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 23, 2000

• 1106

[English]

The Chair (Mr. Peter Adams (Peterborough, Lib.): If we could begin, I'd be grateful if the cameras would leave. I will introduce our witnesses in a moment. As you know, this meeting will be televised, but I would be grateful if the regular cameras would now leave.

There are a couple of things, colleagues, before I begin. I think we have all now received the 1991 and 1994 reports we have been asking for. As you may know, following our meeting on Tuesday, in addition to my usual inquiries, I wrote formally on behalf of the committee and the reports have now been received. I hope everyone has them.

I apologize to our witnesses. If you don't mind, I have to do this business now, because at the end it's sometimes fairly chaotic here. You understand.

Colleagues, with respect to next week and going into the week after, we have lists, as you know, and I suggested I should be able to deal with those lists as well as I possibly could. Obviously it depends on when the witnesses can come and that kind of thing. At the moment, this is what I have confirmed.

For next Tuesday, at our regular meeting time, we have John Reid, the Information Commissioner of Canada; Bruce Phillips, the Privacy Commissioner of Canada; Ekos; and Consulting and Audit Canada in the one meeting.

On Thursday, we have the regional representatives of HRDC, and specifically Danielle Vincent, who is the ADM in the Quebec region; and Suzette Perrault, who is the director general, centre-ville, Quebec. That is a week today, at the same time.

The following Tuesday, which is the fourth, we have the Honourable Lucien Robillard and Treasury Board officials.

That's where we are as far as confirmations are concerned at the moment.

We're here pursuant to Standing Order 108(2), a study of HRDC grants and contributions. Our witnesses today are Denis Desautels, who is the Auditor General of Canada; Maria Barrados, who is the assistant auditor general, audit operations branch; Theresa Duk, who is principal, audit operations branch; and Henno Moenting, who is the principal, audit operations.

We welcome you all here. We're most grateful to you for coming. If I might say to Mr. Desautels, I apologize; I know we've changed the date a number of times. I think you know there were peculiar votes in the House of Commons and various reasons why we had to postpone or shorten meetings. We're grateful to you for your patience, and we appreciate your being here today. I believe you have an opening statement.

• 1110

Mr. L. Denis Desautels (Auditor General of Canada, Office of the Auditor General of Canada): Thank you very much, Mr. Chairman. It's a pleasure for my colleagues and me to meet with your committee today to discuss the management of grants and contributions in our audit at HRDC. Questions arising from the HRDC internal audit have resulted in an unprecedented amount of debate and controversy in the last few weeks. For my part, I welcome this opportunity to discuss these issues with members of your committee.

Many government programs with different program objectives use grants and contributions to make payments. Some of these are statutory programs, such as old age security; others involve a great deal of management discretion, such as the training and work experience programs. In 1998-99, discretionary programs accounted for an expenditure of approximately $17 billion across government—17% of that by HRDC.

I cannot help but express frustration with the way the government manages grants and contributions in general. Our audit work in various departments back to 1977 has identified persistent shortcomings, from problems in compliance with program authorities to weaknesses in program design, instances of poor controls, and insufficient measurements and reporting of performance. We continue to find many of the same kinds of problems each time we audit grant and contribution programs. The recent internal audit at HRDC again pointed to the same types of problems.

The proper management of grants and contributions is an essential part of good public administration in the federal government. There are large amounts of public funds involved, and these should be spent only with great care. Such care can be taken only in the presence of proper performance and financial management, including appropriate levels of control.

[Translation]

Mr. Chairman, the recent internal audit at HRDC reported serious shortcomings in the management of grants and contributions, including numerous weaknesses in control. This is an unacceptable way to spend public funds. Large amounts of public founds were spent without the appropriate controls, making it difficult to know whether the funds were used as intended, spent wisely and produced desired results.

HRDC is a large, complex department with decentralized decision-making for programs that, by design, involve a great deal of management discretion—deciding who is eligible, how much they should receive, whether performance meets expectations and whether payments should be made. In such a decentralized system, it is essential to have in place a sound control framework, appropriate procedures to ensure it is applied, and clear accountability for the exercise of this discretion.

The Internal Audit Bureau at HRDC has reported serious deficiencies over the past decade in the way grants and contributions are managed. For example, its 1991 audit of significant contributions in government programs stated: "present monitoring practices do not offer adequate protection against possible misuse of public funds." In 1994, a follow-up audit found that control and monitoring continued to be neglected, even in large, complex projects.

[English]

In 1998, the department's internal audit bureau conducted an audit of grants and contributions under the Atlantic groundfish strategy. We relied on their audit work in our chapter on TAGS, published in our April 1999 report. We concluded that there had been a lack of due diligence in assessing proposals and signing agreements, and a lack of monitoring.

As reflected in its 1998 plans, the internal audit bureau continued its auditing of current grants and contributions. The 1999 internal audit of HRDC grants and contributions examined programs within seven directorates, involving approximately $1 billion in expenditures. It was the largest and broadest of the audits on grants and contributions conducted by the internal audit bureau. Within the limits of the audit scope and sample, the results are clear and credible.

• 1115

In my view, the internal audit bureau is to be commended for its work. Internal audit plays an important role in departments, providing deputies with assurance that their programs are well managed, and recommending corrective action in areas of weakness.

Internal audit also provides an important input into our work. Whenever we can, we rely on the work of internal audit and try not to duplicate what it has done. We have used or referred to internal audit reports in our work at HRDC. This has allowed us to expand the breadth of our audit and provide a more complete picture to Parliament.

There have been numerous references to the department's action plan to correct the deficiencies identified by the internal audit, and to the letter I've sent to the deputy minister commenting on that plan. I do believe this is a very thorough plan for corrective action to address the immediate control problems that were identified. Some longer-term action plans are also included that further strengthen the approach.

As we conduct our own audit in HRDC, we intend to assess the department's progress in implementing that plan.

[Translation]

In response to a request from the Public Accounts Committee, I outlined my plans last June to audit grants and contributions in selected departments, as part of a phased approach toward a government-wide audit of this type of program. In recent discussions, with the chairman of the Public Accounts Committee, we confirmed that our audit plans remain unchanged.

This October, we intend to report the results of our audit of specific grant and contribution programs in HRDC. We will report the results of our audits of grants and contributions in other departments and agencies in October and December, and our government-wide results in the fall of 2001.

The strategy underlying our audit plan for HRDC is to avoid duplicating work already completed or underway. We will build on work done and address questions not dealt with by internal audit. For example, the internal audit focussed on the documentation in files. It did not consider issues such as program design, eligibility screening or the results achieved. These are areas included in our examination.

