Proceedings of the Standing Senate Committee on
National Finance
Issue 17 - Evidence
OTTAWA, Wednesday, April 13, 2005
The Standing Senate Committee on National Finance, to which was referred Bill C-8, to amend the Financial Administration Act, the Canada School of Public Service Act and the Official Languages Act, met this day at 6:17 p.m. to give clause-by-clause consideration to the bill; and to examine the Main Estimates laid before Parliament for the fiscal year ending March 31, 2006.
Senator Joseph A. Day (Deputy Chairman) in the chair.
[English]
The Deputy Chairman: Honourable senators, I call this meeting to order. This committee's field of interest is government spending, either directly through the estimates, or indirectly through bills. Honourable senators will know that, at our last meeting, we had before us Mr. Dumesnil and Ms. Bouzigon, and they are here this evening in the event we need them. They are here as resource people.
Are honourable senators ready to proceed with clause-by-clause consideration of Bill C-8 at this time?
Hon. Senators: Agreed.
The Deputy Chairman: Hearing no objection, I would ask you to bring before you Bill C-8, in order that we can proceed expeditiously.
Shall the title stand postponed?
Hon. Senators: Agreed.
The Deputy Chairman: Shall clause 1 carry?
Hon. Senators: Agreed.
The Deputy Chairman: Shall clause 2 carry?
Hon. Senators: Agreed.
The Deputy Chairman: Shall clause 3 carry?
Hon. Senators: Agreed.
The Deputy Chairman: Shall clause 4 carry?
Hon. Senators: Agreed.
The Deputy Chairman: Shall clause 5 carry?
Hon. Senators: Agreed.
The Deputy Chairman: Shall clause 6 carry?
Hon. Senators: Agreed.
The Deputy Chairman: Shall clause 7 carry?
Hon. Senators: Agreed.
The Deputy Chairman: Shall the title carry?
Hon. Senators: Agreed.
The Deputy Chairman: Shall the bill carry as a whole?
Hon. Senators: Agreed.
The Deputy Chairman: Shall the bill be reported to the Senate without amendment?
Hon. Senators: Agreed.
The Deputy Chairman: According, I shall report Bill C-8, without amendment, to the Senate tomorrow on your behalf.
I should like to thank the sponsor of the bill, Senator Ringuette, who is here this evening. We thank you very much for your efforts in that regard. Once I report the bill back to the Senate, you will take over.
The officials will report back to the minister that the bill has safely passed through committee.
Our next item of business relates to the examination of the Main Estimates laid before Parliament for the fiscal year ending March 31, 2006. In that regard, under our general mandate of examination of Main Estimates, we will deal with foundations this evening, as honourable senators know.
I want to tell you about a letter we received after our meeting yesterday. The letter is from Ms. Chartrand, who is the President of the Public Service Human Resources Management Agency. First, she apologized that she was not able to be with us yesterday. She indicated that she would be pleased to appear before the committee, and we have taken her up on that. We will make arrangements for her to appear. In the meantime, she has forwarded us copies of some of the documents we have requested. Others will be forthcoming. We look forward to getting the package together and arranging for a mutually convenient time.
In addition, I received word from the leadership in the Senate that it is likely that we will be receiving Bill C-30, as well as Bill C-33. Bill C-30, which is being sponsored by Senator Austin, amends the Parliament of Canada Act to disconnect the salaries of parliamentarians from that of judges and creates a new formula for determining annual remuneration for parliamentarians.
That bill will be debated starting tomorrow in the Senate and will be referred to us, in all likelihood, either tomorrow or the first of next week. That means that we will be dealing with Bills C-33 and C-30 next week. That will be our main focus.
This evening, we will proceed with our ongoing investigation of foundations. We are pleased to have with us this evening Mr. St-Jean, the Comptroller General of Canada. Congratulations, Mr. St-Jean, on your appointment to that position. We also have with us this evening Mr. Morgan of the Comptrollership Branch.
Mr. St-Jean, please proceed.
[Translation]
Mr. Charles-Antoine St-Jean, Comptroller General of Canada, Treasury Board of Canada Secretariat: Honourable Senators, thank you for the invitation to appear before this committee this evening to discuss the Auditor General's report on the accountability of Foundations. With me is Mr. John Morgan, Acting Assistant Comptroller General of the Financial Management and Analysis Sector within the Treasury Board Secretariat.
