Honourable senators, the Senate is resolved into a Committee of the Whole in order to receive Karen Hogan respecting her appointment as Auditor General of Canada.

Honourable senators, in a Committee of the Whole senators shall address the chair but need not stand. Under the Rules the speaking time is 10 minutes, including questions and answers, but, as ordered earlier today, if a senator does not use all of his or her time, the balance can be yielded to another senator. I would now invite the witness to enter.

(Pursuant to the Order of the Senate, Karen Hogan was escorted to a seat in the Senate chamber.)

Welcome to the Senate. I would now ask you to make your opening remarks of at most five minutes.

Thank you, Madam Chair. Good afternoon to you and to all.

I am very honoured to stand before you today and humbled to think that I may be given the opportunity to serve my fellow Canadians as Auditor General of Canada. In my view, the role of the Auditor General is integral to the accountability portion of our democratic system of government.

The Auditor General provides Parliament and the three territorial legislatures with independent, objective, credible information and assurance about the stewardship of public funds. In other words, senators and elected officials can rely on the Auditor General to bring them independent information about how organizations are managing programs for Canadians.

The relationship between the Auditor General and the parliamentary institutions is based on trust. Ethics, integrity and independence are fundamental to my own values and are also at the heart of the work of the Auditor General. If I am appointed Auditor General, I will endeavour to serve Parliament to the best of my abilities.

I was born in Montreal, and that is where I started my career. I’ve been a chartered professional accountant for more than 25 years. My career has been split almost equally between the public and private sectors. I’ve worked at the Office of the Auditor General for nearly 14 years. The office appealed to me because of its leadership, the people who work there and the work that they do. I want to recognize past auditors general and the current Interim Auditor General, Sylvain Ricard.

I firmly believe in the importance of the institution and the value of its work. That work touches virtually every area of government programs, services and spending and as a result most, if not all the groups, both large and small, that make up this great country of ours.

In the past, our office has focused on national and regional issues that matter to parliamentarians and Canadians, whether economic, environmental or social. Some concerns cut so deep that we audit them repeatedly, such as Indigenous issues and climate change.

If I am appointed Auditor General, I will focus on issues of national importance, such as the government’s infrastructure investments and COVID-19 spending. I will also focus on issues of regional impact, such as fisheries, and the oil and gas sector.

Recognizing the Senate’s unique role as a voice for under-represented groups, the audits I would choose would focus on supporting the work of all parliamentarians.

I led performance audits at the government level for many years before moving on to mainly financial audits. For nearly seven years, I was responsible for auditing the consolidated financial statements of the Government of Canada, which is the country’s biggest financial audit. In that role, I worked closely with Crown corporation and department officials to resolve sensitive and complex auditing problems.

Since I was able to experience auditing from the point of view of the auditor and of the person responsible for preparing the financial statements, I believe that I was particularly well placed to understand these organizations’ challenges. Even though we did not always agree, particularly with regard to the government’s approach for estimating its non-current liabilities, I believe that my analysis was fair and thorough. After several years of discussion with senior officials, changes were made that, in my opinion, enhance transparency and accountability with regard to pension obligations.

I was and continue to be inspired by the people working in the office. They are caring, clever, competent and extremely intelligent and professional individuals, who are always careful to meet high standards while contributing to a well-managed, responsible government.

It has been my privilege to work alongside these individuals and to have played a part in shaping the strategic direction of the office and leading organizational change. It would be an even greater honour now to have the opportunity to continue this work of guiding the organization to become an even better version of itself.

If I am appointed Auditor General, I will lead the office with empathy and compassion, with a focus on employees’ well-being while inspiring them to deliver on the vision and mission of our office. I will also focus on modernizing how we work so that we can keep pace with significant shifts in the auditing world and the government landscape.

In closing, I would like to acknowledge the efforts of the many front-line workers and thank them for their dedication to Canadians during this global crisis. I also want to point out the ongoing dedication of the public servants who are supporting the country during this difficult time.

This concludes my opening remarks, Madam Chair.

I would be pleased to take questions from the honourable senators.

Thank you, Ms. Hogan.

Welcome to the Senate of Canada, Ms. Hogan.

My first question has to do with the process around your appointment. Could you sum up the process you went through before coming before us today? When and how did you apply? What tests and interviews did you take and who conducted those interviews?

I applied online through the Privy Council Office website. I knew that the position had to be filled because I was working at the office. I applied online in January.

I was invited for an interview on February 19. The interview committee consisted of six people. Following the interview, a few days later, I was invited to take psychometric tests. From time to time, a representative from the Privy Council Office called me to provide an update on the process. We confirmed in early March that I was still interested in the position. A few weeks later, because of the COVID-19 pandemic, I was told that the process was suspended since it was important for Parliament to be involved. Then I received a call from the minister on April 29 to inform me that I was the nominee for the Auditor General position.

That’s good.

My next question concerns prudent use of taxpayer dollars at the end of the day. Particularly as an auditor, you know that your main obligation is to make sure Canadian taxpayers are getting a solid return on investment. I guess that’s also the ultimate goal of Parliament in terms of our oversight.

Could you please tell me philosophically, if you believe that any auditor in any particular audit, what would be the ratio of an appropriate return on investment? For example, if someone is conducting an audit of a department or a body and you spent $26 million or $27 million on that audit, would a return of $150,000 be considered an appropriate return on investment?

Return on investment is a measure that is often used to gauge whether or not a smart investment was made by a corporation.