[English]

Our audit will set out first to determine the extent to which we can rely on the internal audit and the ongoing performance tracking system established by the department; second, to assess the progress being made by the department in implementing its corrective action plan; third, to assess compliance with financial authorities such as the Financial Administration Act and the Treasury Board policies; fourth, to assess the adequacy of the management control framework—for example, who is responsible for what, how the key decisions are made, the capacity to deliver programs and the controls in place—and finally, we will assess the measurement of results and how they are reported.

The audit will use a combination of methods to achieve these objectives. Among other things, we will conduct audit work in four selected programs, including the Transitional Jobs Fund.

Broader issues, such as why these problems are persistent and why management practices have been so weak for grants and contributions will be explored as part of our upcoming government-wide audit of grants and contributions, as well as our current audit in HRDC.

I hope the combined impact of the actions being taken by departments and the fulfilment of our audit plans will finally lead to better management of grants and contributions across government.

In my recent December 1998 report chapter entitled “Grants and Contributions: Selected Programs in Industry Canada and Department of Canadian Heritage”, I indicated that we would develop a management framework for grant and contribution programs that we hope will help managers. We have already provided our framework to departmental managers on a pilot basis.

I hope that all of this public debate will also stimulate some reconsideration of the design, operations, and effectiveness of these programs. I want to stress the importance of considering how risk is managed in any sort of re-engineering or redesign exercise. It would not make sense to me for necessary changes to lead to excess tightening of the system and unnecessary red tape. HRDC has a complex and varied set of programs to deliver. A balance will need to be established to meet the needs of recipients, to ensure adequate controls, to assess risk, and to deliver results for taxpayers. The department may have gone too far in one direction. Now we need to re-balance.

• 1120

I also hope this controversy does not lead to any negative reactions to internal audit and evaluation in government. This would be very unfortunate. On the contrary, I hope positive things will come out of this. I hope the government will finally come to grips with the basic management of grants and contribution programs across all government; that it can make progress in instilling sound risk management practices; and finally, that it can regulate and review the effectiveness of these programs.

Mr. Chairman, this ends my opening remarks. My colleagues and I would be very happy to answer the committee's questions.

The Chair: Thank you, Mr. Desautels. We really appreciate that. Your colleagues don't have anything to add to that?

Mr. Denis Desautels: No.

The Chair: Thank you.

Colleagues, we'll proceed in a moment. If I could, however, I'd first like to introduce the Honourable David MacDonald, who is here today from Concordia University. He has with him students of the School of Community and Public Affairs at Concordia. These are senior students doing a parliamentary study.

I'd like to say on behalf of this particular standing committee, David, that we welcome you and the students in particular.

[Translation]

Welcome.

[English]

Voices: Hear, hear!

The Chair: Colleagues, as usual, I have a long list. To give you some sense of it, I'll read a fair part of it out. I'm going to try to balance it again. I'll adjust the list that I have if I get some sense that time is being taking up unduly by one side.

I have Maurice Vellacott, Rey Pagtakhan, Paul Crête, Bryon Wilfert, Jean Dubé, Judi Longfield, Pat Martin, Judy Sgro, and Bonnie Brown, and then we'll continue from there. I have others on this list, but I didn't read them out.

Mr. Maurice Vellacott (Wanuskewin, Ref.): I very much appreciate that we can have you in as a committee, Mr. Desautels, Maria, Theresa, and Henno. I know you're not hostile witnesses, so you will be forthright. I've appreciated in the past how you've performed in terms of audits and so on. You're very objective, and I'm appreciative about that in a big way today.

Getting to my question, simply, you do express in your brief to us some frustration with these kinds of recurring themes that have come out of these audits on HRDC and EIC. It's somewhat that the same old, same old keeps coming back up again. In view of your historical knowledge of the weak administrative controls and project mismanagement with HRDC and EIC, why do you think this department has experienced these long-standing and significant administrative problems?

Mr. Denis Desautels: Well, Mr. Chairman, I hope to be in an even better position to answer that once we have completed the current work that we're carrying out. Nevertheless, as I said, the problems that have been identified by the internal audit bureau are very similar to the problems that we reported when we looked at the TAGS program, and to the problems that we noted as well in other departments that we looked at recently, namely Heritage Canada and Industry Canada.

In terms of HRDC itself, the precise reasons are hard to pin down. As I indicated in my opening statement, though, one of the factors that I think has contributed to that is the overemphasis—if I may call it that—on client service at perhaps the expense of some basic administrative controls and paperwork that have to be done to make sure that you at least meet some elementary administrative rules that are in place. So to a certain extent, I think it's this shifting toward the client service aspect at the expense of the administrative side of things. I think that needs to be re-balanced to some extent.

• 1125

Mr. Maurice Vellacott: If I might interject, Mr. Desautels, that would kind of explain this last internal audit, but I guess I'm getting at the historical aspect, 1991 and 1994, some of the same problems to which you've alluded. This whole shift to loosening it up and getting it out the door quicker, this kind of stuff, I understand was a more recent thing, in the last number of years, not back as far as 1991 or 1994. That's what I'm trying to gauge here: Why? Is this any different from any of the other departments, or do we find it in a bigger way with HRDC/EIC, this historical problem with the lax administrative management function?

The Chair: It's early days in the meeting, but I would remind colleagues and the witnesses that the chair is here.

Mr. Denis Desautels: Mr. Chairman, this move towards decentralization has been going on since about the mid-1990s, so it's not something that happened only in the last couple of years. With the reorganization of the department and downsizing, there was a move towards empowerment of front-line people. So it's not exactly new.

But I don't want to oversimplify things either. This is one factor. Certainly, as I indicated, there were problems raised earlier than that, back in the early 1990s and even earlier. The reasons for all these problems are quite profound, and they're not totally unrelated to the fact that there's pressure on people to get the money out quickly. That has always been an issue. But overall, in my view, there simply has not been enough emphasis on the importance of the proper management of government expenditures when it comes to grants and contributions.

Mr. Maurice Vellacott: My next question would be, what incentives exist at present for departments to adhere to Treasury Board guidelines? Are there inducements or strictures that insist that departments adhere to Treasury Board guidelines? In other words, is it optional or are they obliged to follow Treasury Board guidelines?

Mr. Denis Desautels: Treasury Board guidelines are important. In my view, in fact, I think this is an issue that I would welcome this committee to explore: To what extent should Treasury Board go beyond issuing guidelines? To what extent should Treasury Board in fact be involved in setting the terms and conditions of some of these programs, and to what extent should be it involved afterwards in ensuring that the terms and conditions agreed to with individual departments for specific programs have been respected?

Mr. Maurice Vellacott: What does Treasury Board presently do? Do they enforce these rules, or do they just send memos out that these are the guidelines and have no enforcement procedures?

Mr. Denis Desautels: The current philosophy of Treasury Board is to empower departments as much as possible, decentralize as much as possible, issue guidelines and expect that the departments on their own will respect those guidelines.

