Proceedings of the Standing Senate Committee on
Legal and Constitutional Affairs

Issue 10 - Evidence, September 27, 2006

OTTAWA, Wednesday, September 27, 2006

The Standing Senate Committee on Legal and Constitutional Affairs, to which was referred Bill C-2, providing for conflict of interest rules, restrictions on election financing and measures respecting administrative transparency, oversight and accountability, met this day at 2:35 p.m. to give consideration to the bill.

Senator Donald H. Oliver (Chairman) in the chair.


The Chairman: Honourable senators, I would like to call this session of the Standing Senate Committee on Legal and Constitutional Affairs to order.

This is our 22nd meeting in relation to Bill C-2, providing for conflict of interest rules, restrictions on election financing and measures respecting administrative transparency, oversight and accountability. The bill is more commonly known as the federal accountability act.

As senators, our witnesses and members of the public — both here in the room and across Canada on television — know, this bill reflects a central portion of the new government's agenda and is one of the most significant pieces of legislation brought before Parliament in recent years. The committee is giving this bill the extensive, careful and detailed study that it deserves. During almost 70 hours of meetings to date, we have heard from over 100 witnesses.

This week, we are considering various aspects of the bill including whistle-blowing, audit powers and procurement.

To begin this session, I am very pleased to welcome Sheila Fraser, Auditor General of Canada. She was appointed Auditor General of Canada in May 2001. The Office of the Auditor General audits federal government operations and provides Parliament with independent information, advice and assurance to help hold the government to account for its stewardship of public funds. Ms. Fraser has focused the office's efforts on serving the needs of parliamentarians and ensuring they have objective and reliable information with which to scrutinize government activities.

Ms. Fraser is joined today by Mr. John Wiersema, Deputy Auditor General, whose primary responsibility is that of providing support to the Auditor General in areas of strategic significance. We also have present Mr. Jean Ste-Marie, Assistant Auditor General, who serves as legal adviser and is responsible for corporate services.


On behalf of the members of the Committee, thank you for being here. Without further ado, I yield the floor to you and after your remarks, we will have a period of questions and discussions that, I am sure, will be quite useful to the committee.


Sheila Fraser, Auditor General of Canada, Office of the Auditor General of Canada: Good afternoon. We are pleased to be here and thank you for this opportunity to discuss the aspects of Bill C-2 that affect the Office of the Auditor General.

As legislative auditors, we provide objective information, advice and assurance that parliamentarians can use to scrutinize government spending and performance. We appreciate the confidence in our work that is demonstrated in many of the provisions of Bill C-2.


Today, I would like to comment on four areas of the bill that specifically affect our Office: the expansion of our mandate, access to information, the process for appointing the Auditor General, and finally the immunity for agents of Parliament. In June 2005, changes to the Auditor General Act addressed our concerns about audit access to foundations. We are now able to conduct performance audits in non-profit organizations that have received $100 million or more in a five-year period. Legislative amendments have also made us the auditors of three additional Crown corporations. We are now the auditors or joint auditors of all Crown corporations except the Bank of Canada and the Canada Pension Plan Investment Board.

The current bill would expand our mandate further, to what has been called "following the dollar" to any recipients of public funds who have received $1 million or more over five years in the form of grants, contributions or loans.


First, let me say that I appreciate this confidence. I will now discuss some basic principles that underlie our intentions relating to this mandate.

It is management's job in departments and Crown corporations to ensure that grants, contributions and loans provided to individuals or institutions outside the federal government achieve their intended purposes. They do this by establishing the systems and procedures needed to ensure that these funds are used appropriately, including, where necessary, auditing the recipients of those funds.

Our role as the government's external auditor is to determine whether those systems and procedures are in place and how well they are working. We then report to Parliament on the adequacy of the systems, and we provide recommendations where improvement is needed.

We do not believe that it is our role to routinely audit recipients of grants and contributions. As previously noted, this is the responsibility of the managers of those programs. Therefore, I would expect that we would rarely exercise this option. Since I expect to "follow the dollar" only in very rare and unusual circumstances, we are not seeking any additional funding to carry out this expanded mandate.

Certain other witnesses before your committee have raised concerns about the extent of our audit mandate as reflected in this bill. One involved our ability to protect the confidentiality of commercial and other information of the new category of auditable recipients. It is common practice for us to ensure the security and confidentiality of audit information of all kinds. We respect the security classifications or designations given to information by the entities that we audit, whether it is government information or information received from third parties.


I would now like to deal with the issue of access to information. We support the extended application of the Access to Information Act to our office as set out in the bill. We are pleased that the bill excludes our audit papers from access to information requests, and view this exclusion as essential. Such an exclusion has been provided to the majority of legislative auditors, both in Canada and abroad, in recognition of the functions they carry out. Without it, our ability to audit would be compromised as would our corresponding ability to provide a comprehensive and reliable product to Parliament.

In this area, I would like to address a number of issues raised by the Deputy Information Commissioner when he appeared before this committee last week. As a general comment, it is important to remember that agents of Parliament were previously entirely exempt from the application of the Access to Information Act in recognition of their roles and functions. Although exempt, we have in the past voluntarily provided access to non-audit information, and we were among the first government agencies to voluntarily post our hospitality and travel expenses on our Office website. The Deputy Information Commissioner was adamant that the provisions of Bill C-2 that exclude our audit papers from access to information requests go too far and reduce the accountability of government in some way.

With respect, his position reflects a fundamental lack of understanding of the audit function. Our role is to enhance the accountability process by providing assurance to parliamentarians on government finances and operations; all of our conclusions deemed significant are provided in public reports tabled in Parliament. His position also reflects a lack of understanding of the potential harm that could result to our ability to conduct our audits if our audit records were subject to public disclosure. I believe that we would not receive the same level of candour and openness from the people we interview in our audits.

As well, an audit involves a very painstaking process of validation of facts. The release of invalidated information in our files would be harmful to us and, especially, the department or organization being audited.


For these reasons, we also support the exclusion of internal audit working papers from disclosure under the Access to Information Act. We reported in November 2004 that we found the current Access to Information Act to be negatively affecting the effectiveness of internal audit in departments and agencies.

We also take exception to the Deputy Information Commissioner's statement that the quality of our audit work can only be assured through the public access of journalists and others to our audit papers. This view does not recognize the many internal and external mechanisms that we have to ensure that we maintain the highest professional standards and quality in our audit work.

In conclusion on this point, we support the extended application of the Access to Information Act to our office, and believe that the exclusions set out in the bill represent an appropriate balance between the transparency of our non- audit information and the preservation of our ability to carry out our audit function.

We welcome a greater involvement of parliamentarians in the process for appointing the Auditor General. We also appreciate the extension to our office of the same civil and criminal immunity in relation to matters arising in the performance of our statutory duties that are already enjoyed by other agents of Parliament and many provincial auditors general.

This, Mr. Chairman, concludes our comments on the aspects of Bill C-2 that directly concern our office. As committee members are aware, there are many other parts of bill that involve policy issues on which we do not comment. We would be pleased to answer any questions the committee members may have.

The Chairman: Thank you very much for that overview. You will recall that there were two parts to Justice Gomery's inquiry. In the second part, he went across Canada and invited Canadians to appear before him. These meetings were held in camera and the people were free to give their views on things.

I was one of those invited to appear. One of the subjects that I was asked to discuss was the concept of contracts. The proposed federal accountability act would change the Auditor General Act to allow the Auditor General to follow the money. As you have stated here today, the Auditor General would be able to audit all recipients of funds that receive at least $1 million over any five years under a funding agreement with the federal government.

However, the act excludes contracts from the definition of "funding agreement." Given the inability of the Office of the Auditor General of Canada to follow the money into the advertising companies during the audit of the sponsorship program, should the Auditor General have the power to investigate the recipients of contracts as well?

Ms. Fraser: We would use the same logic that we use for recipients of grants to say that it is really up to the departments and the agencies of the government to ensure that the contracting procedures are followed and that they receive value for money.

The departments should have in place the systems and procedures to ensure that. In fact, in the departments, on contracts, they actually have to sign off that they have received the services or the products for which they contracted.

We will generally look at those systems and procedures to see if they are adequate. I do not think, quite honestly, that the sponsorship program is a fair representation of what goes on generally in government. I would hesitate to use that case to argue that we would have greater powers. It is the responsibility of the departments and the agencies to ensure that those procedures are in place. They have, under many contracts, an ability to carry out audits. If it was deemed essential, we could probably work with them and use their powers in order to do an audit, but that would only be in extremely rare and unusual circumstances.

The Chairman: Are there any organizations that you think should be included for audit by the Auditor General that are not covered by Bill C-2?

Ms. Fraser: We are satisfied with our mandate. We did have concerns in the past regarding the foundations that had been established to which very large sums of money had been transferred. We were particularly concerned about the accountability provisions of those foundations to Parliament. Under the modifications of our act that occurred in June 2005, we were given access to the foundations. In fact, we now have three performance audits, either under way or concluded, that include foundations as part of those audits. We have taken a decision within the office not to do an audit of a foundation per se, but rather to include them in broader-scoped audits. For example, the Commissioner of the Environment and Sustainable Development is coming with a report tomorrow on climate change, and the Foundation for Sustainable Development Technologies obviously plays a large role in that. As part of that audit, we have an audit under way on research and development. Some 25 or 26 departments and agencies are potentially in that audit. The Foundation for Innovation will be in that. We are about to begin an audit on support for education and ensuring access to education, and the Millennium Scholarship Fund will be in that. It is our intention to cover the larger foundations in looking at these broad-scoped audits that will include government departments and agencies as well.

Senator Ringuette: With regard to the issue of "follow the money" — you can probably guess where I am going — would that include money transferred to provinces and territories?

Ms. Fraser: No. I believe there is a specific exclusion for other levels of government. There is a specific exclusion for "the government of a foreign state, a provincial government, a municipality...or any of their agencies." Each province has its own legislative auditor. We, in fact, act as the auditor for the territories. We would respect that. We would not go there, no.

Senator Cowan: Unlike some of your other colleagues, I understand that you were, in fact, consulted by the government a good deal in the development of the proposals contained in this bill.

Ms. Fraser: There were consultations, particularly on the "follow the dollar" issue, on the question of access to information and on immunity, yes.

Senator Cowan: In your testimony in the other place, you described those as good, vigorous discussions on certain items.

Ms. Fraser: As they tend to always be.

Senator Cowan: I think I know the answer to this question, but I will ask it anyway. Are there any things, as they affect your particular function, that you would like to see in the bill that are not there or that are in the bill that you would prefer not to see there?

Ms. Fraser: There is nothing that we would have wanted to see that is not in the bill. It is not any secret to say we had suggested the immunity, because that has been given to other agents of Parliament. We thought that should apply to the Auditor General's office. In particular, given recent cases where our people have been called to be witnesses in criminal proceedings and others, we thought it would be important to have that in the law.

On the whole question of the "follow the dollar," we raised a concern with government because initially, the way it was defined, it would have included First Nations. We had a great deal of concern about First Nations being subjected to that and an expectation could be created that we would then audit First Nations that already have their own auditors. Of course, there has now been a modification to take that out.

Senator Cowan: You had extensive discussions on those issues in the other place, and that has been withdrawn. I understand your concerns.

Provisions are set forth in clauses 258, 260 and 262 with respect to changes in the internal audit procedures.

Senator Day: Pages 186, 187, 188 and 189 of Bill C-2.

Senator Cowan: Yes.

Ms. Fraser: My understanding is that these clauses are essentially legislating the internal audit policy that exists. I think these provisions are important because they give more importance to internal audit. Perhaps Mr. Wiersema would like to elaborate.

Senator Cowan: In the sense that it would move it from policy to legislation?

Ms. Fraser: Yes, absolutely.

John Wiersema, Deputy Auditor General, Office of the Auditor General of Canada: The Treasury Board approved a new policy for internal audit that has a phased-in effective period. It was released on April 1 of 2006 and is to be implemented on a phased-in basis up until April of 2009. My understanding is that some of the key provisions of that internal audit policy have now been put right into this bill. The Office of the Auditor General is on the record supporting the strengthening of internal audit and the importance of internal audit. The Office of the Auditor General is also on the record indicating its support for the establishment of departmental audit committees, with some external representation. Not having actually looked at the bill, I believe that is essentially what some of these provisions provide.

Senator Cowan: In general terms, are you satisfied that this legislative codification of existing policy and practise is satisfactory and meets the standards that you would like to see?

Ms. Fraser: Yes.

Senator Cowan: With respect to the role of the accounting officer, it is my understanding that the accounting officer function as detailed in this legislation is significantly different from that in the United Kingdom, for example. Can you comment on why there would be a difference and if you believe that this is a better procedure?