[English]
Foundations have been a focus of considerable interest over the last few years. I understand the committee is interested in the evolution of the policy direction in this area in response to the recommendations of the Auditor General.
The foundation has been used to categorize not-for-profit entities operating at arm's length from government that receive upfront federal grants. It first rose to prominence in the federal government with the creation of the Canada Foundation for Innovation, in 1997, through an act of Parliament. Subsequently, in 1998, the Millennium Scholarship Foundation was created by an act of Parliament following the same legislative model. While there are other legislatively created foundations, most of these organizations are new or existing not-for-profit entities created by others under the Canada Corporations Act.
As the government announced funding for other foundations, funding agreements were structured to provide oversight and reporting based on the earlier legislative models and the requirement of the policy of transfer payments that provides Treasury Board direction on grants and contributions.
The policy of transfer payments was significantly revised in 2000 to reflect a more results-oriented focus and include more explicit requirements for audits, evaluation and reporting to Parliament. It also reflected the principle outlined in “Results for Canadians: A Management Framework for the Government of Canada.”
The term “conditional grants” was used in the revised policy to categorize upfront grant payments, including endowments. Recognizing the upfront nature of this assistance, ongoing monitoring, oversight and reporting requirements were built into the funding agreements that were to be administered by departments over a specified term. The Treasury Board Secretariat provided guidance to departments in the development of the funding agreements that required Treasury Board approval prior to their being signed.
The policy on alternative service delivery was issued in 2002. It applies to federal departments and agencies that seek to create new organizations structured as shared governance organizations. Since then, there have not been any foundations created through acts of Parliament for which this policy would apply. However, many of the same principles apply to the funding of foundations created by third parties.
[Translation]
In response to the recommendations of the Auditor General in 2002, a number of changes were announced in Budget 2003 designed to strengthen the accountability and reporting framework relating to foundations. These included the requirement for departmental compliance audits and evaluations, the submission of corporate plans and annual reports, improved reporting to Parliament through reports on plans and priorities and departmental performance reports, default and dispute resolution clauses, as well as the ability to recover funds in the event of a breach in the agreement or wind-down. The government was able to amend legislation and existing funding agreements in order to implement these commitments.
Budget 2003 also outlined a number of principles to guide the appropriate use of foundations. The government has done more work in recent months as a result of discussions with the Office of the Auditor General leading up to the tabling of her February 2005 report. The Auditor General noted in that report that she would like to have the Office of the Auditor General appointed as the external auditor to most, but not all foundations. I understand her main intent is to be able to undertake performance or value for money audits rather than financial statement audits.
[English]
After considering the recommendations of the Auditor General and parliamentarians, the government has proposed to expand the mandate of the Auditor General and has made further improvements to the agreements relating to funding announcements made in Budget 2005. This expanded mandate for the Auditor General has been included in the budget implementation bill before the House.
The budget implementation bill 2005 includes proposed amendments to the Auditor General Act. Under the bill, the Auditor General would be permitted to inquire into the use of federal funds by not-for-profit and certain other corporations to the extent they have received at least $100 million over a period of any five consecutive fiscal years.
The government has also worked to address other concerns of the Auditor General. Funding agreements recently signed include performance audit provisions as well as the need for foundations to use recognized evaluation standards. On a go-forward basis, we will work closely with the Auditor General to ensure that any new or amended agreements fully address her audit requirements.
Honourable senators, earlier this year, this committee was provided with a schedule of the various major foundation and an assessment of the accountability criteria related to them. We have made further improvements to these arrangements and are pleased to provide the committee with an update as of March 31, 2005.
That concludes my opening remarks. We would be pleased to respond to any questions the committee may have.
Senator Downe: Mr. St-Jean, in your presentation this evening, you indicated that the budget implementation bill includes proposed amendments to the Auditor General Act, but they pertain to the use of federal funds by not-for- profit and certain other corporations to the extent that they have received at least $100 million over a period of any five consecutive fiscal years.
Of the current foundations, and I believe 15 have been created since 1997, how many are excluded from that restriction of $100 million? If you do not have that, you can send it to me.
Mr. John Morgan, Executive Director, Financial Management and Accounting Policy Directorate, Comptrollership Branch, Treasury Board of Canada, Secretariat: Honourable senators, the difficulty is trying to define “foundation.” We refer to a foundation as any entity that receives funding from the government in the way of a conditional grant upfront. Of all the organizations identified by the Auditor General in the public accounts, there are approximately 11 or 12 that would be included within the scope of her audit mandate that have received $100 million over a period of five years.
