Health-related Audits

Notes for an address by Sheila Fraser, FCA, Auditor General of Canada, to the Federation Council, Moscow, Russia, 14 March 2006

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Thank you very much. I'm delighted to be here with you today.

Strong oversight by Parliament is an indispensable element of effective democratic government in Canada. My Office—the Office of the Auditor General of Canada—exists to help Parliament provide this oversight.

Today I would like to focus on some of the health-related audits we have done in the last five years, and give you an example of how Parliament used one of them to put pressure on the government to make changes to benefit Canadians.

But first, let me give you just a bit of background on how the Canadians system works.

Background

Like Russia, Canada is a federation. We have 10 provinces, each of which has its own independent legislative auditor.

My Office serves as the legislative auditor for the federal government—the Government of Canada—and for the governments of our three Northern territories.

Another point of interest is that Canada 's political system is a Westminster-style parliamentary democracy modelled after that of the United Kingdom.

In our system, the main power to make policy, prepare budgets, draft legislation, and manage the public service resides with the executive. By that I mean the Prime Minister and his or her cabinet of Ministers.

In Canada, we have a check in place to ensure that the powers of the executive are used responsibly rather than arbitrarily. And that check is our federal legislature, known as the Parliament of Canada.

The government of the day must answer for its actions to the people's representatives in Parliament. The people's right to control how public funds are collected and spent is one of the cornerstones of democratically accountable government.

So, Parliament is responsible for overseeing and scrutinizing government activities. It can raise questions and challenge the government on behalf of Canadians.

But to do that effectively, members of Parliament need independent and objective information.

OAG serves Parliament

That's where my office comes in. Our job is to give parliamentarians fact-based and reliable information on how programs are being delivered—and how they can be delivered better.

We provide this information by performing different types of audits that answer important questions. I'm going to focus here on performance audits, formerly called value-for-money audits, which are designed to assess how well government initiatives are being managed.

As you can imagine, governments are involved in a vast range of activities, and ours is no exception. We can't audit everything, so how do we decide where to focus our efforts? How do we ensure that our decisions aren't perceived to be arbitrary and capricious?

Deciding what to audit is a complex and challenging exercise that requires a sound knowledge of government and its functions.

The process we use is called "one-pass planning" and it is systematic, strategic, and rigorous. By using our in-depth knowledge of how government functions, we are able to identify government programs and initiatives where the consequences of failing to achieve specified objectives makes them "high-risk."

And what are some of the more important consequences we consider? Well, wasting large amounts of taxpayer's money is one obvious example. We audit programs that spend in the billions of dollars, such as some of the programs of our defence department.

Other areas that are important to audit are those that have the potential to put the health and safety of people at risk, do severe harm to our natural environment, or even threaten national security.

When we conduct audits, we follow prescribed methodology that reflects professional standards. Essentially, we examine government activities against established criteria, such as its own laws, policies, and targets.

The Auditor General Act gives us the authority to look at whether government activities are being carried out with due regard for economy, efficiency, and environmental impact, and whether measures are in place to determine how effective they are.

At the federal level, we produce some thirty audits that are published in several performance audit reports tabled in Parliament every year.

Unlike our counterparts in some other countries, we have no power to compel government departments to act on our recommendations nor can we ask the courts to do so. It is by working with and through Parliament that we make a difference.

Relationship with Parliament

So let me say a bit more about our relationship with this important body.

By convention and House rules, the OAG has a close working relationship with a committee of the House of Commons called the Standing Committee on Public Accounts or PAC.

Reports of the Auditor General are referred to this committee once they are tabled in the House of Commons.

By holding hearings on our reports, the PAC and other committees can keep the public spotlight on the issues we raise. This attention helps to educate the public and encourage the government to take appropriate action. The process makes it much harder for government to ignore our findings.

The reports issued by committees are substantive and are based on the testimony received. The committees' reports often endorse our recommendations and contain recommendations of their own.

Committees may also request that the government table a response to their reports, and the government has 120 days to do so.

These hearings and reports are very important to us. Without the support that Parliament can offer through its attention to our findings, we are not nearly as effective as we might otherwise be.

While it may be a bit simplistic, it is not inaccurate to describe the partnership between a legislative audit office and its oversight committee as a garden that needs to be tended if it is to flourish. Both parties need to work at it.

As legislative auditors, we need to be sure that the things we bring to Parliament's attention are not only significant and relevant, but are also clearly presented and done with the utmost professionalism.

And we have to remember that, at the end of the day, we are all working toward well-managed and accountable government.

But parliamentary hearings are not the end of the road either. We don't just conduct audits, report them, make recommendations, attend hearings, and then leave things at that.

Once a reasonable amount of time has elapsed—usually a few years—we go back to do another audit to see whether anything has changed for the better and whether our recommendations have been implemented.

Once a year we produce a report called the Status Report, which contains the results of several of these follow-up audits. This year's Status Report will be tabled in the spring.

Health-related audits

My Office has done a significant amount of audit work in the health area over the last 10 years, however, in the interests of time, I will mention only the latest of these.

Recent performance audits have looked at the management of Canada 's strategy to deal with illicit drugs, health programs provided to our First Nations people, population and public health programs, and federal support for health care delivery. We've also looked at the tracking of diseases, and the management of the medical devices program.

In addition to this work, we have been collaborating with our provincial counterparts on a project designed to provide assurance on the quality of health indicators being used by the federal and provincial governments to assess the performance of the health care system.

Most recently, we audited the management of drug benefit programs by six departments. This was contained in my November 2004 report to Parliament. Let me tell you a bit more about this one.

Drug benefit programs are a significant and high-risk area to audit for two reasons: their high cost—which currently exceeds $430 million—and their impact on the health of large numbers of Canadians—approximately one million Canadians receive benefits under these programs.

One of our concerns was that while some programs log the details of millions of transactions in sophisticated databases, this information is not shared with health care professionals in a way that would benefit clients.

We found, for instance, that the number of clients that had received more than 50 prescriptions in a three-month period had almost tripled since 2000.

As well, hundreds of clients were obtaining narcotics from more than seven doctors. But government systems were not programmed to send alerts to pharmacists when these events occurred.

Our audit also revealed that the programs were missing opportunities to save money. So we recommended, for example, that government departments develop a common list of approved prescription drugs and a single fee schedule for dispensing fees.

The departments agreed to all our recommendations, and informed us that the details of the actions to be taken would be supplied to us within a few months.

What happened next? The Public Accounts Committee held a hearing on the chapter a few months later and endorsed our recommendations fully in a report issued in May 2005.

Action plans have been developed and departments are working collaboratively together to find solutions and to implement the recommendations. When the time comes, we will go into these departments once more to conduct a follow-up audit of the actions taken.

This is a good example of how Parliament can play a very important role in pushing government departments to act. The Public Accounts Committee adds the necessary teeth to the results of audits.

Conclusion

In the Canadian system of government, Parliament, the Auditor General, and the government all have distinct powers and responsibilities.

Working together, all three can help improve the management of government programs and services and the way government accounts to the Canadian people for what it achieves.

While it is the job of my Office to be critical, ultimately I believe we have a constructive role to play in maintaining the confidence of Canadians in government, thus helping to build stronger public institutions, a better country and a healthier democratic society.

My staff and I are extremely proud to be part of a long history of dedicated service to Parliament and to Canadians.