Proceedings of the Standing Committee on
Internal Economy, Budgets and Administration
Issue 9 - Minutes of Proceedings - June 11, 2013
OTTAWA, Tuesday, June 11, 2013
The Standing Committee on Internal Economy, Budgets and Administration met this day at 6 p.m., in camera, to study administrative issues, and in public to consider other matters.
Senator David Tkachuk (Chair) in the chair.
[Translation]
Senator Carignan: I would like us to discuss why part of the committee meeting will be held in camera. It seems to me that our discussion with the Auditor General is a matter of public interest. We will not really be talking about personal information. So I propose that our discussion with the Auditor General be held in a public forum.
[English]
Senator Marshall: I agree with that. I did have some Exchange emails with one of the officials in the clerk's office. I was very interested in having the meeting open to the public and indicated my desire to do so.
The Chair: Okay.
Senator Furey.
Senator Furey: Yes, chair, I have really no problem either which way, but I think because this is a preliminary meeting we should perhaps ask the Auditor General himself if he would prefer to do it in camera or if we prefer to have cameras in here and go public for this meeting. I do not particularly care either which way, but I think it would serve us well if we sought the views of the Auditor General himself.
The Chair: Mr. Ferguson.
Michael Ferguson, Auditor General of Canada, Office of the Auditor General of Canada: Thank you, Mr. Chair. We are here to help. Really I have no preference, whatever is the wish of the committee. I am quite prepared to have the discussion in public. It really does not matter to me.
The Chair: Senator Downe, do you want to say anything?
Does the Liberal side have a problem?
Senator Munson: No, we never had a problem.
The Chair: Well, I just asked.
Is it agreed, then, that we open the meeting up?
Hon. Senators: Agreed.
The Chair: Okay, let us take a minute and invite the press in if they wish.
Mr. Ferguson, first, I would like to welcome you here, as well as Mr. MacLellan and Mr. Stock. I know it took some doing to come here quickly and, on behalf of all my colleagues, I would like to say that we appreciate it.
I understand you have an opening statement, Mr. Ferguson, so please proceed.
Mr. Ferguson: Mr. Chair, honourable senators, thank you for inviting me to discuss our acceptance of the Senate's invitation to conduct a comprehensive audit of the Senate, including senators' expenses.
With me today are Clyde MacLellan, Assistant Auditor General, and Gordon Stock, Principal.
[Translation]
I know that you have many questions about this audit. However, it is too early for me to be able to provide you with a detailed list of what the audit will or will not include.
I can tell you that we will select the most important processes in place and resources used by senators to conduct Senate business. We will also review the work done by the internal and external auditors of the Senate.
[English]
One question that senators and others may be asking is how this audit would be different from our past audit. Our past audit examined the application of policies and procedures for the Senate's administrative services. This audit's focus will likely include senators' expenses and samples of their offices' transactions but, as stated, we have yet to determine the scope of the audit.
I would like to emphasize that I do not see my audit including the Senate's constitutional, legislative or public policy roles.
[Translation]
We will conduct this audit as we conduct all of our audits — in accordance with professional standards. We will proceed in three phases: planning, examination and reporting. In addition, as in all of our audits, we will ensure that our work is undertaken in an independent and objective manner.
When necessary, we will make recommendations to further strengthen current internal practices and procedures. I want to assure the committee that we have sufficient resources to conduct this audit. As we did in our last audit, we may engage experts, if the need arises.
[English]
We expect to discuss the audit plan with the clerk and the audit subcommittee prior to the end of the planning phase and explain the scope and objectives of the audit. After we finalize the audit plan, we will gather and examine evidence that we believe is necessary to conduct the work, allowing us to conclude on our audit objectives.
During the reporting phase, we will confirm and validate the facts in a draft report to the clerk and audit subcommittee. The results of our work will be presented in the form of reports addressed to the Speaker for presentation in the Senate.
It is too early for us to fix a date for reporting as we need to complete our planning. Throughout the audit, we will communicate regularly with the clerk and the audit subcommittee.
[Translation]
Mr. Chair, this concludes my comments. We would be pleased to answer any questions the committee members may have.
[English]
Senator Furey: Thank you, Mr. Ferguson for coming. Thank you, Mr. MacLellan and Mr. Stock.