Ms. Fraser: I am afraid I really cannot give you much information in that regard. We have not studied that particular section of this proposed legislation. The only work that we have really done in this area was back in about 2004. We looked at the question of roles and responsibilities between the minister and the deputy minister and the various pieces of guidance that existed, be it from PCO, Treasury Board or others, and found a lot of confusion and a lack of clarity around roles and responsibilities. We said then that government had to clarify those roles. There were terms being used like "accountable" and "answerable." It ended up, quite frankly, in certain cases where no one actually took responsibility. We said that this needed to be clarified. This, I believe, is the government's attempt to do that, but we really have no opinion on this particular piece of legislation in that respect as it relates to accounting officers.

Senator Cowan: To follow on from some questions the chair asked you with respect to the exclusion of contracts from funding agreements, I can understand the distinction you made between your role and the role of the internal auditor. It is the department or agency's job to manage, and you are not doing their internal audit. I accept that distinction. However, I do not quite understand why there is an exception for contracts. It would seem to me that a lot of the public attention around this issue has come as a result of the sponsorship situation. There, as the chair said, we were dealing with contracts, and at least in part the public's interest, and perhaps your own interest was piqued because of the weakness in the situation. Why would it not be desirable for you to have the ability to follow the dollar with respect to contracts, accepting what you say, that it will not be your everyday practice to do that and you would only exercise your power to follow the dollar in rare circumstances? I appreciate that view, but why would there be a distinction?

Ms. Fraser: To be quite honest, I do not know. It was a decision by government not to include contracts in this. I would think most significant contracts do have a clause that allows the department to go in and audit. If something very unusual occurred, we could probably work with the department under that clause to have access. Maybe that is why it was excluded. I do not know. That would really be a question to put to government.

Senator Cowan: I am sure we will have that opportunity. As I understand your presentation and from what I have read of what you have said about this issue in other places, it seems to me that you would exercise this power to follow the dollar only rarely, and primarily you rely upon the department to manage its affairs. I fail to see a distinction. It would be logical that would you have the same power to follow the dollar, which you would exercise only rarely, but that you would have not just a hope that you would be invited in to help with an audit, but that you would actually have some power to do it of your own volition, the way you do in other cases.

Ms. Fraser: Yes.

Senator Cowan: On page 200 of the bill, clause 304 sets out certain criteria. Would all recipients of federal funds be expected to meet those tests, except for the statutory exception of provinces and others?

Ms. Fraser: It would depend on the funding mechanism and the kinds of conditions put on it. For example, if it was a grant from the government to a non-profit organization, they generally have no conditions on them and it would simply be a flow of funds. When we talk about money received or used with due regard to economy and efficiency, or a failure to report on the effectiveness of these activities, it cannot be expected that we would look for that if there are no conditions in the funding agreement to begin with. With regard to grants, when there are no conditions except simply eligibility criteria, we would not put any more conditions on them than the federal government would.

Senator Cowan: Would you rely on the agency or foundation or department to attach appropriate conditions or to ensure that the money was spent as was expected?

Ms. Fraser: That is right. We would expect the department to clearly outline the objective they want to achieve. How do they know they are achieving that objective if they simply give the money with no conditions?

We have begun to have some discussions with the federal government on the whole question of funding and transfers of funds and what they call contributions, which do have agreements and grants. We are saying, "Are they not really all the same thing except the conditions vary and you should move to a risk basis? The conditions you are going to put on large sums of money should be much different than those you are going to put on smaller amounts."

Senator Cowan: Apart from discussions with departments, foundations and agencies, are you pressing — I guess there is distinction between eligibility criteria and a condition — the givers or the granters of the money to be more specific in terms of expectations so that a measure can be taken of the results that come from the expenditure of the money?

Ms. Fraser: Yes, but at the same time, this past spring we did an audit on grants and contributions, and one of the main issues noted in that audit by recipients was an overburdening on them of having to produce a multitude of documents. Some organizations will have grants or contributions from several government departments and different levels of government, and they have to respond to each one individually. We are saying that they have to find a way to simplify the system to move to a risk-based accountability around the funds and try to move, as well, to results.

For example, some were complaining they would receive money with the condition that they could not buy a computer but they could rent one. Is it not more important to know that they are actually training people? We are trying to get them to move to a results-focused process and simplify the accountability process.

Senator Cowan: In your presentation you commented at some length on the difference of view, difference of opinion that you have with the Deputy Information Commissioner who testified before us a short while ago. He was very adamant and very strong in his testimony that this access to draft reports was absolutely essential to a proper transparency of operations. You take quite the contrary view.

His view, at least in part, was that without journalists and opposition members of Parliament having had access through Access to Information Act requests to draft reports and similar document, much of what we now know about the sponsorship situation would not have arisen. Could you comment on that? I do not mean to simplify his position, but I believe he comes close to saying that if it had not been for the ability to access that information, then it would never have come to the point where you would have launched your investigation and all that followed from it. Can you help us with that?

Ms. Fraser: Yes, I would be glad to. It is important to go back and remind everyone of how we actually got into that audit. It is true that the Access to Information Act played a role because a journalist made an access to information request to receive a report that the federal government had paid for. It was not through an internal audit report. It was a report on activities that the federal government should be sponsoring. The journalist requested one report in particular and the department, unable to find the report, replied that they could not find it. It started here with the government paying half a million dollars for a report that no one could find.

There were a lot of questions in the House of Commons and the Minister of Public Works at the time asked us to do an audit on the contracts and on the missing report. We ended up looking at three contracts for three reports, which appeared very much to be similar in nature. When we saw how the program was being managed and how those three contracts had been managed, that is when we decided to undertake the broader sponsorship advertising audits. It was not because of an access to information request for an internal audit report. The internal audit reports actually came up much later once the story developed more in the media.

Senator Cowan: What was Justice Gomery's view on the accessibility of internal audit reports, at least after the completion of the audit? I can understand that drafts might not be available during the currency of an audit, but I am not sure why there should be a blanket exemption forever after the conclusion of these things. As I understand his report, Justice Gomery did not accept what I understand your position to be either.

Ms. Fraser: What he said, and the way we interpreted it, is that he generally endorsed many of the recommendations made by the Information Commissioner that more institutions and Crown corporations should be subject to access to information. It is important to recall that the Office of the Auditor General is not currently subject to access to information. We will be for all of our non-audit or administrative data, and that is fine; we have always voluntarily complied in that way anyway. People can know what our contracts are and what we spend on various issues.

One of the comments that he made — I have the reference here, page 183 — is that where a record relating to "investigation" is protected, it should be understood that an audit is included in the term "investigation." Up to now "investigation" has not been interpreted to include "audit." I do not think he comes out and says, "internal audit should be or should not be," or "external audit should be or should not be," but he would seem to us to indicate some recognition that there could potentially be some protection around audit working papers as they are investigative in nature.

Senator Cowan: Can you explain why you believe that disclosure of these draft reports would have a dampening effect on your ability to do your work?

Ms. Fraser: As I mentioned, we did an audit on internal audit in 2004 or 2005, and it was clear to us that their audit reports were not being written. There were verbal findings being given, and the audits were not being documented in the way that one would expect them to be. We were told the major issue for that was access to information. If someone has an interview or starts an analysis and you have to release all of that, it does have a dampening effect on the ability to do an audit.

The Chairman: When you say an auditing report was not being written, what would be in the report?

Ms. Fraser: It would be a verbal or an oral report.

The Chairman: It was not a document?

Ms. Fraser: That is right.

Senator Cowan: There was no paper trail.

Do you feel it is necessary that this be a blanket exemption forever, a blanket secrecy? Is it necessary to be forever? Cabinet documents are not protected forever.

Ms. Fraser: That is something that can be looked at. After a certain period of time, our files and documents are given to Library and Archives Canada, who go through an analysis of what they believe to be of historical significance. After 15 years, the documents no longer belong to us. In fact, the documents belong to them, and they will either destroy them, if they think there is no historical value, or the documents can be released and researchers can look at them. There is almost a 15-year limit on the papers.

Senator Cowan: That is because they are not your papers anymore.

Ms. Fraser: Yes, they are not our papers anymore.

Senator Cowan: We had one witness, Mr. Rubin, who testified that he would like to see this bill amended to give your office the power to hear and respond to complaints about government audits, works and procedures. Do you have a comment on that point of view?

Ms. Fraser: That comes back to a management function. There is a centre for internal audit at the Treasury Board Secretariat. We rarely receive complaints, but we have received some about internal audit departments not following up sufficiently on issues, and we will go in and look at that. I am not sure that we want to be the arbitrator of the quality of internal audit throughout government. That should be a central agency function; they should have the mechanisms in place to ensure that the quality is maintained. If there are specific complaints, people are always free to write to us. We do generally try to give some follow-up to issues that are brought to our attention.

Senator Cowan: With respect to organizations that are presently excluded from your purview, leaving aside this contract business we discussed earlier, are there any that you now cannot audit that you think would be in the public interest for you to be able to audit?

Ms. Fraser: We are fairly satisfied with the mandate we have now. The only one we have been discussing with government is the Canada Pension Plan Investment Board because we audit the Canada Pension Plan, and that is the organization that manages the funds. It is complicated because it requires the provincial consent, so the federal government cannot name us auditors unilaterally, and we are able to satisfy ourselves. We contact the auditors who are there and review their working papers and plans to be able to give opinion on the Canada Pension Plan. We are able to satisfy ourselves professionally. That is the only one that I see potentially.

Senator Cowan: Are consultations going on now with the provinces and territories with respect to that?

Ms. Fraser: There have been consultations. It has been put on hold for a while. It is not a burning issue for us, and we are able to satisfy ourselves in order to give the opinion on the Canada Pension Plan. We have no concerns about the quality of the financial audit that is going on there, and I would not want anybody to think that. However, these are large sums of public money, and a legislative auditor should be involved in that audit.

Senator Joyal: I would like to come back to the testimony that we heard from the Information Commissioner because he made an important statement earlier on this week. He stated — it is here quite clearly in evidence of the committee's proceedings — that if some clauses of the bill were adopted as they stand now, the journalist would not have been able to disclose the sponsorship scandal to the extent that he disclosed it. In other words, he said that if the amendments provided for in clauses 150 and 221 of Bill C-2 had been implemented at the time of the sponsorship scandal, access to information would have prevented the release of the documentation that was helpful to the journalist's investigation and led to the conclusions that we all know now.

For us, it was troubling because we are trying to improve the situation, not close doors. We are trying to open the windows and the doors. It seems to us it is a statement that has a lot of implications for the work of the media, generally. Your office has important elements of public discussion, but media, too, is part of democracy, and as much as we want to be open and accountable, they have a role to play.

How would you respond to that statement by the Information Commissioner that, in fact, it will be more difficult for journalists, or any Canadian in the same position, to have access to that documentation?

Ms. Fraser: It is true that this bill provides protection for internal audit working papers. I still believe the sponsorship audit would have occurred irrespective of whether the internal audit working papers had been disclosed. The difference is that once those audits began, you will recall there were a series of newspapers that every day had a new case on the front page, and that all came from the internal audit working papers. The journalists could have accessed that information directly from the department and would have had to do the analysis themselves.

There is an issue around internal audit reports, what is being reported and how much detail is being given there. If they are providing proper conclusions in their final reports and in their public reporting, those cases should still be there.

If my memory is right, that internal audit report was finalized in 2000 or 2001, before we began our work. If the report had been comprehensive, there would have been cases given there, so the journalists would have been informed that way. It is true, though, that they would not have gotten probably as much because the internal auditors looked at a number of cases, and the journalists were able to take that quite easily.

Senator Joyal: As I understand it, in paragraphs 15 and 16 of your brief, you take a position of principle that any draft audit document or any other working papers should be barred from access to information for any departments, agencies or government bodies.

Ms. Fraser: I do, for a couple of reasons. First, as I mentioned earlier, we found in our audit that internal audit was being influenced negatively by access to information. It is a question of whether it is more important to have a rigorous internal audit function that is able to work, do the analysis and validation of the facts and then present a report based on that, or to have journalists have access to that kind of analysis. There is a tradeoff because some reports are not being written, and that is more damaging to government and to government administration than the contrary.

The other major issue we have tried to highlight is that in the audit process we gather a great deal of information, and the entire audit process is about validating that information. Often at the outset, an audit might appear to have something erroneous, troubling or incorrect. However, as you proceed further with the audit, you might find the explanation and reason. Therefore, if you release that information too early, I think you can do a lot of harm to people.

Senators might recall the HRDC internal audit that was released to the public. At the time, the internal auditors did not understand it would be released publicly. Many comments made at the time were quite inappropriate and had not been validated by the time of release. That created more of an issue and did a lot of harm. All auditors have a responsibility to ensure that validation is done and then to report fully and frankly on their audit findings.