When it comes to an audit, the time it takes to make sure that you dig into the issues in the right fashion and provide some value to a corporation can’t always be measured by just a simple return on investment and a monetary calculation. Proving accountability and transparency doesn’t have a price tag, in my view. Any time we can improve that, we should make every effort to do so.

If I were appointed Auditor General, I would want to ensure that the recommendations that we would bring out of all our audits, whether they be financial or performance audits, would be focused on improving outcomes and ensuring that the government remains accountable and transparent.

I think that’s very appropriate, but don’t you think there still has to be some kind of monetary issue attached? At the end of the day, money is not infinite. If money was infinite, of course, then there wouldn’t be an issue.

Absolutely. It’s finding the delicate balance between spending the time needed and finding that right return.

Honestly, once you’ve started an audit, it’s important to make sure that you get to the bottom of what you’ve found. Any good auditor will tell you that once you’ve told me something, I can’t ignore it, and I will make sure that I consider it when I weigh the pros and cons and make recommendations.

Here is my third question, Ms. Hogan: Earlier this week the interim Auditor General, Sylvain Ricard, appeared before the House of Commons Finance Committee and indicated that, as a result of the current government’s refusal to provide adequate funding, the Auditor General’s office will not be able to undertake any performance audits this year.

Normally, of course, the Auditor General conducts approximately 27 audits each year. Funding constraints had already reduced this to 14 previous audits a year, and now the interim Auditor General indicated there would be zero performance audits undertaken this year. In essence, the Auditor General has a legislated mandate to conduct performance audits but no money to do so, going back to my point, of course, that you need candy in order to play or you can’t audit.

Could you provide some insight as to how you plan to address this problem? What is the role of the Auditor General’s office if you don’t have funding from the government to conduct your operations this year?

I firmly believe that it’s very important that the Office of the Auditor General be properly funded and resourced. The office plays a very important and key role in the accountability mechanism of our democratic institution.

When Mr. Ricard was at a committee earlier this week, he referred to needing to delay audits. He also mentioned, and I would remind you, that we have three chapters that were ready to be tabled in March. Unfortunately, we were unable to do so. So there is some work that would be ready to present to Parliament.

In the coming year, our efforts will be focused on investing in Canada and COVID-19. There will be some audits. If I am appointed Auditor General, those would be my two biggest priorities. I commit that I will do my best to get timely information to Parliament as soon as possible about those two initiatives.

Of course, we don’t know how long these COVID programs will run, and inevitably and invariably, those audits would take place at the end of those programs.

Looking at the current funding situation problem that the Auditor General’s office is facing, have we ever had any precedent of this nature in the past?

To my knowledge, we haven’t. I’ve been with the office for 14 years, and I don’t recall us being in such a situation.

For the funding, I do believe it’s important that we continue to have conversations, and I would be committed to discussing this with members of the Privy Council Office and the government in order to ensure that we get funding. Funding in the short term is important. What’s even more important, in my mind, is setting up an independent funding mechanism to ensure that our office is able to have predictable, long-term funding. That mechanism, in needing to be independent, would obviously also include, in my view, a role for Parliament to make sure that we are held accountable to the funds that we spend.

Mr. Ricard also told the House of Commons Finance Committee:

Given the nature and extent of the work that we believe is required to conduct the audits of the Investing in Canada plan and the COVID-19 response, and in light of our limited resources, we had to revisit the timing for completing and reporting on our current and future performance audit work.

Can you please elaborate on the consequences of these delays in your office’s ability to ensure financial accountability, which is, of course, your number one priority within the Government of Canada? How seriously do these delays impinge on your office’s ability to carry out its mandate?

Our office will be focused in the short term, and, obviously, probably in the medium term, on taking care of audits related to COVID and the Investing in Canada plan.

The audits that we originally had planned for in the fall, I believe, have been delayed indefinitely at this point because we felt it was very important to focus our resources on these two important audits that matter to Parliament and Canadians.

Obviously when you’re unable to produce a larger volume of work, it takes away from the role of the office to support Parliament in holding government to account. So we will do our best to ensure that we can continue to get access to that funding, and it will be something that I will take very seriously should I be appointed.

You also have an ally in the Official Opposition, both in this chamber and the other chamber; we agree that accountability and transparency are important, regardless of which government is in power.

When the House of Commons asked the Auditor General to audit COVID-19 spending, the House of Commons also called upon the government to take such measures as are necessary to ensure that the Auditor General has sufficient resources to conduct the work on COVID-19 spending, on the audit infrastructure and special warrant audit. The audit of the $187 billion infrastructure program is to be completed by January 29 of next year, and the audits of special warrants and COVID-19 programs is scheduled by June 1.

Given the current government’s refusal to provide the funding —

I’m sorry, Senator Housakos, your time has elapsed.

Welcome, Ms. Hogan. Senator Renée Dupuis, from Quebec, and I have discussed some issues, and I have a few questions for you on behalf of us both.

As you said, you’re applying for a job as an officer of Parliament. This is an extremely important job. That’s why my first question is about your understanding of the parliamentary context. What power does the Senate have over its own governance and the exercise of its parliamentary privilege?

The Senate is responsible for its own governance and for overseeing all of its expenses. Our office can conduct audits only if the Senate invites it to. It would be my pleasure to help you improve your accountability and oversight of your expenses.

Thank you. I will give you an opportunity right now with the second question Senator Dupuis and I wanted to ask you, which has to do with the follow-up to the recommendations that came out of the Auditor General’s report in 2015 on Senate expenses between April 1, 2011, and March 31, 2013. You noted significant problems and shortcomings related to oversight, accountability and transparency.