How soon, sir, do you think you could give us a timeline with respect to when you could start and how long the three different stages will take?
Mr. Ferguson: It is difficult to give precise timelines.
In terms of starting, we are already in the process of identifying the staff that will be needed. Once we have the staff in place, they will come together, do that planning phase and go through all of the validation of the planning. Then we will start the examination.
Again, at this point it is virtually impossible to say how long each component will take, but what I can say is that it is our intention to get the staff assigned to this piece of work as quickly as possible and get it started as quickly as possible.
Senator Furey: Okay. Thank you.
[Translation]
Senator Carignan: Auditor General, the letter you sent to the Speaker of the Senate, Senator Kinsella — regarding the acceptance of the mandate issued to you by the Senate — states the following:
The report on our audit findings will be provided to you as Speaker of the Senate.
Will that report contain only findings, or will it also set out recommendations — if any shortcomings are identified — to remedy the situation and prevent it from happening again? I think one of the audit objectives is to identify any shortcomings.
[English]
Mr. Ferguson: It is our intention to conduct this audit in the same manner as we would conduct any similar type of work. It would be our intention that in the report we would make recommendations in areas where we feel those recommendations could be useful and could improve practices or policies. Certainly, as I said, that is our intention, namely to do it the same way as we would do any piece of work and make recommendations where we feel they are warranted.
The Chair: As you know, Mr. Ferguson, there was an Ernst & Young audit done on expenses in 2009-10 and then I think in 2010-11 the Auditor General did an audit, plus we have a number of private audits on financial statements. Are those taken into consideration in your planning stage going forward?
Mr. Ferguson: Certainly it is a normal part of our practice to look at any work that has been done by other auditors, to look at internal controls and at all of those types of things and determine where we can place reliance.
Again, it is a process of making an assessment. It may be a case where, even though something has been subject to an audit in the past, we may want to look at it from either a different perspective or in more detail. We may go further or we may look at some things from a slightly different perspective, but we would not repeat work that another auditor has done that we feel is still relevant and timely. Wherever we can rely on regarding that work, we will, but that does not mean we would not do other procedures or look at something in a bit more detail.
The Chair: While we have the media here, perhaps you could spend a minute explaining the difference between what the Auditor General does as a performance audit as apart from an audit of financial statements that you would be doing for a company.
Mr. Ferguson: Certainly. An audit of financial statements — in fact, more than half of our practice in the Office of the Auditor General is auditing financial statements — expresses an opinion on the fairness of a set of financial statements.
When you audit a set of financial statements, it is much more. What you are doing, the procedures, are sort of similar year to year. You can always come across issues in a financial statement audit from year to year, but because you are doing them regularly, you know exactly what it is that you are likely to come up against. Financial audits tend to be easier to plan and estimate how much time they are going to take. They are looking at a set of financial statements, balance sheets, income statements, that type of thing, and expressing an opinion on whether they are fairly presented.
In a performance or a comprehensive audit, we will look at other things. We will look at practices. We will look at programs and how they are running. We will look at performance measurements. It is much more expansive.
It can be the case in a comprehensive audit that we would do a financial statement audit in conjunction with the other work, the performance type of work.
In performance audits, when you are going in it is harder to estimate how long it will take because it is more of an unknown. We have to set the objectives, determine the criteria we are auditing against, and then we have to plan it. That would be how I would describe the difference.
Senator Marshall: I have two questions. One is with regard to the audit process. Did I understand you correctly that the process used during the last audit would be similar to this process and that we would get periodic updates?
Mr. Ferguson: Certainly our intention — and again, that is the way we conduct every performance audit — is that we are going through these types of audits and we are identifying things that we think are issues. We want to make sure that we are validating those and that there is no information that we are missing and that type of thing.
As I said in my opening statement, we expect that there would be touch points with the clerk and with the audit subcommittee as we are going through the process. That is normal, the way we would conduct these things with departments. As we go through a performance audit with a department, for example, and we are identifying things, we will go back and discuss those with the department. Our intention is to conduct this in a similar manner to how we conducted the last audit in this area, and how we conduct all of our audits. However, at the end of the day we are independent. We will take all the information, but then we will draw our own conclusions.
Senator Marshall: My second question relates to the reporting process. Is it envisioned that there would be one report? Is there any contemplation of more than one report, or do we expect it all to come at the one time?