Senator Downe: Is it correct to say that there would be three or four that would not fall under this provision?
Mr. Morgan: That is correct, of the 15. As I said, there are many smaller ones that the Auditor General may have put into a footnote. They have received upfront funding. It may have been $10 million. As well, there are larger organizations that may have received billions of dollars. There is a wide range in the size of foundations and what they do, and there are a number of smaller ones whereby the Auditor General would not have the ability to do an audit on her own accord. However, the Auditor General could do an audit, if a minister, through Order-in-Council, approached her to do so.
Senator Downe: Of the 15 foundations created since 1997, how many have a termination date and how many carry on forever?
Mr. Morgan: I do not have the exact number with a termination date, although the majority would have. There are some that are endowments, where the endowment is to be maintained in perpetuity. As an example, the Pierre Elliott Trudeau Foundation is to be maintained in perpetuity. The may be a number of others. The Green Municipal Funds, which are administered by the Federation of Canadian Municipalities, is an endowment, a revolving fund through which money is lent to municipalities for environmentally friendly activities. That money is repaid into the funds that the federation maintain. That is an endowment maintained in perpetuity.
The Deputy Chairman: Senator Downe indicated 15 foundations, but you seem to suggest that it depends on the definition. Do you accept his figure of 15? How many foundations would you say are in existence?
Mr. Morgan: We have included a list in our table, but I have not counted them. Fifteen is the number the Auditor General has included in her public accounts observations. However, she also noted that there are a number of other organizations that she did not label as foundations but which, from the government's perspective, are very similar. The governance arrangements are very similar; they get upfront conditional grant assistance. For her own reasons, the Auditor General has decided to exclude them from her labelling as a foundation.
There are probably 20 to 30 in total in this table.
The Deputy Chairman: That would include all the smaller ones? The Auditor General referred to 15 and you have given us a list of 10.
Mr. Morgan: Ten that are of sufficient magnitude, where, over a period of five consecutive years, they have received $100 million.
The Deputy Chairman: Do you have a list of all the 20 to 30?
Mr. Morgan: That is included in the table we have here.
Senator Downe: The section I originally referred to in your presentation talked about not-for-profit and certain other corporations. On foundations alone, the Auditor General has identified 15. Are you telling us that there are 15 not-for-profit foundations and other corporations that make up your list of 20? If we asked the Auditor General how many foundations there have been since 1997, she would tell us, I assume, 15. However, you are telling us there are 15 foundations plus others that meet your definition of not-for-profit and certain other corporations.
Mr. Morgan: That is right, and we would categorize them as foundations even though the Auditor General does not. An example is the Green Municipal Funds. There are two funds provided to the Canadian Federation of Municipalities. One is an endowment and the other is a kind of payment under which they were to use the principal. The Auditor General identified those two funds and said that one is a foundation but that the other is not a foundation, that it is clearly independent of government. From our perspective, the governance arrangements were exactly the same. Hence, we would include the two as the umbrella organizations receiving upfront assistance.
Senator Downe: Is it correct that, of the 20 or so you have identified, only 10 have received over $100 million in five consecutive years?
Mr. Morgan: Approximately, yes.
Senator Downe: How much money has the Government of Canada transferred to these 20 foundations, as you call them?
Mr. Morgan: In the table, we show a total of $10.5 billion.
Senator Downe: That includes all 20?
Mr. Morgan: That includes all the organizations in the table. That money has not yet been advanced. About $600 million is subject to the current budget implementation bill being passed.
Senator Murray: On the chart that you have given us, you have listed 10 foundations; there is then another category, called “Other Endowments and Foundations,” which received $130 million in funding in the fiscal year that ended a few weeks ago and have received $704 million to date.
Footnote (12) lists “Others — Endowments and Foundations,” and they are as follows: Forum of Federations; Clayoquot Biosphere Trust Society; Pacific Salmon Endowment Fund Society; Canadian Institute for Research on Linguistic Minorities, University of Moncton; Frontier College Learning Foundation; Canadian Institute for Health Information; Precarn; Canadian Network for Advancement of Research, Industry and Education; Canadian Institute for Advanced Research; and Canadian Centre for Learning. If I am counting correctly, that is another nine to add to the 10 you have mentioned up above, so that is 19.