Senator Joyal: In other words, you interpret the discretion in favour of the auditing process rather than in favour of the access to the documentation and the information contained in the draft papers. You balance the system. You say that your job is to look into everything, under each carpet and behind each door. Sometimes issues or items might need to be checked further because the information is incomplete. You do not people to have access to that incomplete information and that puts more restraint on the system. There could be a reaction that could impair your office and your job, and so you prefer to close the door to everyone.

Ms. Fraser: Yes, I guess that is a way to characterize it. The other issue is interviews. Obviously, we do many interviews to assess what is happening. People talk to us confidentially, and I am sure we would not get the same level of frankness if those interview notes were to made public, which would harm the audit process. Our job is to take all that information, put it through a rigorous analysis and come to a conclusion. Until we have done all of that work and come to that conclusion, those papers should not be released. Keep in mind that people can obtain that information directly from government because the documents and purchase orders, et cetera, are accessible. The difference is that our analyses and interviews are quite different.

Senator Joyal: I am able to imagine the distinction. Your position, as the Auditor General of Canada, is protected under clause 144, page 118, where it states that all of your working documents and draft audits are protected. However, clause 150 extends it across the board. As much as I have a tendency to be sympathetic to your office, generally, for all kinds of previous involvement with you and your predecessors, I think twice about extending this to all departments so that everyone is presumed to be doing the right thing. I might have to pause when I cross the Rubicon, having accepted that your position and your responsibility might command that kind of "secrecy." To extend that to all departments, especially since the law will change to restrict access. Of course, we would then need compelling reasons of examples all across the government administration proving that it makes the internal audit process of government departments and bodies ineffective. You could tell me today that you have reviewed the system, and that the open system has made the system ineffective so it has to be closed. I would be tempted to say, "Well, there is their case." I understand your position, in as much as you are over and above everyone in the realm of public administration. You are an officer of Parliament and you claim some immunity, so you work for Parliament.

Ms. Fraser: Yes.

Senator Joyal: The internal audit processes in the departments are working for the public administration — the executive, not for Parliament. You are working for us and you are our representative. I can understand that you require a special status and a special power. However, when you say that you want to extend that protection across the board in the system and restrict the access, then I have to say that this is another reality. This would be for the administration; this is not Parliament exercising its accountability and responsibility. I think about what the Access to Information Commissioner stated so clearly, which you have read and to which you are responding today. Still, there remains the matter of needing a very good case to restrict access to information. The way you put the issue is that you conclude, in principle but not in an analysis of many cases, that we should restrict it for matter of efficiency.

Ms. Fraser: I will refer you to the audit that we did of internal audit. We would be pleased to provide a copy of that to the committee. I apologize for not bringing one today. We would not have been able to do the kind of analysis that you would like to see. It was different in 1980 than it is today. We saw clear evidence in that audit that reports were not being written and that there was verbal reporting of results by internal audit departments to senior management. That significantly weakens the system because then no one ever knows. Is it better to have some restriction over the analysis of the working papers and have a report that comes out fully and frankly with the conclusions or have no reporting at all, only verbal reporting? We saw clear evidence of that. The report recommended that government look at this issue.

I would add another element. We found that across Canada and the U.S., the majority of states and provinces provided exemptions for audit, be they external or internal. As well, internal auditors need the same kind of space in which to work that we need. In many ways, perhaps they have more pressure within their departments than the external audit does. They must have that independence within their departments. I recognize that not only do they work for the administration but also they have an important role in ensuring validation and appropriate conclusions. They have to conduct interviews as well.

I would make the following link, although I know it is not the same thing. We all respect the right of journalists to not reveal their sources. Why would we not respect the right of auditors to not reveal their sources?

Senator Joyal: We will organize a seminar on that. Some might laugh at the idea, but it is a serious issue because it the basis of the way we understand the function and operation of democracy. It has a lot of implications in the system.

You stated that you noticed that now that the press and Canadians generally have access to the internal working papers and draft audits, it has incited some administrators to avoid producing a paper trail. We had that experience with the Gomery commission; we wanted to see certain papers and you could not find them. You mentioned this in your report.

It is a very serious breach of professional responsibility to destroy documentation. Some sections of this bill provide for serious penalties for a member of the public service who knowingly destroys paper to avoid the possibility of an audit. The same penalties apply to anyone knowingly destroying a working paper.

Your answer to that is to say well, we are going to lock the door to everybody, so everybody will feel much freer to go around. As you said, there are all kinds of questions about public ethics.

When you are sworn in as a minister, you come to cabinet and it is supposed to be secret; the highest secrets of the land are in cabinet, yet even that is open to access sooner rather than later. The positions you take in the discussion of a solution to a crisis that involves the life and integrity of Canadians — the Armed Forces and so forth — are discussed at cabinet. You come to cabinet with the conviction that one day what you say will be accessible to historians, journalists or anyone who wants to review the deliberations and conversations spoken in cabinet.

I do not need to give you examples of issues that have been reviewed by papers 20 years later, or immediately after the seal is open, for a story. I do not have to give you examples; I am sure you are aware of the story to which I refer.

When you compare the strategic nature of those decisions with an internal audit and say that all the internal audit papers will be sealed forever, I have some difficulty in reconciling that decision. Maybe we should seal them for a while, I can understand that; but to say that they will be barred from scrutiny forever, it hurts the very democratic principle of access to government.

Ms. Fraser: In fact, we are not saying forever. I know for the office, the way it is written, it would be forever. However, because of the way the documents work, it is 15 years. I believe, for internal audit, it is also for 15 years. That time period could be considered.

What particularly concerns me is working papers being released while an audit is going on, or shortly after at an audit, which is the case now. People have not been able to validate those things and erroneous information could be made available. As long as the audit is protected while it is going on, and for some period of time afterwards, that would be fine.

We are not saying forever. In fact, the bill provides for 15 years and that can be discussed.

Senator Joyal: If the head of a department is of the opinion that it should be excluded for a while there is a capacity for the head of the department to contact your office and say, there is an internal audit going on, it is an issue that is of a particular nature and we want to exclude it. Are you of the same opinion? Then an external evaluation of a discretionary decision should be taken. That should be available for the sake of public interests, but there will be arbitration somewhere. To exclude everything all across the board without checks on the system — I am not talking about your office, I am talking about administration — that is where I feel that we might want to reassess.

I accept your role totally and I am very supportive of your role. You make the judgment whether an internal audit or a working paper, because of the integrity of the result you are looking for, should remain sealed. That is different from excluding everything across the board.

Senator Andreychuk: I am going to take the same liberty as Senator Joyal and restate some of the things that you have said. I heard you say, not that there be a closed system.

Ms. Fraser: No.

Senator Andreychuk: What you were saying is that you want the accountability to be addressed appropriately within departments and government. There were many things that were going on that, perhaps in the eyes of the public, were wrong. You might support those by restructuring all of the things that are in this bill and many other things that are being done.

The one that you think would strengthen accountability is to have the internal audits not released while they are being prepared. I would assume that is very much like other systems that we have. We do not have a total right to access elsewhere. In certain cases, we close our courts; we close our records within court systems; we close cabinet documents. What you are saying is that the right balance would be struck if more responsibilities were put on the managers in the departments, if they received more encouragement to act professionally within the audit, and have this part protected — the professionalism and the documentation in the process — until the end.

It would be like a medical assessment by a doctor. If you get three lab tests and those are released, where is the professional assessment of those tests? It is when the doctor performs his or her assessment that you can really know the condition of the patient.

Ms. Fraser: I think you present an interesting perspective on this, which is about the purpose of audit, or an internal audit in particular. It is to improve management; and one should expect that departmental managers would take action on internal audit reports. There are many provisions in this bill — for example, the establishment of audit committees with independent members that will provide a rigour to ensure that the internal audit function is taken seriously and that issues that are brought forward are dealt with properly.

While I can understand journalists and others wanting to have access to that, should we not rely upon mechanisms that should be in place within government to make sure that issues are dealt with rather than through a public airing of cases of wrongdoing. That is what makes the front pages of the newspapers.

What we have noted in all of the high-profile audits that we have had, there has always been an internal audit that identified the problem years earlier but was not acted upon. You need to have a mechanism for internal audit to be able to raise these issues.

I think the independent external committee is a way to do it. It would ensure that management takes action rather than simply ignoring it and that business continues as usual. There has been very good internal audit work that has never been followed up. If we can strengthen the mechanisms around the internal audit function, that will accomplish much more.

Senator Andreychuk: I believe in reporters getting access. Without freedom of the press, democracy weakens.

However, having reporters go to an auditing process seems too late. There are all kinds of material reporters can get that will lead to an audit.

Part of our process of evaluating programs and seeing that the functioning of the public service and the political/ executive arm is working should start earlier than the audits. Somehow or other, we seem to be skewed by thinking that is where we get at the truth. Should we not be getting at the truth a lot sooner?

Ms. Fraser: That is an interesting question for journalists. Under this bill, journalists would have the same access to information that we would have. What they would not have is the analysis and the interviews.

The Chairman: As well as your drafts.

Ms. Fraser: Yes, and that is part of a validation process. I can assure you that with respect to our drafts, we go through a very long validation process with the departments to ensure the facts are correct. None of us should take the chance of something coming out that could be factually incorrect.

Senator Andreychuk: I take it from what you have said, both in your presentation and in responses to questions, you see yourself as a very important part but not the exclusive part of ensuring accountability in the departments. In other words, we need all of the other pieces in order to make it work, and your office is certainly an important aspect but not the only aspect.

Ms. Fraser: We play a very small role in providing information to parliamentarians that they can use to hold the government to account.

Senator Andreychuk: You said you would voluntarily give up material in relation to your expenses, et cetera. I am torn between knowing the rules are there and that they are being complied with. On the other hand, I like the initiative of doing something because it is the right thing to do. You believe you have demonstrated that by coming forward, that there is that high threshold now that does not need to be mandated.

Ms. Fraser: No, we are quite happy being subject to the Access to Information Act. We have voluntarily complied with the act for many years and have no difficulty at this point in providing any non-audit information to the public. We have been doing so for quite some time.

I believe that the Office of the Auditor General should be subject to the Access to Information Act. We spend public funds and we should be disclosing our travel expenses and contracts to the public. I have absolutely no difficulty with that. I really want to ensure that our audit working papers and drafts are protected.

Senator Ringuette: I agree that you have a balance in regards to access. I would not want to receive incomplete information.

My concern is about the exclusion of contracts for your audits. As we know, contracts can be small, but they can also be very large. For instance, how can we ensure that we have value for money from untendered contracts for the magnitude of polling firms to military supply? In my opinion, it is part of your mandate to perform a value for money audit.

If all of that is excluded from your mandate — take a look at the budget of Public Works, which is a major portion of government expenses. Most of their purchasing is done by contract, whether tendered or not. I do not want to get into that discussion. My concern is that then you do not have the ability to audit these contracts. Auditing encompasses a good portion of government spending.

Ms. Fraser: To clarify, we do audit government contracts. We will audit major acquisitions, looking to see that proper processes have been followed, that there is a business case, that we have complied with contracting rules and that there is rationale as to a certain supplier or certain piece of equipment. We are able to do that within government.

This provision is talking about actually going out to the supplier and looking at what the supplier has done.

Senator Ringuette: Are you referring to the subcontracting?

Ms. Fraser: The contractor. Frankly, if they are purchasing a good, surely we should expect government to have the documentation and rationale available to explain the reason they got value for money. Our role is to determine whether they have that, and if they do not, there is a problem with government processes.

Our role does not include going to the supplier and determining whether they made a lot of money and what they did. That crosses the line a bit.

There are cases when a contract is given and irregularities occur. Generally, the government department would have a clause that allows them to go in and audit to ensure they complied with the conditions. We would expect the managers of the program, and at times internal audit, to then take it further, if necessary.

I think we have never been involved in that kind of audit, but we probably could go in under their mandate. We have never felt it necessary to do so. We look at government operations and how they are managing the contracts.

Senator Ringuette: As an example, let us say the government signs a huge contract and there are conditions within that contract with respect to economic development, that 50 per cent of the parts must be made and purchased from Canadian companies. Would you have a mandate with respect to that type of situation?

Ms. Fraser: We would look to see what the department has done to ensure that condition has been met. If we felt that the information they obtained in the processes was not sufficient, we have two choices, and one would be to report to Parliament that the department did not do that. At times, on very large contracts, we do ask to interview the suppliers. I can think of a couple of cases. One that we looked at a few years ago, which was clear in our audit report, was the NATO flight training contract. Amounts were overpaid to the supplier, and we actually had very extensive discussions with the supplier.

Senator Ringuette: Yes, I remember that report.

Ms. Fraser: That was all done on a voluntary basis. Generally, suppliers will talk to us. We do not have the right to ask to see their books and question what they have done on a contract or how they spent the money. We do not go that far. We expect the government department to have in place the mechanisms to ensure conditions are being met.

