This Web page has been archived on the Web.

1992 Report of the Auditor General of Canada

Assistant Auditor General: Ronald Thompson
Responsible Auditor: Jeff Greenberg

Main Points

6.1 In the early 1980s, the government reformed the Estimates and introduced a new package of information for Parliament on departmental spending: Part III of the Estimates. This change led to considerable improvement in reporting, but, as was generally agreed, it was limited to annual spending.

6.2 Yet the business of government is complex and the instruments it uses are varied, only some of which are reflected through annual spending. Parliament should expect and receive a regular accounting on the exercise of the entire business of government: in a phrase, global stewardship. The Part IIIs should change to meet this proposed global stewardship paradigm, and they should be produced and reported on a cycle that could vary among departments.

6.3 Both parliamentary committees and government departments would be better served by these cyclical, in-depth reviews of departmental "global stewardship" within the current system of annual parliamentary approval of the Estimates.

6.4 While this method of reporting would mean more and better information, it need not mean more printed text. Existing technology provides an emerging opportunity to produce shorter, stewardship-based printed Part IIIs with additional information stored in electronic libraries. This additional information would be updated at least annually and made available on request, electronically and in printed form.

6.5 Accounting for "global stewardship" does not end with a better Part III. Ministers' speeches, answers to questions in Parliament, testimonies before committees by ministers and officials are all occasions to satisfy the need for disclosure by government. The quality of reporting should be a preoccupation of the mind, in living up to the ideals of responsible government.

Departmental Reporting

Background: The Institutional Setting

Parliament, confidence and the Estimates
6.6 Since Confederation, Parliament has fulfilled its annual obligation of dealing with the government's request for authority to spend money in the next fiscal year. In doing so, Parliament has followed the well-established tradition that it does not govern; governing is the executive's responsibility. Parliament's duty is to satisfy itself on behalf of the Canadian public that the Crown's ministry is competent and has the full confidence of the House of Commons.

6.7 There are a number of means that parliamentarians use in the House to fulfil this duty. For the Opposition and Government backbencher, they include such things as oral and written questions, statements, debate and motions. In response, the Government tries to maintain confidence through a variety of reporting vehicles including the tabling of reports, speeches, answers to questions, and testimony before committees. In addition, it tries to manage the parliamentary agenda by using such means as closure, time allocation, and control over the raising of revenues through taxation (the Business of Ways and Means) and the spending of money (the Business of Supply).

6.8 A necessary procedure of the Business of Supply is the tabling of the Estimates (called votes). This procedure sets in motion the opportunity for Parliament to examine detailed transactions or activities as a means for considering the competency of the executive. The related vehicle for voicing parliamentary displeasure at this time is a motion to reduce or reject a vote in the Estimates. The Government responds to such motions as criticism of its competency, and naturally opposes them. On the rare occasions when such motions prevail, they almost inevitably end in the dissolution of Parliament and an election.

6.9 The tabling of the Estimates, and the measure of their usefulness, are set against this procedure that has stood the test of time since the early days of Confederation.

Reform of the Estimates
6.10 Since the first Estimates were tabled in 1867, there have been three changes to their form and content: in 1938, 1970 and 1981. The last reform took place after a review of financial management and accountability by the House of Commons Standing Committee on Public Accounts, the Office of the Auditor General and the Royal Commission on Financial Management and Accountability (the Lambert Commission). The newly created Office of the Comptroller General was given the task of responding to the recommendations.

6.11 Both the Lambert Commission and this Office recommended in 1979 that financial accountability would be better served if the government would report its spending plans in the spring with the Estimates, and on past performance in the autumn. The expectation was that this autumn report would eliminate the need for most departmental annual reports and departmental information in the Public Accounts, by amalgamating the best of both and eliminating the rest.

Part III of the Estimates and accountability
6.12 In response, the government of the day proposed that Parliament and government would be better served by limiting reform to the Estimates. This led to the creation of a new three-part Estimates report. Part I would be the expenditure plan for the entire government while Part II, the Main Estimates, would support the annual spending legislation, the Appropriation Bill. Part III of the Estimates, also called the departmental expenditure plans, would contain forward-looking information on expenditures as well as information on past performance. The government's reasons for limiting the reform to the Estimates were accepted as reasonable by members of the Public Accounts Committee and other Members of Parliament. The reform project also had the full support of the Office of the Auditor General.

6.13 In hindsight, this decision may well be one reason for frustration about the Part IIIs both in Parliament and in government. The Part IIIs are Estimates documents that report on spending plans and on results against previous plans. They are designed to be completely consistent with the structure and content of Part II of the Estimates and the associated Appropriation Bill. With the exception of adequate performance information, they have come a long way in meeting the information needs about annual spending they were intended to cover. In a sense they have become the most established vehicle for departmental reporting to Parliament.

