HUMA Committee Meeting

STANDING COMMITTEE ON HUMAN RESOURCES DEVELOPMENT AND THE STATUS OF PERSONS WITH DISABILITIES

COMITÉ PERMANENT DU DÉVELOPPEMENT DES RESSOURCES HUMAINES ET DE LA CONDITION DES PERSONNES HANDICAPÉES

EVIDENCE

[Recorded by Electronic Apparatus]

Thursday, March 16, 2000

• 1107

[English]

The Chair (Mr. Peter Adams (Peterborough, Lib.)): Colleagues, if we could begin this meeting, the order of the day is pursuant to Standing Order 108(2), a study of HRDC grants and contributions.

I have a couple of things I would like to say before we begin and before I introduce our witnesses. I would ask the clerk to circulate a draft schedule to the committee. If you could listen to me carefully, I would prefer that you have some time to look at that draft. Towards the end of the meeting we will discuss it, but I'm circulating it now because I understand there's going to be a vote. In fact, do I see the vote beginning now?

As you know, we have made very little progress on this matter. I would like you to look at the schedule later in the meeting, to make suggestions or to accept it. I would also like you to give me permission to schedule additional meetings. With the situation we're in now, it looks as though our time slots on Tuesdays and Thursdays are very popular time slots for votes. We will need to have meetings either at other times on the same days or on other days.

My request to you, in all seriousness, is that you look at that schedule. We will discuss it towards the end. Would you think about granting me permission to automatically call additional meetings? That's one.

Secondly, I have here a list of our requests to date. Even though we have not met very frequently, we have made a number of requests of the department. Alan Winberg is one of our witnesses today. He might be a useful vehicle, but I'm saying this on the record because there are a number of requests that colleagues on both sides of the House have made. We are hoping to get responses to those fairly quickly.

Mr. Winberg, when I've introduced you and you're officially here, I will see to it that you get this list. These are outstanding requests from the committee so far.

Colleagues, and those of you who have just arrived, you understand my point. The schedule is there. I'd like us to look at it and discuss it later. I would like permission to call additional meetings.

Paul Crête.

[Translation]

Mr. Paul Crête (Kamouraska—Rivière-du-Loup—Témiscouata—Les Basques, BQ): Obviously, I agree with you that we may need to schedule some additional meetings. We have already voiced some concerns about whether or not we can keep to the agreed upon timetable and table an interim report in due time. I wouldn't object to our meeting five times a week, if necessary.

[English]

The Chair: My point is that if we can.... I'm in your hands. I agree with that.

• 1110

[Translation]

Mr. Paul Crête: The list you sent us does not contain the names of the witnesses suggested by the different parties.

[English]

The Chair: Some of them are there and some of them are not. For example, with regard to the Bloc, let me give you the schedule here. We have Jim Martin today, who was requested by the Reform. We have Denis Desautels—

[Translation]

Mr. Paul Crête: I'm sorry, Mr. Chairman, but I'm not talking about the list of witnesses approved by the committee by way of a resolution. You asked us to submit names of other possible witnesses, and I see here that none of the names suggested by the Bloc Québécois appears on your new list.

The Chair: You're partially correct. I would, however, point out that Danielle Vincent and Suzette Perrault are two of the names you suggested and they appear on my list.

Mr. Paul Crête: That's true. I just wanted to be certain that the other names we suggested haven't been discarded.

The Chair: Not at all. We haven't yet decided on additional witnesses. We could hear from some of them after the Easter break. All we were trying to do was determine the committee's schedule for the next few weeks.

Mr. Paul Crête: Personally, I think we need to meet more often before the Easter break.

The Chair: I agree.

Mr. Paul Crête: We have to be certain that we can table our interim report on time.

The Chair: That's why I was seeking your permission to hold additional hearings.

Mr. Dubé.

Mr. Jean Dubé (Madawaska—Restigouche, PC): I just want to say that I concur with Paul's and your position. I believe I also said two weeks ago that we needed to pick up the pace.

The Chair: That's right.

Mr. Jean Dubé: Should we move a motion to this effect?

The Chair: I have a short memory.

Mr. Jean Dubé: I understand, but do we need to adopt a motion to hold more meetings? The bells are still ringing. I think that everyone here wants things to move forward.

The Chair: I understand.

Mr. Jean Dubé: If necessary, I'm prepared to move a motion to this effect.

The Chair: Fine.

[English]

Thank you very much.

Colleagues, while you're thinking about those things, I will introduce our principal witnesses for today. James Martin is director general, internal audit bureau. Jim, we welcome you here. Alan Winberg is assistant deputy minister of financial and administrative services. Alan, we welcome you again. I had mentioned to you, as you heard previously, that I will see to it that you get this list and I hope you would convey it to the department.

You heard me say that we suspect there are going to be votes again during the meeting. I assume that one or both of you have a statement. We would be glad to hear it and then as usual there will be questions from members on both sides.

Mr. Alan Winberg (Assistant Deputy Minister, Financial and Administrative Services, Department of Human Resources Development): Thank you, Mr. Chairman. The idea was that I would present a short statement and then Jim would follow.

The Chair: Very good.

Mr. Alan Winberg: Also, we are working diligently to produce the materials the committee has requested. I'll take the list you give me back to the department and we will ensure that the commitments that were made are followed up on.

The Chair: Thank you very much.

Mr. Alan Winberg: With me today is Mr. James Martin, who is director general of internal audit. We are honoured to have been invited by this committee to speak about the internal audit of grants and contributions.

[Translation]

Before turning the floor over to Mr. Martin, I'd like to make some brief remarks about the importance of the internal audit function, particularly about the significance of the internal audit process for improving HRDC's grants and contributions programs. As our minister had stated on numerous occasions, both she and her senior management team at HRDC want to ensure that we have in place sound management practices and furthermore, that we are managing tax dollars well.

[English]

For me, as assistant deputy minister of financial and administrative services, this means that we must constantly apply the best, most up-to-date practices in financial management. We must pursue the course set out clearly by the Treasury Board to help government departments achieve better management of resources, sound management of risk, and rigorous reporting of results.

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Let me speak briefly about internal audits. Internal audits differ from audits conducted by the Auditor General of Canada, an officer of Parliament. Auditor General reports are tabled and discussed in Parliament as part of the government's accountability to Canadians. Internal audits are used within each department as an integral part of sound management. This is true in both the public and private sectors.

[Translation]

Every year, federal departments conduct many internal audits in order to strengthen their management practices and delivery of programs and services. The internal audit function is well established in HRDC.

[English]

All internal audit work is done under the authority of the deputy minister. The deputy minister has ultimate approval of all internal audits that take place. Internal audits allow us to continually modify and adjust programs to ensure that they are more effective and to help better manage risks. This is exactly what we are doing with our six-point action plan to strengthen the management of grants and contributions. In my view, the department's action plan addresses well the issues that were identified in the internal audit.

Let me speak to some of the details. We are controlling present payments. There are no payments being made without written confirmation that critical criteria are met. We are correcting past problems. Follow-up action has been taken on the 37 projects that were flagged in the internal audit report. In addition, we are reviewing all other active files. We are equipping and supporting our staff, who are key to fixing these problems. Our people are professional and dedicated, and we are putting into place the tools and training they require. We are ensuring accountability.

We have established a performance tracking unit to monitor the department's corrective actions and to provide quarterly reports. External auditors will review the implementation of the action plan, with reports due in June, in October from the Auditor General, and again in January 2001.

We continue to get the best advice available. For example, we are in regular contact with the Office of the Auditor General and several major accounting firms. We are committed to reporting openly and objectively on progress.

I believe these actions will lead to better administration of HRDC's grants and contributions programs. As we share our work with others, I think it will also contribute to improved public administration more broadly.

[Translation]

Mr. Chairman, I hope this background sets the context for our discussion of the internal audit.

[English]

Jim, could you please proceed.

Mr. James K. Martin (Director General, Internal Audit Bureau, Department of Human Resources Development): Thank you, Alan.

Mr. Chairman, I'm pleased to be here to answer any questions the committee may have on the audit of grants and contributions. It might be helpful, however, if I took just a few minutes at the start to put the audit in context.

As you're aware, Mr. Chairman, I'm the director general of internal audit at HRDC and therefore responsible for the report on the Review of Program Integrity—Grants and Contributions. The internal audit bureau is located within the financial and administrative services branch, which Mr. Winberg heads. However, the bureau receives its direction from the department's audit and evaluation committee, which is chaired by the associate deputy minister. As Mr. Winberg has just said, all audits are conducted under the authority of the deputy minister, which is in line with Treasury Board's policy on internal audit.

Each year the internal audit bureau conducts 25 or more reviews and audits, and typically we spend about $3 million on our work in any given year. These 25 reviews cover most business lines in Human Resources Development Canada, and they address a variety of operational risks the department faces in trying to attain its objectives.

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The audit of primary interest to this committee, Mr. Chairman, was first approved in February 1998 as part of the audit plan for fiscal year 1998-99.

It might be of interest to you to know that we go through an extensive risk assessment as we are developing our annual plan. Internal audit bureau staff assess operational risks using a tailored version of the Canadian Institute of Chartered Accountants' criteria of control for organizations. An extensive effort is then made to work with all executive heads to get their views on the level of operational risks with regard to both their own areas as well as the department as a whole. We then put forward drafts of the annual audit plan for comment before sending it to the departmental audit and evaluation committee. If the committee concurs, the plan is then forwarded to the deputy minister for approval.

Let me assure you, Mr. Chairman, that in the case of the 1998-99 plan, everyone agreed. It was all executive heads who very much wanted the bureau to undertake the review of grants and contributions for the reasons that were identified in the introduction to the audit report.

In late 1998 preliminary work on the audit of grants and contributions was started, with the terms of reference finalized on December 18, 1998. The terms of reference state, and I quote:

The objectives for the review are to assess the management and delivery of grants and contributions programs within HRDC and provide managers and staff with practical, results-oriented recommendations on ways to improve project management, reduce risk, and develop a better accountability framework.

To achieve the review objectives, Mr. Chairman, the audit team settled on four techniques to identify potential problem areas. The first—and this took by far the greatest effort—was a review of randomly selected files. Here the audit team used a checklist of standard items one would expect to be contained in the written record on a reasonable number of the 459 randomly selected projects. These files were all brought to Ottawa for this exercise. In essence, the audit team's task was to determine whether they could or could not provide a high level of assurance based on our official project files that the grants and contributions programs were well managed.

The second technique was to conduct field reviews, to go visit the projects on the ground to see if there were issues. The team, as described in the audit report, selected some 63 projects and reviewed one or two claims of each of the sponsors, which they had submitted. Let me stress that the goal of this second exercise was not to establish overpayments that were potentially owed to us by the sponsors. Rather, the goal of the field visits was to determine how well the department managed its contribution agreements.