Senator Ringuette: I know that you have been working closely to ensure that each department has its own internal audit committee in place. When you say expect the government department is that a recommendation that you have made to the different departments for them to have that ability?

Ms. Fraser: To audit; to go further, you mean?

Senator Ringuette: Yes.

Ms. Fraser: It depends almost on a case-by-case basis, I guess. Sometimes we have said they have a provision that they can go in and audit. It would depend on the case.

Senator Ringuette: It is not a standard policy.

Ms. Fraser: We have not done an audit like that generally of contracting and the kinds of conditions that they should put in. I believe that most of the larger contracts at least do have that in it.

Senator Ringuette: Thank you.

Senator Day: Good afternoon. So that we can put all of this into perspective, could you tell us how many employees you have in your department, both full and part time?

Ms. Fraser: There are about 650 heads; 620 full-time equivalents.

Senator Day: And your budget for this fiscal year?

Ms. Fraser: We were just talking about it this morning.

Mr. Wiersema: Our appropriation is approximately $75 million. Our fully loaded costs, when you factor in services provided without charge for other departments, are just over $80 million.

Senator Day: I would like to put something else into perspective for my colleagues. We have had a chance to talk about these things before, but there are different types of audits. You are certainly not just doing financial-type audits. In fact, a big part of your office work is dealing with performance audits, compliance-type audits, and other sort of system audits. Can you explain that and divide the percentage of the employees? Roughly how many employees would be involved with what traditionally we think of as an audit-type job, especially an outside auditor coming in and doing a finance audit, and the type of work that you are really doing for us?

Ms. Fraser: We do three types of audits. One is the financial audit, and the audit of financial statements, be it of the Public Accounts of Canada, the Crown corporations, the three territories, about 30 territorial agencies, and two agencies of the United Nations. We issue somewhere around 130 opinions on financial statements each year. That represents about one half of our workload.

A form of performance audit, which is required under legislation, is what we call special examinations. Special examinations are a review once every five years of the operating procedures and practices, management, of Crown corporations. There was a change in the legislation in 2005. There were some Crown corporations that were exempt from having to do special examinations. That came off in 2005 and we actually have more special examinations to do now than we did previously. I am trying to think of what percentage we do now. It is about 10 per cent probably.

Mr. Wiersema: The special examinations are cyclical because of the five years, so it varies from year to year. However, if you normalized it, it is probably approaching about 10 per cent of our total.

Ms. Fraser: Yes, about 10 per cent of our work effort. The balance is what we call performance audit, which is a review of government. It could be government programs, an issue area; or a function area like human resources. Those are the reports that we table in Parliament. Performance audits include the work of the Commissioner of the Environment and Sustainable Development, which was created in 1995. That represents 40 per cent to 50 per cent of our workload.

Senator Day: I am going from imperfect recollection of this 250-page bill, but is there a five-year special review provision in here, is it for foundations?

Ms. Fraser: You are probably referring to what we call special examinations of Crown corporations which must be done every five years.

Senator Day: Is there not a provision in Bill C-2 in that regard? That is all right. I am going from imperfect recollection in any event.

I would like you to go to page 95 of Bill C-2, and the proposed section 110 amendment to section 3 of the Auditor General Act, your main driving force. I cannot find the definition of "qualified auditor." Can you help me there?

Ms. Fraser: I am not sure there is one. Up until now, it has been changed.

Senator Day: There is no question there. I am thinking of your replacement after 10 years or age 65.

Ms. Fraser: Up until now, it has been generally been accepted that the Auditor General will be a chartered accountant. Up until now, chartered accountants have regulated the auditing profession within Canada. That could change over time, as other auditing professional accountants acquire more practice rights. The CGAs, for example, have practice rights in many provinces. I expect it would be a professional accountant, and probably someone who has, I would hope, experience in auditing.

Senator Day: I asked you about the break down in the time of work because you are clearly evolving from the typical financial audit-type work to many other types of review of systems, of government systems. Surely, there are other non-accounting professional people who could be described as qualified auditors.

Ms. Fraser: First, the provisions to do performance audit have been in our act since 1977. We have been doing this for close to 30 years now. The level of activity may have increased in the first few years, but it has been fairly constant over the last few years.

The other issue is that the Auditor General must sign opinions on financial statements. I do not know that we have ever researched this, but while it might technically be possible for a non-accountant who does not have practice rights to sign financial statement opinions, I am not sure that would be well viewed. Up until now, it has been someone who would have the right normally to sign an audit opinion.

Senator Day: Do you mean financial statements?

Ms. Fraser: Yes. The largest accounts we do are the Public Accounts of Canada. You would want to have someone who has practice right to sign that.

Senator Day: That was helpful. We may explore that issue further. It is an interesting point. For the purpose of this act, I wanted to see if we needed any amendments. We are reviewing Bill C-2 with a view to seeing if provisions that are in here are necessarily here and if provisions that are here can be improved upon. That takes me, in a general sense, to the additional authority that is given to the Auditor General here. You say, "I do not think we would use that very often." That was questioned by Senator Cowan in relation to following the money. It is a policy decision, but it is one we should think about, namely, if you did not ask for it, you probably said, "We do not want it," in your discussions. I do not want you to comment on that.

Ms. Fraser: I would not do so.

Senator Cowan: That was part of the vigorous discussion.

Senator Day: Exactly. Why would we have it here? Why are we putting into law something that you do not think is either necessary or part of your overall mandate?

Ms. Fraser: That is a question for government, senator.

Senator Day: Thank you. I think it probably is, too, but it is important to put it on the record that it is a question as to where we are going with this bill. Does it create false impressions or false expectations that could cause some difficulty?

Ms. Fraser: We have tried, actually. We have sent some communication out, particularly to Crown corporations, departments, and others who viewed this with some trepidation that we might be auditing everyone, and have indicated to them what our position is, should we be granted these additional powers. First, we believe it is a management responsibility and it is not our role to audit all recipients of grants, contributions and loans across government.

Senator Day: That might be helpful for us.

Ms. Fraser: I would be glad to give you a copy.

Senator Day: Send that to the clerk, perhaps. That would be great.

I wish I had this on a computer so I could push a button to see how many times the Auditor General is referred to and how many times the Auditor General Act is being amended in different places and in different parts of this bill. I say that because you have to jump around through the bill to several different places to find that information.

Have you done any analysis in that regard? Do you have a number?

Ms. Fraser: No. The analysis we have done is with regard to the four areas that affect us, something which we have referred to in our opening statement.

Senator Day: I wish to refer you to Part 5 of Bill C-2 on page 200. Clause 301 of the bill deals with the Auditor General Act. The very first clause talks about the repeal of the definition of "not-for-profit corporations." In your introduction, you talked about not-for-profit corporations. Will we use another term now? Why are we repealing the definition of "not-for-profit corporation?" How does that fit in with the overall scheme?

Ms. Fraser: These definitions of "recipient corporation" and "not-for-profit corporation: were put into Bill C-43 in 2005. That was done to allow us access to foundations. It was defined very narrowly to allow us access to foundations.

"Recipient corporation" received more than $100 million over a five-year period. That has been taken out of C-2 and replaced. It refers to any recipient of grants, contributions or loans who have received more than $100 million. There are some exclusions.

Senator Day: Are you referring to page 201 clause 304? If you are happy with that, we are happy with that.

Ms. Fraser: Yes.

Senator Day: My next topic of discussion concerns the proposed parliamentary budget officer. In your extensive review of systems, do you feel that we need this new position?

Ms. Fraser: We have never taken a position on this. I would be very hesitant to comment on it.

Senator Day: You have seen the words in the act that set out what the parliamentary budget officer will do and what he or she is expected to do. Have you had any opportunity to analyze that role?

Ms. Fraser: No.

Senator Day: As part of your mandate, will that be one of the offices you will be auditing at some time along the way?

Ms. Fraser: No, that office would become part of Parliament. In fact, we do not currently audit Parliament, an issue about which we are also in discussion.

Senator Day: It is part of the Library of Parliament which is part of Parliament.

Ms. Fraser: That is right.

Senator Day: You are having discussions on that one.

Many of the amendments to various agencies and Crown corporations go to corporate structure. I am assuming that you have no difficulty with them. They tend to harmonize four-year appointments. They require the breaking of the division of responsibilities of the chairperson and the president. They require having audit committees, if they are above a certain size.

Have you commented on any of this and suggested this should be done? Is this reflective of what you have wanted?

Ms. Fraser: I believe most of this reflects some of the policy announcements that have been made by government over the last few years. We have done several audits of Crown corporation governance, the last one in 2005. At the same time, we worked closely with the government to ensure that our recommendations were reflected in that policy, for example, distinct positions of CEO and chair. Independent audit committees generally exist throughout Crown corporations. As to length of terms, we did not give specific times. We were saying that, generally, the terms were shorter. There was a great deal of turnover. There were many vacancies and not a large number of appointments. There were a number of issues raised and they were reflected in the policy. My understanding is that most of that is reflected here in Bill C-2. We would be comfortable with that.

Senator Day: You were asked to comment on the creation of the accounting officer concept. The only other point I wish to bring out here concerns amendments to the Financial Administration Act. At page 189 of Bill C-2, I want to draw your attention to an amendment to the Financial Administration Act proposed subsection 16.5(4). This is where there is a dispute between the minister and the accounting officer deputy head. The Treasury Board gets a copy of their dispute, each of them outlining their concerns. You will be copied with that. It states that a copy of the material or the decision of the Treasury Board shall be in writing. The copy of the decision provided to the Auditor General of Canada is in confidence. What good is it if you cannot use it? Why would you want to be involved in that process?

Ms. Fraser: First, as a matter of course, we receive all the Treasury Board decisions. When they were looking at this process, there was some consideration given to the model used in Great Britain where the dispute goes to the Auditor General and the comptroller.

Senator Day: Is it not made public?

Ms. Fraser: It can go then to the Public Accounts Committee.

The Chairman: The letter of protest becomes public.

Senator Stratton: The letter is sent to an official in the government, which makes it public.

Senator Day: In your case, you say you are getting everything from Treasury Board.

Ms. Fraser: We are currently getting the decisions of the Treasury Board, yes.

Senator Day: As a normal rule you would get everything, including this. This measure is in the bill to avoid that being published. I assume that is what that means. What does proposed subsection 16.5(4) mean?

Ms. Fraser: Even in our audits now, we have to be very careful. We receive copies of decisions but we must be careful about how we refer to those decisions in our audits. There is almost a code that we use to talk about decisions because we cannot talk about them openly because they are in confidence. We would still have them. If there was an audit going on and we felt it was important and relevant to that, we could make reference to it. However, we would have to be careful as to how we did that. Obviously, the government would certainly have comments on the way we were reflecting that decision. We are always careful about how we treat those kinds of decisions.

Senator Day: Is that what it means?

Ms. Fraser: For example, we cannot publish "decision made by Treasury Board on such and such a date." We cannot do that.

Senator Day: It says that it is a confidence of the Queen's Privy Council for Canada.

Mr. Wiersema: All TB decisions have that label.

Ms. Fraser: It is for any act of Parliament.

Senator Day: It must have a meaning and you will find that out.

Ms. Fraser: It is a cabinet confidence.

Senator Day: You cannot produce it, then?

Ms. Fraser: We would not produce it, no.

Mr. Wiersema: We can still ask a lot of questions.

Senator Day: Presumably, that is why you get it in the first place.

The deputy head or chief executive officer of a department is responsible for ensuring an internal audit capacity appropriate for the needs of the department.

That is proposed section 16.1, page 187. "Appropriate for the needs of the department." How do you audit that?

Ms. Fraser: It is a question of what have they done. If it is a very large department, one would expect to have an actual internal audit shop in place with people there assigned to it. It could be through a risk analysis based on the number of people. One of the things raised in this audit of internal audit departments was that there should be analysis done of the capacity required in the departments. If it is a very small department, for example, even an officer of Parliament, you may not even have a full-time internal auditor because the departments are small. In many cases, you might even contract out much of the work to be done. It would depend on the size and complexity of the department.

Senator Day: Would you set up guidelines or have discussions with various departments?

Ms. Fraser: We would expect that the Comptroller General and his centre for internal audit would work on that and we would have discussions.

Senator Day: The Comptroller General and that whole concept have already been established, so, as in other practices like your voluntary disclosure and meeting the terms of the Access to Information Act, we are going from a practice to something that is statutory, but there is not a lot of change. It is just now statutory as opposed to a practice.

Ms. Fraser: Much of this is codifying policy. I do not know that I would go so far as to say there will be no change, because I am not sure how well it is being implemented currently and respected throughout the system. Once it becomes legislation, perhaps there is more attention paid to it.