6.14 But governments sometimes engage in activities that are not well reflected in the annual spending process, or that are organized in a way inconsistent with the Estimates structure. When that happens, a gap is created in that the Part IIIs do not represent the complete accountability document.

Reporting on Stewardship: The Full Range of Departmental Activities

Government's business is complex
6.15 Government is in the complex business of serving the public interest and, in so doing, managing its substantial resources judiciously. The instruments it uses to achieve this mission are varied. Parliament has a right to expect and receive a regular accounting on the exercise of all these responsibilities. Annual reporting that focusses on compliance with spending authority does not reflect these broader duties and obligations to preserve, maintain, and foster the government enterprise: in a phrase, "global stewardship".

Since Confederation, the relationship between Parliament and government has changed
6.16 For the first 70 years after Confederation, government stewardship responsibilities were relatively simple and modest, and reasonably well reflected in the annual appropriation of money. World War II and its aftermath changed Canada into a modern state. It also changed the way government operated, and changed the old relationship between government and Parliament.

6.17 On the spending side, new economic and social programs sprang up that involved substantial transfers to provinces and individuals, including programs for health, education, fiscal equalization, pensions and child support. These were permanent programs requiring continuity in funding. To run them, Parliament gave government continuing authority to draw funds from the Consolidated Revenue Fund without the need for annual parliamentary approval.

6.18 From 1962 to 1991, these statutory programs grew from $3.1 billion to $93.0 billion, or from 46 to 66 percent of total expenditures.

6.19 Also on the spending side, the government occasionally relies on the private sector to help carry out its mission. For many years the government, through loan guarantees, has encouraged the private sector to undertake, or to provide financial assistance to, projects considered to be in the public interest. The rationale for this kind of government backing is that, without it, the private sector might otherwise not make the investment. For example, in the 1960s loan guarantees to students under the Canada Student Loans Program began to expand, and they continue today. More recently, much of the federal government support for energy megaprojects like Hibernia and the NewGrade Upgrader has been through loan guarantees. Last year these potential liabilities, excluding events such as native land claims, amounted to about $8 billion.

6.20 There are also illustrations on the revenue side that demonstrate the pervasiveness of the government's use of instruments that fall outside the regular annual appropriation process. Vote netting, for example, allows departments to reduce their gross expenditure requests to Parliament by using the revenues they collect to offset spending.

6.21 On a much larger scale, tax expenditures - which include deductions, exemptions, credits, reduced rates, or deferrals - are a way of using the tax system as an instrument or set of instruments to pursue economic and social purposes. When we looked at this in 1986 we estimated, based on the 1985 Department of Finance Account of Selective Tax Measures , that tax expenditures amounted to $28 billion annually, the equivalent of more than a quarter of the value of expenditures for that year.

6.22 The growing use by modern government of a variety of instruments to get the job done is shown in other ways. The resources under the protection of the federal government are vast. The Canadian public, through Parliament, expects the government to act responsibly in its stewardship over both physical assets and liabilities, which range from buildings and ships to the preservation of historic sites, from protection of employee pensions to protection of the environment. One of the most visible instruments the government uses are regulatory programs which influence public behaviour through government actions ranging from education to persuasion, to enforcement. Regulation over the environment, and the implementation of the government's environment strategy, show how significant the government's influence can be without involving substantial increases in expenditures.

6.23 These wide-ranging responsibilities are far more pervasive and complex than could ever be captured in the Estimates process, or reflected in conventional financial statements. In an age of scarce public resources and growing debt, seeking ways to see that things get done by or through others, rather than spending money to do them, becomes increasingly important.

6.24 This does not diminish the need to provide information for the Estimates and to report results against plans; it does mean that there is still considerable room to disclose the entire business of individual departments and agencies - in other words, "global stewardship".

Our View of Adequate Departmental Reporting

6.25 In our view there are three categories of interrelated information that require full disclosure and that are vital for maintaining the confidence of Parliament: stewardship information, financial information, and operational information (see Exhibit 6.1 ).

Stewardship information comprises information on the broader duties and obligations to preserve, maintain, and foster the government enterprise, seen from a macro perspective
6.26 Stewardship information would include a description of the organization's mission, its major lines of business, the way it is structured, the instruments it uses, its strategic targets and objectives for achieving the mission, and performance information showing to what extent these objectives have been met. It should also include recognition of the departmental responsibilities for managing significant public resources under its control.

6.27 Reporting on stewardship by senior management of an organization means articulating its mission in a manner that enables it to determine its success. Clarifying the mission can be the single most important planning task for management because it allows it to focus on the purpose of the organization, to call attention to what it believes is important, and to set measurable goals toward achieving that purpose. It cannot be seen simply as a collection of every program, activity and sub-activity of the organization.

6.28 If done well, it can and should form the basis for a relatively brief stewardship report that focusses on strategic and macro-level information. Detailed supportive information, described below, has to be available and easily accessible but need not be printed with the stewardship report.