Mr. Maurice Vellacott: Are there any sanctions they can impose upon a department that's found to be in violation of the Financial Administration Act? Can they impose a sanction? What steps or measures can they take in respect to departments that violate or frequently violate and it's known to be the case?

Mr. Denis Desautels: I believe Treasury Board has a number of tools available to exert pressure on departments to actually meet the terms and conditions it would like respected, but it hasn't been in the practice of doing that in the last little while.

The Chair: Maurice, are you winding up?

Mr. Maurice Vellacott: In effect, then, I'm understanding from you that there are no real teeth. It's trying to use some suasion or whatever, but there's nothing really to bring any censure or strictures to enforce the Treasury Board guidelines.

Mr. Denis Desautels: Treasury Board has the authority, the tools, and the mandate to enforce certain terms and conditions. It's up to them to use those tools and that authority.

The Chair: Maurice, one last question.

Mr. Maurice Vellacott: If I might suggest, then, going back to 1991 and 1994, if some of the same stuff appears to keep coming up here, it would occur to me—and you can differ or suggest that maybe you would agree—that Treasury Board is not following through in terms of any of these things even at their disposal, because we keep coming around to some of the same types of flaws and problems audit by audit. Would that be a fair conclusion to draw? Would it be objective to state that?

• 1130

Mr. Denis Desautels: I think there's a slightly broader issue here on which, as I said earlier, I would welcome more discussion among parliamentarians.

The issue really concerns the role of Treasury Board or Treasury Board Secretariat in relation to specific programs. How does Treasury Board carry out its role in setting terms and conditions for specific grants and contribution programs? Are the proposed terms and conditions systematically reviewed and challenged by Treasury Board? Is it compliant with the approved terms and conditions followed up by Treasury Board?

I think there's a basis or enough reason here to engage in a discussion of some of those issues, and it would be beneficial not just in terms of HRDC, but for the overall administration of grants and contributions across government.

The Chair: Rey Pagtakhan, Paul Crête, Bryon Wilfert, and Jean Dubé.

Mr. Rey D. Pagtakhan (Winnipeg North—St. Paul, Lib.): Thank you, Mr. Chairman.

Thank you, Mr. Auditor General, for your presentation.

It's very reassuring to hear from your office that indeed the six-point plan is a very thorough one for corrective action. One hopes of course that the problems you presented, which recurred from 1991 to 1994, and then, within other departments, lack of due diligence and lack of monitoring, would no longer be present following your audit, or at least will be highly corrected in light of your reassurance to us.

My question relates to the adequacy of management control. The Clerk of the Privy Council was with us last Tuesday. I was not so clear on the actual role of the Clerk of the Privy Council in the management of the federal public service. Perhaps I had no time to pose the question because of time limitation. How do you see the role of the Clerk of the Privy Council in the overall scheme of management control?

Mr. Denis Desautels: I think this is very much a policy issue: To what extent does the federal government wish to have a very centralized or more decentralized administration, with authority delegated to individual deputy ministers?

I believe when you come to large departments like HRDC and most other government departments, you're talking about large organizations. In my view, these organizations should be treated like big boys and girls. They should be given certain objectives to achieve and should be measured against those objectives, but they should not necessarily be micromanaged.

So it's a general philosophical issue. Certain organizations prefer a tighter style, but I believe when you're talking about large government organizations, you have to empower sufficiently those who are managing those programs but hold them accountable.

Mr. Rey Pagtakhan: With the very large organizations you have spoken of, and 4,200 employees, from your knowledge of the department today, is that adequate human resources for this huge department, with a very huge budget and a very extensive set of programs?

Mr. Denis Desautels: I don't think I can answer that question. You're right, it's a huge department. Whether or not there's a shortage of staff or whether they have the right resources is really a difficult thing to answer. But with the work we're doing, I hope we'll be able to shed some more light on the issue of capacity of the organization to deliver its mandate.

It is an issue we come across in more and more departments, where there's a difficulty in matching the capacity of the department or the ability of the department to deliver what's expected of them. It's a legitimate issue, but I'm not in a position today to answer it with any more precision. After this audit, I hope we'll be able to shed more light on that.

The Chair: One very short exchange.

Mr. Rey Pagtakhan: Coming back to guidelines and directives, and speaking about directives or guidelines coming from Treasury Board and then the guidelines within the department, what is the fundamental distinction between a directive and a guideline, to begin with? I know the guidelines will have more flexibility.

Mr. Denis Desautels: Maria, would you like to reply to that?

• 1135

Ms. Maria Barrados (Assistant Auditor General, Audit Operations Branch, Office of the Auditor General of Canada): I think there has been a loose use of terminology. There has been an effort to distinguish between the things you must do and things that are more in the order of suggestion. Treasury Board has been trying to shift from narrowing down the numbers of musts to directives on good practice, expecting that good practice to be taken on board and followed. I don't think the lexicon is as consistent as it perhaps should be.

[Translation]

The Chairman: Paul Crête.

Mr. Paul Crête (Kamouraska—Rivière-du-Loup—Témiscouata—Les Basques, BQ): Mr. Desautels, thank you for coming today. You say in your document, which I am quoting, that the problem is serious:

Large amounts of public funds were spent without the appropriate controls, making it difficult to know whether the funds were used as intended, spent wisely and produced desired results.

I personally compared the situation at the Department of Human Resources Development to a cancerous tumour.

In your opinion, Mr. Desautels, is the flexibility that the former deputy minister told us about last Tuesday not an example of a laissez-faire attitude that led directly to the administrative mess we are facing and to the partisan use of the funds that resulted?

Mr. Denis Desautels: Mr. Chairman, as I indicated a little earlier, during our audit we plan to examine the extent to which the directives and criteria were clear and well publicized before the requests for assistance were approved. Once we have completed our work and assessed the situation to see whether there was too much flexibility or even a lack of clarity in the way that the files were managed, we will be in a better position to answer that question. For the time being, Mr. Chairman, I am not in a position to answer Mr. Crête's question any more specifically. Next October, when I have completed the work, I will probably be in a better position to describe how the programs were administered and if the criteria were defined clearly enough.

Mr. Paul Crête: You mentioned in your document that the Transitional Jobs Fund was one of the programs that should be studied in greater detail to verify these facts.

Mr. Denis Desautels: Mr. Chairman, that is correct. We have included that program in our work plan.

Mr. Paul Crête: I would like to ask you another question on the 1991 and 1994 audits that we received. Does it not seem to you that the deputy minister at the time was displaying inexcusable ignorance when he told us that he had not been apprised of the outcome of these audits when he took up his position, even though the initial assessment of the 1994 audit dealt with recommendations from 1991, the first of which dealt with contributions, and considering that we have been specifically told that the recommendation was deemed unsatisfactory?