Senator Day: Page 118 deals with the Access to Information Act. You are now under proposed section 16.1, and you say you do not mind being "statutorized?"

Ms. Fraser: Not at all.

Senator Day: You do not mind coming under this act?

Ms. Fraser: No.

Senator Day: You might be aware that the Public Service Commission has also asked to be included in this proposed section. There is an exception in proposed section 16.1(2) that softens this a little bit. Section 16.1 says, "shall refuse" — not "may," but "shall refuse" — and 16.1(2) says "shall not" refuse. Only certain officers are under 16.1(2), including (c) and (d), namely, the Information Commissioner and the Privacy Commissioner. How would you feel if we made you an exception and put the Auditor General into 16.1(2)? Would you be able to live with that?

Ms. Fraser: I believe proposed section 16.1(2) provides an exclusion to access to information up until the time of the completion of an audit.

Senator Day: That is right, "investigation or audit and all related proceedings, if any, are finally concluded." After that, the material will not be refused.

Ms. Fraser: The material will become available. I believe it should be for a longer term than that, not immediately after an audit is released, because we often go back to do follow-up audits. If we interview someone this summer on an audit and then report in November and the person's interview notes become accessible in December, I think that would affect our ability to audit.

Senator Day: Would the follow-up audit not be other proceedings in relation to the audit? Proposed section 16.1(2) says after all that is concluded.

Ms. Fraser: It still has to be long enough that interviews and things are a bit distanced. The people will still be in place. If someone gives us an interview and knows that within a few months it will all be public what they say, that will hamper our ability to do audits. I would not want to be under section 16.1(2).

Senator Day: No one does. It is 15 years, and then we send it over to the National Archives, and let them make the decision.

Ms. Fraser: The National Archives makes the decision currently. If they judge it not to be of historical value, they destroy it.

Senator Day: Rather than "shall," why not leave it in your discretion and say "may?" Why must it be mandatory?

Ms. Fraser: I am convinced that there is no auditor that will release working papers. It is a common practice among auditors. If you look at all the professional auditing associations, protection of working papers and confidentiality of working papers is absolutely important. We need to provide that kind of assurance to people that we are interviewing and the people who are conducting our audits.

Senator Day: At clause 150 of Bill C-2, at page 120, as Senator Joyal mentioned, that is "may refuse to disclose" internal audit material. Could you live with a "may" over here that would give you the discretion? Why does one have to be a "shall" — you shall not under any circumstances divulge material — and the other "may" — you may not divulge it? Is it up to you?

Ms. Fraser: I prefer the "shall."

Senator Day: You do not want any discretion?

Ms. Fraser: Not on this one.

Senator Day: I have one other question. The internal audit is at clause 237 page 180. The internal audit for the Comptroller General's activity for all departments is coordinated under the Treasury Board except, it seems, for the Canada Revenue Agency. Is there a reason for that? Clause 237 puts the internal audit of the agency under the control of the Canada Revenue Agency, whereas, at clause 258, all other internal audit activities are coordinated under Treasury Board. Can you explain why?

Ms. Fraser: I am not aware of this, so I do not know what it means, unless it has something to do with taxpayer information. There is confidentiality to taxpayer information. In fact, we have an interesting protocol with CRA in order to have access to that information. We must respect specific rules. Maybe it is not to give wider circulation to that. However, I do not know for sure.

Senator Day: Our chairman is keeping a list of questions that should be asked of ministers in due course, and perhaps we will put that on the list.

The provisions with respect to procurement auditor in this bill seem to suggest we will create this office and then Governor-in-Council can create rules as to how the procurement auditor can operate and what the procurement auditor will do. What discussions if any have you had in relation to the role of this procurement auditor, and will this reduce some of the work that you would otherwise be doing?

Ms. Fraser: We have had almost no discussions on this — very limited discussions. Depending on the role that the procurement auditor would play, if it is a quality assurance role on procurement in government and we are satisfied with the procedures that that auditor conducts, we could rely on the work of the auditor. We would not duplicate work, much as we already do with internal auditors. If internal auditors have done work, we will not necessarily go in and redo it. Depending on the roles and the functions and obviously the operations of that auditor, we might rely on the reports, but we do not do contracting or procurement audits every year. Therefore, I am not sure that this would have much impact on us.

Senator Day: You do some.

Ms. Fraser: We do do some, yes.

Senator Day: If there is to be a procurement auditor who is a quasi-officer of Parliament, will some of the 600 people who work for you move over from your department?

Ms. Fraser: I certainly hope not.

Senator Day: On page 204 of Bill C-2, there is an amendment to the Department of Public Works and Government Service Act. It is clause 306 of the bill and proposed section 22.1(4).

The Procurement Auditor shall also perform any other duty or function respecting the practice of departments for acquiring materiel and services that may be assigned to the Procurement Auditor by order of Governor in Council or the Minister.

Is that not the practice of how a department acts with respect to the acquisition of goods or services? That is part of what you do.

Ms. Fraser: It is, and we will have to see how that procurement auditor defines his or her role. We will certainly try to minimize duplication. I cannot respond much more than that until the program is actually in place.

Senator Day: We will deal with this more tomorrow, but I take the opportunity to talk to you about it because it seems that we are being asked to pass something where we have no idea what this person will do, and I now I know that you are in the same position.

Senator Joyal: Ms. Fraser, are you aware whether the Auditor General in Great Britain has the same privilege this bill would give you in clause 150, which amends section 22 of your act? You can find it on page 120 of the bill.

Ms. Fraser: The Comptroller and Auditor General of Great Britain are not subject to access to information. I believe the legislation is changing and they will be for their non-audit information. I am afraid I do not know about internal audit. We can find out quite easily if you would like.

Senator Joyal: I am not talking about access to information. I am talking here about privileges, which is a totally different set of issues. I want to discuss the clause at page 202 of the bill, which deals with your immunity.

Ms. Fraser: I will ask Mr. Ste-Marie to respond.

Senator Joyal: I want to return to this clause but it raises an important constitutional issue.

The Chairman: Mr. Ste-Marie is prepared to comment.

Jean Ste-Marie, Assistant Auditor General, Office of the Auditor General of Canada: I believe it is on page 202 of the bill, clause 305 proposed section 18. My recollection is that this parallels the U.K. I do not have the bill before me, unfortunately, but I can follow up if that is the senator's wish.

The Chairman: Write a letter to the clerk, please.

Senator Joyal: May I explain my point? It is a constitutional issue. You are claiming in this bill that we will give you immunities and privileges that go beyond the immunities and privileges of parliamentarians. The way the privileges of parliamentarians under section 18 of the Constitution have been interpreted by the Supreme Court in the Vaid case, establishes that the privileges of parliamentarians, especially related to freedom of speech, have to be interpreted in a very limited context. In this proposed section, we are granting you privileges not only about what you say but also about documentation and conversations or investigations with other people. Therefore, it goes beyond what members of Parliament or senators have under the Constitution. We cannot establish more privileges than we have. We can extend our privileges as parliamentarians to agents of Parliament but we cannot give to agents of Parliament more privileges than we have ourselves as parliamentarians, because they are derogation to common law. Section 18 of Constitution is very clear, as has been interpreted by the court. I doubt that we can grant you that much privilege.

Maybe it was not an issue you have canvassed because it is a constitutional issue that pertains to the rights of Parliament. I understand you are not ready to answer this, but it is a serious issue as it raises the constitutionality of that clause of the bill.

Ms. Fraser: Obviously, I am not an expert in this area. The Department of Justice would have reviewed all of this. These are the same clauses that currently exist for other agents of Parliament. This is not something new. I take your point.

Senator Joyal: With great respect — and do not want to interrupt — it is a difference between civil and criminal immunity and privileges related to the freedom of speech. Those are two different sets of immunities. You are right that the immunities, to which you refer, the criminal and civil immunities, exist across the board, but this is not a parliamentary privilege. The freedom of speech that is extended to you by proposed section 18.2(2) is another kind of immunity.

Ms. Fraser: I take your point. That is an issue the committee may wish to follow up, but I am saying that is currently granted to other agents of Parliament. This is not new for us. There may be an issue with it and there maybe an issue more broadly, but, for example, the text of the Access to Information Act is exactly the same as in here.

Senator Joyal: We may then have to review it constitutionally because we are limited to extending privileges to the ones that exist in Great Britain, which is clearly the letter and the law of the Constitution as has been recently interpreted. We can grant privileges to you and to officers of Parliament, but we cannot give you more than we enjoy ourselves.

Ms. Fraser: I would suggest that is something to take up with the Department of Justice.

The Chairman: Exactly. You are the Auditor General, not a constitutional expert or a lawyer. We understand that.

Senator Joyal: I do not want to embarrass you or the officer because I know it is a constitutional issue, but since we have been investigating that issue recently in relation to the case to which I referred you, this is of course an important issue.

Ms. Fraser: I can ask Mr. Ste-Marie to follow up as well with the Department of Justice.

Senator Day: If they are to determine this in discussions with the Department of Justice, could we have the results of their determination?

The Chairman: The Minister of Justice will be coming back to this committee. That is a question you can put directly to the minister.

Senator Day: It will be easier to ask him if I have his comment beforehand.

Senator Stratton: Normally, at the end of a session like this I do a summary on questions that need to be answered, if I can answer them, with respect to certain aspects. However, Ms. Fraser, you have answered all the questions exceptionally well. Thank you for that. The Canadian people really owe you a debt of gratitude for your role and giving them value for money in what you do. Without that, we would not be sitting here. As a result of your investigations into the sponsorship scandal, we now have Bill C-2 before us. I am not asking for every Canadian to send you a bouquet of flowers, but perhaps a thank-you letter from each and every one of us for services you have rendered.

Ms. Fraser: Thank you, senator.

The Chairman: I would like to thank you very much for your candour and for your help in our understanding of this important piece of legislation for Canada.

Continuing with our theme of audit powers, I am pleased to welcome the Certified General Accountants Association of Canada. They are a self-regulating professional association of 68,000 students and certified general accountants.



I know that the Commission has followed closely the proceedings of this committee. I want to thank you for being here. Without further ado, I yield the floor to you, and after your remarks, we will have a period of questions and discussions that, I am sure, will be quite useful to members of the committee.

Carole Presseault, Vice-President, Government and Regulatory Affairs, Certified General Accountants Association of Canada: We have some preliminary remarks. We have circulated copies of our brief. On behalf of the Certified General Accountants Association of Canada and our members, I wish to thank you for this opportunity to appear before you and give voice to our thoughts and concerns on Bill C-2. I understand that this committee has already undertaken a full review of the bill. You can expect long sitting hours in order to achieve this considerable task and if we can contribute in any way whatsoever to your deliberations, we would be quite pleased to do so.


The genesis of Bill C-2 is a crisis of confidence that goes well beyond the purview of this government, Parliament, and indeed Canada's borders. This morning, as we turned the pages of our morning newspapers, we read about accountants, CFOs and CEOs being jailed. This was a sad reminder of what happened a few years ago, the scourge of scandal within the private sector. As a professional association, we take these issues very seriously. We are starting to come to grips with the number of initiatives we must take. These problems hit very close to home. The crisis of confidence is a direct result of the perceived absence of ethics among our corporate, political and bureaucratic elites.

The important questions are how it has come to this; what, if anything, has changed; and what we can learn. The topic before you, of course, is what measures Canada should adopt to avoid a recurrence.

There is a cure for fraud and scandal, and it lies in transparency and accountability. To that end, we applaud the government and this Parliament for efforts to address the shortfall in how government performs and is seen to perform by its shareholders — Canadians. There is nothing new about principles, ethics and responsibility and the role they deserve to play in decision making. Nonetheless, the taint of latter-day scandals affects us all, and if our trust and pride in our public institutions is to be restored, the time for clear remedial action is now.

Canadians are watching closely and will reserve judgment until they have seen evidence of constructive and effective change.


While we all hope the legislation before us will help prevent many of the wrongs of the past from being repeated, rules and regulations are no substitute for ethical behaviour. The Auditor General has said as much on several occasions; to paraphrase her, there is no shortage of rules, merely a failure to follow them.

Ironically, we appear before you today in defense of a cautionary approach to rule making. After all, accountants are predisposed to rules and structure. We are number crunchers, financial analysts, chief financial officers, auditors, business leaders. We are the people others turn to for guidance on how to follow the rules governing capital, assets, profits and losses. In that connection, the accountancy profession bears an enormous burden of public trust and responsibility — a burden we shoulder willingly. It is, after all, our stock-in-trade. But we need to remind ourselves that rules for their own sake won't likely achieve the outcomes for which we all strive.

The challenge before this Parliament and this committee is to ensure that we are able to achieve the right balance between rules, ethics and sound governance. Canada wants and needs a federal accountability act that works, but not just at any cost.