Financial information would reflect all a department's financial activities, even those that do not require parliamentary spending authority
6.29 We have already indicated that it is common today for the government to use a variety of instruments and financial resources to see that things get done. Apart from obtaining Parliament's approval for their administrative costs, much of the financing to see that these activities get done takes place with private sector support. Loan guarantees and regulation such as environmental protection are just some examples.

6.30 In addition, when the government purchases physical assets like ships and buildings, it does not recognize them as assets; it simply pays for them and treats their purchase as an expense, like office supplies. In a sense, the government's view is "a dollar is a dollar is a dollar." There is no recognition that some spending creates assets that continue to be used in succeeding years, if properly maintained. If these expenditures on capital are not recognized as physical assets, we run the risk of ignoring or delaying the need to maintain them; in other words, out of sight, out of mind.

6.31 We believe that departmental financial information for Parliament must reflect all the financial resources and instruments employed by a department, whether or not they involve annual spending.

6.32 To a large extent, stewardship information and financial information overlap. We should expect this because financial information is related to the business of the organization.

6.33 We should also expect to find that reported financial information reflects the way Parliament authorized the expenditures. This may create a dilemma when the lines of business differ from the structure in the Estimates. In such cases financial reporting should reflect both; there should always be an accounting for the cost of carrying out the lines of business at the macro level. But there should also be a cross-walk relating these costs to the Estimates.

Operational information would include more detailed information in a variety of areas
6.34 Operational information would clearly be linked to the financial category and, like financial information, would flow out of stewardship information.

6.35 It would include information on the business of the organization; administrative issues that are particularly significant to MPs; human resource management issues; and cost comparisons over time. In addition, it would include information on evaluation studies that contribute to the economy, efficiency and effectiveness of the organization.

6.36 It would also include specific information Parliament has called for in, for example, legally required annual reports. This would be consistent with the amendments to the Financial Administration Act and announcements in the February 1992 Budget, whereby departments could move to eliminate these required annual reports and to incorporate the information in the Estimates or the Public Accounts. The key is that the information continue to be collected on a timely basis.

6.37 It is important to continue the timely update of this operational information, whether it is published separately, incorporated into another report, or simply made available on demand.

6.38 In essence, operational information refers to regular information that would help departments display their competence in managing the department's business. We are not suggesting that new information systems would be required, nor are we calling for a replication of management information. Operational information for Parliament should flow directly from current management information, but in the same way that reports are prepared for Parliament today, it may have to be massaged and summarized. We have already stated that managing is the business of the executive, not Parliament. Parliament's role is to be satisfied that the executive maintains the confidence of the House of Commons, and to influence the action of the executive through examination, questioning, and criticism.

Information for Parliament should answer four questions
6.39 As we developed this framework of information for Parliament, we also considered whether enforcing adherence to it would require a detailed set of rules and instructions. We concluded that there is a need for a balance between some control at the centre and delegation of responsibility to those entrusted with stewardship. In striking this balance, we believe that global stewardship reporting would be well served if the following four questions were answered:

  • What are the department's mission and lines of business?
  • How does the department carry out its lines of business to achieve its mission?
  • What are the department's strategic objectives for realizing its mission, and plans for managing the significant public resources under its control?
  • How did the department do in meeting its objectives, and how much did it cost?
Criteria for information for Parliament
6.40 Information for Parliament ought to meet three overall criteria - relevancy, reliability and understandability. To be relevant, the information should be meaningful, complete, and timely, and answer our four questions. To be reliable, the claims made should be consistent from one information source to another and over time, and able to stand the rigor of validation. And to be understandable, anyone not versed in the language of the public servant or in the details of the department's organization should be able to comprehend the information. See Exhibit 6.2 for a graphical representation of this reporting framework.

There are limits to the amount of information that can be absorbed
6.41 Parliament is a busy place and even the most diligent reader cannot possibly absorb the amount of material its Members currently receive. We also recognize that MPs have varying needs: some want a simple, high-level overview of a department; others who might have a deep interest in a department want to know considerably more about its business; others may simply want enough to inform their constituents, for example through their "householder" magazines. The challenge is to package information in a way that satisfies all parliamentary users.

6.42 Ten years ago, when the last reform of the Estimates took place, user-friendly information technology was in its infancy. Today, there are many such technologies available that can access more information and that take into consideration the tremendous range of user skills with computers. We believe that it is possible to make information better, to make more of it available and to make it less burdensome than the current proliferation of paper.

6.43 The financial and operational information we have described could be made available in printed form as well as through a variety of electronic media, ranging from on-line interactive databases to self-contained electronic libraries. At present, a popular method of managing large amounts of information is CD-ROM, a technology where one computer compact disc holds more information than 10 of our annual Reports, in both official languages. We recognize that, in the very near future, this electronic library approach may be supplanted by on-line databases. Our concern is that we must start now, in the most user-friendly way, but remain sufficiently flexible to accommodate changing technology.