My question is twofold. First, are you aware of the remedial measures the Senate has taken since then to improve its governance? Second, one of your recommendations involved creating what the Auditor General called an independent, external body to audit the Senate. In light of the changes the Senate has made as a result of the 2015 report, are you of the opinion that an audit committee composed of senators and external members, who would meet primarily in public, would be better suited to this context than an entirely external body, as was proposed, given parliamentary privilege?

Thank you for that clarification. I wasn’t involved in the Senate audit at all. In preparation for today’s appearance, I took the time to read the report, and I noted that the Senate has started to make changes in response to our recommendations. As for the independent committee, as an external auditor for whom independence is all-important, yes, in order for an audit to be objective, I believe that having independent members would allow any organization to ensure that it’s under proper oversight and that the decision-making process is objective and independent.

In the context of parliamentary privilege, do you think that a more suitable arrangement for the Senate would be a committee consisting of senators and external members, which would meet primarily in public? Do you think an adaptation like that would suit the Senate, as one of the two houses of Parliament?

Taking into consideration the Senate’s responsibility and its own governance, I can’t offer an opinion on what you believe to be the best decision, but I encourage you to improve accountability and oversight. Also, as an external auditor, I think that independence is essential for accountability.

Thank you.

Welcome to the Senate, and congratulations on your nomination to the position of Auditor General of Canada.

You have an impressive private and public sector professional and leadership background. I’m very thankful to see that someone of your calibre has put yourself forward for this extremely important and demanding role, especially during this historically difficult period for our country.

I have two questions for you this afternoon. When our former Auditor General, Mr. Ferguson, sat in your chair in the Senate back in 2011, Senator Nancy Ruth asked him a question regarding auditing the government’s commitment to gender-based analysis. As you know, today’s government has a commitment to gender-based analysis plus, an analytical process, which you well know, used to assess how diverse groups of women, men and non-binary people, taking into account the intersectionality of multiple identity factors, may experience policies, programs and initiatives.

Could you please tell us how familiar you are with the Government of Canada’s performance in meeting that commitment? What would you do to build upon that?

Unfortunately, I’m not that familiar with their performance. I haven’t been part of any of the bodies of work that I know we’ve undertaken as an office in order to look at this issue.

Part of the role of the Auditor General is to ensure that the government follows the policies it sets and honours the commitments it makes.

In order to be able to answer your question, I would have to look into what the government has done. Should we decide to go back there, obviously that would be the angle we would take in making sure they have honoured the commitments they made.

Thank you very much. We’d love to hear more later.

My second question has to do with operating in a resource-constrained environment, again following up on the questions posed by Senator Housakos. As we all know, due to the COVID-19 pandemic, the rate and amounts of government expenditures have increased dramatically in order to urgently support Canadians.

We’ve heard mention — and it has been mentioned already here today — of resource constraints in your office prior to this pandemic. These may be exacerbated further in the future; we don’t know. We hear that you will certainly advocate for the funding you will need. However, given that there may be further exacerbation of this resource constraint, what creative measures would you take to ensure you can still fulfill your role in providing Parliament with the information we will need to monitor government spending and program results, especially after this period of significant emergency spending?

You are correct in noting that prior to the COVID-19 pandemic, we did have resource constraints and capacity issues as a result of increased government spending and the creation of new Crown corporations, which added to our workload and did not come with additional funding. COVID-19 has highlighted that we need to focus so many of our resources on delivering a product that will help parliamentarians hold the government to account for the spending during this pandemic.

The creative ways in which I could approach this — which I’ve started to explore, and will continue to do within our office — are that we could report information faster to Parliament so that we could hopefully encourage the government to take action sooner. We could explore real-time auditing instead of the traditional hindsight auditing. In that way, we could disseminate information sooner so that adjustments can be made as soon as possible to improve programs and delivery to Canadians.

Thank you very much.

First, I would like to congratulate you. It is nice to listen to a prospective auditor general who is bilingual. Can you explain how you see your role in relation to politics? You are an officer of Parliament. Should politics have an impact on your decisions and your recommendations? Should the political impact of your recommendations be considered?

I am happy that I am bilingual. I must thank my parents for the gift of having me learn French when I was young. Thank you. As you mentioned, our office is an officer of Parliament. Two main characteristics of the Office of the Auditor General are independence and objectivity.

We therefore do not comment on politics or the government’s decisions, but we must ensure that the government is adhering to its own policies. If I become the Auditor General, it will be very important for me to remain honest, to respect my values as a person of integrity and to examine every issue in an objective manner.

Your job is to investigate and conduct audits to ensure that Canadians’ money is being well spent. This year, we’ve spent more than ever before in our country’s history. The Parliamentary Budget Officer is saying it’s about $172 billion. Where will you start?

As you mentioned, the COVID-19 pandemic involves a lot of spending. Once we received the recommendation to start the audit, we started planning. We’re still in that process.

My first step would be to ensure that I understand the full extent of the spending, so that I can then communicate with the deputy ministers to find out their concerns and speak to parliamentarians to ensure that we can start auditing the most important sectors or the sectors where we could make a greater impact more quickly.

I believe that the post-COVID-19 audit will take more than a year. We still don’t know whether there will be several reports or one large report. All of these decisions are yet to be made, but we will try to split it all into blocks that will be easier for us to manage and audit and for Canadians to understand, and that will enable us to work more effectively with parliamentarians.