A third approach used by the audit team, Mr. Chairman, was an analysis of available data. The audit team examined expenditure patterns across the contribution programs audited, with a particular focus on whether advance payments conformed to Treasury Board policy. There was also, for your information, an analysis of access privileges to our computer systems.

Finally, an assessment was conducted regarding disbursement control.

Mr. Chairman, the work of the audit team began in earnest in January 1999 using these four approaches, and the work wrapped up in early September.

The final audit report was issued on October 5, along with a draft management response for discussion at the audit and evaluation committee meeting held on October 18, 1999. Following that meeting of the audit and evaluation committee and the briefing of the minister on November 17, the management response underwent a number of revisions. I received the final version of the management response to the audit from the assistant deputy ministers of human resources investment branch, Mr. David Good, and of the financial and administrative services branch, Mr. Winberg, on January 6, 2000.

On January 11 the deputy minister gave an overview of the audit's findings to employees across the department through what we call a BTV session. This is a session televised to our employees in all of our offices across the country. This was followed shortly thereafter by the release of the complete report to employees on January 19.

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As this committee is keenly aware, the report identified a number of shortcomings with the way the department administered the four key stages in the life cycle of projects: selection and approval, contract writing, project oversight, and disbursements.

In the audit report, 25 recommendations were made that we believed would help the department manage its risks better, and the managed response contained in the final report laid out a comprehensive action plan that, in my judgment, possibly addressed those recommendations.

Thank you.

The Chair: Colleagues, as you can imagine, I already have a long list. I have at the moment Judy Sgro, Paul Crête, Raymonde Folco, Jean Dubé, and Maurice Vellacott.

Diane.

Mrs. Diane Ablonczy (Calgary—Nose Hill, Ref.): Thank you, Mr. Chairman.

My first comment would be with respect to our request for the audits that were conducted in 1991 and 1994. We requested these from Mr. Winberg quite some time ago. I had hoped to have these in my hands in order to have a foundation for asking intelligent questions of Mr. Martin today. In fact we do not have those documents. Surely these documents are not difficult to obtain. They were prepared several years ago. They surely could have been provided to us in a matter of hours. Instead, we have weeks passing where we don't have these.

So my first question is why don't we have those documents?

Mr. Alan Winberg: Those documents were only available in English, and we are translating them for this committee.

The Chair: Mr. Winberg, if I could point out, they are on the list I sent around to you. I don't know if you've had time to see it, but they're under Mr. Williams' name.

Mrs. Diane Ablonczy: I would simply point out that it's very difficult for us to make the most comprehensive use of Mr. Martin's valuable time without the kind of background material that we requested some time ago, and I'm most unhappy that we have not received those documents yet. I don't think that has served the committee well. However, I would like to go to some questions of Mr. Martin.

Mr. Martin, I would refer to your remarks, first of all, and I have a couple questions for you.

On the first page, at the first little box there, it says you use a “tailored version” of the Canadian Institute of Chartered Accountants criteria. I wonder if you could very briefly—because we don't have a lot of time—say in what respects your version would differ from those that other professionals use.

Mr. James Martin: If I could inform you very briefly, the Canadian Institute of Chartered Accountants has a set of criteria, twenty criteria divided into four broad areas: does an organization know where it is going, its purpose; do they have the commitment to get there; do they have the capability to get there; and do they learn from their mistakes along the way?

In HRDC, we use the same criteria, and we've added in some additional ones with respect to information technology management that were not in the CICA's. Frankly, we just shuffled them around to make them correspond to a set of initiatives that had been undertaken in HRDC: supporting people; results-based accountability; HRDC as a learning organization; and the broader questions of vision.

Mrs. Diane Ablonczy: Because your version of assessment is different from those used by professionals, what would be your professional opinion as to the adequacy of the approach you use as opposed to the approach used by the professional association?

The Chair: If I could remind all colleagues, the chair is still here.

A voice: And the witnesses.

Mrs. Diane Ablonczy: I do apologize, Mr. Chairman, and such a good-looking chairman as well; I don't know how I could have missed that.

The Chair: I understand. That's okay.

Mr. James Martin: There's no substantial difference between the Canadian Institute of Chartered Accountants criteria and our own. It's essentially a question of rewording and precision to make it apply to our organization. In fact the Canadian Institute of Chartered Accountants recommends that organizations that use their criteria tailor them to their own organizations.

Mrs. Diane Ablonczy: I appreciate that, but the “tailored” version just twigged something in my mind.

In the third box, you mention “If the Committee concurs”. In other words, you put your audit plans before the internal committee of the department, and if they agree with your plan, you go ahead with it. Is it often or standard that an organization being audited would have to approve the audit plan that is being used to assess their own organization?

• 1130

Mr. Alan Winberg: I'll say a word and then pass it to Jim.

As we've stated in the opening remarks and pursuant to Treasury Board policies, internal audit is designed as an internal management tool and we run it according to a risk-based approach. This is why it is approved in terms of a departmental audit plan—but I'll pass it to Jim to amplify that.

Mr. James Martin: As Mr. Winberg has pointed out, what I try to do is assist the senior management in the department to improve—

Mrs. Diane Ablonczy: I'm sorry, I don't think you're quite getting my question. I'm asking whether that is standard practice in auditing procedure.

Mr. James Martin: It is standard practice for internal audit. You have to differentiate between internal audit and external audit. If you look at the standards promulgated by Treasury Board or by the Institute of Internal Auditors, which is an international organization, you would find that is actually normal practice.

Mrs. Diane Ablonczy: For an internal audit?

Mr. James Martin: For internal audit.

Mrs. Diane Ablonczy: So it doesn't have quite the same degree of objectivity, one might say, as an external audit would.

Mr. James Martin: No, I don't think that's the case. There is a series of codes of ethics and standards for the practice of internal audit that are approved by the Treasury Board and are required for the professional conduct of internal auditors. Objectivity, honesty, and integrity are the keys to being a good internal auditor. If you can't have those, then you shouldn't be in the profession.

Mrs. Diane Ablonczy: But you still concede that your plan of attack, so to speak, had to be approved by the people who were being assessed.

Mr. James Martin: With respect to this particular audit, for example, they very much wanted us to look at how grants and contributions were actually being administered. I don't think one would say we've soft-pedalled the findings in this particular audit. I think it's a good example of how internal audit can bring information to bear to management to help them find problems and react.

Mrs. Diane Ablonczy: Touché.

I now want to go to your terms of reference on page 2.

Because we don't have the 1991 and 1994 audit reports...and in a federal government in a bilingual country, I'm surprised that these would not already be available in both official languages. I find that a little difficult to understand. But in any event, are these terms of reference in any way different from the terms of reference in the 1991 and 1994 audit reports?

Mr. Alan Winberg: There are significant differences between the audits done in 1991 and 1994 and the one that was done and released in January 2000.

Jim, would you point out the differences?

Mr. James Martin: One has to remember that there was quite different programming at those different times. For example, in the 1991 audit, the focus was on what was called “significant contributions”—that is, very large contributions. The 1994 audit was a follow-up to the 1991 audit, and it was focused on the implementation of the recommendations from the 1991 audit. However, the programming they looked at was different from that of 1991 because we had changed programs between 1991 and 1994. So it had a different set of programs.

By the time 1999 rolled around, with our terms of reference, we included a broad base of programs. So it covered different types of programs. The heart of the matter, though, in terms of looking at administrative practices, was—

The Chair: One very short exchange.

Mrs. Diane Ablonczy: Sorry, Mr. Chairman. It's frustrating, because I've barely begun to scratch the surface of this.

I understand in fact that the 1994 audit, which was supposed to follow up on the 1991 audit, was never completed. Is that correct?

Mr. James Martin: It never moved to the stage of being finalized.

Mrs. Diane Ablonczy: So from 1991 to the present time, we've never had a complete comprehensive audit of the management practices of this department. Is that correct?

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Mr. Alan Winberg: There's an extensive audit program with many audits done each year on various aspects of administrative management.

Mrs. Diane Ablonczy: I'm talking about a comprehensive audit of the department.

Mr. Alan Winberg: There has been no comprehensive internal audit of the department over that time, to my knowledge.

The Chair: Okay.

Judy Sgro, then Paul Crête, Raymonde Folco, Jean Dubé, Maurice Vellacott, Judi Longfield, Yvon Godin and Christiane Gagnon.

Ms. Judy Sgro (York West, Lib.): Thank you, Mr. Chairman.

Can you clarify for me the issue of internal audits, and whether this is similar to what goes on in other organizations? Was it a management review or an administrative review? I think it needs to be clarified whether it was a true internal audit. When I hear about an audit, I know that every particular item is analysed completely, and so on. Can you explain to me the difference, and whether this was a management review or an internal audit, in the regular sense?

Mr. Alan Winberg: This was a true internal audit, according to the federal government's regulations issued by Treasury Board that govern internal audits. It was done the internal audit group, which has a degree of independence over and above any management review.

Management reviews are conducted in the federal government by the managers who are running a specific program. In this case, it was conducted by internal auditors outside the day-to-day management of the program.

The Chair: Ms. Sgro.

Ms. Judy Sgro: On the kinds of problems, Mr. Martin, we uncovered in this internal audit, can you give me some examples of what you actually found and what was the most significant one?

Mr. James Martin: I can just give you a couple of examples. You have to remember that this was a review of files. We found, for example, that 80% of files did not contain records of financial monitoring. That isn't to say there wasn't financial monitoring done outside the 20%, but there weren't records of it. So that's an example of a particular practice.

I don't think it is a good idea to try to find one finding that is most significant. In fact, you have to take all of the findings together as a whole, I think, to get an understanding of the underlying problems that have to be addressed. There are the problems of complexity in our programming; the problems that have emerged because of downsizing and the lack of resources to respond to administrative needs, that type of thing; and training, which could have been better. There's a series of underlying causes. If you look at just one finding, it will lead you down a blind alley to those—

The Chair: Again, I'd remind you both, through the chair.

Ms. Judy Sgro: Okay.

What kinds of controls were in place when the department was administering both the TJF and CJF grants?

Mr. Alan Winberg: The standard financial controls of the Government of Canada were all in place.

Ms. Judy Sgro: Were the issues that came out of the audit strictly administrative?

Mr. Alan Winberg: The audit found administrative issues that are being addressed through the government's remedial plan.

Ms. Judy Sgro: I have one last quick question. When these programs were introduced, what level of controls were put in place at the same time the money was being put aside for the TJF and CJF grants? What kinds of controls were put in place at that time?

I'm very supportive of the controls on your six-point plan and I feel very comfortable with what I see here for the future, but what kinds of controls were put in place for the previous times when these grants were announced?

The Chair: Mr. Winberg.

Mr. Alan Winberg: The audit looked at an entire spectrum of programs, not just the particular one you're talking about. They took a small number of files from each of seven major programs. The controls that were in place are called the terms and conditions of the programs. They are put in place when the programs get approved and are put through the Treasury Board process and the parliamentary voting process.

The Chair: If it can be in 20 seconds—Judy, is that okay?