6.44 Moving this way would naturally lead to some additional costs, in both the technology and the gathering of information. On the information side, virtually all text information produced today is already in electronic form on computer. Making selected information available through electronic libraries means deciding what information is important, cataloguing it properly, meeting common standards of compatibility and ensuring that access to this information is user-friendly. However, we recognize that there are costs to collecting information and that these costs must be weighed against the benefits of providing it. For information that management requires, the cost of providing it to Parliament is incidental. But sometimes the information needs of management and Parliament are not synonymous. When this occurs, the associated benefits and costs must be assessed by both users and suppliers before proceeding.

6.45 But even with additional costs, there really is no choice. The proliferation of information is such that it is no longer feasible to print all available information, nor is it possible to ferret through written texts for selective information without new search technology. And finally, the next generation of users, including MPs, will increasingly expect information to be available electronically. In our view, there is no choice but to proceed in this direction today.

How Current Reporting Measures Up

6.46 We have so far described the concept of "global stewardship" and the related information we think would be appropriate for Parliament. In this section, we summarize our assessment of current reporting against our view of appropriate information for Parliament. Those readers wishing to see the detailed findings can read them in the Annex to this chapter (paragraph 6.91).

6.47 We explored the extent to which a selected group of departments were providing information of sufficient breadth to describe their stewardship responsibilities. We used as our framework the matrix of four questions and three criteria shown in Exhibit 6.2 .

Departmental information is not broad enough
6.48 Current departmental reporting does not provide the breadth of information needed to convey the global stewardship duties and obligations of departments. This means that when departments engage in activities or use instruments that are not reflected in spending for the coming year, they often do not report these in the Part IIIs. Examples include new loan guarantees for megaprojects like Hibernia, commitments to development banks for assistance to developing countries, and new programs delivered through changes in the tax system rather than through expenditure.

6.49 We also found that the way departments manage and carry out their business is not always consistent with the way they report in the Part IIIs. The Department of National Defence is an example of a department whose framework for reporting to Parliament is different from its internal management framework. This should not be construed as a criticism as such, even though such a practice may lead to difficulty in understanding a department's business.

6.50 When the business of government was relatively simple and the day-to-day spending of money reflected its business, reporting on expenditure captured the essence of "global stewardship". But government business has changed, and for years, even before the recent growth in debt, government has relied on a varied set of instruments to carry out its business. Reporting has not kept pace with these complexities. And today, with government looking for ways to curtail spending, but continuing to see that its business gets done by making greater use of other instruments, we are concerned that its disclosure against spending alone will miss the mark even more than it has in the past.

6.51 In fairness to the departments, the reporting practices, particularly in the Part IIIs, are generally consistent with policies and guidelines established for them. The one exception is the previously reported weakness in reporting results, performance and effectiveness.

6.52 In summary, through our assessment we found that, while information on annual spending is well covered, there is considerable room for more openness by management about its global stewardship role. However, there are some real constraints to this. The next section describes some of them.

Constraints to Better Reporting

6.53 As part of the work for this chapter we consulted both users and suppliers of information. On the user side, we met with the Public Accounts Committee and the Liaison Committee of the House of Commons. We also met with individual parliamentarians. On the suppliers' side, we held individual and roundtable discussions with senior public servants. The common message that both groups expressed was their frustration with current reporting.

Parliamentarians' concerns about information
6.54 Users of information, the MPs, indicated that they were unhappy with reporting for three reasons. First, they are expected to use the Part IIIs when voting Supply, to have a better understanding of the requests for program resources. Yet they told us that the Supply process is not a meaningful exercise to them. They can't influence spending plans during Supply because, under our current system of responsible government, any changes would be viewed as a loss in confidence in the ability of the government to manage competently. In fact, even though the various votes in the Estimates are referred to committees for review, there is no requirement that committees actually report their views on the Estimates.

6.55 An outward sign of MPs' frustration over their lack of influence on Supply is that there are very few committee meetings held on the Estimates. Even worse is the smaller number of committees reporting back to the House on Supply. To illustrate this, for the 1991-92 Estimates, 20 formal committee meetings were held to discuss the $158 billion to be spent that year, down from 101 meetings in the previous year. Those meetings resulted in only one committee report to the House on the Estimates for the 1991-92 fiscal year; in the previous year, not one committee reported on the Estimates.

6.56 Second, MPs told us that if they were to undertake reasonable reviews of departments it would be very difficult for 20 or so standing committees to examine more than 80 Part IIIs each year. They also told us that, in those Part IIIs they do examine, there is much repetition from one year to the next because the business of departments does not change all that often.

6.57 Third, they told us that the Part IIIs are not helpful reading to understand the business of the departments. They find that there is either too much information or too little; they cannot always tell what departments are doing, or how much things cost; and they cannot get a reasonable perspective on performance. Added to this are the increased demands on their time from constituents, special interest groups, caucus and party duties. The result is that, even if the information were there, they would have little time to devote to gaining the perspective on departments they feel they should have.