Does it seem acceptable to you that the deputy minister or the ministers were not made aware of the state of the situation? We will soon be celebrating the 10th anniversary of the unsatisfactory operation of these systems.

[English]

The Chair: Maria Barrados.

Ms. Maria Barrados: Mr. Chairman, the way HRDC operates is that they have an audit and evaluation committee that is chaired by the associate deputy minister. The associate deputy minister is there on behalf of the deputy minister. All the information on the audit and the audit plans flows through that committee. Our office sits as an observer on that committee. The information flow is there. The material is there. It is the responsibility of the deputy minister to brief the minister.

[Translation]

Mr. Paul Crête: I'm going to repeat my question. In your opinion, was it acceptable that the deputy minister in charge of the largest department in the federal government was not made aware of the outcome of these two internal audits? Does that not illustrate the consequences found in the new audit for the 1999-2000 fiscal year, where we can see the same lax approach as in previous audits?

[English]

Ms. Maria Barrados: Mr. Chairman, as an office, we feel internal audit and evaluation are very important functions and they make an important contribution. We expect the results of those reports to pass through to those committees through those processes and go to the deputy minister.

[Translation]

Mr. Paul Crête: So you do acknowledge that the deputy minister should normally have been made aware of the situation.

• 1140

[English]

Ms. Maria Barrados: I would expect the deputy minister to be briefed.

[Translation]

Mr. Paul Crête: Mr. Desautels, I believe you said that you were going to carry out a more in-depth investigation. I understand that an internal audit and a general audit of the entire department are not of the same magnitude. Are you excluding from the outset the fact that you could recommend a public and independent inquiry into the matter, since on three occasions, the department has been audited internally, and has not followed up on the recommendations?

In your presentation, you say that it will be important to remedy the situation this time. Are you excluding the possibility of calling for an independent public inquiry in light of the conclusions that you have drawn, especially with respect to the evaluation of programs like the Transitional Jobs Fund?

Mr. Denis Desautels: Mr. Chairman, we are not excluding any possibility with respect to recommendations that will flow from our audit. However, I must point out immediately that we very rarely recommend public inquiries. That decision is usually left up to parliamentarians. We will table our report with Parliament and it will contain the appropriate recommendations. For the time being, nothing is being ruled out, but I have to wait to examine the contents of these files.

Mr. Paul Crête: Through the Chair, I would like to ask you if we are not facing a situation that requires some very specific and exceptional solutions because the recommendations set out in the 1991 and 1994 audits were never implemented. What control measures would you propose to ensure that next time, five years down the road, we will not face the same situation, despite your recommendations and a more comprehensive internal audit? You said yourself that the internal audit had been well done and that the problem was not at that level. We have to ensure that action is taken on the recommendations contained in these audits.

Mr. Denis Desautels: Mr. Chairman, I agree with Mr. Crête that this is an exceptional situation that requires some exceptional remedies.

The action plan that was presented has led to an exceptional reaction, and I would hope that departments would react the same way each time we present an audit report.

The resources devoted to this action plan by the department seem exceptional to me. We will ensure that it can go ahead, carry out its action plan, obtain results and correct the shortcomings that were identified by both the internal audit and us.

Yes, it is an exceptional situation that requires exceptional solutions. In my opinion, the action plan falls into that category, and we are going to ensure that it is properly implemented.

Mr. Paul Crête: Mr. Desaultels, our experience with the implementation of the Transitional Jobs Fund was quite special. In Quebec, for example, 54% of the money was used during the electoral period, out of a three-year timeframe. Do you plan to prepare some recommendations in the short term, before the next election, to ensure that we do not experience the same situation, to ensure that a government program will not be used in a partisan way and that public funds will benefit all citizens?

Mr. Denis Desautels: Mr. Chairman, it goes without saying that our audit will, among other things, cover the information that we have gathered on these types of programs. In my opinion, transparency is the initial solution. Practices will improve considerably and be more healthy if all information relating to expenditures is clear and sufficiently detailed, and if the time factor and geographic data are taken into account. I am banking on transparency and good information. We will be making recommendations along those lines.

Mr. Paul Crête: Mr. Chairman....

[English]

The Chair: Very, very briefly.

[Translation]

Mr. Paul Crête: When you look at the criteria for the Transitional Jobs Fund, will you determine if a directive was sent out to all members of Parliament to make them aware that certain regions where the unemployment rate was below 12%, but where there were pockets of high unemployment, were eligible for this program? Will you look at that from the transparency perspective you mentioned?

Mr. Denis Desautels: One of the first things we are going to do, Mr. Chairman, is identify the criteria that were used to manage the program and that we will subsequently use in our work. We will assess the criteria in terms of clarity and transparency.

• 1145

[English]

The Chair: I'll read the whole list because I see members getting very restless: Bryon Wilfert, Jean Dubé, Judi Longfield, Libby Davies, Judy Sgro, Bonnie Brown, Phil Mayfield, Paul Crête, and Larry McCormick. By the way, I already have Maurice Vellacott and Rey Pagtakhan on a second round. For those who are substitutes, we have 18 members on this committee, not 16, which is one of the reasons we keep to this pattern.

Bryon Wilfert.

Mr. Bryon Wilfert (Oak Ridges, Lib.): Thank you, Mr. Chairman.

I thank the Auditor General for appearing. I always find his comments very illuminating.

I would start off by saying to the Auditor General through you, Mr. Chairman, that I would concur with your assessment with regard to the HRDC audit in terms of the shortcomings and that very clearly it is a very unacceptable way to spend public funds.

Having made that comment, you also said that the approximate $17 billion that was spent on discretionary programs covers other departments as well. Would it be fair to say, then, that these problems may be systemic across the board, and given that HRDC is only one component in terms of these discretionary programs, would it not be reasonable then to suggest that we should be looking to see—I know that we as a committee do not have the authority, but certainly we could be making recommendations—that the six-point action plan being proposed in HRDC, which you have already commented on, evaluated, and indicated you support, is applied across the board in all areas where discretionary funds are spent?

Mr. Denis Desautels: Mr. Chairman, I think it's too early to come to that conclusion. I think the six-point action plan that HRDC has come up with is quite appropriate for their situation and for the types of programs they are managing. The grants and contributions programs can be quite different from one department to another. Each one has its own risks because of the nature of the program. So while there may be some possibility of knowledge transfer from this experience to others, I think it's a little early to say that.

I would like to remind the committee that following our audit of grants and contributions in two other departments, we have worked on developing a framework for managing grants and contributions. We have made that framework available to a selected number of departments for field testing, and there has been very positive reaction to that. There has been a lot of interest on the part of departments wanting to use this tool. A lot of it is as a result of what has happened at HRDC, of course, but I'm counting on that to a large extent and on the collaboration of departments in perfecting that tool to really give us something that will be helpful not just in HRDC but across all of government.