In response to Senator Housakos’s question earlier regarding a cost-benefit analysis, you said that there wasn’t really a cost-benefit ratio, that there wasn’t necessarily minor spending and that you would examine the various aspects to ensure that best practices were followed. However, you just said that you would review whatever has the biggest financial impact. Do you see a contradiction there?

I’m sorry; perhaps I didn’t explain myself properly. What I meant to say is whatever has the greatest impact on Canadians. Obviously, sometimes that’s where the most money is spent, but other times it’s an essential service or program for Canadians. I would want to be sure to strike a balance between money spent and the impact that has on improving the lives of Canadians.

Normally, when you do your audit, you have to ensure that spending is done according to the directives, policies and parameters in place. How will you conduct your audit or your analyses if the directive is to send money no matter what and fraud is no big deal?

In planning any audit, as an auditor, we have to consider fraud or the risk of fraud and ensure that if the risk is high, the procedures are followed.

For COVID-19, the government acted quickly and just like in any organization when we act quickly, I expect there is a risk of error. As an auditor, I expect the departments to follow procedures to identify the errors and after adopting a good policy for addressing the errors, the departments will be able to recover the money with the help of some sort of mechanism.

I am thinking of the letter that the Secretary of the Treasury Board sent to the departments at the beginning of the COVID-19 crisis, saying that it was important to serve Canadians, but also to document decisions to ensure accountability. We will start there to ensure the decisions were made and well documented and ensure that monitoring was done as well.

Both the person being audited and the auditor could be teleworking and so how will you begin your audits given the constraints of distancing? This establishes certain limits on auditing and working.

We have been working remotely for eight to nine weeks. In my experience, it takes a little longer for the person being audited and the auditor to obtain information. We have a lot of confidence in technology. We must be creative to ensure that we have the right documentation. We have to be patient and recognize that the people who are audited also have difficulty providing us with the information. It is not impossible to conduct an audit remotely. It is just a little more complicated and it takes more time.

You spoke a lot about documentation and the fact that everything must be well documented. Apart from the Treasury Board directive on the obligation to document, there is no mention of it in the act. As I recall, when we were reviewing the Access to Information Act, I had brought forward an amendment on the obligation to document. Does the fact that the government is under no obligation to document its reasons when making a decision present an obstacle for you when doing your audits?

We expect justification for decision-making to be documented in some way, shape or form, absolutely. If it isn’t documented, it’s really difficult to demonstrate that all decisions were made appropriately. So, yes, I would expect that if I were Auditor General.

That’s great, thank you.

Welcome to the Senate, Ms. Hogan. I believe you were born in Montreal, so I’m pleased to welcome another Montrealer here, in Ottawa, to an important position.

My first question is the following. Does the Office of the Auditor General plan to adapt its auditing principles to take the emergency assistance into account? I’m referring to the Canada Emergency Response Benefit, the Canada Emergency Student Benefit, and so on. All of these programs were designed to provide assistance to Canadians quickly, with as little red tape as possible. According to an internal memo reported in the media yesterday, public servants were apparently instructed not to do too many verifications. In your own verifications, will you adapt your audit principles to the operational reality of the pandemic, or will the normal principles apply?

As I just said, when an organization makes a decision quickly, there’s always a risk of error. Yes, we’ll adapt to the fact that the normal processes were likely changed to take distance into account, for example that approvals were probably done electronically instead of through normal channels.

Departments must still have proof that their spending choices were prudent and that they complied with policies that support the sound management of public funds.

Yesterday, the Prime Minister himself said that there are probably 200,000 people collecting the Canada Emergency Response Benefit who maybe shouldn’t be. That’s $400 million in the first month of the program. Does the amount of money at stake justify a more thorough audit?

It’s very hard to say if that amount of money justifies a more thorough audit. All pandemic spending justifies a more thorough audit. Whenever we become aware of possible fraud, we have to investigate. We would expect departments to have processes and mechanisms in place to detect mistakes, follow up, make changes and, if necessary, recoup unwarranted payouts.

My next question is about the fact that you have been with the Auditor General’s office for about 14 years so far. It is a typical question I ask in interviews, but I’m going to ask it of you. You’ve been there for 14 years: What are the lessons learned? What should we do better?

What are the lessons learned for our office and the government?

For your office and for the government, of course.

Our office is one with so many passionate individuals who are incredibly professional and strive to continue to push themselves towards further growth. That is probably the biggest lesson I have learned since I’ve been there; continuously challenging what we do in order to do it better, to provide better results and more value added to Parliament and Canadians. It is probably the one thing I’ve learned the most and what I really respect about our organization. I think that’s something that translates to the government as well. We should all strive to do better and to make Canada better.

Thank you very much for being here. You can hear in the Senate today that we certainly have a variety of different experiences in domestic and international audits, auditors, oversight and developing common principles.

When I looked through your most impressive resume, I saw that you were involved in government-wide testing and the performance audit of the Phoenix payroll system. We know what happened with Phoenix and the untold hardship it has brought upon thousands of our public servants. In fact, our National Finance Committee visited the employees on Victoria Street in Miramichi to talk with them directly, and we gained some profound insight. From that and from your resume, building on experience, I’m interested in what lessons you learned from the Phoenix matter and audit, and how you would implement those kinds of learnings in your role as the Auditor General.