Mr. Ferguson: I referred in my opening comments to reports. I think there is the possibility — and I want to leave open the possibility — that there could be more than one report. Also, normally in our performance audits we would often conduct follow-up audits after we have made recommendations, so we would need to consider that.
If we were going to report more than once, again it would be in the same manner. The report goes through the process; each report would get tabled and each one would follow that process. Depending on the size of what we will look at, we need to consider whether multiple reporting might be a way of helping people understand what we are finding, how the process is going and what progress is being made. If we think it will take a while before we can report, multiple reports may be a better way to do it. However, we still have not determined that.
[Translation]
Senator Massicotte: Mr. Ferguson, I want to thank you and your colleagues for joining us this evening.
Could you give us an overview of the scope of your mandate? Would it be reasonable to think that a team of 5 to 10 people could carry out the work within 3 to 4 months?
[English]
Mr. Ferguson: Again, without setting any timelines on it, many of our performance audits, from the point in time that we start until the point in time that we present the audit, can take 18 months. We cannot set those time frames until we have actually done the planning. I do not know how long it will take. Everything we do goes through a very rigorous process, and we have to make sure that we are complying with standards, that we are getting all the evidence and information we need, and that we are building our file.
This will be a significant undertaking. It will mean we will have to dedicate staff to it. How long it will take, I am not sure, but that is why I referred to the fact that if we thought that to get from beginning to end might take 18 months, then that is where we might say that maybe it makes sense to have some interim report in this exercise as well.
We still have to determine those things. I do not think we have ever done an audit in two months. I would be very surprised if we ever did an audit in four months. Trying to determine that time frame is something we still have to do.
[Translation]
Senator Massicotte: So we can expect the process to take at least 6 months, and up to 18 months?
[English]
Mr. Ferguson: Again, I would not expect that we would be able to report anything in a two- to four-month time frame. Whether we can report something in six months, I would not commit to that either. It is difficult to say, but we will go through the planning and lay out what we think needs to be done, how many items we will look at and what items we will look at. When we have planned that out, we will move backwards from how long we think that will take us and say, ``Is there any opportunity in there for us to complete a piece of this work earlier and report on it and when would that be?'' That would be something that we would bring back to the audit subcommittee, to the clerk, to say that once we have the plan done, this is now what we think our time frames will be.
[Translation]
Senator Massicotte: I assume that your audit will probably be typical of that type of review. So you should be examining the systems and internal controls in place to determine whether or not they are satisfactory. You would then identify weaknesses and determine what their consequences are. Is that right?
[English]
Mr. Ferguson: In any audit, we do look at systems of internal controls, how things are administered and that sort of thing. I think that in this particular instance we do have the advantage of having been in recently to look at the practices of the administration and how the administration manages much of the business of the Senate. Our knowledge of those processes is recent, so that is a good thing that will help us. If we had not had that, we would have to build up all that knowledge about how things are processed. That is a good thing, and we will take that into account.
Even though we will take it into account, this audit is different. This audit will be more about not just how does the administration manage things, but it will be looking at things at a more detailed level.
[Translation]
Senator Massicotte: Before I wrap up, I would like to make a comment. If the audit takes 18 months, at least 10 senators will have retired by the time it is completed. So I encourage you to try to move a bit faster, as I think it would be important for you to complete your audit before their retirement takes place.
[English]
Mr. Ferguson: That will be one thing that we determine when we look at it, when we divide up our whole plan, how we prioritize which things we need to look at first and that type of thing. There will be many considerations in that. Retirement was not one I had originally thought of, but maybe I will have to consider that. There will be many things we have to consider in determining how to prioritize that.
Senator Downe: Mr. Ferguson, you indicated in your opening remarks that notwithstanding the cutbacks in your budget and your staff, you still have resources that you require to do the audit. Will there be any cost recovery to the Senate? Do we have to pay any of the expenses, or do you absorb that in your overall budget?
Mr. Ferguson: No, there will be no charge to the Senate for the work we do.
Senator Downe: That is the best news I have heard all night, chair.
Senator Cordy: My daughter is a C.A. She has worked for an accounting firm and she also worked in private industry. She said it is much easier doing the audit than being audited. Nonetheless, we welcome you here to the Senate.