It's Paul Crête and Raymonde Folco.

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[Translation]

Mr. Paul Crête: First of all, I was somewhat surprised to hear that the reports for 1991 and 1994 weren't available because they hadn't been translated. It's hard to accept that someone is trying to blame bilingualism and French for the fact that these documents aren't available today. I find that a little hard to swallow.

I have several brief questions for you. In your opening remarks, you stated the following:

In essence, the audit team's task was to determine whether they could, or could not, provide a high level of assurance based on our official project files that the grants and contributions programs were well managed.

Mr. Martin, can you tell me whether or not, further to your audit, you concluded that the methodology used was valid? Since, as you stated, this was your audit team's primary task, were you able to ultimately confirm that the grants and contributions programs were well managed?

I'd also like to know if you were able to evaluate program effectiveness, particularly the effectiveness of the Transitional Jobs Fund, because merely announcing a job creation program is clearly not enough. Ultimately, an evaluation must be done to determine whether or not jobs were in fact created. I want to know more about that evaluation.

In your speaking points, we note the following:

Each year, the Internal Audit Bureau conducts 25 or more reviews;

Could you provide us with copies of the 25 audits and reviews conducted over the past year? We would then know if the cancer has spread to all departmental programs.

For my third question, can you tell me if you conducted any further audit activities following the release of the damning internal audit findings? Do you have plans to undertake in the short term an audit of new or existing programs? Will you be paying close attention to some of these new programs, particularly job creation programs?

[English]

The Chair: Alan, you have three very comprehensive questions there, but you might want to begin by commenting on the translation point that was made at the beginning.

Mr. Alan Winberg: Okay.

[Translation]

I'll answer a few questions and then turn the floor over to Mr. Martin who can enlighten you further.

I believe you had four questions in all. The first concerned the translation of previous audit reports. The remaining questions dealt with the validity of the process, sound management and program effectiveness. I'll let Mr. Martin field those questions.

I undertake here and now to provide you with copies of any subsequent audits. I can tell you a bit about the 1991 and 1994 studies. I'm sorry these reports haven't yet been translated and that we can't provide you immediately with copies. Our department wants to ensure that the documents it provides to committee members are in both official languages, in accordance with the rules adopted by the committee. These reports are currently being translated and we hope to have them available for you very shortly.

Mr. Paul Crête: Mr. Chairman, am I to understand that we are going to receive a translation of the 1991 audit report on the 10th anniversary of the actual audit? That would be a nice 10th anniversary gift.

[English]

The Chair: Okay. Alan Winberg.

[Translation]

Mr. Alan Winberg: We will also be sharing with you the findings of the reviews conducted over the past year.

We have just concluded our audit of 37 projects which were flagged for follow-up action in the initial audit report. The minister released these audit findings to the public yesterday. You can find them on our website in both official languages. I'll now turn the floor over to Mr. Martin.

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Mr. Paul Crête: Mr. Chairman, I wasn't asking if the findings in the case of these 37 projects had been made public. I was asking if any additional investigations or audits were being conducted as a follow up to the initial audit. I'm well aware that you published the findings in respect of these 37 projects because I read up on this daily.

Mr. Alan Winberg: I understand. I was talking about the audits that were conducted further to the initial audit. Perhaps Mr. Martin can now answer your second and fourth questions.

[English]

The Chair: You have plenty of time, but if we're not careful, we'll run out of time. There's plenty of time at the moment, but we should keep it moving.

Mr. James Martin: Okay. Thank you, Mr. Chairman.

With respect to the question of whether we could conclude from the audit that the department's grants and contributions were properly managed, the answer is we couldn't conclude that. On the basis of the written record, it is not possible to draw assurance that the programs are well managed.

With respect to the question of whether we looked at or could determine the effectiveness of the projects, that was not part of the scope of this audit. The audit was focused on the administrative practices of the department. It was not focused on the cost-effectiveness of the projects or the programs. We didn't look at that as part of this exercise.

On the last question of whether we are going to be conducting further audits, one of the actions management took was to create within the internal audit bureau what we call the performance tracking directorate. The way to think of this is that for a couple of months now we have been running continuous audits of a similar nature to what we did in 1999 in order to be able to track whether or not there have been improvements. It's pretty much the same program, the same methodology, with actually some improvements, to be able to be determine over time whether or not improvements are being made.

Frankly, one of the reasons I have some confidence in the action plan is that this is an integral part. We're going to be able to determine whether or not we're actually measuring progress in the improvement of the G and C management.

The Chair: Mr. Crête.

[Translation]

Mr. Paul Crête: If you have conducted a number of continuous audits, you must have identified certain common denominators. Could you provide us with a list of the files that are currently the focus of continuous audits? What are you focusing on at this moment, further to the initial internal audit?

Mr. Alan Winberg: Mr. Chairman, we have documents describing the work of our audit team and we would be pleased to pass them along to you.

The Chair: Fine.

Mr. Paul Crête: That wasn't my question.

The Chair: Right.

Mr. Paul Crête: I asked the witness to identify for us the files that have been targeted for follow-up action further to the internal audit. Mr. Martin talked about a continuous audit. Which themes are the focus of regular follow-up action?

Mr. Alan Winberg: The same ones presented in the January 2000 audit.

Mr. Paul Crête: Then you didn't think it was relevant to focus on program effectiveness, for instance, even though no one was able to tell us how many jobs were actually created as a result of a grant or whether this money was invested in the right place. Of the 37 projects audited, it was discovered that Vidéotron had received a $220,000 overpayment. Shouldn't this tell us that within the department, there are likely many other similar cases where no one can say how many jobs were actually created? Shouldn't an inquiry be conducted in light of the data you have collected and shouldn't it be conducted now?

[English]

The Chair: A brief response.

Mr. Alan Winberg: Part of the action plan is to add proper monitoring of programs, which was found to be lacking in cases in the audit. So the audit is checking whether this financial monitoring and program tracking are taking place in the program areas.

The Chair: Now it's Raymonde Folco, then Jean Dubé, Maurice Vellacott, Judi Longfield, Yvon Godin, and Christiane Gagnon.

[Translation]

Ms. Raymonde Folco (Laval West, Lib.): I have a few questions for you concerning the follow-up to the 1998-1999 audit. Ms. Ablonczy may have already asked some of the same questions and if so, don't hesitate to tell me.

• 1150

We know that your department, HRDC, has undergone some major changes - and I'm talking to Mr. Winberg in particular - and that the 1994 audit was never completed.

Given this fact and the fact that, to my knowledge, no further audit was conducted until 1998-1999, what prompted you to conduct this audit four years later, particularly since you stated - and I'm addressing Mr. Martin more specifically - that you conduct an audit every year? I recall your saying that at some point in your presentation. Why did you wait so long? What prompted you to conduct an audit in 1998-1999? Were there specific reasons? What explanation can you give for the four-year gap between 1994 and 1998?

The 1998-1999 audit brought to light a number of serious problems. How does the department intend to follow up on these audit findings? Were the shortcomings identified in the 1998-1999 audit similar to the ones discovered in previous years? Were more problems identified and were these of a different nature? It's a rather complex question, but it covers a range of subjects. Thank you.

Mr. Alan Winberg: I will try to be brief and then turn the floor over to Mr. Martin.

First of all, let me say that the 1994 audit was never formally completed because of the major changes that took place within the department and the different focus given to these audits. Programs changed. Between 1994 and 1998, we audited other program components, including, for example, the TAGS program. This particular audit brought to light a number of problems and we decided to do a more in-depth review to ascertain if similar problems existed in other grants and contributions programs.

[English]

In terms of the risks involved, the audit plan is designed to address what the department considers to be the highest risks, to get a measure of them, and to put in place sound management practices to address those risks.

Jim, would you like to add to that?

Mr. James Martin: Yes, I'd like to expand a little bit. After 1994, there were actually three other audits, besides the audit on the Atlantic groundfish strategy, all focused on the employee benefits support measures programming, most of which was employment insurance part II moneys. These were designed to try to help manage that particular program better, there being a couple of billion dollars associated with the program.

In terms of the question on whether the types of administrative errors that were identified in the 1998-99 audit were similar to the types of problems that were identified earlier in 1991 and 1994, the answer is, yes, there is a lot of similarity. In terms of financial monitoring, for example, this has been an issue for a while. Again, I want to stress that this is on the basis of file reviews, this is what's in the written record. The types of problems are not that radically different from those in the 1991 and 1994 audits.

• 1155

The Chair: Now we have Jean Dubé, then Maurice Vellacott, then Judi Longfield. Jean.

[Translation]

Mr. Jean Dubé: Mr. Chairman, I'd like to start with a comment rather than a question. A new millennium has dawned. We live in a bilingual country, but audit reports produced by the Government of Canada back in 1991 and 1994 have still not been translated into French. Not only is that unfortunate, it's unconscionable, in this day and age, in the year 2000, that Government of Canada documents are not available in French.

A member: Shame!

[English]

The Chair: It's not part of your time, Jean. I have to say, gentlemen, speaking through you to the department, that I agree.

[Translation]

Ms. Christiane Gagnon (Québec, BQ): You say: “I agree”, but surely you can say more than that.

[English]

Mr. Jean Dubé: Mr. Chairman, I have many questions. They are very short and I am going to ask one at a time. I think yes or no is acceptable in response to these questions. My questions are for Mr. Martin.

I would like to know, Mr. Martin, when this last report was started.

Mr. James Martin: We started drafting the report in September. In fact it may have been late August when we started the report. We finalized the report and I signed off October 5 for the internal audit portion of it.

Mr. Jean Dubé: So in September 1999 the audit was started.

Mr. James Martin: No, as I explained earlier, we started the audit in January. We completed the final field work and reviews in late August, early September. We started writing in August, and we completed the drafting of the report and the to and fro with the primary clients on this audit and finalized it on October 5.

Mr. Jean Dubé: So in January you started, in August you started writing the report, and on October 5 it was completed by you and submitted for approval.

During the January part of it to the August part of it, I'm sure you consulted with a lot of people to get as much information as you could on these grants and contribution programs. I know there's a big list here, but I'm looking at whether the deputy minister was involved in these discussions with you as the person responsible for the audit. Did you consult with the deputy minister, Claire Morris, on your findings during this time?

Mr. James Martin: Mr. Chairman, we began getting an indication of the types of findings we would have in late May or early June, and at that time I alerted the chair of the audit and evaluation committee, the associate deputy minister, as to the types of problems we were seeing. As a result of that, I made a preliminary oral presentation to the audit and evaluation committee on June 14 of last year.

As a result of that set of discussions, two things happened. One, the decision to create the performance tracking directorate was taken at that time. It wasn't staffed until late November, but the decision was taken to create the tracking directorate to measure progress.

The second thing was to put in place a national working group to develop an adequate management response to the types of findings that were emerging. A very senior official, the associate executive head from Ontario, was chosen to head up that group, and they worked over the summertime to try to have, by the time we finalized the report, an adequate response to the types of findings we were identifying.