Mr. Bryon Wilfert: You're suggesting, then, that interest in the lessons that have been learned is being expressed in other areas.

In that case, I'd like to go back to the issue of Treasury Board. You mentioned in your closing comments that you try to redress the balance in terms of delivering programs and getting the dollars to the people and programs that need it versus the appropriate administrative tools. We seem to have moved away from the mandatory directives of Treasury Board to what appears to be more suggested guidelines. I want to ask whether you think we should go back to that position and whether that is one of the checks that would in fact prevent future problems, whether it's in this department or in others.

The Chair: If you can, Mr. Desautels, please give a short reply.

• 1150

Mr. Denis Desautels: Mr. Chairman, I think there's a need to redress the balance, but I also said in my opening statement that we should not go back to a situation where we have excessive red tape. I think there are solutions to that. I think we should bring in intelligent risk management for this kind of program. I think it's feasible and doable. We can in fact still maintain the objective of giving good client service but still respect the objectives of the Financial Administration Act.

The Chair: Next is Jean Dubé, followed by Judi Longfield.

[Translation]

Mr. Jean Dubé (Madawaska—Restigouche, PC): I would like to thank Mr. Desautels and his team for their presentation.

Mr. Desautels, in paragraph 3 of your presentation, you say:

I cannot help but express a certain frustration with the way the government manages grants and contributions in general.

You will understand that as members of Parliament and taxpayers, we are also frustrated to see how the government is managing our money.

There were some students here earlier on. Students are asking for more money for better working tools, the provincial health departments are asking for more money for health care, and we are witnessing what is happening here in Ottawa. There is not enough money for health care, but at the same time, there is bad management here in Ottawa.

I think it was Ms. Barrados who answered a question on the Department's audit committee. Ms. Barrados, I would like to know who in your office sits on this committee with the people from the Department of Human Resources Development.

[English]

Ms. Maria Barrados: Mr. Chairman, currently I am the member of the office who sits as an observer on that committee. If I can't attend, one of the audit principals who are sitting here with me would be going on my behalf.

[Translation]

Mr. Jean Dubé: There were undoubtedly a number of meetings, perhaps even 30, required to produce a report like that. Mr. Martin, who appeared here last week, said there were about 30 meetings. Did you attend 30 meetings at the audit committee?

[English]

Ms. Maria Barrados: I'm not sure of the reference Mr. Martin was making, Mr. Chairman. I just took over these responsibilities in October, and the first meeting I went to in October was when there was a draft of this report. My understanding is that there had been previous discussions about this audit in the June meeting, at which unfortunately nobody from my office was present, and that there had been other discussions, but more in terms of planning where it was on the agenda. Mr. Martin probably was discussing other meetings in the department.

[Translation]

Mr. Jean Dubé: Do you have a list of the people who attended the meetings that you had with the department?

[English]

Ms. Maria Barrados: We have, Mr. Chairman, complete minutes of the audit and evaluation committee meetings, and they always show the members who were present.

[Translation]

Mr. Jean Dubé: Did you ever see the name of Deputy Minister Claire Morris in the minutes?

[English]

Ms. Maria Barrados: Mr. Chairman, during the time I have been sitting on that committee as an observer, which is since October, Mrs. Morris' name was not down as a member of that committee. It was chaired by the associate deputy, Mr. Jim Lahey. Earlier on when Mrs. Morris was the associate deputy minister, she was the chair of that committee, and she was there as the chair.

The Chair: Mr. Dubé.

Mr. Jean Dubé: I'm going to try to find some sense in what has gone on here with this department and these grants and contributions. Like many of the members here, I think what we want to do is fix the problem, and it's urgent. As Monsieur Crête said a while ago, it's a very urgent problem. But I think it's bigger than just HRDC. I think it's throughout government departments.

Monsieur Desautels, I've seen your work, and you did excellent work with these audits, but I'm just wondering if you have the resources. We know this situation is urgent. We're talking about billions of dollars of taxpayers' money. I know you're going to come back to us in October on this one, maybe after the next election, and certainly it won't give taxpayers the time to take a look at what's been going on and to form their judgment. Do you have the resources on hand to really audit what you as the Auditor General think should be audited at this time?

• 1155

Mr. Denis Desautels: Mr. Chairman, the question has been put to me before. We're operating in a very tight situation. In order to do what we think needs to be done in HRDC, of course we have to free up resources from other work that we would do to be able to staff this particular assignment. We've succeeded in doing that.

We now have a team of fairly senior people put together to do the work we need to do at HRDC. We have a very detailed program as to what we're going to look at and how much time it's going to take. We're geared to do that. By hook or by crook, we've managed to find the resources to do that. While it's tight, I did not judge that it was necessary to go back to Parliament and make a special request to do this. I think what we will deliver will be very thorough.

Mr. Jean Dubé: You've taken resources from other places to concentrate on HRDC. As I said at the outset, there are other departments as well that probably need auditing that do grants and contributions. I think of the Department of Industry and the Department of Canadian Heritage. Do you have concerns that other departments could be in the same situation as HRDC and in turn would not have the proper resources to audit these very departments?

The Chair: If I could, as the chair, I just want to say we're very interested in the evaluation and audit committee. It seems to me that such a committee doing evaluations and being involved in audits is very critical in this whole process, in a department as large as this. Jean Dubé just asked you some questions about it.

Your participation in that committee, which really has to do with internal auditing.... I'm wondering about the loop, with due respect, with your independence. Here you are, at the moment evaluating internal audits, and yet you're in the loop at the internal audit level, not in the operation of the audit but in the decision of what should be audited internally and how it should be audited. Would you care to comment on that?

Mr. Denis Desautels: As Ms. Barrados said, we are observers on that committee, so we do not participate in the decisions made by the committee as to what to audit and what not to audit. HRDC is not the only department where we are in that kind of relationship. The reason we do that is so that we can be best informed as to what internal auditing is doing.

In our work, we rely on the work of internal auditing in as many departments as possible. If we can coordinate our work to a certain extent with the work program of internal auditing, we can achieve better coverage of government operations overall. It's been quite profitable to enter into that kind of relationship with departments. I think it still keeps us at arm's length, because we're there as observers. If they find that we should not be there, if they prefer to discuss some things without us, we'll pull out of a meeting. It's a relationship that I think has been quite profitable but is not unique to HRDC.

The Chair: There's a similarity of culture between your audits and these other auditors. I know they're different and the perspective is different. These people must be people in your profession or professions and so on. With the observer status you mentioned, is there informal or formal advice at various stages as an internal audit proceeds, when it's being designed, when it's being executed, when the results are in? Does that advice ever get to the point of being negotiation?