You spoke earlier about the terms of reference. Will the terms of reference be related to the motion that was passed in the Senate or will you be speaking with the audit committee to determine the exact terms of reference, or is that still in the planning stages?
Mr. Ferguson: Again, we will determine what needs to be audited and how we are going to audit it. We will consult with the audit committee and others that need to be consulted with as we make that determination, but again, it is all part of the planning process. It is all part of getting information, getting input on what needs to be done. Once we have all that information, then we will set the actual scope of the audit.
Senator Cordy: You said earlier that this audit will be somewhat different than the audits that the Senate has gone through in the past number of years. When you are auditing senators' expenses, will you be looking at every senator, will it just be random audits, or is that something yet to be determined?
Mr. Ferguson: Those are the types of questions that we have to consider as we are doing the planning and establishing. For each senator, how many items would we look at? All of those things would usually be based on statistics, but we have to consider whether we want to look at each and every senator or not, and that has not been determined yet.
Senator Cordy: Earlier you said that you would be presenting the final report to the Speaker for presentation in the Senate. Will updates be given to the audit committee and to the committee as a whole?
My other question concerns the notion that there might be several final reports along the way. Will they be given to the Internal Economy Committee before they are given to the Speaker in the Senate and to senators? Maybe you do not know that yet.
Mr. Ferguson: Our intention is that if we decide that this is something that needs to be reported on in different phases, each report would go through the process of finalization, completion, all of the normal steps, and then submitted to the Senate as a whole for tabling. If we decide it is something that needs to be divided up into more than one report, each report would go through that process.
Each report that we would end up tabling at the Senate would go through multiple stages to validate and make sure that we have got our facts right. That type of validation, right now our anticipation is we would work that through. Obviously if we find some things that we are questioning about an individual senator, the individual senator will know what things we are asking about. That is not going to be a secret that we try to keep from the senator. If we find things related to a specific senator, we need to talk about those and understand the situation, but as we are pulling together reports, the intention is that we would validate those through the clerk and through the audit subcommittee. At least that is the way that we are anticipating it would work.
Senator Cordy: A question you probably cannot answer now is how far back would you go? I guess that would depend on individual circumstances and what you find as you start auditing.
Mr. Ferguson: You are absolutely right. That is another one of the variables we have to consider when we determine how much testing and examination we are going to do: how many senators, how far back, how many claims. Are there other aspects we need to look at? There are many things we need to consider as we are doing our plan.
Senator Kinsella: I want to build on Senator Cordy's questions. In our correspondence, I have committed that I will table forthwith any report that we receive from the Auditor General. If I understood from your correspondence, you indicated that you would be publishing the report on your website in short order.
The question that is going through my mind is that I am only able to table a report if the Senate is sitting. I was wondering whether you had some thoughts or some guidance for us if the final report or reports are concluded and you think that they should reach the Senate, is there a mechanism available if the Senate is not sitting because it is a normal break period or, indeed, if there is a prorogation of Parliament? Could you just help us a little bit, at least help me? What do I do with the report if we are not sitting?
Mr. Ferguson: That is a good consideration, something that we need to consider. A normal process when we are releasing reports is that most of our reporting is through the Public Accounts Committee, so we always have to take sitting schedules into consideration. We will do that also in this case.
If we got to a point where we felt something needed to be reported and the Senate was not sitting, that would be something we would then have to work out at that point in time, making sure that we are cognizant and aware of how to do something like that.
Right now, our intention would be to look at the sitting schedule and use that as we are assessing when we might be able to report.
The Chair: Just a follow-up question on that. I noticed in your letter you said that the report will be tabled to you as Speaker of the Senate. I think the last time the procedure was the report was tabled with Internal Economy and Internal Economy presented it to the Senate for debate. The Chair of Internal Economy at that particular time was able to answer questions that senators may have had about the audit and the audit would be part of the process. I am not sure if the Speaker wants to do that, but I was wondering why the change? Will it cause some difficulty? I am not sure.
Go ahead, Mr. Ferguson. Maybe, Speaker Kinsella, you can enlighten us as well.
Mr. Ferguson: Our objective, our intention here is to do this piece of work in the same manner as we do all of our other performance audits. The work that we did last time in the Senate and the work that we did on the administration in the House of Commons, those followed slightly different processes.