We must be wary of well-intentioned initiatives that may stifle productivity and limit the ability to innovate. Everything comes at a cost, whether a direct cost or the cost of opportunities lost. Our financial community in the public sector needs to have the support and the resources to implement these changes.

I am tempted to draw a parallel between the bill before this committee and initiatives to strengthen public confidence in our capital markets. Five years after Enron's demise, questions are being asked about whether the pendulum has swung too far. Are the rules too costly to observe? Are they limiting growth and affecting productivity?

Academics and well-informed observers are questioning the potentially perverse effects of some of the proposed measures. Monitoring and control are essential components of public administration but should not be implemented in isolation.

We suggest that, when put to the test, Bill C-2's success or failure will hinge largely on the government's willingness to sow and nurture a new culture of accountability and individual collective responsibility, one that cuts across conventional bureaucratic and political lines. This requires cultivating and rewarding, not legislating and regulating. This requires learning and development.

In bringing forth Bill C-2 we believe that the government has got several critical elements right. We welcome the clarification of roles of deputy ministers and their assistant deputy ministers as accounting officers. While it may be redundant to state, we believe that such assignments will add necessary profile to a task that may sometimes be overlooked without interfering with the responsible minister's accountability to Parliament. Moreover, that clarification entrenches an internal expectation of financial consideration where policy and program considerations have typically been dominant.

We support the creation of independent external audit committees. Properly protected from undue operational influence and struck with external representation, objectivity is best preserved. We also believe that the access to information protection afforded to internal audit working papers is appropriate and will improve the internal audit process in departments and agencies.

We are pleased to see that while appropriate safeguards have been put in place to ensure that draft audit reports are protected, provision has also been made for the event that a final report is not delivered within two years.

We believe that these measures, coupled with the Comptroller General's ability to conduct ongoing internal audit practice inspection by independent and qualified professionals, bolster the independence of the internal audit process and will help maintain the objectivity of the observations contained in the final internal report. In sum, these measures taken together can safeguard the integrity and effectiveness of the audit process.

We also applaud the broadening of the Auditor General's authority to follow the money. We agree with the new requirement for a five-year review of relevance and effectiveness of grants and contributions, a provision that we have recommended many times in federal budget hearings. We also think that parliamentarians will be well served by the new position of parliamentary budget officer.

These are many factors that contribute to sound financial management. Speaking for our members and future members, we agree with the Auditor General that a background in accounting is a beneficial attribute in championing financial management and control in departments. Our members can be found across government departments working in many roles. They know that their designation is serving them well. Officials seeking to strengthen their financial management acumen with a professional accounting designation will find the CGA program provides the knowledge, skills and leadership necessary to meet the challenges as set out in this legislation.

I realize that the session today is about auditing, but as a registered lobbyist I would be remiss not to say a few words about your subject of study for next week.


Clarity lies at the root of all good legislation and regulation. It ensures that each player in the system is made aware of what is expected of them. We believe that more enforceable legislation governing the conduct of lobbyists is a laudable objective. To this end, we lend our support to the Government Relations Institute of Canada, that you will be hearing in the next few weeks, and its call for stronger investigative and enforcement provisions. While the vast majority of lobbyists are fully compliant with the law, more and better enforcement provisions will serve to protect the majority from the tarnish caused by a misguided few and we think that is in everybody's interest.

We must, however, make sure that the legislation does not go too far regarding the registration of lobbyists; in this regard, we will be pleased to answer your questions and we have some proposals to submit to you if you are interested.

We all want what is right for Canada's future though we may, at times, disagree on how best to get there. Such is the agonizing beauty of democracy, but no one ever said it would be easy.

Mr. Chairman, my colleague Rock Lefebvre and myself will be pleased to answer questions put by senators.


The Chairman: Thank you very much for that; you have covered many points in this presentation. As you know, we were stressing auditing, but your comments on the Lobbyists Registration Act were interesting, and you may hear from some honourable senators on that.

Senator Cowan: Was your organization consulted in the course of the preparation of this bill in an informal or a formal way?

Ms. Presseault: I would consider it informal consultation. As you are well aware, the bill was written in a very short time span. We were consulted on a number of very specific matters. There was not a broad or widespread consultation. We were consulted on the issue of internal audit and we were able to weigh in on the development of the bill.

Senator Cowan: You mentioned in your presentation that you are generally pleased with what you see in the bill, but you do say that it could be improved. Our role is to examine this carefully, as we have been doing over the past weeks and will over the next little while. That is our purpose, too, to try to see in what ways the bill could be improved.

All of us share the same desire to see more openness, transparency and accountability, but we want to get it right. This is a huge bill that affects many sectors of the public service. You use the phrase "unintended consequence" in your presentation. We had heard previously of a number of unintended consequences.

You say you have no doubt that the bill can be improved. Can you give us some suggestions as to how it could be improved?

Ms. Presseault: I will just say some of the remarks I wanted to make regarding unintended consequences. I would use a specific example that is not in this bill, which is the drive for more transparency and accountability. There is a Senate bill now that, if adopted, would require government departments and agencies to table — I imagine in Parliament — quarterly financial statements. We have had some discussions and some consultation on this. That would be an unintended consequence of a drive for more transparency or accountability.

When we were asked what we thought of the bill, I am sure the intention was quite honourable, but the reality is, what will it accomplish? That would be an unintended consequence.

The choices you have to make are very important. Specifically, in the bill, there are many details, and we have not seen or evaluated the implications of the new internal audit policy that came into effect in April. I would be interested to see that because we are already codifying the internal audit policy. What will be the implications of codifying that policy?

You know so well how difficult it is to change legislation once it has been enshrined. How well is our government doing? How accountable are they in appointing the independent audit committees? How is that going? Those are some of the questions we are posing.

We know from our members and the people we talk to that it is a slow process. We are talking about a change of culture rather than just codifying; again, that is a cultural change.

There is a big drive right now to strengthen financial management and internal audit expertise, but that is a very slow process, and not only within government. We are launching an executive program where we can help senior officers who do not have an accounting designation to obtain one, but it will take some time for that to happen. That is what we talk about.

Senator Cowan: You and others have made the point that here we are putting the ideas into legislative form, with all the clout that invokes, whereas policy is easier to change. On the one hand, if policy is not working, it is easier to change than legislation. On the other hand, perhaps people take legislation more seriously than simple policy. That is where the balance comes.

Considering the policies — such as the one you mentioned that was announced in April — now purporting to be embedded in legislation, do you have concerns about any particular part of that internal audit policy, which, if this bill were passed in its current form, would now be in legislative form?

Ms. Presseault: I do not think we have a problem with the internal audit policy as it is. To put it in the legislation, I think, is a philosophical approach. Some of us would prefer that more than others. Government policy is meant to be observed. Does it need the force of legislation? I think there are people more expert in that question.

Rock Lefebvre, Vice-President, Research and Standards, Certified General Accountants Association of Canada: Accountants, as you probably appreciate, are fairly linear in the way we work and think.

Senator Cowan: Lawyers would never say that about accountants, any more than accountants would ever say anything disparaging about lawyers.

Senator Joyal: We have not heard the Canadian bar yet.

Mr. Lefebvre: There are certainly advantages to policy, in some instances. However, when we look at some of the considerations before the committee now with respect to independence of audit committees and the appointment of chief accounting officers, in my humble opinion, it needs the weight of law. In order to prop up the intent or the spirit that is sought in government today, I think the public demands it at this point.

We have seen Sarbanes-Oxley compliance in the United States and some multilateral instruments here in Canada that have affected the private sector. There has been some push back, but, generally, even for those instruments that have been pushed back, there has been improvement in the culture of private sector Canada.

Unfortunately, there is not a good, clean answer. I wish I could even assess what those costs would be, but that would be deceptive at best because we do not know what the fallout would be from such an approach.

I believe Senator Day asked the Auditor General whether that means we can transfer resources from one department to another. In reality, accountants tend to rely on the work of other accountants. If the internal audit process is reputable and honourable, savings will materialize in ways we might not imagine. That is the long way of saying that, when it comes to the type of changes required, legislation is very supportive.

Senator Cowan: I would like to get your assistance with two other areas. One is the mandate of the Auditor General. It is now being broadened, and the right to follow the dollar is being extended in certain cases with the notable exception of contracts. Do you have an opinion of that?

The Auditor General was reluctant to express a view. I think her position was her mandate is what Parliament says it is, and she is not going to say whether it should be greater or lesser. You are perhaps not constrained by the same parameters. Do you have a view as to whether it would be wise or unwise to extend the Auditor General's mandate to follow the dollar with respect to contracts, which is specifically excluded under the current bill?

Ms. Presseault: We have the freedom to take a larger view but, of course, we are bound by an act passed by the Senate a few years ago. Again, you cannot put everything in the bill; sometimes you have to draw a line in the sand. My colleague will probably disagree but because I am not a lawyer or an accountant, I can say pretty much what I want to say. From a public administration perspective, you have to be careful how far you broaden the roles because this is taxpayers' money. There has been a tendency to send them to arm's length agencies, but you want to ensure that the public policy objective that was set out initially is followed in follow-the-money terms. Does it apply to contracts? That would be pushing it.

Mr. Lefebvre: Following the money is part of the process of an audit. I am surprised that it took until 2006 to recognize that there was a disconnect there. We are accustomed to working in a certain way. However, we have seen the Auditor General's office demonstrate ability with respect to both financial control and policy consideration. Personally and professionally, I would like to see a practice of follow the money indoctrinated in their culture. It is a failure that there is no review.

Senator Cowan: If you had the authority, you would extend that, would you?

Mr. Lefebvre: It would require a culture shift. One again, it is high risk either way, possibly, and there is greater advantage to granting that mandate than to withholding it.

Senator Cowan: My last point has to do with the difference of opinion between the Auditor General and the Information Commissioner with respect to the blanket of secrecy over internal audit reports, about which we had a lengthy discussion with the Auditor General. From your presentation, I understand that you would support her position with respect to such protection for draft audit reports. Is that correct?

Ms. Presseault: You are talking about working papers.

Mr. Lefebvre: Ms. Fraser explained how accountants and auditors tend to behave in those instances. We would represent our members to provide that kind of protection. Having said that, we do not have the privilege of leaving it open-ended. I am not qualified to judge, but perhaps two years is not the right length of time. However, there should be some kind of limiting time. Otherwise, it can be deferred for any reason, or become lost or simply go by the wayside. Professionally, I would support some kind of timeline.

Senator Cowan: Reference has been made to a number of different timelines. In some cases it is forever and in other cases it is until the completion of the audit or the filing of the final report. It is your view that there ought to be a balance somewhere. I understand that you would not see the possibility of release some time in the future as impeding the ability of your fellow professionals from carrying out their responsibilities. Is that correct?

Mr. Lefebvre: I believe they can approach these undertakings with the same proficiency as otherwise. It is simple a case of developing the habit of completing audits in a timely fashion. I have worked for both the federal and provincial governments, and sometimes priorities shift such that things fall by the wayside. However, there is a larger public good to be considered, which is the reporting to Canadians. I do not think that our profession should be able to shield itself, simply and conveniently, with confidentiality on that basis alone.

Senator Cowan: Forever?

Mr. Lefebvre: That is correct.

Senator Joyal: I was listening to you carefully, Mr. Lefebvre and Ms. Presseault, and I read through your brief attentively. I heard a phrase in a movie last year about President Mitterrand. In the movie, which I think was called The Solitary Walker on the Champs Elysées, Mitterrand says, "After me there will be only financing and accounting." I wonder if we are not creating a world of accountants, especially with the independent audit committees. We are now in the business of auditing the auditors, resulting in at least three layers of auditors. We will have the internal audit of the department, because the deputy minister is presumed to be the chief auditor; then the external audit of the internal audit by an independent audit committee; and then the audit of the external audit of the independent committee by the Auditor General of Canada.

Ms. Presseault mentioned the unintended consequences that will follow from all that. I have to ask where we will find all those auditors. Ms. Presseault told us that she cannot find auditors even to prepare her internal audit. Could you comment on those layers of auditing? I totally accept your position that an accountant is a professional committed to a set of professional rules and ethics. There is no presumption that the work of a professional auditor in a department is not acceptable. Perhaps we are falling into a kind of over-audit trauma for the sake of transparency and accountability?

Mr. Lefebvre: If you will permit me a quick answer, senator, there is nevertheless a difference of mandates between the layers. The internal auditors will not necessarily be doing financial statement audits, but would be checking internal controls and reporting back to the various stakeholders, such as the minister, the assistant deputy minister and the chief audit officer of the department. The concept of external audit committees is borrowed from the private sector, where it is common to have external participants on the audit committees. Often, you will have one or two accountants only on such a committee. There is much value in having representation from retired parliamentarians, lawyers, engineers and possibly one or two accountants, which is what the private sector does. Certainly, we are not suggesting that only accountants can do this work. Within government, the internal audit serves a different function, perhaps, than what Ms. Fraser's department is doing, which is a high-level audit of the authenticity of government performance and reporting out. The internal audit has quite a different role.