• 1200

Mr. Denis Desautels: Mr. Chairman, our presence is at the committee level, where work programs are being discussed. It does not extend to involvement in the detailed work plans for a specific audit.

There can be exceptions to that, and the exception I've talked about this morning is in the case of the TAGS program. We made an agreement with HRDC. If internal audit looks at this, we can work together, because we need to have some more detailed work done that we would use to make some higher-level observations on the running of that program. So the audit of TAGS that was reported in 1999, I believe, was a joint effort between our office and the internal audit bureau of HRDC.

The Chair: Thank you very much.

Judi Longfield, Libby Davies, Judy Sgro, and Bonnie Brown.

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

I want to echo some of the concerns the member opposite referred to. I mean, 23 years of reoccurring problems with grants and contributions is indeed serious. The problem that's now at HRDC clearly didn't arise overnight; 1991 and 1994 pointed to some pretty severe deficiencies. You mentioned TAGS as being one.

I'm curious as to why, when you prepared your notes in the Public Accounts of Canada, you didn't mention the administrative defects in HRD and why there wasn't some sort of flagging of problems that were there.

Mr. Denis Desautels: Mr. Chairman, I'd just like to confirm that Mrs. Longfield is referring to our opinion on the financial statements of Canada itself.

Mrs. Judi Longfield: Yes.

Mr. Denis Desautels: The opinion we give on the financial statements of Canada relates to the fair presentation of the expenditures of the Canadian government and its tax revenues and its assets and liabilities. Within certain spending programs, there can be concerns about the internal control that was exercised. At the end of the day, if it does not affect the accuracy of the reported figures, then we can conclude that the financial statements are fairly stated.

The opinion we gave on the financial statements of Canada is basically aimed at different kinds of objectives and strictly the kinds of administrative problems we're talking about today.

Mrs. Judi Longfield: Thank you. That clarifies one.

Moving beyond this, are you concerned about the administrative practices of programs that are delivered under full transfer of market agreements, that kind of thing? It's been devolved to third parties, provinces, where clearly it's federal dollars being spent. Who's responsible to look at that? A fair amount of the spending that goes on under HRD is done by third parties.

Ms. Maria Barrados: Mr. Chairman, we have just completed an audit on new governance arrangements, and we talk about two different types: those that are in partnerships and those that are fully delegated. The delegated ones are completely at arm's length with government. There are a lot of partnership arrangements in HRDC.

As a general concern, we are concerned that the government doesn't use a consistent framework in asking the questions about accountability, in asking the questions about clarity of responsibilities, in asking questions about transparency and the kinds of reporting to Parliament. So we do have that general concern. It varies by different kinds of partnerships, what elements they have in and what elements they don't have in, and what's working well and what isn't.

The Chair: Make this a very brief exchange, Judi.

Mrs. Judi Longfield: Have you made specific recommendations to the various ministries and departments on how they might alleviate some of your concerns?

Ms. Maria Barrados: Where we are now is that we just finished actually having some meetings with the public accounts committee where we had Treasury Board with us. We are recommending that the government put such a framework in place and that Treasury Board work on this and ensure itself that these elements are covered. And Treasury Board has agreed to do that.

• 1205

The Chair: Libby Davies, Judy Sgro, Bonnie Brown, Phil Mayfield, and John Godfrey.

Ms. Libby Davies (Vancouver East, NDP): Thank you, Chairperson. First of all, thank you very much for coming today. My apologies for being late, but I was covering in another committee.

I have two questions. One is a general question about the role of the Auditor General's office and what kind of accountability there is, and then I have a more specific question in terms of the work you're undertaking in HRDC. But a number of members of the committee and you yourself have commented on really what is a systemic problem in terms of not just this department but other departments with grants and contributions over 21 years.

You have an independent role, but within your mandate are there any measures in terms of accountability when recommendations are made and they're not acted upon? You talk about the performance management framework that you are now developing as a result of these systemic problems within that framework. Is there anything you can peg it to? Is there anything to say to HRDC or any other department, if you haven't measured up to the management framework, then there are consequences in terms of the way funds are allocated from Treasury Board? What kind of connection is there, if you understand what I'm getting at? It seems to me that you're expressing frustration, everybody's expressing frustrations. So we have all of this body of work that is produced, a huge amount of evidence that there are very serious problems, and yet the ability to actually implement the changes, whether it's 20 years ago or from the last audit, is a serious matter.

That's my first question, and I think it really bears upon what Mr. Crête was raising; that is, are we at the point where we need to have an independent public inquiry? I think you said it was a very rare thing. Does your office actually have the ability to recommend that when you feel the work that's been done has just been ignored for so long?

That's my first question.

Mr. Denis Desautels: Thank you.

Our office cannot force government departments to implement our recommendations. Our power, our leverage, is our ability to report to Parliament, and if we report to Parliament in a clear enough fashion, explain the problems clearly enough, hopefully Parliament will agree with us and exert pressure on government to make the necessary changes. But we cannot go beyond that. And in fact we have no power to force departments to implement our recommendations, nor do we have powers to sanction government departments if they don't implement our recommendations. Those powers of sanctioning belong strictly with the government.

Ms. Libby Davies: What will your performance management framework do? It implies that you're putting something in place that will set out criteria for performance and management, and it seems to me it's implicit that if it's not met there's a consequence. So what would the consequence be if it's not met?

Mr. Denis Desautels: The consequences of not following that framework, if it ever gets adopted as a general tool, as basic across government, will have to be determined by government managers themselves, or deputy ministers and higher people in authority. Our objective in developing that tool is hopefully to get general acceptance around the criteria for managing grants and contributions in the modern world, in the modern government, and if we can get that general acceptance, then I think we're setting the pace for judging people's performance against that basic set of criteria.

Ms. Libby Davies: Do you see that as a major shortcoming in this kind of performance management framework, that for the work you do, in effect, at the end of the day there isn't that accountability? In a general sense it exists through Parliament, but look at us today. Look at the mess we're in.

So it seems to me that this is a very serious public policy issue in terms of how do we, in a real way, ensure that this accountability exists from the work your office does, from the Treasury Board, from the Financial Administration Act? We have these so-called checks and balances, but if they're not working and the checks and balances don't exist, then this is a very serious matter.

• 1210

Mr. Denis Desautels: In my nine years as Auditor General, I think I can say that we've had good support from the standing committees in dealing with a number of issues. We work, as you know, most closely with the Standing Committee on Public Accounts, and whenever they've studied one of our chapters, one of our reports, and issued their own reports afterwards to the House, you could notice usually a very positive response by government to the committee's recommendations. So I believe that standing committees can indeed influence how things eventually get administered by the government.

Ms. Libby Davies: I have one brief question.

In terms of the work that you've now undertaken in this department, one of the issues we've been concerned about is what rules exist or don't exist for disbursement of certain grants and contributions.