As was mentioned in my opening statement, I was responsible for the audit of the consolidated financial statements of the Government of Canada for about seven years. Almost three of those included extensive, detailed testing related to Phoenix. I know a great deal of my audit team actually visited Miramichi. I want to say that it is extremely important to pay individuals in a timely fashion and in the accurate amount. That’s true of any payment that is made by the government, whether it be old age security, EI, payroll. All amounts that the government pays should be done on time and in the correct amount.

What I learned from all those experiences is that major IT projects are always more complicated and difficult than anyone can envision, and that planning them properly and ensuring that there is good oversight and accountability is incredibly important. I have always firmly believed in telling it like it is and making sure that I provide accurate and comprehensive information to decision makers, and I believe that those are elements that we definitely saw needed to be improved.

If I’m appointed Auditor General, I would like to see our office get involved earlier with significant IT projects that the government is going to undertake. We know that there are many coming down the pipeline and that part of a good governance system should have some form of independent oversight, whether it be our office or established another way within departments that take on big IT projects.

Congratulations on your nomination, it is good to see you here today.

On May 11, 2020, the National Post reported that an internal memo of Employment and Social Development Canada told its employees not to halt payment or trigger investigations for potential abuse in relation to CERB payments. It is my concern — and I have heard you speak about doing the COVID-19 funding audits — that I believe in the last number of years, there have been issues around the amount of funding that the Auditor General’s office already has to conduct audits that you have already booked, and projected over the next three to seven years. Have you received a commitment for funding from the federal government to actually conduct future audits when it comes to COVID-19, as I think it will far exceed the budget that you have now?

As I mentioned earlier, our office has been trying to seek a permanent addition to our funding for several years now. It started back in 2017. We received some money in 2018 and made another request in the most recent budget, which has not yet been tabled.

Funding in the short term is extremely important, but it’s also important to make sure that we can have access to predictable, long-term funding. That funding should not rely on a department that we audit in order to gain access to that funding. I will be committed to trying to make sure our office can be a better resource and funded if I am appointed Auditor General. In parallel, I will continue to work on establishing an independent funding mechanism to ensure long-term funding for our organization to deliver on our mandate.

Specifically in relation to the COVID-19 audits — which you made a commitment here to conducting, and I believe the government has probably made the same commitment — have they identified funding in any of the initiatives or announcements they made, or in discussions with the Auditor General’s office in the last three months, that they would allocate funding for the audits of those programs?

Not to my knowledge have I heard or am I aware of a commitment of such a fashion.

Good afternoon, Ms. Hogan. I too would like to take this opportunity to congratulate you. As you said, you’ve been working for the Office of the Auditor General of Canada for almost 15 years. You’re taking on this role right in the middle of the COVID-19 pandemic, and I’m sure you’ll have plenty of opportunities to conduct audits, so we look forward to your findings.

It is my humble opinion that Canadians would like to know why Canada didn’t have enough masks to handle a health crisis and how we’re going to manage the billions being paid out to help businesses and individuals.

Given your extensive experience, what kind of impact do you think your reports have other than in the media? Are you satisfied with the changes made? Do you think people pay attention when you present your reports?

Our reports have an impact and they’re successful only if Parliament studies them and if the departments keep their commitments. The best way for Parliament to support our office is to study our reports and follow up with the departments.

On our side, I’d like us to continue following up with the departments on a more regular basis to ensure that they’ve kept their commitments.

Thank you very much, Ms. Hogan.

Ms. Hogan, welcome to the Senate. I congratulate you on your nomination.

I wanted to take a moment to reflect that the Auditor General appointment is for a good period of time — it’s 10 years — and in the periods of which we have had various auditors general, we’ve had various priorities adjust and change as they reflect the changing circumstances and personalities of the auditors general. I’m thinking back to J. J. Macdonell, who is the first Auditor General I knew, which goes back a long way. J. J. Macdonell convinced the government of the day to move beyond simply financial compliance to introduce what he called value-for-money audits. At the time, the mandate was changed and value-for-money audits were incorporated in the mandate. He said, “I don’t think this value-for-money audit should take more than 10% of our budget.”

Forty-plus years later, of course, one audit told me it was 78% of the budget. I don’t know what it is today. My point is that value-for-money audits have significantly changed the agenda of the Auditor General and the resource constraints or resource pressures.

There have been some outstanding observers of this. I’m thinking in particular of Donald Savoie, who is probably the leading Canadian expert on public administration and management. In one of his books, he comments on his growth of value for money and says:

 . . . the media and opposition political parties are not about to challenge the work of the OAG, because it is not in their interest to do so. Best to keep spending public money on measures that contribute precious little, other than providing fuel for the blame game by challenging the work of the OAG.

In another book he says, “Officers of Parliament are different from parliamentary committees.” And the Auditor General is, in many respects, amongst the primary officers of Parliament.

Savoie notes:

They work out of Ottawa and can focus exclusively on their mandates free of political considerations. They need not worry about oversight bodies challenging the quality of their work. Sharon Sutherland argues, for example, that the role of the Auditor General has been “flipped on its head” where parliamentary committees have become “stakeholders” and “clients” instead of “the source of [the office’s] role and authority.”

She asks the question: Who regulates the regulator?

I’m not expecting you to embrace the critiques of your office, but I would like you to comment on the exponential growth over this period of time in value-for-money audit processes. Would you at least commit to an independent review of value-for-money audit processes in your organizations to establish what the appropriate balance between financial compliance auditing and value-for-money auditing? It’s an easy question.

