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1991 Report of the Auditor General of Canada

Main Points

21.2 The Office provides a variety of services to meet the needs of Members of Parliament (21.14 to 21.22).

21.3 Employment equity concerns are being addressed by the Office (21.26 to 21.29).

21.4 The Program Evaluation and Internal Audit Group serves the Auditor General directly to ensure that the Office obtains good value for money in its own expenditures (21.32).

21.5 The Office has made progress in the development of its methodology, which includes the new Comprehensive Auditing Manual (21.37 and 21.38).

21.6 Investment in new technology has provided an environment for the cost-effective exercise of professional judgment in the planning, execution and reporting of audits (21.47 to 21.52).

21.7 The Office is the secretariat to the INTOSAI Development Initiative, a training program of the International Organization of Supreme Audit Institutions, and participates in a program funded by the Canadian International Development Agency to expose international Fellows to Canadian legislative auditing (21.56 to 21.60).

21.8 The Office completed special examinations of three Crown corporations in 1990-91 (21.61 to 21.64).

The Work of the Office

Products Required by Legislation

• the financial statements of over 100 Crown corporations and government agencies;
• special examinations of Crown corporations where the Auditor General is the appointed auditor;
• annual attest and value-for-money audits for the governments of the Yukon and Northwest Territories; and
• other work under section 11 of the Auditor General Act.

Section 11 of the Auditor General Act

21.12 As part of its ongoing efforts to finalize arrangements for activities not specifically provided for by the Act, the Office has received orders-in-council pursuant to section 11 relating to the:

• International Civil Aviation Agency
• North Atlantic Treaty Organization
• International Atomic Energy Agency
• International Organization of Supreme Audit Institutions Development Initiative
• United Nations Development Program
• National Energy Board Cost Recovery
• Fisheries Prices Support Board
• Self-supporting Airports and Associated Ground Services Revolving Fund
• National Film Board
• International Fisheries Commission Pension Society

Organization of the Office

Parliamentary Liaison

Serving Parliament

21.15 The range of services provided to Parliament is broad and covers a variety of products, from the annual report to letters responding to requests for information about reported matters from individual MPs and Senators. This section outlines the various services provided to parliamentarians, along with other activities undertaken during the fiscal year ended 31 March 1991.

Responding to parliamentary requests

21.17 The Auditor General Act requires that matters of significance be brought to the attention of Parliament in the Auditor General's annual report. For this reason, the practice of the Auditor General is to include any findings in his next annual report, rather than report to the member or committee making the request.

21.18 During the 1990-91 fiscal year, the Auditor General received 18 such requests to look into a range of matters, varying from the failure of an Indian band to pay an auditor's bill to the disposition of the Harbourfront land in Toronto. Members of three major political parties were represented in the requests. The disposition of these requests is outlined in Exhibit 21.2 .

21.19 As Exhibit 21.2 shows, the majority of parliamentary requests are acted on in a positive and direct manner in the course of the regular audit work of the Office. Those beyond the scope of the Office's work usually are matters of a nature that would require the Auditor General to comment on government policy. It should be noted that Exhibit 21.2 does not include requests that may be delivered informally in conversation with the Auditor General; nor does it include those that may be set out in the course of parliamentary proceedings, including specific recommendations of parliamentary committees. For example, almost every report of the Standing Committee on Public Accounts (PAC) contains a recommendation that the Office carry out some form of assessment of departmental responses to PAC report recommendations. All of these are followed up by the Office.

21.20 The Office devotes considerable effort to monitoring the proceedings of Parliament in order to maintain an awareness of the interests and concerns of its primary client. For this reason, requests from individual Members to consider specific matters are taken seriously as a direct expression of client concerns.

Electronic data processing services to Parliament

Video services

Audit Operations

21.24 Audit Operations includes two regional groups. There are regional offices in Vancouver, Edmonton, Winnipeg, Montreal and Halifax. The regional offices contain 17.2 percent of the Audit Operations staff and are responsible for a full range of audit products in their regions.