The Chair: Jean.

• 1200

Mr. Jean Dubé: Maybe I'm wrong, and if so you can correct me, but on June 14, when you briefed the department, was the deputy minister present at that briefing?

Mr. James Martin: No, she wasn't.

Mr. Jean Dubé: Who was present at that briefing?

Mr. James Martin: It was the members of the audit and evaluation committee. The chair was the associate deputy minister. The senior assistant deputy minister for service delivery was there; the assistant deputy ministers for systems and financial and administrative services were there; the associate executive head of the human resource investment branch was there. I'd have to look at the actual list of people and go back to the minutes, but most of the senior members were there.

Mr. Jean Dubé: Let me go now to October 5, at the completion of your report. Were there any briefings on October 5 to the department on this final report?

Mr. Alan Winberg: The report was presented to the audit and evaluation committee on October 17, I believe, or maybe October 18.

Mr. James Martin: There were, over the course of September and October, probably thirty meetings that I attended with one or another senior official and working groups who were trying to devise the appropriate action plan to follow up the report. My memory fades as to whether there was a meeting on October 5 or October 6, but there was a large series of meetings.

Mr. Jean Dubé: You said you had many meetings. We'll take thirty as an example. At any of those thirty meetings was the deputy minister present?

The Chair: Mr. Winberg.

Mr. Alan Winberg: Mr. Chairman, the meeting at which the report was presented to the departmental management was on October 18. The deputy minister did not attend that meeting. She is not on that committee.

Mr. Jean Dubé: Mr. Chairman, this is not my question. I'm asking, of the thirty meetings—not the meeting of October 17—that you've had consulting with the department, was the deputy minister present at one of those meetings, one of those approximately thirty meetings? My question is for Mr. Martin.

Mr. James Martin: During that time period, right around the beginning of October, no.

The Chair: Jean, do you have one more very short question?

Mr. Jean Dubé: Sure. I can take more if you want.

The Chair: No, just one, please.

Mr. Jean Dubé: You probably all saw the president of the union a couple of days ago on television talking about the staff at HRDC. Do you agree with the president...? This is to Mr. Martin again, because you did the audit and you did these investigations, and there were a lot of problems found in your audit. There were problems with the grants and contributions. I think we're all aware of that and we've been aware of it in the House of Commons for quite some time because it has been the highlight of Question Period.

Do you agree with the president that there was during this fiasco, which we can call it if you want—you can call it by other definitions if you want, but I call it a fiasco and a disaster—political interference in the approval of these grants and contributions? Did you see anywhere in your findings that there was political interference by the government on these grants and contributions?

The Chair: I'd like a short answer. Mr. Winberg.

Mr. Alan Winberg: I'll start and Mr. Martin can answer. First of all, this audit found a series of serious administrative difficulties, which we are addressing in an action plan as opposed to anything other than that.

Second, the audit addressed administrative issues through a file review and some field visits and did not find any, or make any, mention in the audit report of this political interference issue.

• 1205

The Chair: We will proceed to Maurice Vellacott, then Judi Longfield, Yvon Godin, Christiane Gagnon, and—

Mr. Jean Dubé: But Mr. Martin wanted—

The Chair: Okay. Let me finish my list, Mr. Martin.

Last is Bonnie Brown.

James Martin.

Mr. James Martin: Yes, Mr. Chairman, just to reiterate what Mr. Winberg said, we're focusing on the questions of administrative practices. That was the focus of the audit. And no, in the work we did, we didn't find any evidence of political interference.

The Chair: Maurice Vellacott.

Mr. Maurice Vellacott (Wanuskewin, Ref.): Thank you, Mr. Chair.

In view of the style of record-keeping—or inadequate record-keeping—Mr. Martin, could you know accurately, based on your internal audit, what number of actual permanent long-term jobs were actually created? Would you know that from the audit?

Mr. James Martin: Mr. Chairman, no. We were focusing on the administrative questions. We weren't looking at the cost-effectiveness of the programs. In particular, with respect to, for example, the Transitional Jobs Fund, just to raise it, there were a total of 20 TJF files in the entire sample. This is not what the focus of the audit was.

Mr. Maurice Vellacott: Would there be enough “information”, in your estimation, even in those 20 TJF files, to have any way of knowing accurately? If somebody else has that information, would they have some way of assessing the number of permanent jobs actually created?

Mr. Alan Winberg: Mr. Chairman, the files, first of all, were substantial for all the projects. However, they were missing essential elements, which are well set out in the document. One of the aspects was improved monitoring. That's part of our action plan, and those aspects will be in the files in future.

Mr. Maurice Vellacott: I want to take the question back to Mr. Martin again. Am I safe in concluding that we either don't know or don't have the answer to whether there's enough substance within those files as to actual jobs created? Would you have a sense of that, Mr. Martin?

Mr. James Martin: With respect to all of the grants and contributions programs, not just the job creation programs, Mr. Chairman, one of the things that we identified as lacking is good documentation on operational monitoring and on checking for expected results of the projects at the end of the projects. A lot of that is not documented on the file.

The Chair: Maurice Vellacott.

Mr. Maurice Vellacott: That does concern me, because often the vaunted boast is of some 30,000 jobs and how this is wonderful. Then we have to divvy up and decide whether it's effective at that point in terms of dollars spent. There are a lot of press releases coming out from HRDC—I know that's not with respect to Mr. Martin, and Mr. Winberg may or may not have knowledge of that—where time and again they are talking about the creation of over 30,000 jobs and so on. I have a press release dated December 14, 1998, here. Yet I'm hearing again today that, one, we don't know if there's even substance to that, that it's extrapolation, that it's guesstimates. That is my best understanding of it. As to whether it has been a success, we really don't know.

Mr. Winberg maybe wants a quick comment, and then I want to move on quickly.

The Chair: Mr. Winberg.

Mr. Alan Winberg: My quick comment is that within the department there is a group that studies this; they are called the program evaluation group. They use the same kinds of scientific sampling methods—which are well established—as were used in the audit to do a similar type of data collection. It's on the basis of that independent assessment that the job creation figure of 30,000 has been established. It is valid in the same sense that this study was one of administrative practices, based on a sample. It is valid as well.

Mr. Maurice Vellacott: In regard to this study, then, I'd like to ask, Mr. Chair, for the sake of the committee, if we could have that data, that material, released to us with respect to what gave them this estimation of the 30,000 jobs. Could that be provided—that data and how you got those results—to the committee?

Would that be a fair enough request to make, Mr. Chair?

The Chair: Alan Winberg.

Mr. Alan Winberg: We would be pleased to provide the evaluation study on which the job figure of 30,000 is based.

Mr. Maurice Vellacott: Okay.

From there I want to move to another quick question with respect to the audit: was there an attempt to select projects from program areas on the basis of program spending; that is, Mr. Martin, did you try to ensure that you selected enough projects from the program area that maybe represents a large proportion of spending on grants and contributions, or was it all “smaller”...? Would you have selected from, say, the billion-dollar ones, the million-dollar ones, or the thousand-dollar ones?

• 1210

And yes, then you're going to have a lot of files, but we don't know what proportion of spending that represents. In your audit, Mr. Martin, did you do...?

Mr. Alan Winberg: Mr. Chairman, the audit was based on what's called a “stratified random sample”, not a simple random sample. It allowed a set of files—the same number—to be taken from each of the programs. The programs that have the higher-value files would therefore be overrepresented in the sample.

Jim, maybe you'd like to amplify that.

Mr. James Martin: If you look at the contract value in the total universe of the sample of 459 projects, there was approximately $230 million worth of contracts for those projects. If you think of a total universe annual expenditure of a billion dollars, it's clear that we over-sampled “larger-value projects”. The intent was not to over-sample those projects but to get a sufficient number of files in each of the program areas. The fact of the matter is, the way the programs are designed, you just automatically, when you use that approach, effectively over-sample the larger-value projects—but it wasn't the intent to go after those.

The Chair: Very briefly, Maurice Vellacott.

Mr. Maurice Vellacott: Very quickly, in respect to the often talked about six-point action plan, in view of the facts in the past, how do we know or have we any assurance that there's going to be effective monitoring of those recommendations, the six-point action plan, when there was not that in respect to the 1991, the 1994...? Why do we have any greater assurance that they'll be followed through on now, when the same types of recommendations, I think, were made before?

Mr. Alan Winberg: Mr. Chairman, the six sets of important initiatives that we are running under our action plan will be implemented, because we have put in place a set of accountability measures that is different from that in the past.

The first one is a continuous audit by this performance tracking directorate. It did not exist in the past. We created it this past year in order to measure and track the implementation of the elements in the action plan and measure how we are improving the administrative aspects of the grants and contributions programs of the department. That would be the most significant.

In addition to that, we have made a number of commitments to put into place additional features such as post-audit and such as a certification program in which, before a payment is made on a file, there's a certificate signed by a senior officer of the department that says that everything is in order.

The Chair: Judi Longfield.

Mrs. Judi Longfield (Whitby—Ajax, Lib.): Thank you, Mr. Chair.

Following up on a question of Mr. Vellacott's on how the audit sample was chosen, was the audit universe divided into the seven program areas and were programs then selected from the seven program areas?

Also, you've already talked about the financial or the monetary, but was regional distribution taken into consideration as well when you were selecting the projects?

Mr. James Martin: Mr. Chairman, there were in fact about 27 different subprogram areas that we looked at. It wasn't just the seven broad areas. What we tried to do was to have a sufficient number for each of those programs such that we could draw conclusions about whether or not they were being well managed. We wanted to be able to know whether or not the problems we were identifying were focused on one particular area or broadly across the department.

In addition, we tried to make sure that we had a reasonable number of files from each of the different regional areas. If you look at annex A of the audit report, it gives you the actual breakdown of the sample by program area, by region, or whether or not it was managed out of national headquarters.

• 1215

Mrs. Judi Longfield: Okay. That leads me to my next one: did you find that the degree of administrative mismanagement—perhaps that's not the correct word—or problems varied significantly if they were managed out of the regional offices or out of national headquarters?

Mr. Alan Winberg: The way the sample was drawn, the numbers for any specific subset of the 27 programs, or subset of the 10 regions plus headquarters, are very small. The generalizations that can be made are with the entire set of programs. It's not possible from that kind of sample and a piece of work to identify specific programs, specific regions within the sample, or any characteristic of what management was like in any of those particular parts of the sample.

Mrs. Judi Longfield: Given that, and because the samples were so small, is there going to be any attempt to focus in on either regional or national headquarters when you're looking at checks and balances in the future?

Mr. Alan Winberg: Yes, Mr. Chairman, in the performance tracking group, which has been set up, they will continue with a sampling procedure that will allow monthly reports and these quarterly reports, which we will be issuing, to identify by program and specific region the characteristics of their administration of grants and contributions.