I’ve got an answer. Right now, in our current context, our value-for-money auditing, as you call it, or performance auditing, does not occupy a great deal of our budget in that it is discretionary. A lot of our efforts, resources and our auditors are focused on the work that we must do in accordance with legislation, which is financial auditing and special examinations of Crown corporations.

You asked me about someone watching us and whether I would commit to that — absolutely. Our office is already audited by an external audit firm, so our financial statements are audited. Usually, once during every Auditor General’s mandate, the office commits to a peer review by other supreme audit institutes across the world to come in and look at all of our processes, which would include value for money.

I was there when the peer review occurred for Sheila Fraser, I was there with the peer review for Michael Ferguson, and if I was appointed Auditor General, we will have a peer review before the end of my mandate.

Every organization has a culture. There are positives and benefits to every culture, and it is up to the leaders to create a safe environment in order that everyone can bring their best self to work. I’m a firm believer of that and it is part of the leadership style that I bring to our organization and one I think every leader should bring to their organization.

Obviously, as I mentioned earlier, if someone hasn’t documented or doesn’t have a record of why decisions are made or justification for those decisions, it makes it very difficult to then come in and ensure that they have acted with due regard to economy and efficiency and the environment. The focal point of the value-for-money-audit is to make sure those mechanisms are in place, but also to make sure that there are mechanisms in place to measure the outputs and the outcomes.

I would approach situations like that focusing on exactly that, on the outcomes, and ensuring that if we make recommendations, it isn’t to add process but to improve the outcomes and benefits and programs.

As you mentioned and I mentioned in my opening statement, the Indigenous population is definitely an area that our organization and the Office of the Auditor General is always focused on. It was a priority for Ms. Fraser; it was a priority for Mr. Ferguson. In fact, he called the lack of action an “incomprehensible failure.”

If I am appointed and we go in to look at other Indigenous issues, I would start by looking at prior commitments and ensuring that action is being taken. I would encourage Parliament to hold organizations to account for actually delivering on those commitments.

Having been on both sides of the audit relationship, I can appreciate the need for an external auditor to really understand an organization and understand its difficulties in delivering on its mandate. Not having conducted many audits on Indigenous issues, I would personally start there, to make sure that I really understood the concerns and the pressures and then focus on coming up with recommendations that would improve the situation, and then hold departments to account to honour their commitments to fix things.

Thanks for joining us and congratulations on getting here.

In the short time that we’ve spent with you already, I know that you understand both sides of the job that you’re hopefully about to move into, the professional side of the country’s Auditor General and the CEO role, the leadership side of that job. That’s evident from what you’ve said already.

I want to explore very quickly the leadership part of it. You’ve mentioned values. You’ve mentioned some priorities. Could you tell us more about this? Having been around in the organization for 14 years, what are the things that you have decided already that you’d like to tackle, change and improve? In particular, I am interested in key values and priorities on the human resources side.

I have been a part of the management team and leadership within the office for the entire 14 years I’ve been there — more recently on the executive committee. Our organization is so fortunate to have a very engaged executive committee that is very much focused on the individuals who work in our organization. It is truly the anchor point of my leadership skill to ensure that those around me succeed. That would absolutely be a focus of mine to promote the personal growth of everyone in our organization. Their growth only translates into better audits and better audits translates into better value for the country.

In terms of a couple of things that I would tackle right away, I would love to see us continue on the avenue we’ve started, and to keep pushing to modernize how we work. Not only our processes but also to modernize the way we approach audits, to keep pace with the change in the auditing environment. We do need an investment in our IT tools in order to better handle large data and to deal with disruptive technology that’s out there that would result in more efficient audits, whether it’s financial or performance audits.

I would also like us to take a hard look — and I know we’ve started — at the way we communicate and the way we report. A long-form technical report is great for the technical subject matter experts, but there are so many other parties who are interested in our work and who would benefit from digesting it in different ways. So I’d really like to explore how we can go about doing that in order to reach more Canadians and in order to have a greater impact with the work that we do.

Thank you.

Thank you, Ms. Hogan, and welcome here today.

The House of Commons has requested that the OAG undertake three special audits, an audit including the $187 billion infrastructure program, an audit of special warrants and an audit of the COVID-19 economic response program. As we know, the government is spending a record amount of money to address COVID-19 and will probably continue to do so in the foreseeable future.

As the Auditor General’s office is insufficiently funded for normal times and given the magnitude of the COVID-19 economic response program, is there a possibility that the current level of funding will be insufficient for you to complete one or more of the audits?

As you mentioned, we were asked to do three special audits. It’s my understanding that there have been no special warrants issued now. We have focused our efforts on the performance audit part of our organization toward investing in Canada and COVID-19.

As I mentioned earlier, in order to give those two significant audits the attention they deserve and to complete them properly, we have had to delay other work. So yes, our resourcing challenges are having an impact on us being able to bring a large, comprehensive body of work forward to Parliament in order to support its role in holding the government to account.

Mr. Ricard, when he was at the House of Commons committee of finance, said that the OAG had started to analyze the spending aspects of the program, such as those related to liquidity, supporting individuals and businesses, health and safety. He further mentioned that the OAG is looking into emergency response and preparedness measures for future waves of COVID-19 or other pandemics.

Will you, as the new AG, continue the work undertaken by Mr. Ricard, as he’s planning it, also with the possibility of the interim report, or will you look at analyzing differently with different aspects and elements putting in place new methods and measures to conduct the audit?

