 Report of the Auditor General of Canada

Chapter 6—Denial of Information Required to Audit Ministers' Travel Expenses

Main Points

6.1 In 1989-90 we had planned to conduct a government-wide audit of expenses claimed by ministers for travelling on government business. In our opinion, the Auditor General has clear statutory authority to audit these expenses (paragraphs 6.5 and 6.9).

6.2 We requested access to receipts where ministers had followed Treasury Board's advice to retain them. The Government told us that even if receipts existed they would not be made available to us (6.18 and 6.19).

6.3 We sought access to the written requests from ministers to the Minister of National Defence for use of VIP fleet aircraft. The Government indicated that we would not be provided with this information (6.36 and 6.37).

6.4 The Auditor General therefore decided that in accordance with the Auditor General Act, Section 7(1)(b), he must report to the House of Commons that he had not received all the information and explanations required to carry out the work of his Office. He also has decided not to proceed with the audit at this time (6.41).

6.5 In 1989-90 we had planned to conduct a government-wide audit of expenses claimed by ministers for travel on official government business, including expenses of accompanying exempt staff and public servants. Specifically, we had planned to audit:

• the adequacy of systems for financial control and reporting of ministerial office travel;
• the adequacy of controls over the use of administrative flight services (AFS or VIP Fleet) by ministers and staff, cost recovery by the Department of National Defence (DND) and the reliability and completeness of information on the operating and overhead costs of the Fleet; and
• the completeness of information on the costs of ministerial travel provided in the Public Accounts of Canada.

6.6 To verify that financial and reporting controls were working satisfactorily, in April 1989 we requested access to receipts and other documentation supporting ministers' travel expense claims. We also requested copies of requests written by ministers to the Minister of National Defence (MND) for use of the VIP fleet.

6.7 On behalf of the Government, the Privy Council Office (PCO) informed us on 13 June 1989 that the information we had requested would not be made available to the Auditor General.

6.8 Our authority to conduct the audit and the Government's reasons for not providing the information are discussed below.

6.9 In our opinion, the Auditor General has clear statutory authority to audit ministers' travel expenses. As stated in the Auditor General Act, the Auditor General is auditor of the accounts of Canada, including those relating to the Consolidated Revenue Fund. These include the accounts of the various departments and agencies of government.

6.10 The travel expenses of ministers are paid out of departmental budgets. The Treasury Board states in its Administrative Practices: Guidelines for Ministers' Offices:

A ministerial budget is an integral part of a department's budget, and is subject to the same provisions of the Financial Administration Act (FAA) that apply to all other departmental funds. These provisions are intended to assure Parliamentary control over public money; they prescribe a complete financial control framework over all financial transactions.

6.11 Ministers' travel expenses are reimbursed under an honour system; supporting receipts do not have to be submitted or retained. In response to our request for access to receipts and supporting documentation for ministers' travel claims, the Government wrote that ministers do not have to submit or retain such supporting information. It stated:

As you are aware, Ministers are required by virtue of a 1963 Treasury Board decision, only to provide a certificate stating their expenditures to secure reimbursement. Ministers are not required to submit, nor are they required to maintain any receipts with respect to such expenditures.

6.12 We learned that this honour system had been initiated on 2 December 1963. On that date, Cabinet approved a proposal from the Minister of Finance as to how ministers should submit accounts for moneys advanced and spent for travel on official business.

6.13 For each trip ministers were asked to report expenses under two general headings -- transportation expenses and other expenses -- together with a statement of the duration of the trip and the place visited.

6.14 Ministers were required to certify that their expenditures had been incurred on official business. The certification is made pursuant to a requirement in the Financial Administration Act for a certification that "work has been performed, the goods supplied or the service rendered as the case may be". At the time of our request the Government indicated that such certificates would be made available to us.

6.15 We pointed out that in its guidelines Treasury Board had stated that:

While, for reason of confidentiality, some payment requests by Ministers do not have to be supported by receipts and other documents that provide evidence of goods and/or services received, these supporting documents should nevertheless be retained in Ministers' offices for possible verification by, for example, the Auditor General of Canada.

6.16 We also pointed out that in its Guidelines Treasury Board had advised that "Even though Ministers do not have to provide receipts and supporting documentation, it would be prudent to maintain such information in Ministers' offices for audit purposes".

6.17 The Government wrote to us on 17 August 1989. It stated that:

Ministers' offices have indeed been advised that it would be prudent to maintain their receipts for travel expenses. The rationale for that advice is based on the fact that Ministers are accountable to the House of Commons and would want to be in a position to respond, in the event that questions were raised in the House.

6.18 We requested access to receipts in those cases where ministers had followed Treasury Board's advice to retain receipts.

6.19 The Government told us that even if receipts existed it would not make them available to us. Only the previously mentioned certificates would be provided. It stated:

While such certificates would, of course, be available for the proposed audit, any other receipts that may exist in the Minister's office records would not, in our view, be so available.

6.20 A system that does not require receipts to support claims for expenditures is not susceptible to audit. Without receipts we cannot determine whether claims for reimbursement are appropriate.

6.21 We also cannot make this determination if the Government will not make available those receipts kept by ministers who followed Treasury Board's advice that it would be prudent to keep receipts.

6.22 We also wanted to audit the adequacy of the financial and reporting procedures for use of the VIP Fleet. DND operates the Administrative Flight Service (VIP Fleet) for members of the Royal Family, the Governor General, the Prime Minister, past prime ministers travelling for purposes related to their former office, Cabinet ministers, foreign dignitaries visiting Canada, parliamentary committees or delegates on official business and, when authorized by a minister, senior federal officers on government business.

6.23 The fleet of eight Challenger aircraft is available for use throughout the year, seven days a week, 24 hours a day. Other types of airplanes, such as a Boeing 707, are also available.