Footnote 13 reads: “In FY 2004-05 an additional $130 million was announced to 4 foundations: Canadian Academies of Science ($30M),” which we did not mention, “Precarn Inc. ($20M), Canadian Youth Business Foundation ($10M), Forum of Federations ($20M), and one endowment: the Asia-Pacific Foundation of Canada ($50M),” for a total of 23.
You have 10 listed, and under “Others” you have another 13, for 23. Is that about right?
Mr. Morgan: That sounds right.
Senator Murray: The total amount is, as you have said, $10.5 billion to date and $895 million in the fiscal year just ended.
Looking at the foundations you have listed, I see the Pierre Elliott Trudeau Foundation. That was created in 2001. The idea was that Parliament would kick-start it with $125 million and the foundation would raise money from private contributors to supplement that.
Do you happen to know the extent to which that has been done with the Pierre Elliott Trudeau Foundation? Also, can you tell me whether there are other foundations that are expected to raise money privately or from sources other than the federal government?
Mr. Morgan: In budget 2003, a number of principles were outlined whereby foundations would be an optional delivery model for government, and that included the ability to lever funding from other private-sector or other government organizations. Many of the foundations have that provision, that they lever additional sources. I am not sure to what extent the Pierre Elliott Trudeau Foundation has been able to lever funding from other sources, but that would be one of their objectives.
Senator Murray: Several of the foundations appeared before us several months ago. I recall that one or other of them told us that they were quite busily engaged in raising funds, that they were not totally dependent on the federal government for their funding.
Mr. St-Jean: An example of such a foundation would be Genome Canada. The federal government has contributed $400 million and Genome Canada has raised $400 million from other sources, including, I believe, $100 million from international foundations.
Senator Murray: Where it says “Funding, Total to date,” I just assumed that that was funding from the federal public purse. Is it?
Mr. St-Jean: Yes.
Senator Murray: Genome Canada has $600 million in federal funding to date, of which they received $225 million in the fiscal year just ended, and you are telling us that they have also raised how much?
Mr. St-Jean: Just about $400 million.
Senator Murray: You can probably get us the information about the others, can you?
Mr. St-Jean: Yes.
Senator Murray: That would be interesting to have.
The Deputy Chairman: Do you agree to obtain that information for us and to send it to our clerk?
Mr. St-Jean: Yes, indeed.
Senator Murray: I have just one other matter. The chart that the Auditor General provided some time ago included a place that indicated whether or not the Auditor General audited the particular foundation in question. It is probably moot now because, if I read this correctly, all of these 10 foundations will now be audited by the Auditor General — any that got $100 million over a five-year period, and all these seemed to have received at least that much. Is that correct?
Mr. St-Jean: All those foundations or organizations that are receiving in excess of $100 million will be subjected to the performance audit by the Auditor General, but not financial audits, which are conducted by the external auditors of those foundations. However, the Auditor General can look at the management of any one of those funds through a performance audit, which is what she wanted.
Senator Murray: Yes, I understand.
There is one other matter. I wish there had been room for another column or three here. I think we ought to know, just to take these 10, never mind the smaller ones, how many of them are subject to the Official Languages Act, to the Privacy Act and to the Access to Information Act? If you know the answer to that question, it would be nice to put it on the record now.
Mr. Morgan: I would indicate that the Canada Foundation for Sustainable Development Technology is subject to the Official Languages Act. That was part of the act of Parliament that created the organization.
For most of the other organizations, and we can do further research, they would not be explicitly subject to the acts. However, in the funding agreements with those organizations, we would ensure that they respect the intent of these, to the greatest extent possible, in terms of transparency and conducting business in both official languages.
Senator Murray: The Official Languages Committee is having lunch with the Commissioner of Official Languages tomorrow, so that is perhaps a matter we can pursue with her.
The Deputy Chairman: I should like to have a point of clarification, Mr. St-Jean, with respect to an answer you gave. You indicated that with respect to new funding agreements the provision is being made for a performance audit by the Auditor General. Is that correct?
Mr. St-Jean: It is to enable the Auditor General to conduct, at her wishes, a performance audit on those foundations.
The Deputy Chairman: How many foundations, of the 23 that we have talked about, have you now made provision for the Auditor General to perform a performance or value-for-money audit?
Mr. St-Jean: I will ask my colleague to give the precise number. We have been dealing with every foundation one by one to amend the agreements. We are not finished yet, but the intent is to get to all of them shortly. As the Auditor General has agreed, it is on a best-efforts basis, so in the next few months we expect to have most of them done and to satisfy that need.