In the interests of making sure that everyone understands that this piece of work is done according to our methodology, how we approach all of these pieces of work, we feel in this case that the best thing is if we follow our normal process. As I said, normally we would table, because most of our work, of course, is done for the other place. We feel following that normal process is important in this instance, so that is why the change.
The Chair: Speaking of the other place, the Speaker is in charge of the board, while in the Senate, the senators are in charge of the board, which is the Internal Economy Committee, so it is a little different.
As far as I am concerned, it does not really matter, but it does matter in a way in the sense that at least when it was presented last time, senators were then able to ask questions of Mr. MacLellan and Mr. Stock and yourself as to the audit itself before it was presented in the chamber, and that opportunity will be missed otherwise. There is a bit of a difference.
Mr. Ferguson: When we are tabling something, our normal process does involve an in camera session usually chaired by the Chair of the Public Accounts Committee, but anyone, senators, members, is entitled to attend that in camera. We usually do that just before the report is tabled, so a couple of hours before the report is tabled. We could consider something like that because, again, it is part of our normal process, understanding that I do not appreciate all of the functioning of the Senate and whether something like that would be possible or not.
I think if there are ways to accommodate that type of thing — but, again, there is our normal process. We feel it is important that this whole piece of work be conducted in a manner that is as similar as possible to how we would conduct any other performance audit. Certainly, any of those types of considerations, we would take into account to figure out if we can work that into our normal process.
The Chair: We will put a letter together and get it off to you, you can give it your consideration and we will go from there.
Senator Comeau.
Senator Comeau: Thank you for appearing before us this evening.
Senators on this committee have always wanted to feel confident that the internal controls in place are there to help us spot problem areas. Occasionally, circumstances will happen such that the controls were probably not as effective as we wanted them to be, and I think we are sensing this right now.
That is why I want to bring up the issue of possibly being able to provide interim reports. For example, if you look at the internal controls as one of the initial steps in your program, if we could sense that there are deficiencies in our internal controls, we would certainly like to be able to tackle them and not have to wait until the whole audit is done.
In effect, I am making a pitch for early advice to us on how we can improve. Most of us are not auditors, and we do depend on internal controls to help us, as a committee, spot problem areas. Interim reports would be of use to us.
Mr. Ferguson: Again, we will take all of those suggestions into consideration as we are doing our planning and trying to decide how we divide up the work and report on it.
There are two aspects to dealing with internal controls: How were they designed — so have they been well designed to do what they were intended to do — and then how have they been implemented and are the processes being followed?
We have a certain amount of knowledge on that already from the last piece of work we did, but we will go back into the whole area of internal controls and decide whether there is something else we need to do there. Maybe it is more work in terms of the design of the internal controls rather than the application. We will look at those types of things and then take into consideration how we do the reporting and whether we do interim reporting.
The Chair: Any other questions, colleagues?
Thank you very much, Mr. Ferguson, Mr. MacLellan and Mr. Stock. We very much appreciate the discussion we have had today. I am sure the audit committee is looking forward to meeting with you to discuss the process going forward. Thanks very much Mr. Ferguson.
Mr. Ferguson: Thank you, Mr. Chair.
The Chair: The next item on the agenda is the implementation of the travel policy. Ms. Proulx will brief us. Travel policy was passed and now we have to administer it, so she will give us a quick briefing on the administration of it.
We are not going in camera. You wanted it open; it is open, public. Proceed.
Nicole Proulx, Director of Finance and Procurement, Senate of Canada: This committee tabled the twenty-fifth report, which provides some changes to the senators' travel policy with the aim of improving internal controls, risk mitigation, increasing transparency and public understanding of the Senate and its work.
The twenty-fifth report was adopted in the Senate, and I will read the final recommendation, which was that:
[Translation]
That the internal economy committee be authorized to make necessary consequential amendments to all existing policies and guidelines and to designate the dates that the above recommendations shall take effect and communicate them to senators.
[English]
The Chair: You all have a copy of the letter in front of you. I need you to agree for me to send it to all senators because we want to make sure that senators are well aware of the implementation strategy. I think six or seven of them will be implemented on July 1. A number of others cannot be implemented that quickly because they have to do with numbers over a period of a year. Of course, we are well into the year, so I think there are four that will be implemented on October 1.