6.24 The VIP Fleet is supposed to be used only under certain conditions. The Guidelines state that "Executive aircraft should only be used in cases where commercial air service is not available or not suitable, and when the purpose of the trip is to carry out ministerial or departmental business." Further, the Guidelines state that "These aircraft may never be used for party or constituency purposes, or for purposes connected with an election campaign".

6.25 Specifically, the aircraft are supposed to be used by ministers in the following circumstances:

• When the flight is being made to a point where there is no commercial air service; where no space is available on a commercial air service; or where, because of difficulties in routing or timetables, substantial savings of essential time can be made by using administrative aircraft in place of commercial services.
• When sudden changes in plans require emergency air transportation.
• In instances where ministers are travelling with official parties of some size that need to travel together and where advantage can be gained by using a government aircraft.
• Where security considerations render commercial travel impractical.

6.26 The minister requesting use of the VIP Fleet is supposed to follow specific procedures which include stating the specific reasons for use. According to the Guidelines, the office of the minister requesting a flight is expected to telephone DND with a preliminary indication of the requirement and the reason for the request. The request is then passed to the Flight Co-ordination Centre in DND, which contacts the minister's office to obtain necessary details.

6.27 The minister requesting the flight is also required to forward a written request for the flight to the Minister of National Defence providing:

• an itinerary of the trip, which indicates all points of departure and arrival;
• the specific reason(s) for which the use of government-owned aircraft is requested;
• a complete list of passengers showing their departure and arrival points and their affiliations; and
• the contact person in the requesting minister's office.

6.28 In addition, the following statement must be included:

"I (or my Minister) request(s) the use of this aircraft, fully cognizant of the Guidelines for Use of the AFS, consistent with the Government's commitment to restraint, and consistent with the Conflict of Interest and Post Employment Code for Public Office Holders."

6.29 The request must be signed by the minister requesting the flight or by the minister's executive assistant on behalf of the minister.

6.30 Charges to ministers for use of VIP Fleet vary according to type of flight. In 1984 the Secretary to the Cabinet wrote to ministers and deputy ministers concerning the use of the VIP Fleet. He indicated that the Prime Minister had approved the procedures outlined in the memorandum.

6.31 The memorandum identified three types of executive flights:

Special Flight is defined as a flight carrying members of the Royal Family, the Governor General or the Prime Minister.

Ministerial or Parliamentary Flight is a flight arranged by the Governor General, the Prime Minister, a Minister of the Crown, the Speaker of the House of Commons or the Senate, or delegations on official business, foreign heads of state and visiting dignitaries and such other persons as may be authorized, for general government purposes not specifically related to the programmes of a department.

Departmental Programme Flight is a flight involving a minister, a minister with officials, and such other persons as may be authorized by a minister or officials travelling alone on business related to a departmental programme.

6.32 The memorandum also outlined the costs to be charged to the requesting minister for the different types of flights:

Special Flight: No charges.

Ministerial or Parliamentary Flight: Double the first class return fare per flight that would be charged by commercial carriers for the same or similar flight, or $100, whichever is greater. This charge is per flight, not per person.

Departmental Flight: Charges are recovered in accordance with rates approved by the Treasury Board.

6.33 The minister requesting the flight decides how it will be categorized.

6.34 For Fiscal year 1989-90 the departmental flight charge for a Challenger aircraft is $2,451 per flying hour. These charges do not include in-service maintenance costs, attrition, depreciation, base support and crew costs. Based on 1989-90 data from DND, adding these costs would increase the charge to about $5,460 per hour, or by 123 percent. The actual costs of a given flight would also include the cost of food and amenities ordered by the travelling minister for all passengers and an adjustment for the actual travel expenses of the airplane crew.

6.35 Our initial audit survey found that about 95 percent of flights are categorized by the requesting minister as Ministerial or Parliamentary flights, which means that ministers are usually charged at the lowest rate. For example, $3,815.20 or double the first class fare was charged for one recent flight. If charges had been at the departmental program flight rate the cost would have been about $29,900. The addition of non-included costs would have increased the flight charges to an estimated $66,600. The full costs of operating the VIP Fleet, either in total or for each minister, are not disclosed to Parliament. However, DND has advised us that it is bound by the provisions of the Access to Information Act and rarely, if ever, has grounds for withholding cost information.

6.36 We were denied access to information on the purposes for the use of the VIP Fleet by ministers. We sought access to the written requests from ministers to the MND for use of VIP Fleet aircraft, to verify that aircraft were being used for official business and under the conditions stipulated in the Guidelines, and that the charges to ministers for use of the aircraft were appropriate.

6.37 In its letter of 13 June, the Government indicated that we would not be provided with this information.

6.38 Conclusion: We believe that Parliamentary control over the public purse extends to travel expenditures made by ministers on official government business. We found that the full costs of operating the VIP Fleet, either in total or by minister, are not disclosed to Parliament.

6.39 An audit by this Office is an integral component of maintaining Parliamentary control.

6.40 We reviewed whether or not we should proceed with an audit, given that:

• Ministers' claims for travel expenses are reimbursed under a system that is not susceptible to audit because supporting receipts do not have to be submitted or retained.
• Even if ministers kept receipts, based on Treasury Board's advice to be prudent, the receipts would not be made available to us.
• Information on the purposes for use of the VIP Fleet by ministers would not be made available to us, which would prevent us from determining whether use was for official government business only and that the charges for use were appropriate.

6.41 The Auditor General then decided that, in accordance with the Auditor General Act, Section 7(1)(b), he must report to the House of Commons that he had not received all the information and explanations required to carry out the work of his Office. After careful consideration, he also decided that we would not proceed with the audit at this time.