Two days ago we had the former deputy minister saying there really weren't rules for the Transitional Jobs Fund. We've had the minister in the House saying something rather different. I have a lot of concern that the rules have to be clear, they have to be transparent, and they have to be fairly and consistently applied. If that's not happening and there's a huge variation throughout the country in terms of how members of Parliament are involved, how decisions are made, and how political those decisions are, then that is a very serious issue.

I'd like to know whether or not, in your work now coming up, you will actually be looking at that in terms of the decision-making process and whether or not, first of all, rules exist, and secondly, whether they are being adhered to and are being applied inconsistently from region to region across the country. Will you be looking at that?

Mr. Denis Desautels: In our upcoming audit we will be looking both at how the rules, or the terms and conditions, for each of the programs that we'll look at have been spelled out, have been laid out, and how well they've been followed in terms of approving projects. So we will definitely be looking at that, because I'm very concerned about it myself. We'll also be looking in general at how the Financial Administration Act has been respected, because the FAA has certain objectives in mind, certain principles in mind, and we want to make sure these principles of the FAA have been respected.

The Chair: Judy Sgro, Bonnie Brown, Philip Mayfield, John Godfrey, Paul Crête, Larry McCormick.

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

Thank you, Mr. Desautels, for giving us some information this morning.

When I listened to your presentation you talked about these problems going back to 1977, so they certainly didn't appear just in the last couple of years. Is the problem with the department? Is it too big a department, and have you ever considered in your recommendation a suggestion that maybe it should be broken up and split into other departments?

Mr. Denis Desautels: We don't make recommendations dealing with the organization of government. We consider that to be a matter of government policy and therefore we'll stay out of that.

We do get within a department if there are some problems with management controls that could have a link to organizational issues. We would consider that, but the fundamental model followed by the government for its organizational structure we consider a matter of policy.

Ms. Judy Sgro: Do you not do any follow-up, once you've delivered your report, to require management letters back from anyone, or is that something that goes to Treasury Board rather than to you?

Mr. Denis Desautels: We do systematically follow up every report we produce for the House. Two years after the initial tabling of a report, we re-examine the situation and see to what extent progress has been made in implementing or dealing with the problems we raised, and we report back as a standard chapter each year in our annual report to the House on these follow-ups.

Ms. Judy Sgro: Is there an opportunity through the committee to ensure that the action you are recommending is followed through on a normal process?

• 1215

Mr. Denis Desautels: The answer to that is a definite yes. We welcome, for instance, committees asking departments for an action plan with dates and responsibilities and regular reporting or information back to the standing committee. That has been done quite successfully by the public accounts committee. As far as I am concerned, it can be done by any committee, and I think it works well.

Ms. Judy Sgro: So when you're making your recommendations regarding HRDC—I'm new here, so I'm not sure what the process is—you're recommending a variety of things and some reports back in October and on a quarterly basis. Are you recommending that those reports come through the HRDC committee to ensure the follow-up?

Mr. Denis Desautels: It's up to the committee to decide, but I think it would be a very legitimate request by the committee that it be updated regularly on the progress made on the action plans.

Ms. Judy Sgro: I have one last question.

The Chair: Go ahead.

Ms. Judy Sgro: At the current time, regarding the six-point plan that has been put in place for HRDC, you are supportive of that and you feel it will once and for all possibly get a handle on some of the problems in HRDC.

Mr. Denis Desautels: We said publicly that we are supportive of the six-point program and we think it can solve the immediate problems that HRDC is facing. We will be monitoring in our current audit how that is going, and we'll be reporting back on that as part of our report that will be coming out in October.

The Chair: Thank you.

Judy, if I could point something out, before you came on our committee, we did a study of social insurance numbers, which was a fairly extensive study. It was the result of a follow-up of the Auditor General's report. One of the values of that, it seems to me, is that a standing committee like this can actually put more time into it than public accounts can on a very specific issue like that. So I think your point is well taken.

Ms. Judy Sgro: But within our process, is it possible through a recommendation or a motion, depending on the committee or the chair, if it's advisable, to have these reports come back directly here to this committee for an analysis and further recommendations?

The Chair: The standing committees can follow up on any aspect of the Auditor General's reports, so it would be well within our power to do so.

Ms. Judy Sgro: Thank you.

The Chair: Bonnie Brown, and then Phil Mayfield, John Godfrey, Paul Crête, and Larry McCormick.

Ms. Bonnie Brown (Oakville, Lib.): Thank you, Mr. Chair, and thank you, Mr. Auditor General, for coming.

You and others have identified this trend from a rather tight system with a lot of red tape to one that is more focused on service. I wonder if, at about the same time, there wasn't another trend that had HRDC trying to secure more partnerships with the private sector as opposed to the non-profit and institutional sector. It seems to me 20 years ago those would be the kinds of groups with whom we would partner. Would you agree with that, or do you remember the days when it was suggested that we get more private sector participation in our grants and contributions?

Mr. Denis Desautels: I do agree with the fact that there is a trend towards new forms of delivery of program services, and those might involve not only the private sector but other levels of government as well. That kind of program has a lot of advantages, but it is a little more complicated.

Ms. Bonnie Brown: The risk factor is higher.

Mr. Denis Desautels: I'm not necessarily ready to say that. If those programs, those joint efforts, are properly negotiated, I think you could end up really with better management and better accountability than we've traditionally had. It requires more up-front planning and negotiating as to who's responsible for what, but if you do that well, you can end up with a very satisfactory situation.

Ms. Bonnie Brown: It just seems that some of the cases that have come to light as having very serious questions about them, so serious that some have been referred to the police, all seem to fall in the realm of private sector partnerships as opposed to institutional partnerships or non-profit organizations, at least in what has turned up so far. I wonder if, when you go into your study this year, you might try to get some kind of comparative figure on that and maybe have an opinion by the time you report back in the fall.

• 1220

Mr. Denis Desautels: We certainly have an open mind on that., and we will be taking into account the delivery mechanisms that are being used and we'll see whether or not there's a link between the difficulties encountered and the type of delivery mechanism we're talking about.

Ms. Bonnie Brown: I have other concerns. We're talking $17 billion in grants and contributions that we want to make sure are well administered, but soon there will be almost $15 billion in the CHST. We also have a lot of money in the labour market development agreements. What is your experience of cooperation in finding out from the provinces exactly how the money was spent? Do you and those auditors general meet together to talk about those things? Some of us have very serious concerns particularly about certain provinces and what they're doing with our money. What is your assessment of the current state of that?

Mr. Denis Desautels: That remains a difficult area. Our expectation was that when the federal government transferred programs such as the labour market programs to the provinces, it would negotiate proper audit arrangements with the provinces. That has been done and there are audit clauses under those programs, but I don't think it has provided the federal government with the kind of information or assurance they would really like to have. So we need to do further work on improving that aspect of those programs. I think the kind of auditing that might be carried out would be more limited than what you might expect, so there's more work to be done on that particular aspect.