Professional and Administrative Services Branch

Financial records

Employment equity

21.27 The Office of the Auditor General has an Employment Equity Committee that meets every two months. Its membership represents both branches of the Office. A working group in the Office has been responsible for a program to employ people who have disabilities, which has substantially increased their employment participation in the Office. This working group also addresses employment equity concerns for women, aboriginal peoples and visible minorities.

21.28 The Office has an Employment Equity Co-ordinator, and an Employment Equity Action Guide that serves as a tool for planning and control. The Office's approach to employment equity is not to give preferential treatment to particular groups, but rather to break down any barriers to their employment. The purpose of this approach is to ensure that all persons have an equal opportunity to be hired and promoted. For people with disabilities the Office makes sure that there are no physical barriers to impede their performance in the workplace.

21.29 A number of approaches are used to ensure that all groups covered by the program are aware of available employment opportunities. For example, the Office consults with guidance officers at universities. It also works with some Indian bands to make them aware of employment opportunities in the Office. Working group members also meet on specific issues with representatives of the various groups.

Education and professional associations

21.31 A similarly high level of representation is evident in the professional designations in the Office. A total of 294 staff members are certified Chartered Accountants, General Accountants, Management Accountants or Professional Engineers. The Office encourages all staff members to upgrade their education through outside studies whenever possible.

Program Evaluation and Internal Audit Group

The group provides management information on the performance of the Office that is not readily available elsewhere. Last year the group concentrated on the following three important areas:

• how the Auditor General's annual report could be made more effective;
• whether the financial auditing standards have been complied with;
• how well the Office interacts with government departments and, if needed, what opportunities exist for improvement.

Increasing the effectiveness of the annual report

Quality of financial auditing

Interaction with government departments

• how audit teams get a working knowledge of the entity for the purpose of deciding what to audit - this analysis revealed some effective practices by individual audit teams that could be more widely used by the Office;
• how audit teams develop rapport with the entity when beginning an audit, when communicating audit progress, and when clearing results; and
• how audit team leaders brief the Office of the Comptroller General of Canada on their audit findings.

Methodology Development

21.38 The most significant achievement in the year was the publication and implementation of the Office's revised Comprehensive Auditing Manual. This marks an important step forward for the Office's methodology. It reflects in one volume the lessons learned over more than a decade of comprehensive auditing. It thus provides a more complete framework within which the Office's professional staff can exercise the judgment and initiative required in value-for-money auditing. The manual not only reflects a more mature methodology but also signals a greater degree of discipline in our work than was feasible in the pioneering days of comprehensive auditing. (See photograph )

Planning future methodology

21.40 Perhaps most important, the Office's audit methodologies respond to changes in the control and accountability relationship between Parliament and government. This is because many questions about audit methodology are, at their roots, really questions about parliamentary control and accountability. Where expectations, responsibility and accountability are unclear, audits are difficult to perform. Legislative auditing serves the accountability and control relationship between Parliament and government.

21.41 It would be unrealistic for the Office to try to develop its audit methodologies in isolation, because of the close relationship between audit and the accountability relationship it serves. Many questions have concerned the practitioners and observers of comprehensive auditing since it was first introduced in the federal government by the late James Macdonell. They include, for example:

• What results are important, and how accurately and precisely can we (and should we) measure them?
• Which types of audit, study and investigation that have emerged in practice best serve the accountability relationship between government and Parliament?
• How do audit methodologies reflect and respect the nature of responsibilities at different levels in the accountability chain, and the involvement of different levels of government?
• How can we ensure that audit conclusions are fair and consistent among audits conducted in various government departments at various times?

21.43 The results will help establish whether and how the Office can do its work in ways that will better help Parliament and government to improve the control and accountability relationship that the Office serves.

Professional Development Activities

21.45 During 1990-91 the Office's Professional Development Group:

• presented 85 different courses internally in 191 offerings, for a total of 3,640 training days;
• funded 591 days of external training; and
• provided approximately 1,200 days of professional conference attendance.