Mr. Morgan: We actually had nine foundations that were getting funding out of the last couple of budgets, and we were able to amend the agreements. Many of them we were able to incorporate the requirement for performance audits and also for the Auditor General to undertake those. You will note, in one of the columns, under “Ministerial Responsibility — Performance Audits,” that Genome Canada, the Canada Foundation for Sustainable Development Technology and the Green Municipal Funds provide for the Auditor General to conduct performance audits. There could be a few others, but I do not have the details here.
The Deputy Chairman: The policy is to bring all of them in as they get new funding. Would that be one of the conditions?
Mr. St-Jean: Even before getting new funding by having discussions with those foundations.
The Deputy Chairman: That meets one of the Auditor General's major concerns.
Mr. St-Jean: Yes.
Senator Downe: Have any of the 23 foundations refused to cooperate?
Mr. St-Jean: I would not know about all 23. Of the 10, to the best of my knowledge, none has so far.
Mr. Morgan: We do have to renegotiate the agreements, so that is something that is done between two parties. At the end of the day, we end up signing an agreement.
Senator Downe: Is there an indication from any of the 10 that they will not agree to any new conditions?
Mr. St-Jean: Not to the best of my knowledge, but we will come back to you on that, if you wish.
Senator Ringuette: I am looking at footnote (2), which reads: “$615M is subject to the coming into force of the appropriate provisions provided for under the 2005 Budget Implementation Bill.” You have listed “Funding ($ millions)” for 2004-05 with a total of $895 million. Should I conclude that the reality is that for funding for the 2004-05 budget you have $280 million, and for the upcoming budget you have $615 million? Is that the way I should read it?
Mr. Morgan: The $895 million represents the total that will be expensed on the books of the Government of Canada for fiscal year 2004-05, as provided for in the budget of both 2004 and 2005. Of the $895 million, $200 million for the Canada Foundation for Sustainable Development Technology was actually announced in budget 2004. It was part of the budget implementation bill for 2004. There was another $20 million or so that was part of Supplementary Estimates (B) for 2004-05. The remaining sums are included in budget 2004-05. The agreements that were executed by March 31 for those arrangements are subject to the passage of budget bill 2005, at roughly $615 million.
Senator Harb: I have a couple of questions with regard to the decision of the government to allow the Auditor General to audit foundations. I recall that in the past there was a resistance by the government. The government position was such that, in order to provide foundations with the flexibility they need, the Auditor General should not be given a mandate to audit these foundations. Now that has changed.
Have you done any study to find out whether that decision has in fact affected the flexibility of these organizations? What is the position of some of these organizations on this decision?
Mr. St-Jean: The position as of 2002-03, where there was some difference of opinion between the government and the Auditor General about the opportunity of having the Auditor General being the external auditor to foundations, has not changed. However, the Auditor General has indicated that she is not interested in doing the external audit of the foundations.
The external audit of the foundations will continue to be done by the external auditors of the foundations so as to preserve their independence. However, the office of the Auditor General is interested in conducting performance audits. By all means, it is good public policy to have the Auditor General do it, so the government has agreed to this wholeheartedly.
Senator Harb: On the chart you provided, I should like you to clarify something. Under “Foundation Responsibility — Performance Audits,” there are two foundations that have performance audits, namely, the Aboriginal Healing Foundation and the Green Municipal Funds.
What happened with the others?
Mr. St-Jean: We are renegotiating agreements with these entities to incorporate the ability for the Auditor General to conduct an audit of those foundations. We are in the process of amending those agreements. That will take a few months, but they all will eventually be subject to the audit.
Mr. Morgan: Some of the foundations indicated in the last round that, while there is no need for them in the agreement to undertake performance audits, the government will have a provision to undertake performance audits, or the Auditor General, so they said they did not have to put that into the agreement.
However, nothing prevents an organization from undertaking a performance audit. All we are saying is that in the funding agreement we, in some cases, have spelled it out. My understanding is that some organizations have undertaken these audits as part of good management practices.
Senator Harb: As a board, have you had a chance to look at the viability of having a foundation versus having a department run a program? Have you done any performance-type of study to determine the pros and cons? I know there are two schools of thought. One would suggest that perhaps that is what government is for, that there is no need for foundations or independent agencies such as foundations; another one would suggest that in fact there is a need. In particular, when we talk about the Canada Foundation for Innovation, there is a tremendous amount of public support for such an organization.