6.58 In short, with respect to the Estimates process, the Part IIIs are not very useful because MPs cannot alter spending plans for the current year. And with respect to an overall understanding of departments, they are not useful because they do not describe the business of departments completely and succinctly.

Departmental concerns about current reporting
6.59 The suppliers of information also expressed considerable frustration with current reporting. In their case, the targets were the Office of the Comptroller General (OCG) and the MPs.

6.60 With respect to the OCG, senior departmental officials told us that the high degree of central control over the form of the Part IIIs left them with little or no flexibility in their approach to reporting. They told us that the Guide to the Preparation of Part III of the Estimates is very restrictive and reads more like a directive than a guide.

6.61 The policy for the Part IIIs, as stated in the Guide , is that each document is to be fully consistent with the presentation in Part II of the Estimates, and to reflect only departmental activities and programs included in the Operational Planning Framework approved by Treasury Board. This policy virtually guarantees that departmental reporting will reflect only approved spending, both annually voted and that under continuing authority. There is no requirement for reporting on the global stewardship of the liabilities, substantial physical assets, loan guarantees, tax expenditures and other such instruments that a department may be responsible for managing.

6.62 The Guide also specifies that each Part III shall be prepared in accordance with the instructions issued by the OCG. This means that each Part III contains information in increasing levels of detail, starting at the department level and ending with the activity/sub-activity level. Yet some departmental heads and deputy heads are stewards over operations or activities that don't fit this pattern. Furthermore, the instructions do not let a department choose the appropriate level of detail for informing Parliament about its operations.

6.63 Officials of the Office of the Comptroller General stress that they do allow for flexibility, but they also acknowledge that it is much easier for a department to stay within the prescribed structure. Change is more difficult than uniformity. To reinforce compliance with the Office of the Comptroller General guidelines, the deputy heads are asked to sign a `representation letter', which states that the document:

  • "...is presented in accordance with Treasury Board policy and instructions and the disclosure principles contained in the Guide to the Preparation of Part III of the Estimates ."
6.64 Both departmental and OCG officials agreed on their frustrations with the lack of attention they believe MPs give to written material departments provide. One senior departmental official summed up this frustration as follows:

  • "We met one (Commons) committee last week. If any of them had read the Estimates they certainly didn't care to reflect it... At the moment we have been able to identify two audiences that pay any attention at all to our Part III. One of them is the Office of the Comptroller General; the other is people who are looking for jobs in our Department."
6.65 Sorting out these constraints. We have considerable sympathy with suppliers of reports who believe that they are simply not used. Yet the real concerns and frustrations of MPs about the business of Supply suggest that there is no quick and easy solution to this dilemma.

6.66 We interviewed a number of people knowledgeable about Parliament, including people who were involved in the major reform of the Supply process in 1968. They reminded us that the business of Supply is the time when government presents its spending plans to Parliament. Parliament, in turn, examines them with a view to testing the competency of the ministry. It has been, and still is, the government's business to govern competently while holding the confidence of Parliament, and Parliament's business to continually test that competency.

6.67 But there are added strains today on this system of responsible government. The business of governing is a complex one, made increasingly so by growing debt. At the same time, demands on our elected representatives grow as constituents and special interest groups compete with the political party, caucus, and Parliament for their attention. Sometimes these increasing pressures erupt as frustrations over issues like accountability.

6.68 Through all of this, we believe that the essential principle that must be maintained is that the business of government must be transparent, irrespective of Parliament's use of the information. There will always be a need for a document of record that describes the stewardship of individual departments, and that is sufficiently flexible to accommodate changing circumstances.

6.69 Finally, while it may sound obvious, the more parliamentarians use the information provided, and the more feedback they give to its suppliers, the more responsive it will become.

Summary Observations and Recommendations

The need for stewardship reporting
6.70 The reform of reporting that took place over ten years ago was a reform of the Estimates. It led to the introduction of the departmental expenditure plans, the Part IIIs, which have become the government's principal departmental reporting vehicle to Parliament. Their introduction has also contributed to considerable improvement in the reporting of financial information, particularly annual spending. However, the responsibility of ministers and senior public servants to manage the entire range of duties and obligations of departments is far more extensive than is reflected by annual spending. We call the overall management of, and accountability for, these broader duties and obligations, "global stewardship".

6.71 Departments should compile and make available information not only on annual spending but also on their global stewardship responsibilities.

6.72 The policy for the Part IIIs should be revised to emphasize reporting on global stewardship responsibilities of departments and on the way they are carried out.

Frequency of reporting and review
6.73 We believe that the business of departments and the broader interests of parliamentary committees would be better served by the production of a cyclical accountability document on "global stewardship", which would be based on the Part IIIs. We also believe that the one constraining factor to the timing of reporting is that it should take place at least once in the life of the "normal" three- to five-year Parliament.