Mr. James Martin: If I might add, Mr. Chairman, the number of files that the performance tracking directorate is anticipated to be looking at over the coming year will be four to five times the size of the numbers of files that we looked at in this particular audit, so there will be a much richer data base for drawing conclusions.

The Chair: Mrs. Longfield.

Mrs. Judi Longfield: When you look back at previous internal audits and then compare them to 1998-99, do you determine that the problems are more serious or more numerous than they were in past internal audits?

Mr. James Martin: It's difficult to compare, and you have to introduce a lot of caveats, Mr. Chairman, because the scope of the audits was different, they looked at somewhat different things. If you look at a specific issue, like financial monitoring for example, you'll see we've had a deterioration in the quality of the files in terms of recording financial monitoring.

That being said, the reason we were asked to do the audit in the first place was that a lot of executive heads were concerned about the reduction in resources we've suffered in the department over the last few years, and the increased complexity of the programs. The programs themselves have become much more complex. They were quite concerned that this had had an impact on the administration of the grants and contributions area. Let me be frank, they weren't terribly happy to discover that they were right all along in being concerned, but that's the fact of the matter. Hence, the department is taking it quite seriously and is trying now to correct the problems.

Mr. Alan Winberg: Mr. Chairman, in response to that question, in section four of the action plan, we have a number of measures—there are six listed in the summary—about ensuring accountability for results. In addition to the performance tracking directorate, we're talking about doing an investigation, an internal review, to assure we have proper segregation of duties and proper post-audit function before disbursements are made, and we are investigating the use of the ISO 9000 quality assurance tool. Those initiatives also are very different from in the past.

The Chair: I'm going to go to Yvon Godin, Christiane Gagnon, then Bonnie Brown.

[Translation]

Mr. Yvon Godin (Acadie—Bathurst, NDP): When I arrived here this morning, I was wondering if I would have any questions for the witnesses. Now, after listening to everyone else's queries, I find that I have enough questions to last me several days.

First off, I just want to say that it is unconscionable, and even insulting, to see that these audits were conducted and that the reports were not drawn up simultaneously in French. I could have delivered a 20-minute speech last night in the House of Commons and Canadians could have read it this morning in both official languages.

• 1220

Au audit was conducted in 1991. My opposition colleague requested a copy two weeks ago before the break and the witnesses are telling us here today that the French translation is still unavailable. That's unacceptable and I say to you that your department isn't doing its job. There's no excuse for this. Officials always say that the problem will be corrected, but we've been hearing that for 100 years. When will the excuses stop? When will we see some action on this front? I don't intend to let up on this.

Secondly, according to what was said earlier, this inquiry or audit of the Transitional Jobs Fund came about as a result of a review of funding of The Atlantic Groundfish Strategy, or TAGS program. Apparently, TAGS wasn't working well, some problems had been identified and a decision was made to conduct a more in-depth review of the file.

Curiously enough, Mr. Chairman, no major scandal broke over TAGS. And why was that? Because TAGS involved workers. An investigation was launched immediately. Inspectors were dispatched to our regions and demanded that workers hand back $15,000 or $20,000 in overpayments.

Last weekend, I met with a worker from the region who claimed that HRDC was the party at fault. The department had made a mistake in calculating his entitlement under TAGS and was now demanding that he pay back $10,000. This poor individual is receiving EI benefits and if he doesn't pay back this amount, his assets will be seized. The department is quick to act when workers are the targets.

There have been cuts at HRDC. EI benefits have been slashed and people have been turned out penniless into the streets. Now, large corporations are receiving lots of money. They're supposed to create jobs, but they aren't doing that. They aren't operating efficiently, but no one is investigating this. The House of Commons has been paralyzed for the past five weeks because of this audit. Now then, I have a question for the witnesses.

Vidéotron has apparently decided to return the $240,000 overpayment. When did it decide to do this? That's my first question.

Mr. Alan Winberg: An agreement was reached with Vidéotron, pursuant to which some calculations were made. We investigated the matter and Vidéotron agreed to pay back this sum of money.

Mr. Yvon Godin: My question was more specific than that. When did Vidéotron decide to reimburse the money and when was this file reviewed? Was it before or after the scandal broke?

Mr. Alan Winberg: In March of last year, before the audit was undertaken, an agreement was reached with Vidéotron whereby it would reimburse the money if the projected number of jobs were not created.

Mr. Yvon Godin: The company returned the money a year later, that is in March of 2000.

Mr. Alan Winberg: That's correct and pursuant to the agreement...

Mr. Yvon Godin: Three times now, you've referred to things that happened in the past. I'm saying that the company only agreed to return the money today, that is in March 2000, after the scandal broke.

The Chair: Careful, you're getting too close...

Mr. Yvon Godin: Perhaps I should change places.

Mr. Alan Winberg: Mr. Chairman, the money was paid back pursuant to the terms of an agreement signed in March of last year, if my memory serves me correctly, or perhaps even earlier.

Mr. Yvon Godin: As I see it, there's a connection between employment insurance and the Transitional Jobs Fund. The EI budget was slashed and the Transitional Jobs Fund was intended to make up the difference. Now we've come to phase 2 where we help companies. According to the auditors, there was no one capable of doing any project monitoring. Why did your department not focus on this particular program, when in the case of EI, which affects workers, there seems to be an endless number of auditors prepared to find fault with workers?

• 1225

Last week, a family man, a forestry worker, was dinged by EI. The department went back three years and demanded $30,000 from this person who survives on EI during the winter. He had made an error in his EI statements and received a $30,000 overpayment. The department goes all out to track down these workers, and yet this morning, you claim that the department doesn't have the manpower to investigate in the case of the Transitional Jobs Fund. We're talking about a government program worth billions of dollars, money that was paid out to large corporations. But that's not a problem. You wait for a scandal to break and for the House of Commons to be paralyzed for five weeks before talking about the situation. You try to protect the Prime Minister, whose riding received many projects, or other ministers who also have many projects funded in their ridings, far more than were funded in the poorest regions of Canada. There's no logic to the system.

Your department may have deep pockets, but from an administrative standpoint, it doesn't have much going for it. There's a double standard at work. You apply one formula to workers. You know how to attack them. You've taken $28 billion from workers who lost their jobs, whereas here, you're trying to find excuses. I'd like you to answer the question. In my opinion, the situation is deteriorating. You need to give workers some breathing room and shift your focus to the real problems.

[English]

The Chair: We have about a minute and a half.

Mr. Alan Winberg: Mr. Chairman, let me just say the department is committed to excellence in our management and administrative practices. We are here today to talk about an audit of our administration of grants and contributions. Over the period of time that we've been discussing, in other areas of management of the department, such as excellence in service delivery and our quality service measures, there are measured improvements in the administration, management, and service to clients. This is demonstrated to Parliament in the reports we issue each fall—the departmental performance reports.

[Translation]

Mr. Yvon Godin: I have one last question.

The Chair: Briefly, please.

Mr. Yvon Godin: Why aren't documents produced in 1991 available in French?

Mr. Alan Winberg: The documents I just alluded to on the department's performance are available in French and in English.

Mr. Yvon Godin: I was referring to the 1991 and 1994 audit reports.

Mr. Alan Winberg: As I said, Mr. Chairman, we're in the process of having these reports translated. We'll get them to you as soon as we can.

Mr. Yvon Godin: That's not the point. Are there two official languages in this country today, in the year 2000? Yes or no?

Mr. Alan Winberg: We take great pride in producing departmental documents in both languages, Mr. Chairman.

Mr. Yvon Godin: It only takes 10 years.

The Chair: Ms. Gagnon.

Ms. Christiane Gagnon: I too am disheartened by the fact that these reports are unavailable to us at the present time. Obviously, some groups that testify don't have the necessary resources to get their material translated. However, I can't for the life of me understand what possible excuse HRDC could have. I'm quite literally shocked and dismayed this morning. It's unconscionable and I can't say it often enough. I no longer have any expectations. It's clear what Quebec wants, and that's to not be assimilated.

I have a question about Vidéotron. You stated that you had reached an agreement with Vidéotron and that the company had paid back the money it owed. Job creation agreements were also reached with other companies that are now being investigated. Why haven't these companies been asked, just as Vidéotron was asked, to return some money? I was wondering if Vidéotron was acting according to previously established rules, but I see that other companies have not paid back anything. If you in fact have control over how the money is spent, why did a scandal have to break first before these companies... Can you explain that to me?

Mr. Alan Winberg: Mr. Chairman, Vidéotron was one of the 37 projects targeted for follow-up action further to the audit. I'm aware of this case. As for the others, we follow up on every file, in accordance with long-standing practices. Each year, our public accounts list certain companies that have reimbursed the department.

• 1230

Ms. Christiane Gagnon: Then you're telling me that Vidéotron reimbursed the department because it was one of the 37 files flagged for job creation funding irregularities. Vidéotron did not follow the guidelines. Basically, that's what you're telling me.

Mr. Alan Winberg: No, I'm saying that I'm aware of the Vidéotron file because of the audit that was done and because my group did a follow-up of the 37 projects identified in the audit. As for the other projects, all I can tell you is that each year, our department draws up a list of grant recipients who were overpaid and who now must now reimburse the department. I don't see anything unusual about that.

Ms. Christiane Gagnon: I'd like to touch on another point. As you know, we are here today to shed some light on the handling of public funds. Everyone knows full well that public funds were mismanaged, that partisanship was a factor and that every trick in the book was used in order to access these funds. One such ruse was labelling certain regions as pockets of poverty or unemployment. In any event, in answer to my question yesterday, the minister told me that according to one internal document, pockets of poverty were one of the guidelines established by HRDC.

In this internal report - although I don't really consider this to be a report or HRDC directive - we're told how the criteria are applied. However, we're not told what this is a determining criteria for accessing grants.

In the riding of Quebec, there are pockets of poverty in Limoilou, Saint-Sauveur and Saint-Rock. Yet, my riding was not eligible for grant monies because the unemployment rate was below 12 per cent, this despite the fact that there were pockets of poverty.

I'd like to know if an official internal HRDC directive was circulating because not many members were aware of this criterion. The only ones who seem to be cognizant of this fact were the ministers and government members who did receive grant funds pursuant to this criterion. Did HDRC issue a formal directive? Did you issue a press release? The department issues press releases when a new policy or program is unveiled. How is it that opposition members were left in the dark?

Mr. Alan Winberg: Mr. Chairman, these are important questions. However, they were not raised during the course of the audit and we are not aware of these matters.

The Chair: Ms. Gagnon.

Ms. Christiane Gagnon: Your job is to investigate. Certain directives must be adhered to. When you investigate, you try to determine whether recipients met certain eligibility criteria and whether the criteria were in fact applied. If I were conducting an investigation, I think I would look at whether the program was properly carried out and at whether grant recipients met the requirements. I think the department pulled a rabbit out of a hat when it brought in the pockets of poverty criterion.