Technology

21.48 The second purpose of the investment is to focus on the importance of the team and the group in auditing. The ability to work together and share information is critical to the success of our audits. Therefore, it is imperative that we provide tools for the auditor to easily store, manipulate and retrieve shared information. Facilitating individual creativity in a team environment requires us to look at communications and applications that bring teams and groups together. This is a particular priority for our regional and field offices. Video and teleconferencing, voicemail, and high speed computer access to the head office will be investigated and implemented where cost effective.

21.49 The technological environment of the Office has continued to change dramatically with the further development of:

• IDEA - Interactive Data Extraction and Analysis a software package that allows an auditor to enter a client's data into a micro-computer and manipulate it with ease and flexibility. A new version, 4.0, whose development was supported by the Office along with major accounting firms in Canada, the United Kingdom and the United States, has been released by the Canadian Institute of Chartered Accountants.
• The ATTEST system - a data base application used as a tool in the audit of the Public Accounts required under section 6 of the Auditor General Act. Audit teams input the results of their audits of departmental accounts; the ATTEST system consolidates these results and facilitates their numerical processing by the Central Team responsible for the Public Accounts.
• Publication of the OAG audit data base on CD-ROM - an electronically searchable repository of accounting and auditing reference material. It contains public sector audit information from a number of countries, including the United States, Great Britain, Australia and New Zealand. (See photograph )

21.51 The first applications implemented on the MIS2000 were intended to facilitate the management of the audit process, but the system has also created opportunities to develop and implement other team and group processes. One such achievement is the provision of access to the OAG audit data base through the corporate system. Not only will this mechanism eliminate the need for most auditors to have CD-ROM drives, it will also allow additions to the data base to be accessible to auditors as soon as the information is prepared or received.

21.52 MIS2000 is, therefore, more than a management information system; it is the beginning of a comprehensive corporate information management system.

Official Languages

21.54 The Office has continued its efforts to improve the second-language skills of its employees. Over the last fiscal year, 94 employees benefited from French language training and 37 from English language training. The Second Language Evaluation Test was administered to 120 candidates.

21.55 The Commissioner of Official Languages noted in his last annual report that the OAG "has improved the quality of its services in both official languages." This progress has been achieved despite the fact that "it still has a number of problems to solve with respect to language of work and the equitable participation of both language groups."

International Programs

INTOSAI Development Initiative (IDI)

21.57 As of December 1990, IDI had sponsored 31 workshops for 694 people from 105 participating Supreme Audit Institutions, who contributed 67 resource persons to the program. IDI has published an International Directory of Information for Audit Training, which is distributed in five languages to all of its 158 member institutions. The directory contains 90 course outlines contributed by 17 Supreme Audit Institutions, training models, case studies and an inventory of microcomputer software for audit purposes.

21.58 IDI has an annual operating budget of approximately $1.2 million provided by various national and international aid agencies. The Canadian International Development Agency was among IDI's first supporters. Other contributors are the Asian Development Bank, the Commonwealth Secretariat, the Finnish International Development Agency, the Inter-American Development Bank, the Japan International Cooperation Agency, the Royal Norwegian Ministry of Development Cooperation and the United Nations Development Program.

International Audit Office Assistance Program

21.60 This year marks the eleventh anniversary of the program; so far 41 countries have participated, sending more than 95 Fellows to Ottawa.

Special Examinations of Crown Corporations

21.62 Section 138 of the FAA requires that, at least once every five years, each parent Crown corporation named in Schedule III of the FAA undergo a special examination. This requirement is distinct from the requirement for annual audits of financial statements.

21.63 The objective of a special examination is to determine whether a corporation's financial and management control and information systems, and its management practices, can provide reasonable assurance that:

• assets have been safeguarded and controlled;
• financial, human and physical resources have been managed economically and efficiently; and
• operations have been carried out effectively.