As I mentioned previously, when we agreed to take on the audit of COVID-19 response, our organization put together a steering committee which is made up of many of the members of our executive, and I am one of them. So I have been sitting side by side with Mr. Ricard as we have been making decisions and starting to look at the scope of what is out there.

I am committed to getting information to Parliament as soon as we can. We’re exploring what kinds of interim reports we can do, how many reports we can do, can we get smaller reports out sooner. We are not discarding any option as we sit down together as a steering committee to think about the best way to report this to Parliament so that you can start working with it and that Canadians can understand it.

I would like to continue following up with Senator Dalphond’s questions regarding the accountability perspective of the CRA. He mentioned that the CRA said if you have the potential of fraud, forget it, just go ahead and look at that.

I would like to have your thoughts about this from the accountability perspective. If you are appointed, how will this affect the OAG’s work in conducting the COVID-19 audit with regard to the CRA, and the Employment and Social Development Canada, since Mr. Ricard has already started to engage with public servants on the operation of the departments and agencies that are responsible for the programs being rolled out?

Our organization has audited overpayments in the past. We’ve seen them in the EI system in the past and have made recommendations to the department to monitor that.

As I mentioned earlier, when any organization makes decisions quickly, errors can occur. We need to see that they have a mechanism to identify those errors and then a clear path on how to take action to fix them, including recouping funds if they were paid in error.

Congratulations, Ms. Hogan.

I was one of the three people who dealt with the Auditor General and the staff when they did the audit of the Senate, which was quite an experience for us in here.

I’ve been listening to your words. You’ve mentioned getting information out before, as opposed to after. Modernize how we work. It would appear, just from listening to you, that you want to lead or be part of a cultural, I’m not going to say upheaval, but maybe a cultural modernization or a move forward. Technology would probably play an important part. At the time we did the audit with you folks on the Senate — I’m not sure how much technology was used as opposed to manual labour. I’m just wondering, in your mind, what will your legacy be as you see it? What would you like your legacy to be when the portrait is drawn, and you’ve had your time, and you’ve made your contribution to the Auditor General’s role, taking into consideration a couple of those points that I’ve outlined, that I heard you tell us?

Should I be appointed and when I look back at 10 years, I would hope that I was able to honour the legacy of the office but did exactly as you’ve characterized it — modernized how it works.

The auditing world is rapidly changing, as is our country. The current pandemic has just made it incredibly evident to everyone our reliance on IT. In order to keep pace with changes in the auditing world, as well as changes in the government — the government has started to interact with Canadians in such a different way. Doing it online in so many other respects than face to face. And, yes, I would love to see that the organization has grown and changed, while still honouring the legacy that it brings to the accountability mechanism of our Parliament system.

Do you have the allies within government to give you the type of funding that you may need? Do you have the quality of staff, of leaders, that will be working with you to be able to initiate what you would like to do?

The quality of staff, of leaders? Absolutely. I have been sitting side by side at the executive table with some incredibly engaged and passionate individuals. We have started the wave, as you say, of changing the culture, and we are all on the same path. I am so excited to hopefully be able to continue to lead that charge with an excellent group side by side with me.

Over my years auditing the Government of Canada’s financial statements, I have developed good relationships; collaborative and constructive relationships. I will continue to talk with those that Mr. Ferguson and Mr. Ricard have been talking to, in order to ensure that we get adequate resourcing and funding to continue to deliver on our mandate.

Good luck with it because you will probably have the biggest challenges getting the money, in terms of convincing the people who need to be convinced that it’s worth the investment.

I’m ready for the challenge. Thank you.

Good luck.

Welcome to the Senate, Ms. Hogan.

My colleagues have asked you about lessons learned. I want to be more specific in a couple of cases.

In 2008, there was a bailout of the auto industry that left Canadian taxpayers billions of dollars short. That money was never recouped.

The Auditor General, your office, concluded in a 2014 report that it was impossible for us to gain a complete picture of the assistance provided, the difference the assistance made to the viability of the companies, and the amounts recovered and lost, because there was no comprehensive reporting of the information to Parliament.

This time, with COVID-19, we’re again going to use the EDC account and the Canada Account, where a big chunk of the funds are going.

Based on your experience on the previous bailout, what will you do the same and what will you do differently in order to get a better picture, a more realistic picture of the transparency and accountability of this massive amount of money that COVID-19 is putting forward?

I know of the audit that you’re talking about, but unfortunately I was not a part of it. So I don’t really know the specifics of how they may have developed criteria and how they may have approached auditing it back then.

I do know how I would approach an audit now, in that I would follow our office process, which is extremely rigorous. We take time to understand the business. We take time to plan and to consider risks. We carry out procedures that will address that.

The cross-government view that we’re starting to see, with how many programs are managed, is a new challenge. It’s a new challenge to the government and to auditors. And a new challenge doesn’t make it impossible. It makes it fun to try and get at it.

I would make sure that we went to every organization we needed to go to, every department we needed to talk to, in order to make sure that we got a good, accurate picture. But in the end, it is up to the individuals managing these programs to properly document and to properly support the decisions that they have made. If that doesn’t exist, then it’s very hard for us to conclude on it.

Those are just fundamentals to an audit. If we found that again, then we would obviously make recommendations for them to improve because our end goal is improving accountability and transparency.

I think the key words you mentioned were methodology and criteria and indicators. It is those indicators that will allow you to evaluate whether there was an efficient bailout, whether there was a recouping of the investment and whether there was transparency during the process.

In 2018, a report on the Canada Revenue Agency by the Office of the Auditor General found that the agency gave preferential treatment to rich individuals or large corporations as compared to ordinary Canadians.