Mr. Alan Winberg: In conducting our audit, we reviewed various administrative aspects of programs for each individual file. One of the things we looked at was whether there was something in the file to indicate that program criteria had been met. That's the type of information we glean from an audit and program review. We gathered up all of the files and poured over them searching for this information. The purpose of the audit was to ascertain whether the program criteria had been met. However, the specifics of these guidelines set were not part of the audit. The auditors did not comment on this.

The Chair: Briefly please, Ms. Gagnon.

• 1235

Ms. Christiane Gagnon: Can you tell me whether or not the files you reviewed were all cases where the unemployment rate was 12 per cent or higher and where grants were awarded primarily because of this factor? Were these particular files the focus of your audit?

I'd like to see for myself, not a program management report, but rather a formal departmental directive. I told my constituents that they were not eligible for grant funds because the rate of unemployment in the riding was below 12 per cent. However, if the determining factor was the presence of pockets of poverty, then, as I understand it, my riding would have been eligible. I wish that that had been the case.

[English]

The Chair: Alan Winberg, briefly.

[Translation]

Mr. Alan Winberg: Mr. Chairman, it's important to understand that in the case of this particular program, we looked at 20 out of a possible total of 459 projects or files. The audit did not focus solely on this program. We reviewed a large amount of data on HRDC contributions. People don't seem to have grasped this fact.

The idea that specific conclusions can be drawn about a program based on this sampling...

[English]

It is not possible to draw conclusions about any one piece of the 27 subsets of the sample. The program that's being discussed is about one of those sub-pieces. It's a mistake to try to draw conclusions about that one program or anything about that one program from the audit work that was done.

[Translation]

Ms. Christiane Gagnon: You say that I may not be talking to the right person. Who then should I be talking to get this information? Until such time as I receive an internal directive... This directive had been circulated to government members and ministers, but it wasn't an official document, and therefore, we weren't notified.

Mr. Alan Winberg: Mr. Chairman, my colleague David Good, the Assistant Deputy Minister, is the person responsible for this program.

[English]

The Chair: Colleagues, I still have a very long list. I know some colleagues have yet to speak. We're going to a second round. We're going to keep it moving. I'm quite willing to stay later and I'm sure the witnesses are.

The list I have at the moment, so you know, is Bonnie Brown, Diane Ablonczy, the chair, Maurice Vellacott, Rey Pagtakhan, Larry McCormick, Yvon Godin, and Jean Dubé. We'll keep it moving.

It's Bonnie Brown first. This is Bonnie's first turn.

Ms. Bonnie Brown (Oakville, Lib.): Thank you, Mr. Chair.

I'm trying to tap into the experience in this field that our two witnesses represent, Mr. Chair. The fact that there were audits in 1991, 1994, and 1999 suggests to me that the business of government partnering with others to create jobs is not new. I'm wondering whether, in that business of government under various administrations, it has always had the same emphasis that I read today when I look at the list of projects with the private sector. It seemed to me, looking back in time, that a lot of government business was done with non-profit and public institutions like hospitals, school boards, art galleries, etc. I'm wondering when the emphasis switched to pursuing private sector partners.

Mr. Alan Winberg: Mr. Chairman, I can confirm that there's been a trend towards more and more partnering with others for the delivery of government programs, but I don't have data that would allow me to give a proper answer to the question. That wasn't covered in the audit, but perhaps we could undertake that.

Ms. Bonnie Brown: No, it wasn't covered in the audit. This is more a policy issue within the department.

Mr. Alan Winberg: We will look to see whether there is a document available that we could provide to the committee on that subject.

Ms. Bonnie Brown: Thank you.

Mr. Martin, I was interested in your membership in this international Institute of Internal Auditors. Would I be correct in assuming that internal auditors are often the first people to turn up what some people call white collar crime, that is, employees or people misusing the funds of the company or, in our case, the department or taxpayer's money? Would that be true for internal auditors almost no matter where they work?

• 1240

Mr. James Martin: I'm not sure whether they would be the first. Certainly one of the things that can happen to internal auditors is that they run across situations that require further investigation, yes.

Ms. Bonnie Brown: Are there any documents out of your international association that suggest that they're finding more of that sort of activity across the board?

I'm just wondering, the violent crime rate is down. I don't think the population has become more saintly over the last decade, so I'm thinking maybe the people who used to rob banks, etc., now have other ways of doing it, and you people might be finding it out.

Mr. James Martin: They may very well have. There is nothing I have seen myself. There is certainly literature around with respect to the incidence of white collar crime.

Ms. Bonnie Brown: Do you pursue that, Mr. Martin? Do you read that literature when it comes to your notice?

Mr. James Martin: Some of it.

Ms. Bonnie Brown: But you can't draw any conclusions from it.

Mr. James Martin: The problem with trying to identify the level of internal fraud, Mr. Chairman, is that there are not good statistics with respect to the incidents. You have to try to draw inferences on the basis of fairly spotty—

Ms. Bonnie Brown: Is that because the private sector prefers not to air its dirty laundry in public? Is that why it's very difficult to get the stats?

Mr. James Martin: I wouldn't want to speculate on the motivation, but it is the case that organizations.... One often hears that this is the case, but I really wouldn't want to speculate that it was a general conclusion you could draw about organizational behaviour.

Ms. Bonnie Brown: Could one say that the publication of 16 binders' worth of information based upon an internal audit done by this government is a very unusual phenomenon in the world of internal auditors?

Mr. Alan Winberg: There is a remarkable openness and transparency with regard to the internal workings of government programs.

Ms. Bonnie Brown: Would I be naïve to assume that if we could get the same kind of transparency out of the private sector—this is not going to happen and I realize this is a hypothetical question—we might find similar kinds of evidence of that kind of activity? This is bearing in mind that the population doesn't vary that much, whether they're in the private sector or the public sector.

The Vice-Chair (Mr. Maurice Vellacott (Wanuskewin, Ref.)): We have to wrap this up fairly soon and go to our next questioner, if you can give a response on that.

Mr. James Martin: I guess I'm not sure I'd really be willing to speculate in order to give an answer to the question. I really just don't know.

Ms. Bonnie Brown: Thank you.

The Vice-Chair (Mr. Maurice Vellacott): That's a good line of questioning.

Diane.

Mrs. Diane Ablonczy: Thank you, Mr. Chairman.

I just have two questions really. When Mr. Martin was following up on the time and the reporting that took place with respect to your audit.... I understand that the audit started in January of 1999 and that you reported more or less on a regular basis. There was a big interim report in June and the final audit, of course, was finished in October.

You mentioned that there were some 30 internal meetings at which you were present and advised members of the department about the progress of the audit and presumably some of your interim findings. Mr. Dubé asked you at how many of those meetings the deputy minister was present. We never really got an answer to that, so I ask again: at how many of those 30 meetings was the deputy minister present?

Mr. James Martin: First off, I hope you don't take the number 30 too literally. Just take it to mean a large number.

The Chair: If I might say, I watched Jean Dubé and I'm sure it was on television. He said 30.

Mr. James Martin: Yes, a large number of meetings. Most of those were with junior officials. No, I didn't talk to the deputy around the time period that we did the final report on the audit.

Mrs. Diane Ablonczy: My question is with respect to the meetings that were held. At how many of those meetings was the deputy minister present?

Mr. James Martin: Throughout September and October, none that I can recall.

Mrs. Diane Ablonczy: I'm not talking about timeframe; I'm talking about number of meetings, Mr. Martin.

• 1245

Mr. James Martin: If you don't include any timeframe, then there have probably been a dozen meetings I've been at with the deputy minister over the course of the last two years where we've talked about issues associated with grants and contributions.

Mrs. Diane Ablonczy: No, I'm talking about meetings held specifically to discuss this audit.

Ms. Bonnie Brown: I have a point of order. I believe that—

Mrs. Diane Ablonczy: No, don't interfere, please. Mr. Chairman—

The Chair: Point of order—

Mrs. Diane Ablonczy: Mr. Chairman—

The Chair: —if it's a point of order.

Ms. Bonnie Brown: I think it is. I believe the exact question was asked by Mr. Dubé while Madam Ablonczy was out of the room, and the answer was none.

The Chair: She's quite entitled to ask the same question again.

Mrs. Diane Ablonczy: I was never out of the room, Mr. Chairman.

The Chair: Carry on.

Mrs. Diane Ablonczy: Mr. Martin, please.

The Chair: Ask the same question again. She's using her own time. She can ask the question twice if she wishes.

Diane, carry on, please.

Mr. James Martin: To discuss, Mr. Chairman, the results of the audit, the first time I had an opportunity to talk to the deputy minister about it was in late December.

Mrs. Diane Ablonczy: I'm sorry, that was late December of when?

Mr. James Martin: It was 1999.

Mrs. Diane Ablonczy: No, that wasn't my question, Mr. Martin. Please, it's a very simple question. You had a number of meetings internally to discuss this audit as it progressed. At how many of those meetings, which were 30, more or less, was the deputy minister present?

Mr. James Martin: I believe I said none.

Mrs. Diane Ablonczy: Are you saying that the deputy minister was present at none of those meetings?

Mr. James Martin: At none of the meetings throughout August or September or October was I in a meeting with the deputy minister to discuss the results of the audit.

Mrs. Diane Ablonczy: But I didn't ask that. I just asked at how many of those meetings where you were present was the deputy minister also present? Why are you being so evasive about that? Surely, you must know that an audit that was finished in October had to have been discussed at some point with the deputy minister. Don't ask me to believe you didn't talk to her at all until December, which was even after the minister was briefed. Please, just give a transparent answer. You had a number of meetings. At how many of those was the deputy minister present?

Mr. James Martin: None. The first time I had an opportunity to talk to the deputy minister when she was at a meeting where I was present was in December. The normal person I work through is the associate deputy minister, who is the chair of the audit and evaluation committee, Mr. Chairman, and it's that person I deal with at all times with regard to the findings of our audits.

The Chair: Okay.

Mrs. Diane Ablonczy: You did not speak at all with the deputy minister.

Mr. James Martin: Not until sometime in December.

The Chair: Okay.

Mrs. Diane Ablonczy: Well, that's very interesting.

The Chair: Diane—

Mrs. Diane Ablonczy: I just had one other quick question, Mr. Chairman.

Again turning to your remarks, at the bottom of page 2, the little box there, you say:

The audit team examined the expenditure patterns...with a particular focus on whether advance payments conformed to Treasury Board Policy.

I have two short questions: one, did you also examine whether the handling of funds complied with the provisions of the Financial Administration Act?

Mr. James Martin: Mr. Chairman, we looked at whether they conformed to the Treasury Board guidelines on advance payments that are promulgated under the Financial Administration Act to govern the way advance payments are handled.

The Chair: As we're on the second round, I think we should move on. Diane, I'm quite willing to add you again to the list.

Mrs. Diane Ablonczy: Yes, do that, please.

The Chair: By all means. I've done that.

I'd like to address a question, if I could, to Alan Winberg. There's an audit and evaluation committee, and the chair of it is the associate deputy minister. Who is, or perhaps was, the associate deputy minister?