Have you done such a study, or do you intend to do such a study?
Mr. St-Jean: In regard to the evaluation of the policy tool, that has not been completed yet. It would remain for the Minister of Finance to provide advice to the committee in terms of when and if they would intend to do it. To the best of my knowledge, the tool has not been subjected to programming evaluation.
Mr. Morgan: We have evaluation provisions in every agreement and they are required to be undertaken by the foundations. Those have been publicly reported and reported to Parliament through their annual reports.
We also included in the more recent round of amendments the ability for departments to undertake evaluations, with the express view that a department that is partnering with a number of organizations and other departments can undertake a horizontal evaluation to ensure that it is working together.
I am not aware of any such evaluation having been undertaken, but the provisions are in there. We have commented publicly that that is why we built those into the agreements, that is, to enable that kind of evaluation to take place.
The Deputy Chairman: Mr. St-Jean, I cannot resist asking you how the Comptroller General of Canada's office is developing. As I understand it, you have personnel in various government departments that report back in part at least to you. What if any role would you and your group have with any of these foundations?
Mr. St-Jean: The various departments are managing the relationship with the foundations. There are grants and contributions from various departments, be it from Industry, Health or Environment Canada.
The Chief Financial Officers of those departments have an oversight role in terms of the financial relationship with those foundations. In the normal course of events, it is the role of the CFO to work with the program branches of these various departments to oversee the relationship with the foundations. That is similar to any other financial transactions those departments would be taking.
The Deputy Chairman: As I understand it, the foundation or the fund would receive a lump sum. They would have their own financial people after that to administer according to their mandate. They report through a minister and the minister's department. Does your comptroller in a department have an oversight activity on a day-to-day basis with respect to the financial activities of the foundation?
Mr. St-Jean: On a day-to-day basis, no; that would not be their role. All of the departments are required to add this information in their report on plans and priorities about the foundation. There is a role to ensure that the DPR and the RPP are complete and that the information is well maintained as well as to ensure that external audit reports are received by the departments and to comply with these various agreements.
There is an oversight, but not on a day-to-day basis.
The Deputy Chairman: Are there any checks or oversight rights? We have heard much from the Auditor General as to what she feels her department should do. Is there anything you would like to be able to do with respect to foundations that we not heard about yet?
Mr. St-Jean: As we are trying to improve the management framework around the foundation, much has been done by my predecessor. The framework has improved over the years with more audits and more evaluation performance audits.
There is one issue we are exploring with the Auditor General in terms of the accounting treatment of the advances to look at the expenses to see when the payment is made by the Government of Canada. What I would like to explore with the Auditor General to see if it is appropriate from an accounting perspective is to see if we could recognize the expense without having to make the payments to better protect the taxpayers' money. We are having those discussions with the Auditor General; they seem to be going in the right direction. That additional twist in terms of the management framework would go a long way to satisfy me that we have even better protection of the taxpayers' money. That is one thing we are working on closely with the Auditor General. We should be able to come to a satisfactory conclusion in the coming months.
Mr. Morgan: When new funding proposals come forward for foundations, one of the things we insist on when we recommend approval by the Treasury Board is the results of audits and evaluations. To the extent the departments cannot demonstrate in their proposal that they have done audits or have audit results that demonstrate things are working well or evaluations to demonstrate that there is a need for this, it is still a relevant program, then we undertake to the departments to do those evaluations and audits at some point in the future so that we will have that information going forward. We are trying to enforce the compliance audit and evaluation regime by department so that they have an effective administration with those foundations.
The Deputy Chairman: What contact do you have with a foundation's external financial or fiscal auditors?
Mr. St-Jean: It would be for the various departments that manage those foundations to ensure that they do have the appropriate documentation from the foundation. That would be coming from the foundation to the department. I do not think an external auditor could contact a third party directly. It would not be appropriate for an external audit to do that, to comment on the business of their clients to a third party. They would have to go to the foundation. That is the reason they have external audit reports that are very clear. There would be no direct contact except to receive the external audit report.
The Deputy Chairman: In your first point, Mr. St-Jean, you indicated that you were talking about a way of accounting for expenses. Surely, the external auditor and the accountants, whoever that foundation hires, would have to be happy with whatever way you are handling expenses. There must be some dialogue with the external auditors in that regard, would there not?