Senator Joyal: It speaks to something fundamental in the system. You presume by the very definition that if you are involved in accounting operations, someone will have to check, over check and recheck everything you are doing. There is the presumption that people cannot do their work right in the first place. That culture of suspicion has reached the point that it will have an effect on the system; there is no doubt about that. With all the issues surrounding private sector events over the past few years, such as the collapse of Enron, it is small wonder people think that anyone anywhere anytime could be a crook. Therefore, we must ensure that we have a set of guidelines, because even those checking on those who check may not be satisfying the rules at some point in time. We will have another layer of audit.

As much as I am in support of accountability, responsibility and honest management of the public purse, there is a limit on what you can get from a system that becomes overburdened with accounting operations. Am I exaggerating or am I describing this reality of good intention we are presently putting into place?

Ms. Presseault: You make valid points. We need to go back to the roles of each individual. We have imported elements of the private sector model, but I am not sure that independent external audit committees will be easily achieved.

Based on the private sector model, you will have specialists and people who know the business rather than the audit sit on these committees. I am sure you will hear from the Comptroller General, if you have not already.

The additional layer of oversight or surveillance evolved throughout the 1990s. There are all kinds of reasons why that extra layer of oversight was introduced in accounting and in many other professional fields.

Is it a good thing or a bad thing? It is good as long as there is clarity of roles. Will it create more problems with recruitment? Yes and no. There is a level of expertise in our public sector in terms of development. One big part is building capacity within the public sector for financial information.

From a corporate point of view, the layered audit sounded right, having an independent committee accountable to the public or to the taxpayer and removed from the political process. Will it be successful? Time will tell. A big cultural shift will be needed in order to accept this external layer of oversight.

Senator Joyal: Yes, but the private sector operates under one single law, the law of profit. Everyone wants to have access to the pot. However, that rule does not apply to public administration. You are not there trying to make more money; you are there to serve the public. There are different ethics present by definition.

In the private sector, the temptation of money is always present; people vote for themselves, the board and benefits — we all know the story without giving examples. In the public sector, in my experience, that is not the norm. People do not enter the public sector to make more money or to get more benefits. Everything is regulated and defined by categories, and everyone knows that.

Importing a culture that is needed in one reality and expecting that it will have the same impact in a different reality is a mistake, in my opinion. It is a conceptual mistake about what the system means.

Ms. Presseault: There are a number of experiments underway, if we can call them that, in public administration. The way government is being run is changing. For instance, government still struggles with public/private partnership.

The position of chief financial officer is another importation from the corporate sector, with which you create a new level of accountability in terms of certifying the veracity and validity of financial statements. Similarly, Sarbanes-Oxley brought forward the CEO/CFO certification. Will doing that bring more accountability?

By certifying the validity of financial statements, as I understand it from a CEO/CFO perspective, you are assuring yourself that the right quality control system is in place to ensure that the financial statements you are signing off on are a true picture of the organization. Mr. Lefebvre knows more about financial statements than I do.

Mr. Lefebvre: I certainly pretend to.

Senator Joyal: How many people need to sign the financial statement so that at the end of the day we believe they are correct? How many signatures do you need on the same document to ensure the money has been well spent?

Mr. Lefebvre: That ties in with accountability. The private sector has had challenges getting there. The recognition was simply that it had to be done, if they were to show shareholders that there was a level of respect for their money.

In accountancy, there is a fundamental element called segregation of duty. That carries nicely into auditing as well. I do not have an answer to your questions, but we think that over time the roles fill themselves with the appropriate parties. Internal audit would assume the roles that should be segregated to them around internal control, processes, special investigations, and potentially how procurement works in their department and authority levels. That is where we see internal audit going.

The external audit committees would not be looking over those elements so much. They would naturally receive a report or at least be privy to the information coming from internal audit, but that represents one small element of their overall mandate, which is to attest to the quality of those statements and the performance of that agency or department.

You are right, it sounds like more layers of accountants, but quite possibly, in the hope of not being disrespectful, there was a shortage in the past of those types of segregations. That might have enticed folks to do things they might not otherwise have been able or inclined to do.

Senator Joyal: Are you aware of a lack of accountants or related professions? The audit layers are multiplying rapidly and the public sector has to compete with the private sector for accounting services. My impression is that the government does not know where to find all the people it needs. How many professionals will be produced each year so that there are enough in the system to implement all the controls this bill contains?

Ms. Presseault: I hope that you get to hear from people who are closer to the ground on this. I know that the Association of Canadian Financial Officers and the union group representing them do talk about possible shortages. They would have a better read on where people are recruiting. We turn out qualified people as fast as we can. We know there is a market; it is a profession in demand.

Like any other profession, we are faced with labour shortages, aging population and population growth problems. We have developed a number of programs that we think facilitate access, but not by watering down our standards. We try to help folks obtain professional accounting designations.

However, this problem was not created overnight, nor will it be solved overnight. The lack of capacity and lack of financial expertise has been well-noted by the Auditor General in previous reports. The Comptroller General has also been very vocal about that.

Since then, as a result of the growth of the public service, people have been promoted in the public sector, despite their background in finance and accounting, causing the shortage we are now having to deal with. Government must have measures in place to facilitate access and to help people build capacity in the area of financial management.

Senator Andreychuk: I think you have made the case as to why we need to look at new systems within the public service. I want to go back to the differences between the private sector and the public sector.

The problem seems to be that the job within the private sector is much like the job in the public sector. The professional needs are the same. The objectives may be different from the government's perspective as to why it is spending money, but would you agree that the capacity of financial officers, auditors and so forth is the same with respect to professional skills?

Mr. Lefebvre: We could probably site cite examples of where they are equal or not equal. I have worked on both sides of the fence, and I would tend to say that government employees might have to have a better command of a whole other set of skills that private sector CFOs or accountants might not need.

We heard a few moments ago that the private sector behaves in pursuit of the purse, and that is an accurate reflection. However, the government has entire levels of complexity that are not present in other businesses, except in larges businesses that have a social conscience, for instance companies that have gone into sustainability, which does require full transparency and reporting outside financial areas. My opinion is that government basically has to do that kind of reporting all the time because they represent the taxpayers and are a public body. I would make an argument that accountants in government need additional skill sets, not superior or better skill sets.

Senator Andreychuk: That has been identified regarding the public sector, though whether it has been addressed is another matter.

Thinking of your example of Enron, is it the role of the auditors to perfect the bottom line for the company? Is that not the problem that we ran into in the private sector?

Mr. Lefebvre: Pressure was exerted as a result of the pursuit of profit.

Senator Andreychuk: The auditor's role is not the pursuit of profit. It is to verify the practices and the accounting side and to follow the money. Is there not the same kind of push now in the private sector from the stakeholders, namely, the shareholders, pension fund dealers, et cetera, who are saying, "You do not just work for the company. We are going to define who you work for?" Are they not now getting almost as complex as government always was?

Mr. Lefebvre: They all have certain complexities, which is evident if you look at the independent standards and codes of ethics of various accounting and auditing bodies.

There have been substantive changes over the last few years with respect to conduct of accountants; typically, that speaks to the whistle-blower legislation and everything else. In fact, accountants are expected and encouraged today, much more than they were five years ago, to report erroneous bookkeeping to the authorities, and there are certain protections. In time, it will become in vogue. Right now, an accountant works for a company, whether private or government, and will tend to follow the instruction received. Certainly, they have to be provided with a level of independence, and we are trying to create a mindset or shift where, whether we work for the private or public sector, we do owe the public something. I am not a lawyer, so I cannot explain how that might happen, but I can see it in the philosophies that we are embracing, and it is materializing in our self-governing rules, namely, that we expect accountants to use their judgment. Applying our judgment is supposedly what we are best at, hence we cannot knowingly misrepresent the financial performance of an organization.

Senator Andreychuk: It seems to me that if accountancy is a profession, there is a bottom line, so that all are trained to a certain standard. Then you go into either the public or the private sector, and you must either acquire more skills or adapt to a different system.

We are making changes because of the need for accountability in the public sector. Are the people working in the public sector sufficiently trained? We are trying to get them to adapt to a new system, whether more audit committees, fewer audit committees or different audit committees. They must have certain basic skills. Does Bill C-2 support the basic structures and philosophies that you put out for all accountants?

Mr. Lefebvre: It certainly does speak to the Comptroller General's office and the Auditor General's office. A major key in this proposed legislation is the appointment of chief financial officers. These things taken together will influence that mindset in a positive direction.

Senator Andreychuk: Do you think that the public then would begin to understand? Enron taught me how everyone was caught off guard, how we were not all aware of the problems in our public sector. We have to create a culture of accountability and it cannot be different in the public sector and the private sector. They have to have some commonality. Am I hearing you say that that is the professionalism?

Mr. Lefebvre: The professionalism sets minimum standards that every accountant must adhere to. We have a disciplinary process to deal with any violations, and we do treat accountants across the board in the same fashion.

Senator Andreychuk: We may talk about the need for more accountants, but the skills training is in place now. Would it fit the model that is being proposed?

Mr. Lefebvre: It is my view that the three accounting bodies in Canada are producing highly competent people who can do this work. We have introduced the CGA executive program to entice those who come from a different background, such as heads of departments, senior executives and bureaucrats and officers, to take the designation whether they have a master's degree in social work or whatever. It will give them an orientation to finance, and the idea is to fast track some of the brightest in government to adopt this new way of thinking.

Ms. Presseault: I should say that within the CGA designation there are various streams, and a CGA who wants to work in the public sector would have a specific number of courses that would address the desire to work in the public sector and its public sector not-for-profit stream. Our training program has different streams. Audit is a different stream. We would not be competitive if we allowed our program to get our sync of with reality. We have a thorough process. We work closely with senior public folks working in the public sector and other sectors to ensure we are responding to the marketplace needs with the right skill sets.

We have just released a new program that our members can follow on the Internet. The CD-ROM, called "Public Sector Accounting," looks at the implications of the Financial Administration Act, the role of the Auditor General, the Comptroller General, the Treasury Board and so forth.

To be competitive, we have to be current and have the right kind of programs. If we turn out accountants who are not prepared to hit the ground running, we will have failed our members and our mandate. We have a rigorous internal process to ensure our program is at the leading edge of accounting professionals.

Senator Day: There are the certified general accountants, of which you are representatives, and there are the CAs. What does "CA" stand for?

Mr. Lefebvre: It stands for "chartered accountant."

Senator Day: What is third one?

Mr. Lefebvre: It is CMA.

Senator Day: Does that stands for "certified management accountant?"

Mr. Lefebvre: That is correct.

Senator Day: Am I right in thinking that primarily accountants deal with figures and financial matters?

Mr. Lefebvre: Typically, yes. We are getting more creative, though, because sustainability and so forth are creeping into the finance world.

Senator Day: Every time I meet an accountant, I get the sense that he or she is doing something else. It seems that accountants get the designation and then immediately do something other than accounting.

Ms. Presseault: Our members are everywhere. You will find them working as accountants, as business managers and business advisers. They will be running big companies and they will run small companies.

Senator Day: Is there any professional group for auditors, separate from accountants?

Ms. Presseault: There is a requirement in Canada, if you want to work as an auditor. In our association, if you want to practice public accounting — and we can talk about the practice of public accounting, which is outside the private sector — there are additional requirements.

Senator Day: Public accounting is not the public sector; is that right?

Ms. Presseault: People in the Auditor General's office would be practicing public accounting because they are providing services; it is auditing. There are additional requirements in that field, additional standards that my colleague is responsible for and there are additional experience requirements.

Senator Day: That is within your organization?

Ms. Presseault: That is within our organization, yes.

Senator Day: These are all financial people growing into other things. Is there any organization that deals with auditors who do not have a financial background?

Ms. Presseault: An American-based organization, the Institute of Internal Auditors, provides a certified internal auditor designation, CIA. You will see more of them around. There is a tendency in the public sector in Canada to support individuals to obtain the CIA designation in addition to their professional accounting designation. However, it is not external auditor designation, and there is a difference. Treasury Board is promoting the program as being a certification that might be helpful for those financial managers who may not have an accounting designation.

Senator Day: The Auditor General told you that over 50 per cent of the 600 people who work for her do not do financial audits. They are not involved in that kind of work. They are doing environmental audits, business system audits and so on. They are not looking at balance sheets and that kind of thing.

Page 95 of Bill C-2 says the Auditor General should be a qualified auditor. I would like to know what a qualified auditor is.