Mr. Alan Winberg: His name is Jim Lahey.

The Chair: Has any thought been given to having him appear before the committee?

Mr. Alan Winberg: The department will be pleased to answer any invitations from this committee.

The Chair: It's called the audit and evaluation committee. I know we're talking here about audits, but in very simple terms, what's the difference between an internal audit and an evaluation?

• 1250

Mr. Alan Winberg: The internal audits look at internal management practices of the department. Program evaluations look at the results being achieved by departmental programs.

The Chair: With regard to these programs we're looking at, and I know we're looking at the audit, were any evaluations of them conducted during the period we're thinking about?

Mr. Alan Winberg: Yes. We have undertaken, in response to an earlier question from the committee, to provide you with the evaluation study demonstrating that there were 30,000 jobs created under one of the programs included in this audit.

The Chair: I'm glad, and we look forward to receiving that. So we'll have an example of an evaluation. I realize they're two different things, and I now understand clearly what they are. But when an internal audit is being conducted, are the evaluations ever consulted?

Mr. Alan Winberg: The auditor may look at evaluations. However, the subject matter of the audits is internal administrative practices, and that is different from the evaluations, which look at the results achieved from the programs. The Treasury Board guidelines and policies that govern these types of functions in the government are quite separate and distinct. There's one for internal audit, which says how audits run, and there's one for program evaluation, which says how evaluations run. The program evaluation group is run out of a different branch from mine, and they come together at the audit and evaluation committee. The plans for both types of study are reviewed together and approved in terms of the total coverage the department wishes to see take place.

The Chair: I understand. I was intrigued by the title of the committee, though. Perhaps I could put it another way. When an evaluation is conducted, do the evaluators take into account internal audits that may have been done on the same programs? I asked you vice versa. It seems to me that you have two separate things, and they do come together at some point, and one activity provides information that might be relevant to the other. Do you see what I mean?

Mr. Alan Winberg: Yes, and that's why they're coordinated in one committee where all the work for both internal audit and program evaluation is brought together to be considered by departmental management.

The Chair: Okay.

Next is Maurice Vellacott, followed by Rey Pagtakhan and Larry McCormick.

Mr. Maurice Vellacott: I want to ask Mr. Winberg a question that picks up on something that was said previously. You had an agreement with Videotron. Is it possible you have agreements with a lot of companies? If not, why don't you have an agreement for the return of money where companies don't produce jobs across the piece, kind of thing?

Mr. Alan Winberg: Again, each of the 27 different kinds of grants and contributions programs in the audit sample would be governed by terms and conditions that would be distinct for each of these various pieces. For each and every one of them there are agreements as to what the terms and conditions are for that agreement.

Mr. Maurice Vellacott: So you're saying that across that particular program area you have on file a whole lot of others like Videotron, and you have an agreement where it's mandatory or of their own will or volition that they will cough up certain money if x number of jobs are not produced.

Mr. Alan Winberg: In the case of that program, there were only 20 files in the sample of which we have knowledge. Videotron was one of the ones in which there was a detailed follow-up, and that is why I know about Videotron. For the other projects and programs, no definitive statements can be made based on the audit work.

For more information about the specific programs, I believe we have made an undertaking in earlier appearances before this committee that full program documentation will be provided for the various programs committee members asked for at earlier meetings. Those set out the terms and conditions and the different aspects of those different programs. They're different. That's why in the performance tracking group we are tailoring the tracking so that we will be picking up on the proper administration of each of the various types of programs. Those reports will be made available to the committee as and when they become available.

Mr. Maurice Vellacott: Is there anything in the audit—or it might be that there's some good reason to have something in the audit, which is the other way to put the question—that would try to gauge the impact if you give dollars in a certain area to a large sock company, or this type of thing...the impact it would have on other competitor companies, whether it hurts them, whether they go out of business, what it does to the total industry? Is there anything of that nature so that we know that in fact there's no net gain of jobs across the country or in the industry? Are we just looking at these in isolation?

• 1255

Mr. Alan Winberg: Mr. Chairman, these questions are outside the field of the internal audit group and the financial and administrative services group. You're asking questions that are better directed to the program group involved, and I've given the information about who the proper people would be. As I say, the department is very interested in assisting the committee with their work in these areas, and we would be pleased to provide the witnesses as required.

The deputy minister, when she spoke two weeks ago, mentioned a list of areas that we would be very pleased to provide information about. But the questions I'm being asked are program questions, which I do not have the answers to today.

Mr. Maurice Vellacott: The audit doesn't get at anything at all to do with net jobs as opposed to maybe losing as many jobs in the country. That's not a facet of the audit at all.

Mr. Alan Winberg: Mr. Chairman, we tried to explain that the audit was based on a file review, mainly, in which we pulled the file for 459 different projects, only 20 of which were in this particular program, the other 439 of which came from the other grants and contributions programs of the department.

We read the file to look at the evidence against the items that are listed in the audit report to see whether or not that evidence was in the file. We did not get into the question the member is asking.

The Chair: Rey Pagtakhan, then Larry McCormick, for the first round.

Mr. Rey D. Pagtakhan (Winnipeg North—St. Paul, Lib.): Thank you, Mr. Chair. Thank you, and I apologize for being slightly late.

My first question is what constitutes continuous audit? Is it daily, weekly, monthly, or quarterly? What is it exactly?

Mr. Alan Winberg: Continuous audit is a process in which every day work is going on in that tracking group. I'll let Mr. Martin explain in more detail the way that group is running.

Mr. James Martin: The way the group will be running is that every month we will be drawing a random sample of files, bringing them in to Ottawa, analysing them, and conducting our field visits. So we'll be doing it basically on a monthly basis. It's continuous work that will be going on to analyse the files, but it—

Mr. Rey Pagtakhan: May I interrupt? You indicated daily, but then you say monthly. Which is it?

Mr. James Martin: There is a file selection, which will be made every month. We will be getting the files in. There will be 150 files that will require work on a daily basis by the group. It's going to be running continuously, at all times, so in that sense it's daily. But the file selection—

Mr. Rey Pagtakhan: It will be a random sample of all projects—

Mr. James Martin: Yes.

Mr. Rey Pagtakhan: —and not every single project.

Mr. James Martin: It's a random sample of the entire universe of grants and contributions.

Mr. Rey Pagtakhan: Yes. Good.

The second thing is, how long does it take to complete a particular analysis or audit of one project? How many hours?

Mr. Alan Winberg: How many hours per project?

Mr. James Martin: Mr. Chairman, it takes about a half day to analyse a file. That will vary by the complexity of the file. Sometimes it takes longer and sometimes it takes less, but that's about an average.

Mr. Rey Pagtakhan: When you identify a potential problem, is it part of the process that there is an immediate intervention in terms of solution?

Mr. Alan Winberg: What is built into the process, which is a standard procedure, is that the file gets reviewed and then the results of that review, if there are observations, would be discussed with the appropriate program person.

Mr. Rey Pagtakhan: Now, to go back to the question raised by Mrs. Ablonczy earlier, the authority to conduct audits rests with the deputy minister. That's a given. The audit of primary interest was first approved in February 1998. That's a given from your presentation. In late 1998, the preliminary work was done, and then the terms of reference were finalized on December 18, 1998. During that time, how many times did you meet, if any, with the deputy minister, to your recollection?

Mr. James Martin: To the best of my recollection, I did not meet with the deputy minister at that time.

Mr. Rey Pagtakhan: Okay.

The second point is that the final audit was issued on October 5. To whom was it issued?

• 1300

Mr. James Martin: Mr. Chairman, the final report, which I signed off on October 5, was sent to the audit and evaluation committee for discussion. There was a draft manager response included in that report.

Mr. Rey Pagtakhan: The committee met on October 18, then the draft response was given. The minister was briefed on November 17, then subsequently the employees were briefed—given an overview, not the complete report—and a complete report was received on January 6, 2000. Did the complete report include both the audit findings as well as the final management response?

Mr. James Martin: The final management response, Mr. Chairman, I received on January 6 of this year, and it was at that point that the report became complete and final and was being prepared for distribution across the department.

The Chair: I have to keep it moving. It's one o'clock and we have a long list.

Go ahead please.

Mr. Rey Pagtakhan: On this review of the random sample—and the goal is to determine whether it could provide a high level of assurance based on your official project files—my question is, following that process, did you conclude that your approach is valid statistically, and at what confidence level?

Mr. James Martin: Well, Mr. Chairman, it was not a pure random sample, as Mr. Winberg has explained.

The Chair: It's a stratified random sample.

Mr. James Martin: It's a stratified random sample. The way the sample was determined was to try to identify and ensure that we were able to determine whether or not there were problems generally throughout the different program areas. And yes, we were able to conclude that the types of problems we found could be found everywhere throughout the department.

The Chair: Okay. I'm going to pick up the pace, Larry, even though it is your first round. I understand that.

Mr. Larry McCormick (Hastings—Frontenac—Lennox and Addington, Lib.): Thank you very much, Mr. Chair, and thank you, gentlemen, for being here.

Certainly at this moment, my question will be on the audit of 1999 versus previous audits. I just wonder—and you may have addressed this—whether this audit was more in-depth and in more detail in any way than previous audits.

Mr. Alan Winberg: Mr. Chairman, Mr. Martin has done an analysis of the current audit against the previous one, so I pass it to him.

Mr. James Martin: There were a larger number of files included. It had a broader scope in that it looked at all of the different program areas; it was not restricted to, for example, larger contribution agreements, which was the case in 1991. So in that sense, it's broader. The basic criterion approach that was used and the types of findings that emerged were not radically different.

Mr. Larry McCormick: Thank you.

Mr. Chair, I wonder whether any previous audits have ever resulted in money being returned to HRDC—I'll just get my other two halves to that question—whether previous audits have ever resulted in files being handed over to legal authorities, and following the files being handed over, approximately how many cases there were where criminal charges were laid.

Mr. Alan Winberg: Mr. Martin will answer that question, Mr. Chairman.

The Chair: Okay.

Mr. James Martin: With respect to the question, the types of administrative audits we conducted, which was what we spent most of our time on in this particular review, normally would not identify overpayments. To identify overpayments you have to do a very thorough analysis of the entire expenditure patterns with respect to a single project, so it's a very intense process, it's not a file review. When we conduct those types of audits, it's usually because there has been an issue identified. And when overpayments are identified, they are established according to our normal procedures. If there are issues of criminality involved, they are in fact turned over to the police as would be appropriate. I don't know if that answers your question.

Mr. Larry McCormick: Mr. Chair, I'm just wondering, I don't think I had it quite clear. I'm looking for an approximate indication here of how often this type of action has happened before, of them being handed over to the police and charges laid following other audits, compared to this audit.

• 1305

Mr. Alan Winberg: I'd just like to say one thing. As a result of the audit that was done on these 459 files, there was no money...no project was referred to the RCMP, and there was no project, therefore, for which criminal charges were laid.