They had to work out how it will be done. In other words, if we change it to 20 days, that is per diems, plus the 20 days that we are allowed to be here outside of Senate sittings to claim expenses. Then we have the question of the travel policy, of the 52 and 12, which gets confusing and requires a bit of extra work to make sure that we do it right, so that will not be implemented until October 1.
I would like to remind senators and make it clear that we will make it very clear to all senators: Pretend that you are starting now on all of them and govern yourselves accordingly.
Senator Fraser: This may seem like a minor point, chair, but I did raise it at an earlier meeting. It has to do with the mileage logs. I would respectfully ask again that for purposes of travel, road travel, simply between a senator's home and Ottawa — home outside Ottawa, outside the National Capital Region — that we be able to file with the Senate administration the number of kilometres involved. Pick your choice; make it Google Maps, or whatever, but make that a standard thing. Mileage can vary not only with the erratic odometer on my cars, which may be unique to me, but depending on which lane you are driving in, depending on how many curves you go around and so forth. If we could settle on a standard number for that purpose — between home and Ottawa and back again — we could just insert the number and that might simplify things for everyone.
The Chair: The problem we have is that this was adopted by the Senate, but we will take into consideration what you have said.
We do not want to make the administration more difficult. We want to try to make it easier. We will do what we have to do to take your account into consideration, Senator Fraser, but it was adopted by the Senate. We are logged in, so to speak.
Senator Fraser: I am not saying I will not keep a log, but it is the number of kilometres. Why is it 192.5 one day and 189.5 another?
The Chair: I understand.
Senator Comeau.
Senator Comeau: I was looking at item 3. Notwithstanding the fact that this was passed by the Senate, I wanted to go into this ``regardless of the costs.'' It says that travellers are required to provide receipts when seeking reimbursement of taxi expenses, regardless of the costs.
There was an impression going around that receipts were not required for certain expenses. Was this it?
The Chair: Receipts are required for all taxis, except under the travel policy. From home to the airport, it was $30 or a receipt, so if you did not have a receipt you could charge $30.
Senator Comeau: I wanted to get this from Ms. Proulx. Could it be confirmed that this is the issue of travelling from here to the airport, the only issue arising that there were no taxi receipts required?
Ms. Proulx: Exactly. Taxi receipts were required for all taxi travel, except if it was from and to the airport and if it was under $30.
Senator Comeau: This is the only one.
Ms. Proulx: Receipts were required for all of them.
The Chair: Senator Kinsella.
Senator Kinsella: I want to support what Senator Fraser was saying, but I accept your explanation, chair.
I have been keeping a log for years. Depending on which vehicle I take to Fredericton, I can either have 1,016 miles garage-to-garage or 945 kilometres. That is only one variable.
The major variable is that to get to the Maritimes, we have to get around Montreal. Depending on the day you leave and the time you leave, you are going to avoid the Métropolitain because you could be there for an hour. That means if you cross at Hawkesbury and go the north shore, you put on extra miles or kilometres. If you go out to the Eastern Townships to get from Sherbrooke to New Brunswick, the shortcut is through the United States of America, and I do not know whether it is illegal to leave the country, but there you save 100 miles.
As we submit these things, we need some common sense with this.
The Chair: Out on the prairies, we can see ourselves arriving, actually.
Senator Munson: Just a clarification on the 12 points, and you said govern yourselves accordingly. The first five will be implemented on July 1 and the others will be implemented on October 1, but to govern ourselves accordingly, these twelve points will go back to the fiscal year of April 1? No?
The Chair: It will start from October 1.
Senator Munson: October 1. Thank you.
The Chair: Do we need a motion on this? I need a motion.
Senator Campbell: So moved.
Senator Cordy: Sorry. On number 4, selection of a senator's designated traveller, I get that. With the exception of senators, who would they claim other than their partner or their spouse?
The Chair: Sometimes they designate an aide, as far as I know.
We just thought that the two leaders had exceptional circumstances, so we did not put it in, but they could only claim one, so there you go.
Senator Campbell, you moved the motion.
Senator Campbell: I did.
The Chair: Thank you, Senator Campbell.
All in favour?
Hon. Senators: Agreed.
The Chair: Thank you very much.
(The committee adjourned.)