6.74 The current policy for the Part IIIs calls for the annual tabling before Parliament of departmental expenditure plans, as distinct from the tabling of the Main Estimates that support the Appropriation Bill. But within our system of annual appropriations, such detailed annual departmental reporting no longer seems appropriate to government or to Parliament. In the government, the business of departments and agencies seldom changes to any great degree from one year to the next. In Parliament, the Supply process seems so constraining that MPs tell us they find little reason to review government spending plans with much conviction. Furthermore, they tell us that their committees lack sufficient time and appropriate information to review the global stewardship responsibilities of departments.

6.75 Individual departments and agencies should produce printed stewardship documents based on the Part IIIs, on a multi-year cyclical basis, in accordance with a schedule to be jointly determined by Parliament and the government.

6.76 Parliamentary committees should undertake in-depth cyclical reviews of departmental spending and stewardship in accordance with a predetermined reporting schedule.

Information technology and reporting to Parliament
6.77 Earlier in the chapter we described our view of adequate departmental reporting that included three categories of information: stewardship information, financial information, and operational information. Not all this information should be provided in printed form. We believe that only the stewardship information should appear in the new, shorter, cyclical Part III. This would include some financial and operational information of strategic importance to the executive of the department. More detailed information from the other two groups, including performance and effectiveness information, and material eliminated from previous annual reports, need not be included in this new Part III but must be accessible.

6.78 We recognize that our call for stewardship-based Part IIIs, backed up by additional information, could lead to departments having to make available different and, in some cases, more information for Parliament. This, however, does not mean more printed text.

6.79 When the current method of Estimates reporting was developed some ten years ago, personal computers were in the infancy stage and electronic user-friendly information systems were virtually non-existent. We believe that current technology offers an emerging opportunity to tailor information to specific user needs.

6.80 The government should designate an official with sufficient authority to ensure that each department develops an electronic library of additional information, with flexible access to it either electronically or in printed form.

6.81 Each new stewardship Part III should contain an annotated bibliography describing what additional information is available in the electronic library along with a clear explanation on how to access it.

6.82 Making information in electronic libraries accessible is necessary, but by itself is not sufficient. That information must also be kept up-to-date and MPs must be informed about changes to it, including any significant alteration to the department's main lines of business. This requires a discipline in the system to replace the current need for a full report each year.

6.83 Each year, at Estimates time, the government should table a document containing the updated annotated bibliography for every department and agency not producing a new stewardship Part III for that year. This summary document should also contain information on any significant changes to departmental lines of business, to allow parliamentary committees to consider altering their departmental review schedules.

6.84 Before concluding, we need to make one qualification: we have not defined the number of reporting entities. In the last few years, approximately 85 departments and agencies produced Part IIIs. What is an appropriate reporting entity, and the total number, is a matter we leave to the government and Parliament to decide.

Conclusion

6.85 The purpose of this chapter was to take a fresh look at departmental reporting in the context of responsible government. We indicated that reporting should be more reflective of the global stewardship responsibilities entrusted to ministers and senior officials of departments. We also indicated that this will become increasingly important as government tries to avoid substantial increases in expenditure and debt.

6.86 We called for a reform of reporting to allow the Part IIIs to become global stewardship documents and to be produced cyclically rather than annually. We also proposed that both parliamentary committees and departments would be better served by cyclical, in-depth reviews of departmental spending and stewardship, rather than the required annual reviews based on the Estimates.

6.87 Finally we indicated that, although our proposals may lead to more information, that need not mean more printed text. Existing technology offers an emerging opportunity to produce shorter stewardship-based printed Part IIIs, with supporting information stored electronically, maintained on a timely basis, and readily available.

6.88 In recommending these changes, we could have gone much further. We could have proposed a specific model for the new Part IIIs and for the supporting information. We deliberately chose not to do this because we wanted to concentrate on the principles of reporting, not the details. We also recognize that there is no one correct model that is consistent with our proposals. The interpretation and implementation of our proposals could vary across departments and parliamentary committees. Our hope is that the government accepts our proposals and works with departments and Parliament to reform reporting for the coming decade.

6.89 In conclusion, we come back to some remarks we made earlier in the chapter. Confidence is fundamental to our parliamentary democracy and reporting is an integral element of that. Maintaining that confidence does not end with new departmental stewardship reporting. The quality of ministers' speeches, answers to questions, testimonies before committees, all form part of the need for openness in government. The quality of that reporting, for ministers and officials, should be a constant preoccupation of the mind, a willingness and eagerness to foster the ideals of our system of responsible government.

6.90 Yet in saying this we recognize that maintaining a vibrant system of responsible government is a heavy obligation. At times, increasing frustrations and pressures on government and on Parliament periodically erupt in conflict over accountability that sorely test this system. We offer no panacea, but encourage our elected representatives and senior officials to remember the vital role that reporting plays in our system of responsible government.