Ms. Presseault: Normally in legislation, language recognizes a qualified auditor as being a member of a recognized professional accounting organization, and then there are more qualifications. A recognized accounting organization would be recognized by provincial laws, as the Constitution Act of 1982 confers the regulation of professions on provinces. In Canada there are three recognized professional accounting designations: the chartered accountant, the certified general accountant and the certified management accountant.

Senator Day: What about the CIA group that you mentioned? They are in Canada.

Ms. Presseault: They are not recognized by any formal legislation in Canada. There are other accounting groups also functioning in Canada. The Association of Certified Chartered Accountants has a few hundred members here in Canada. They are a very strong U.K.-based accounting organization with a presence across the world, but they are not recognized in legislation.

The Chairman: Are they CAs?

Ms. Presseault: They are certified chartered accountants.

Senator Day: The role of auditor has expanded from an accountant to somebody else, and there are MBAs and people who work in the public service who understand the business systems that are needed but who do not have that basic qualification of an accountant. In your view, would they fit within the definition of a qualified auditor?

Mr. Lefebvre: If it is demonstratable. We have seen firms that have attest functions that range far outside the numbers, as in the examples you have just given. Environmentalists and scientists do other attest functions. I cannot speak for the legislation — I am not a lawyer — but I guess we would have to assume that the definition could expand to include professionals as dictated by their professions.

Ms. Presseault: I am going to break the rules and disagree with my colleague. I think for the benefit of discussion here, we would be loathe to support something that would expand the definition of "qualified" to include anything other than a professional accountant.

We are talking about the role of the Auditor General. You have to consider that person's education, training, experience and ethical background. A qualified accountant or a qualified auditor has a code of ethical practices and rules of conduct and also has a disciplinary process that ensures that that person will follow the rules of his or her profession.

As many times as we have read this bill, we still do not understand it. It did not jump out, until pointed out, that a qualified auditor, according to many other pieces of legislation, is someone who is a member of a professionally recognized accounting organization.

Senator Day: The term is not defined in this act, probably because there is no agreement. Here we are talking about passing something that is not defined and we wonder what effect it might have. I appreciate your two different points of view.

Ms. Presseault: I am glad we could be of assistance.

Senator Day: I think we are all in agreement on this, but I want to make sure that you do not feel there should be more. Several clauses of Bill C-2 will require Crown corporations, separate stand-alone agencies and foundations to follow many rules that were developed as a result of Enron and Sarbanes-Oxley in the private sector, for example separating the chairperson and the president, having an audit committee with a majority of members' being from outside and not management, and directors appointed for four years. Are you familiar with those changes? You do not take any exception to those, I am assuming?

Ms. Presseault: I mirror very much what is happening in the private sector, absolutely. Separating chair and CEO are well acknowledged. We did it in our own organization a number of years ago. These are accepted benchmarks, if you want, or exemplary or best practices that should go to Crown corporations.

Senator Day: The audit committee within the board of directors is similar and that is quite common.

Ms. Presseault: For independent audit committees it is important that the committee chair not be from management. There is a compromise in the legislation, in that initially the idea is to have management play a role in these independent audit committees. I am not sure what the compromise means, but it is not a direct import from the private sector. There has been some accommodation to recognize government within that structure.

Mr. Lefebvre: I would like to add that independent audit committees serve more a function of governance than accountancy or reporting. Regardless again of which sector, that is what we should be trying to strive for in that committee. It should not be a group of experts. They should not be reviewing the work of the auditors; they should be interpreting that to see if it is responsible for its stakeholders and if the report is factual and complete.

Senator Day: We just discussed the meaning of an audit and an auditor. This is an audit committee not made up of accountants, necessarily.

Mr. Lefebvre: Not necessarily, no. You would be well advised to have some on the committee.

Senator Day: I suspect they do.

If you look at Bill C-2, you will see that the Auditor General is asking for herself and all those in her department, and she has received it, immunity from criminal or civil action for doing the job that she is expected to do. She has that immunity. She is now coming under the provisions of the Access to Information Act in this proposed legislation. However, she said, "I've been doing that anyway, so put me in there," and she is. She is being given the power to follow the dollar and she said, "I do not want that. It is there but I won't use it. I am not asking for more staff to deal with this."

In broad strokes, that is what we have. Do you have any comment? Were you here when the Auditor General gave her testimony?

Mr. Lefebvre: I really cannot speak to that. I do not know enough about it, I am sorry.

Senator Day: Do you support the idea that the Auditor General should be able to remain secret with respect to her work material and that kind of thing? The provision is for 15 years. Drafts and that kind of documentation, however, will not be available under the provisions of the Access to Information Act.

With respect to internal audits — and Mr. Lefebvre pointed this out earlier — if somebody stalls this thing, if they start an audit and then get redirected, after two years they cannot hold it back any longer for internal audit. However, for an external audit, which involves the Auditor General, that provision is not there.

Under the current law, the Auditor General is voluntarily doing these things. She can voluntarily release information. Under this law, she will not be able to voluntarily release any information she wants. She is losing that power. There is nothing for 15 years. Are there any rules with respect to the audit profession which say they must not destroy any of their working documents?

Mr. Lefebvre: It is seven years. I heard myself that it goes to the National Archives and those folks decide what to do with it.

I am not really qualified in this area, since it is an area of law, but that is a big expectation gap that is not met from an accountant's perspective.

Senator Day: A few days ago we heard from the Information Commissioner who said that this is not good. We had media people saying it is not good. Now we have you saying there seems to be a little gap.

Senator Stratton: We have to set the record straight a little here. The Auditor General did not say she did not want the follow-the-money clause. I think she said that she would rarely use it. There is a fundamental difference between what Senator Day said and what the Auditor General said.

The Chairman: Mr. Lefebvre, did you want to respond to what Senator Stratton said to set the record straight?

Mr. Lefebvre: Perhaps I misinterpreted it; however, I thought I heard to the same effect as Senator Day. I may have misunderstood that, and I apologize if I did.

Senator Stratton: Spoken like a politician.

The Chairman: I want to remind honourable senators that the authority under which we are meeting today does not extend our time beyond the top of the clock. We have no power to sit after that 6 p.m.


Senator Joyal: Mr. Lefebvre, are you not surprised that none of the 19 recommendations in the Gomery report dealt with the need to review the accounting practices of government?

Mr. Lefebvre: I cannot answer that question because I do not know these recommendations well enough.


Senator Joyal: It seems strange to me that we are embarking on an endeavour of reshuffling everything in the audit context of government operations while the Gomery commission in each and every recommendation never raised the point that it was a lack of rules and layers of rules that was at the root of the sponsorship issues. There were rules, but they were all broken. Somebody who commits a crime, even though there are all kinds of regulations, penalties and defences, will decide to commit a crime for whatever reason or motive that moves that person. It seems to me that aspect of the review of all the audit procedure mechanisms, as we were saying earlier on, of layers, is not an answer to the essential recommendation of the Gomery report.

As much as I am for government control and for the position of Auditor General, I have to convince myself that all that we are doing is for the right purpose and, in fact, will not have a more adverse affect on the system than it will have good in the context of what Justice Gomery had an opportunity to review.

Mr. Lefebvre: This will be a simplistic interpretation on my part. What I took from Mr. Gomery was that there was a lack of governance. Accountants, and the accounting associations such as ours, recognize that we have something to contribute to good governance. Perhaps we have been overzealous, although I do not believe that to be the case. We had a professional obligation to step up our game to satisfy the governance, whether it was in Mr. Gomery's report, the private sector or anywhere. I do not think we are being alarmist. I think we are standing in the ready to support good governance.


Ms. Presseault: Justice Gomery dealt with this issue, but only superficially. There are new requirements regarding accountability.


The new requirement of having the chief financial officer or the senior officer verify financial statements does not add a new layer or a new role.

The second thing that touched on the heart of the recommendations, and my colleague referred to the governance aspect, is the oversight layer. Although there was not a study as to the kind of oversight, you are sort of ensuring there is an independent oversight. You are ensuring you cannot get away because there will be oversight. There will always be — and I think we say this in our notes — people trying to break the rules. If someone desires to break the rules, they will find a way to break them.

You cannot correct that. What you are trying to do is institute a culture that has that layer of responsibility. You put it at the top because the buck has to stop somewhere. Then you bring in oversight. That is the model they have chosen and right or wrong, only time will tell.

Senator Joyal: The government decided not to act upon the main recommendation of Justice Gomery, which concerned the layer of political responsibility. The government decided to use another model than the one proposed by Justice Gomery. However, that one did not effect the accounting operation of governance.

Not a single recommendation among the 19 specifically dealt with the accounting procedure mechanism of government. I wonder if we are, in fact, putting emphasis on something that was not broken and are actually over- fixing something in the system that was working.

I try to understand the government operations and what will be changed in the system, and I am not sure that we will meet the target with these changes. Moreover, the adverse effects that it will have in the system could paralyze the system more than increase its efficiency. Generally, as the Auditor General stated this afternoon, it was working rather well. The Gomery commission dealt with a set of circumstances that were exceptional, and no doubt we have to deal with them, but not by fundamentally changing the system and introducing some external input that would change the very nature of the way we have operated in Canada.


Ms. Presseault: These are serious questions. I hope that you will be able to put the question to other witnesses who are much more cognizant of this field. It is relevant to raise these questions in the present context.


The Chairman: Thank you for that, Ms. Presseault. In your original statement, you said that, in bringing forward Bill C-2, you believe the government has gotten several critical elements right. You welcome the clarification of roles of deputy ministers and assistant deputy ministers, and later you said that you support the creation of independent audit committees. Is that your view?

Ms. Presseault: That is our view. We do support the creation of independent audit committees.

Senator Andreychuk: Mr. Lefebvre, you seemed not to be in agreement with Senator Day when he said that access to information should be at all stages of auditing. The Auditor General commented that access is important but, if you do that during an audit process, you get misinformation because it is not until you complete an audit that you come to an opinion as to the validity of the process you have been scrutinizing. Do you support the Auditor General's professional statement that it is better not to have that information come out until it is complete at the close of an audit? I was a little confused by your answer, and I do not know which side of the argument you come out on.

Mr. Lefebvre: I may have misinterpreted the question from Senator Day, but I was speaking more to the immunity afforded to the Auditor General. When I spoke of releasing interim findings of audits, I was referring to the internal audits. Professionally, we would support our members for the reasonable, prudent time to conduct a good audit; I do not know whether the number is two years or four years, but there should certainly be a limit. When I was speaking about the Auditor General, it had to do more with the gap. It could be in limbo for 15 years, and then it would go to Archives Canada to make the decision. She obviously knows that function better than I do, so she may be right, but from a public accountability point of view, we need to communicate out to Canadians, the taxpayers, where that accountability lies. Is it the Archives that decides the importance of those files, or is it the Auditor General?

Senator Andreychuk: You were not addressing access to information during the course of an audit?

Mr. Lefebvre: No.

Senator Andreychuk: It then becomes a question of whether time will tell whether 15 years is too long or too short a period and whether it should be someone other than the Archives personnel who decides. Despite the fact that they have a lot of good rules and do not easily release information, Archives starts generally with the responsibility and interest to disclose. We had a bill through the Senate where Archives Canada certainly made a compelling case to release information. We are talking about a question of timing, I guess. I just wanted that clarification, because I was left with the impression that you thought there should be access all the way through the process. You are talking about determination at the end.

Mr. Lefebvre: Correct.

Senator Andreychuk: Thank you.

Senator Cowan: In the last paragraph of your presentation, you said that during the campaign you called on all parties to commit to several measures aimed at restoring Canadians' trust, and you then said you were pleased to see that your message was heeded. Senator Day and I were having a conversation about whether there were other measures you would like to have seen dealt with that were not in this bill. In response to my question at the beginning, you said that there was nothing more that you would like to have included. If there are other measures, you can send them to us and we can take them into account. Unfortunately, we do not have time now. Are there such measures?

Mr. Lefebvre: No.

Senator Stratton: Do you think this bill should be adopted or passed?

Mr. Lefebvre: Academically, from an accounting perspective, I think it does many good things. Politically, is it implementable? Several of you raised that question. I think there will be challenges around the institutionalization of independent audit committees.

Ms. Presseault: I agree on both points. We will be hearing more about this, and the legislation will certainly benefit from your study. Time will tell.

Senator Stratton: The essence of what we are doing here is changing the culture. That goes to ethics. That has to be changed. Were you aware that the government would be coming out with a revised guideline for ministers with the intent to put out an entire revision for defining ethics and defining accountability? It is on page 9 of the federal accountability action plan called Turning a New Leaf. If you do not have that, we could arrange to get it to you.

The Chairman: Ms. Presseault and Mr. Lefebvre, thank you for coming to the committee. You can tell from the wide variety of questions from honourable senators that they were very interested in your views and comments. Thank you for being so candid and straightforward with us.

The committee adjourned.