The member is talking about different audits, and I'll pass it back to Mr. Martin.

The Chair: If I can—

Mr. Larry McCormick: We have the answer coming.

The Chair: Okay.

Mr. Martin.

Mr. James Martin: As part of the audit, a number of field visits were conducted. That led to the identification of 37 files that needed to be followed up. They were followed up. Several resulted in overpayments or reimbursements, which you're probably aware of, Mr. Chairman. As Mr. Winberg said, in none of the instances we looked at was there a question of making a referral to the RCMP.

The Chair: Colleagues, we're on the second round, in some cases the third round. I'm glad to do it, but I think each should be quick, just for the sake of us all. Question period will be coming up, and so on.

So it's Yvon Godin, then Jean Dubé, Diane Ablonczy, Paul Crête, and Bryon Wilfert.

[Translation]

Mr. Yvon Godin: I'll keep it short, Mr. Chairman. I don't like having to ask the same question as my colleague Mr. McCormick, but I don't think the witness really answered it. I believe his question was as follows: aside from this particular instance, in the past, has the RCMP laid any charges in connection with certain files or has it ordered any files investigated? The question wasn't answered. The witnesses merely referred back to the same audit. Therefore, can the witnesses tell me whether...

[English]

The Chair: Is that your question as well, Yvon?

[Translation]

Mr. Yvon Godin: Yes, I'm asking the same question.

[English]

The Chair: Okay, Alan Winberg.

Mr. Alan Winberg: In the entire time that Jim Martin has been in the department, there has not been a case where he has done an audit and there was a referral to the RCMP.

The Chair: Thank you.

Yvon.

[Translation]

A voice: That's never happened.

Mr. Yvon Godin: When you conducted your audit, did you discover when this particular criterion, that is pockets of unemployment, was established? In order for a riding to be eligible for funding under the Transitional Jobs Fund, the rate of unemployment must be 12 per cent. Under the Canada Jobs Fund, it was 10 per cent. When did the requirement change? When was that decision made? Did you uncover this fact during your audit? Did you also find out how the department notified members so that they could apply for funding?

Mr. Alan Winberg: Mr. Chairman, we made no such finding during the audit, because of the five techniques or approached described by Mr. Martin in his opening statement, not one would have enabled us to find this out during the course of our audit.

The Chair: Mr. Dubé.

Mr. Yvon Godin: May I ask one more short question?

The Chair: No, I think we need to go Mr. Dubé.

Mr. Jean Dubé: I'd like to focus on the question of the pockets of unemployment that was raised by my colleague seated on my left. I personally called HRDC officials in New Brunswick to ask them which pockets of unemployment in the province were entitled to project funding under the Transitional Jobs Fund? Do you know what I was told? That no such pockets of poverty existed. That's the truth. I then asked them to identify for me unemployment zones in New Brunswick. They replied that there were two such zones: zone 29 and zone 30. Zone 29 encompasses the cities of Saint John, Fredericton and Moncton, while zone 30 takes in the rest of the province.

Therefore, when were these pockets of unemployment established as a criterion by the department so that the minister's riding could qualify for funding under the Transitional Jobs Fund?

The Chair: Mr. Winberg.

• 1310

Mr. Alan Winberg: Mr. Chairman, I think that question should be directed to the officials responsible for the program. Assistant Deputy Minister David Good, who has appeared before this committee several times, is the person in charge of the program.

[English]

The Chair: Diane Ablonczy.

Mrs. Diane Ablonczy: Mr. Chairman, you're doing an admirable job.

I have two quick questions. One is about the tracking program. How often are reports produced?

Mr. Alan Winberg: There's a quarterly report that summarizes the work of the group in each quarter.

Mrs. Diane Ablonczy: When was the first such report produced?

Mr. Alan Winberg: The first report will be produced in the next several weeks, based on a set of files that has just been.... The group was set up and has put in place the practices and procedures. We are finishing that documentation now and will be making it available.

Mrs. Diane Ablonczy: When was the group set up?

Mr. Alan Winberg: The group was set up in November.

Mrs. Diane Ablonczy: So we can look for the first such report shortly.

Mr. Alan Winberg: Yes.

Mrs. Diane Ablonczy: My second question, Mr. Chairman, is really to you. I wonder if we could have written responses to the questions that are set out in our briefing notes. I'd like to ask some of these, but they are fairly lengthy. I think it would be very helpful to have this information. I think it would be easy for the department to just give us quick written responses to these. I request that information, please.

The Chair: Mr. Winberg.

Mr. Alan Winberg: I have not seen the briefing notes in question, but if given them, we will look at—

The Chair: Okay.

Paul Crête.

[Translation]

Mr. Paul Crête: In Vidéotron's case, a $220,000 overpayment was recovered after the internal audit was done. This wouldn't have happened had it not been for the internal audit. In the case of Placeteco, it's a known fact that $100,000 went to repay a National Bank loan. That information wasn't contained in the internal audit as such, but the facts of this case are generally known.

Has the department looked at the total grants awarded for job creation purposes with a view to identifying instances where no jobs were in fact created? If not, does it intend to do so in the very near future? Millions of dollars have been awarded in grants, with no evaluation done to see if in fact jobs were created as promised. Could you clarify this matter for me?

Mr. Alan Winberg: Mr. Chairman, regarding your first question, I can confirm to you that we received Vidéotron's overpayment at the same time as we were conducting our review and taking follow-up action further to this audit. However, as we said, the funds were remitted pursuant to an agreement concluded some time ago.

To answer your second question, this was not part of the audit. Our focus was on the management of grants and contributions programs. Your committee has to understand that only 20 of the 459 files reviewed involved the Transitional Jobs Fund and that this accounted for only part of our study.

Mr. Paul Crête: I understand that. I'm wondering though if the department has assumed its responsibilities and ordered studies to look into cases like Vidéotron - and problems were identified in many other studies - and to assess the impact of the present situation.

Mr. Alan Winberg: As stated clearly in our action plan to strengthen the management of HRDC's Grants and Contributions, we are reviewing all active files and we plan to review closed files on the basis of risk criteria to be formulated by August 30.

[English]

The Chair: Bryon Wilfert, very briefly.

Mr. Bryon Wilfert (Oak Ridges, Lib.): Mr. Chairman, it will be brief. My apologies, as I was double-booked today—unusual.

Mr. Martin, in your presentation you mentioned the fact that the audit team examined the expenditure patterns across the contribution programs that were audited and whether advance payments conformed to Treasury Board policy.

• 1315

My question is very straightforward. Do the Treasury Board guidelines conform to the Financial Administration Act?

Mr. James Martin: Yes, they do.

Mr. Alan Winberg: The answer is yes.

Mr. Bryon Wilfert: What would we conclude from that?

Mr. James Martin: You would be able to conclude from the audit that there were fairly frequent instances where there were administrative errors with respect to following Treasury Board guidelines.

Mr. Bryon Wilfert: Thank you.

The Chair: Colleagues, before I thank our witnesses, I would like permission to go back to this chart. Do you realize I can't guarantee these people are available on a certain day?

Mr. Jean Dubé: I move that this committee give you permission to schedule more meetings in order for us to speed up these hearings.

The Chair: Thank you very much. Can I have the understanding that I can mix and match the people on this list? It's not engraved in stone that I can work with it.

Bonnie Brown, and then Judi Longfield.

Ms. Bonnie Brown: Are we debating this issue that has just been placed as a motion?

The Chair: I was hoping to not have a motion, but the motion is that I can schedule more meetings.

Ms. Bonnie Brown: My concern is that I'm now 16 minutes late for the thing I was supposed to be at. Why don't we just approve the next meeting with Mel Cappe and discuss the rest of it and other witnesses at another meeting?

The Chair: If we're going to get into motions, we probably need a whole meeting to discuss this, but my intent was to avoid that. We have to get ahead, because in the end some of these guests will not be available on the days we want. Could you withdraw your motion?

Mr. Jean Dubé: I'll withdraw it, if that makes it easier.

The Chair: I would simply like the sense of the committee that I can mix and match and move ahead. Now you'll notice, for example, we are late today. In future, we would not be late unless it were an extended meeting—they're mentioned on here. I might start the meetings early, I might end the meetings late, and we might have extra meetings. That will be up to me. If I don't have that authority, I'll be stuck from day to day.

Judi Longfield.

Mrs. Judi Longfield: I understand and I know this is important, but each and every one of us has regularly scheduled meetings. I am not available to come to the meetings earlier because I have another committee meeting prior to this one. I run from one committee to the next. Most of us are in this situation. We have a job to do as parliamentarians, and other functions have to go on.

So it's fine to say you'll call them early and end them late, but something suffers.

The Chair: Paul Crête, and then Bryon Wilfert.

[Translation]

Mr. Paul Crête: The only assurance I want is that our timetable for presenting our interim and final report will not be changed. You can go ahead, Mr. Chairman, and schedule as many meetings...

[English]

Mrs. Judi Longfield: I agree with that.

[Translation]

Mr. Paul Crête: ... as you like, provided we keep to the timetable and no one claims that we haven't had time to meet with the witnesses before tabling the report.

[English]

The Chair: Bryon Wilfert.

Mr. Bryon Wilfert: Mr. Chairman, just a point of clarification. I understood we had agreed we would call additional meetings if there were a consensus by the committee that they were required, but it would be on a needs basis.

The Chair: As your chair, in my view we are at least two weeks behind. It's not the fault of this committee; it's because of circumstances in the House of Commons, where votes have interrupted us. It's my job to try to move these public hearings forward. That's all I'm trying to do, and I want some sense that I have some support for that.

Larry McCormick.

Mr. Larry McCormick: On a point of order, I agree we need to wrap up discussion. I'm wondering whether we can release our witnesses.

The Chair: I would sooner release them when we release the meeting. I'm going to try, to the best of my ability, to move these hearings forward.

Bonnie Brown.

Ms. Bonnie Brown: Mr. Chair, if you want approval of this piece of paper—

The Chair: I don't want approval of this piece of paper. I want—

Ms. Bonnie Brown: I have to express my concern about the concept of extended meetings. I think we will find very poor attendance. Each party will be trying to find people to fill in, as members have to go to, or remain at, other committee meetings. I am not averse to one extra meeting a week, but I am averse to long meetings.

The Chair: I hear this. I will bear it in mind. I hear that extra meetings are preferred to extended meetings. If you can leave it with me, I certainly won't surprise you all by saying next Thursday's meeting is going to be such and such. I'll give you all the notice I can. Generally, you want me to move ahead with this thing. Thank you very much. Everyone nods to a vote.

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I'd like to thank Alan Winberg and Jim Martin. Jim, we particularly appreciate your being here. We haven't heard you before. We thank you for coming. We apologize for this little bit at the end, but you can see this is housekeeping. Because these are public hearings, we have to do it in public.

I want to thank you. Colleagues, the meeting is adjourned until Tuesday.