Annex

Assessment of Current Reporting

6.91 In the chapter we described the concept of "global stewardship" and the information we think is appropriate for Parliament. In this Annex we provide detailed information on our review of current departmental reporting as measured by our framework (see Exhibit 6.2 ). We are aware that current reporting in the Part IIIs is based on the Guide to the Preparation of Part III of the Estimates , not on our framework. This means that "deficiencies" relative to our concept for reporting are not things the preparers of the Part IIIs could be expected to have corrected. They are measured by a standard we are proposing, not one in place today.

6.92 The assessment. We reviewed the information provided by a sample of seven organizations to see what each said about itself. The seven organizations we chose and our reasons for selecting them are shown in Exhibit 6.3 .

6.93 The exercise involved examining the information in regular reports produced by these organizations, not just the Part III, to determine whether it met our criteria.

6.94 Scope of the assessment. In determining the scope of this assessment we noted that Members of Parliament are inundated with documentation: press releases, speeches, committee proceedings as well as regularly reported documents. This makes it virtually impossible for MPs to decide on what is important from a department. We believe that the information MPs need to hold the government accountable ought to be included in, or be accessible through one of the regular departmental documents. As a result, we limited our assessment to departmental information regularly reported in documents such as departmental annual reports, the Public Accounts and the Estimates , including the Part IIIs, the most established vehicle for departmental reporting to Parliament. We also examined some selected significant additional reports that added to the understanding of a department.

6.95 We also limited our review to what the organizations said about themselves in written text, not how they might subsequently have clarified or interpreted what was written. We took the view that writers of reports have to make themselves clear, since most cannot expect to have the luxury to interpret or clarify what they write.

6.96 In addition to these seven organizations, we have drawn examples from other chapters of this Report that include observations on reporting to Parliament, as well as Correctional Service Canada, which came to our attention during the course of our work. Using our framework for reporting, the following examples illustrate the lack of breadth in current departmental information.

6.97 What are the department's mission and lines of business? We wanted to know whether departments were giving readers a sense of their lines of business and the instruments they used. We found that this was not the case. For example, the Department of Finance is the department with key responsibility for tax policy and programs that generate more than $100 billion each year, and for all tax expenditures. While there is some information indicating that the Department is responsible for tax policy, there is little about its stewardship responsibility for major areas such as tax expenditures, or references to where it can be found.

6.98 In its Part III, the Department of Forestry describes its mission and provides details of its activities in research and forestry development. However, it does not discuss how its responsibilities are related to provincial forestry responsibilities. This is especially important since ownership and management responsibility for the bulk of Canada's forests rests with the provinces. In our view, a reader's understanding of this material would be enhanced if the Part III clearly outlined the respective roles and responsibilities of the federal and provincial governments in the forestry sector.

6.99 For some of the organizations we examined, a more complete picture of their business was available from reading their Part IIIs in conjunction with other regularly produced publications. For example, National Revenue - Taxation periodically produces a document called Inside Taxation , which provides a good overview of the Department's operations. The Medical Research Council produces the annual Report of the President , which provides some insight into the Council's direction and current research. The National Defence annual report, Defence 90 , provided more descriptive information on such areas as the Canadian Forces Training System, capital projects, recent operations and peacekeeping missions. Defence 90 also provided information on subjects not included in the Part III, such as the Department's role in the Northern region and in environmental protection. It would have been useful to have these additional sources of information cross-referenced in the Part III in a way that informs the reader how the information would help to fill out the departmental profile. However, this was not the case.

6.100 The megaprojects supported by Energy, Mines and Resources (EMR) are an example of a major line of business not reported because it does not fit within the Part III reporting structure. As described in Chapter 14, EMR is heavily involved in the megaproject business through the Hibernia project off Newfoundland, the Bi-provincial Upgrader in Lloydminster, and the NewGrade Upgrader in Regina. Furthermore, this year the Department plans to spend approximately $300 million, or 36 percent of its budget, on megaprojects. Yet it does not provide any description of its stewardship responsibilities for these projects.

6.101 How does the department carry out its lines of business to achieve its mission? Some departments carry out their business differently from the way they report it in their Part III. For example, National Defence states clearly in its Part III that it does not manage its funds the way it reports to Parliament in its Part III. The Department also indicates that it has a committee structure for managing and for internal accountability, but gives no insight into how it operates. Our Office has been saying for a number of years that the Department could report to Parliament on the basis of defence capability, which is not the way it currently reports.

6.102 In Chapters 10 and 11 we report on Canada's international financial commitments and contingent liabilities. The Canadian International Development Agency (CIDA) provides assistance to developing nations through regional development banks. The Department of Finance has made commitments to provide debt relief to a number of sovereign nations. In both cases Canada is potentially committed to substantial amounts of money, well over $3 billion each, yet CIDA and the Department of Finance provide little information on their use of these financial instruments in their Part IIIs, or where to find information about them.