Mr. St-Jean: We would first have that discussion first with the Auditor General in terms of how to recognize the expense and the books of the Government of Canada. The foundation might have a different accounting treatment, which might be very proper, also.
Therefore, I am not sure if it would be relevant to have those discussions with the actual auditors or the foundation themselves. They would like to be assured, though, that the funds that are announced are protected from some kind of statutory payment perspective. That is probably all they would like to know.
The Deputy Chairman: We have talked about performance audits here this evening. For definition purposes, is a performance audit the same thing as a value-for-money audit?
Mr. St-Jean: Essentially, yes. This is the terminology that the Auditor General is proposing — that is, to now call those value-for-money performance audits.
The Deputy Chairman: Do you mean to call them both?
Mr. St-Jean: The new terminology for value-for-money is now called performance audit.
Senator Murray: Mr. Chairman, to follow up on the dialogue that you have just had with Mr. St-Jean, is it accurate to say that your main source of information about any particular foundation will be the department with which it is connected — that is to say, with your man or woman, the comptroller in that department who reports directly to the deputy minister of that department and in a dotted line to you. Is that the way it works?
Mr. St-Jean: Essentially, yes.
Senator Murray: Do not have any other source of information?
Mr. Morgan: We would have other sources information, including documents that are tabled in Parliament. The annual reports of foundations that represent 80 per cent of the total funding provided by the government are indeed tabled in Parliament, so we would have access to those documents.
Senator Murray: You would have access to them, but is there a system in place by which you would make your own analysis of all those documents?
Mr. Morgan: We do from time to time. We go to the websites of the foundations — under the funding agreements they are required to operate in a transparent manner and make things available publicly, so the websites contain a lot of information as well, and we do indeed go to the websites.
Senator Murray: If you have questions or concerns, what do you do then? Do you go to your man or woman in that department, do you go to the foundation, or do you go to the president of the Treasury Board? Where do you go with your questions or concerns?
Mr. St-Jean: If we have concerns about foundations, we talk to the department and ensure that they get the information and answer our questions. That is part of the management of the department. They manage the foundations, but they also manage contractors and manage partners to conduct their business. We work through the department.
Senator Murray: You have your man or woman, your mole in those departments, your person, and that person reports not only to the deputy minister but to you. That is your guarantee that you can get the information you need and want when you need and want it, and that he or she will flag situations that need to be flagged.
Mr. St-Jean: I do have those discussions with all the senior financial officers of the various departments on a regular basis. I meet with them. When they problems, I have discussions with them. I am kept informed when there are issues.
Senator Murray: A senior financial officer is not your person.
Mr. St-Jean: They report to the deputy minister, but there is a dotted relationship.
Senator Murray: That is the comptroller in the department.
You have given us the total amount of funding that these foundations have received and then the funding in the fiscal year that just ended. Do you happen to have with you the information as to what provision is made for these foundations and the estimates for the present fiscal year, 2005-06? Do you happen to know?
Mr. Morgan: I am not aware of any provisions for funding in the Main Estimates for 2005-06 for foundations, for any of these. As I mentioned earlier, the budget bill does include funding proposals for a number of them, but I am not aware of any that are in the Main Estimates at this point in time.
Senator Murray: Do you mean the budget speech?
Mr. Morgan: Bill C-43.
Senator Murray: The budget implementation bill for 2005-06.
Mr. Morgan: That is correct.
Senator Murray: I should not be asking you to tell me what it is; I should be looking it up myself.
The Deputy Chairman: We will be seeing it soon enough.
Senator Murray: We better get the 2004-05 budget implementation bill dealt with first.
The Deputy Chairman: Next Tuesday.
Senator Murray: There is a timeline on all the issues.
The Deputy Chairman: Yes, I understand.
If there are no further questions of our witnesses, I wish to thank you both, Mr. St-Jean and Mr. Morgan, for being here. We are interested in learning what leadership and guidance the Treasury Board has provided to departments that sponsor foundations and how they have responded to recommendations by the Auditor General's in both her 2002 and 2005 reports. You have been helpful in assuring us that some considerable progress is being made, and we encourage you to continue in that progress. We will continue to watch to ensure that progress is being made. We would be pleased to invite you back in the next while to get a further update on how you are coming along.
Mr. St-Jean, we wish you well in your new role as Comptroller General of Canada as well. We think that is an important check on expenditures within the government, a check that we have supported and encouraged along the way.
The committee adjourned.