The report stated:

For other taxpayers, such as those with offshore transactions, we found that the time frame to provide information was sometimes extended for months or even years. For example, banks and foreign countries could take months to provide information on the taxpayers’ offshore transactions to the Agency or the taxpayer.

You will have to deal with other agencies. And you will have to rely on the efficiency of the transfer of the information.

Can you talk to me about some methodology, tactics or indicators that you would use in order to be able to do the job with the resources that you will be given? In the end, you will have to do your job with or without an increase in resources, so you will need to get creative. Could you please elaborate on that?

I believe that this is where good collaborative relationships with the entities that we audit will come into play. Obviously, as you mentioned, we have to wait for organizations to give us the information that we request, and this is where we set out and agree on the criteria, deadlines and key milestones that we’re going to make, and we hold each other to account, both from an auditee perspective and an auditor perspective. That helps move an audit along.

In terms of creative ways, given our resource constraints, this is where reliance on certain IT tools would help. This is where we understand where the risks are in a program that we might look at so we can really target our work to that area. It might not be as comprehensive as we would like, but if we can target the areas that would have the greatest impact and result in improvements to programs and service delivery, then that’s what we’ll have to do in these times with limited resources.

I commend your courage. If you’re confirmed, you’ll be the second woman to fill this position. I congratulate you on your bravery. Thank you.

Thank you very much. It’s an honour.

Welcome, Ms. Hogan. I’ll join my colleagues in congratulating you on being nominated and, of course, in wishing you every success in your new duties if you are appointed.

I want to take this opportunity to commend my fellow senators and the Senate as an institution for their unwavering commitment to openness and accountability. We have worked, and we are still working, to improve our initiatives pertaining to internal and external auditing and the proactive disclosure of our expenses. More recently, as my colleague Senator Saint-Germain mentioned, we formed an audit and oversight committee that will be composed of five members, specifically three senators and two independent, qualified external members.

The other place has no such committee, which leads me to ask you the following question: In May 2016, your predecessor, Michael Ferguson, told the CBC he was seeking a mandate to conduct routine audits of the Senate’s expenses. In light of the multiple initiatives that our institution has implemented, don’t you think that now it would be a better idea to seek a mandate to audit the expenses of our colleagues in the other place?

An auditor is always pleased to learn that someone wants to improve accountability and oversight. Obviously, our office would feel privileged to audit any organization that invited us to do so. Absolutely.

Thank you, Ms. Hogan. I will take note of that.

Welcome to the Senate. As a CPA and former auditor, I’m glad to end this session. It brings back some great memories. I started my career as an auditor.

You mentioned that COVID-19 is a priority, and you discussed the strategy with the audit programs. Can you share some other risks or major areas of concern you see and that require proper oversight, audit and mitigation?

I assume you mean not related to COVID-19, but just other areas in general.

You did say COVID-19 was a priority. Given that the task of the audit mandate of COVID-19 is going to be huge — it’s going to take a lot of resources and there has been a lot of concern around funding — do you feel you have adequate resources to take on further mandates? How will it affect the nature, extent and timing of these mandates?

Our resource constraints right now are having a ripple effect on the organization, such as, as we mentioned earlier, the fact that we’ve had to delay some performance audits we’d like to do. We are also experiencing some delays in our financial work, so the impact of resource constraints has a ripple effect even beyond just some of our performance audit work.

In terms of other priorities I would like to see, I believe that when I look at what we’re learning as a country and the reliance that we all have on being connected and IT infrastructure, I do believe that it’s time to look at items like cybersecurity and internet connectivity again, especially in remote areas in the North.

However, those will have to wait, as you mentioned. I assume that COVID-19 will occupy a lot of resources and a great deal of my time, should I be appointed, for a few years. I wouldn’t want to guess how long because I think that we need to make sure that we’ve looked at all the important areas in order to look at preparedness, actions taken during the crisis and, more importantly, to look at lessons learned so that as a government and as a country we can all be ready should we have to do something like this again.

Thank you very much. Also, has the lack of funding affected, in general, the accounting personnel or the audit personnel needed or who were used in the past and will use going forward?

Also, are the internal controls of the government and the accounting systems up to date? There has been a lot of concern about the lack of funding and the ability to audit required areas. Is that your biggest challenge? If so, are you satisfied with what you have at your disposal at this point in time?

Obviously, delaying some of our work or not being able to table some of our work has an impact on the morale of the individuals who work within our organization. They take incredible pride in the work they do and the impact they have on the government and on Canadians. I hope the fact that we’ll be able to look at something as important as COVID-19 will help.

When it comes to controls within the government, I would expect that there will be some modifications to controls. It is inevitable with the distancing that we’re all dealing with and the need for us to adjust. Adjustments sometimes happen daily, sometimes weekly, but that doesn’t mean controls need to go away. Controls are always needed in order to ensure that funds are spent prudently and that there’s good authority over them. So even though they might change, I would expect that they will still exist.

Thank you very much.

Honourable senators, the committee has been sitting for 95 minutes. In conformity with the order of the Senate of earlier this day, I am obliged to interrupt proceedings so that the committee can report to the Senate.

Ms. Hogan, on behalf of all senators, thank you for joining us today.

Hon. Senators: Hear, hear!

The Chair: Honourable senators, is it agreed that the Committee rise and that I report to the Senate that the witness has been heard?

Hon. Senators: Agreed.

Honourable senators, the sitting of the Senate is resumed.