6.103 What are the department's strategic objectives for realizing its mission, and plans for managing the significant public resources under its control? Departmental plans beyond the coming fiscal year are generally not provided to Parliament, because the Guide to the Preparation of Part III of the Estimates does not require it. For most departments, internal reports to Treasury Board contain some information on longer-term goals and plans, but these are not generally made available to Parliament.

6.104 Operational uncertainties and risks are important elements in understanding how a department plans to carry out its mission. Yet these are rarely discussed. For example, the federal government has provided loan guarantees through EMR for the NewGrade Upgrader project, amounting to $275 million. Because there is no current expenditure, the Department does not provide any information on this project in its Part III. The only reference to this contingent liability is one line in Table 11.14 of Volume I of the 1990-91 Public Accounts . As mentioned in Chapter 14, megaprojects involve many risks. These risks are not discussed in the departmental documents. How departmental officials manage such risks to reduce or eliminate the potential impact is a fundamental aspect of their stewardship responsibilities.

6.105 How did the department do in meeting its objectives, and how much did it cost? In their Part IIIs, departments generally provide measures of activity, usually in terms of production statistics. But without information on previous plans or on the quality of the production, it is not possible to assess what these productivity statistics say about performance. To illustrate this, we recognize that National Revenue-Taxation has improved its reporting of performance in a number of areas, like telephone inquiries handled, by providing comparisons over time, but it would be even more helpful if the Department provided standards or targets to put this performance in context. In addition, more quality-of-service measures, such as the number of attempts to reach a Tax Office or the length of time to issue refunds, would enhance the production information provided.

6.106 Some departments do not inform the reader how they have performed in relation to their missions or strategic objectives. In its Part III, Forestry states that its mission is "to promote the sustainable development and competitiveness of the Canadian forest sector..." It is difficult for a reader to assess the Department's performance relative to its objectives and mission based on the information presented in its Part III.

6.107 Correctional Service Canada provides a clear statement of its corporate objectives based on its mission statement. However, in complying with the guidelines for the preparation of Part IIIs, it presented performance information by activity, and not by corporate objective. Correctional Service officials told us they intend to reflect performance information based on their corporate objectives in the 1993-94 Part III.

6.108 In the cases we examined where departments did provide performance information, we found some weaknesses. One department, Fisheries and Oceans, has improved its presentation of targets and expectations to provide more understandable information, allowing for a quick comparison of results against previous years' targets and expectations. However, in some cases targets are general and results specific, making it difficult for the reader to assess performance.

6.109 CIDA's Part III states that its support of the regional development banks has been very effective. However, as described in Chapter 11, CIDA does not report the results expected or the results achieved from the grants, payments and guarantees Canada provides to the regional development banks.

6.110 Forestry was unable to provide information to support some performance claims made in its Part III. One claim it made was that the Forest Resource Development Agreement with Alberta ($11 million over a five-year period) has contributed to more than $3 billion of new industrial investment that will utilize Alberta's aspen resources. We were not provided with any evidence to establish that the investment was the result of the agreement, as claimed in the Part III.

6.111 One fundamental piece of departmental information is the cost of a particular activity or line of business. Many departments have distinct administrative activities that are reported separately in departmental documents such as the Part IIIs. These separate administrative or overhead activities ranged, as a percentage of total operating costs, from a high of 33 percent to a low of 17 percent in the departments we examined.

6.112 We are not trying to compare the overhead burden of the various departments because that would require us to be satisfied that they define and report administration in a consistent way. Nor are we expressing an opinion on the size of administrative units. But we are highlighting that these overhead costs do not exist in isolation from the other departmental activities. If, for example, a department reduced or eliminated a major activity or line of business, we would expect to see some savings in the form of reduced administration. Yet no attempt is made to relate administrative costs to the major lines of business they support.

6.113 In Chapter 22 we describe an audit of the RCMP's largest program, contract policing. We concluded that, with respect to this line of business, the RCMP does not show the actual cost of the program against the revenue it receives from the provinces, territories, and municipalities.

6.114 We believe that deputy heads of departments and their executive committees ought to address these concerns about cost information if they are to exercise their stewardship role well. In our 1987 chapter on Financial Management and Control, we stated that reporting "...on the efficient and effective use of resources depends very much on the adequacy of the planning systems they represent. ...Because measures of efficiency and cost information rarely exist, they are rarely reported in the Part IIIs."

6.115 Understanding the text. We examined whether the Part IIIs were understandable. To do this we held focus groups to reflect on their clarity. The groups, who had been unaware that these documents existed, were encouraged about their potential usefulness to the average Canadian. Although some members of the focus groups felt they could understand what the departments were about, for the most part they found that the writers had lost sight of their audience and were too bent on volume rather than quality. The focus groups were also frustrated by the lack of attention to visual presentation in Part IIIs.