The Chair: Phil Mayfield, John Godfrey, Paul Crête, and Larry McCormick.

Mr. Philip Mayfield (Cariboo—Chilcotin, Ref.): Thank you, Mr. Chairman.

I had an interesting conversation. In that conversation, as we were discussing the difficulties with HRDC, I was told that the difficulty, at least in the local offices, was that around late 1995 they had this enormous amount of money to get out the door. Staff had been cut by as much as 50%, and they were not able to reach their objectives. Then instructions came from Ottawa that they were not only to ignore but to pack up documents such as the Financial Administration Act and the bulletins, put them in a box, and get rid of them. There was a binder about two or three inches thick to replace them. That's what I was told.

The consequences were—

Ms. Bonnie Brown: Mr. Chair, on a point of order, I really question the value of anecdotal and hearsay evidence. We all have stories.

Mr. Philip Mayfield: I want to talk about the audits.

The Chair: Go ahead.

Ms. Bonnie Brown: Yes, talk about the audit, but anecdotal evidence from conversation is not part of it.

Mr. Philip Mayfield: I will talk about this as I choose.

The Chair: Phil Mayfield, go ahead.

Mr. Philip Mayfield: I want to know, first of all, if you would place any credibility in that, because you mention in your 1998 report problems with compliance, program authorities, weaknesses in program design, poor controls, insufficient performance measurement, problems in reporting. Coming together with an enormous job to do and limiting the staff to do the job and still having these objectives to reach would place enormous stress upon people who are responsible for doing it. Talking about the audits, I want to know if there's credibility in that kind of report.

• 1225

Secondly, talking about the audits, you give pretty good credit in commending the internal audit bureau in your statement this morning, Mr. Desautels. I'm wondering what provision there is in the audits for picking up what may be a rather dramatic change in policy administration and how that would be reported. I heard Dr. Barrados say that she depended upon the information getting through to the deputy minister.

Is the problem really the lack of financial controls or is the problem more fundamental than that? Is it that we have a big job to do and we're going to get it done and we've made some mistakes and these are the mistakes that have been made? Could you comment on that, please?

The Chair: You have to be fairly short, because it was a very long question.

Mr. Denis Desautels: Thank you, Mr. Chairman.

In our audit, we will look at how the staff at HRDC has been interpreting its responsibilities vis-à-vis the Financial Administration Act and other directives that are applicable to the programs they manage. We want to make sure there's no confusion and there is generally a good understanding of what these responsibilities are.

I'm not aware of the incident Mr. Mayfield is referring to. If there is any kind of confusion out there on the part of the staff, we will try to determine that in the course of our work.

Mr. Mayfield was referring to internal audit and whether or not it was within their mandate or their scope to note that kind of situation if it existed. In my view, it is. If that were the case, I think it would have been quite legitimate to expect internal audit to mention that in their report. They haven't shied away from reporting other problems, and if there had been a clear disregard for the FAA, they probably would have said that in their recommendations or in their conclusions.

The Chair: Phil, briefly.

Mr. Philip Mayfield: Thank you very much.

That leads me to the next step in this, and that is in considering additional financial management controls. More means more cost. Do you see anything like this being part of the problem, that there's not enough financial management control, that there needs to be more investment in this? How could these controls be selectively applied to do the job that's necessary? We'll leave it at that for the time being.

Mr. Denis Desautels: The management of the department has to make the right judgment call here as to whether or not they need to invest a bit more in some of the support functions. I believe they recognize themselves that they may have cut back too much on some of these functions and that may be one of the factors that contributed to the problem we're talking about today.

I believe firmly that you can't cut back too much. You have to make sure you maintain a certain basic capacity to administer programs with due diligence and due care. You can't run programs like this on autopilot. They need a minimum amount of management, and you have to find what that level is. Certainly, if you made the right kind of investment, in the long run it pays off because you make fewer mistakes, and if you make fewer mistakes, you probably have more money available to give out in grants to people who are expecting them.

The Chair: John Godfrey, Paul Crête, Larry McCormick, Maurice Vellacott, Rey Pagtakhan, Jean Dubé.

Mr. John Godfrey (Don Valley West, Lib.): I have two questions, one of which is on the nature of your own risk assessment and risk management as you look across all government operations. The other is to deal with what I would call persistent explanatory factors for what seems to be wrong with HRD since 1977.

• 1230

In the grand scheme of things, as you look across government operations, how do you rank this problem of grants and contributions, either in the context of HRD or across government? Do you know of four worst cases, whether you rank it by sums of money involved or the deficiencies, however you look at that? If you wouldn't mind whispering those rather than sharing that with the opposition....

A subsidiary of that is that within the department itself, you've said that since 1977 there have been problems on this case. Do you think, from a risk assessment perspective, that it's actually getting any better or getting any worse? How are we doing? Do you have any sense of that?

The second question really relates to these persistent explanatory factors, and Mr. Mayfield has referred to this. For example, one is insufficient resources. When I look back at the 1994 report, it says that lack of resources was frequently cited as the reason for inadequate project monitoring, but it is also noted that the time that was available for monitoring was not used effectively. Is there anything to this as a new factor, or is it just a consistent one?

Finally, I want to go back to what Bonnie Brown said about the perils of partnership. If you go back to 1991 and look at the summary, it says here: “the lack of proper record keeping by employers/sponsors, which makes it difficult to reconcile amounts”. That seems to me to be a consistent piece.

I'd be interested in your response to both of those observations.

The Chair: Mr. Desautels, that was another long question.

Mr. Denis Desautels: Chairman, the first question was in terms of our overall risk evaluation. How does the grant and contribution issue rank? In my view, it ranks near the top in terms of our concerns. I won't say it's number one, number two, number three, but it is to me a very serious issue and it's that much more serious in that it has been a persistent problem. The dollars are important and the risk of moneys being spent in a way that won't achieve the purpose is high.

Mr. Chairman, is it getting better or is it getting worse? Again, I'll be in a better position to answer that once we finish this next series of audits. We are concerned that it's certainly not getting better, that it could have slipped to a certain degree. This is what we will try to determine in the next series of audits.

Finally, in terms of resources being an issue, I think resources can be an issue, but if you have not allocated sufficient resources to that aspect of your operations, it's perhaps because you haven't considered that aspect of your operations to be important enough. I think it's more a question of basically having the right appreciation for the importance of some of those issues. If it hasn't ranked high enough, people won't do it well. On top of that, you won't allocated the necessary resources within your total budget for that part of your operation. So to a certain extent it's more of a cultural issue as opposed to a resourcing issue.

The last point dealt with the perils of partnerships. I still will stick with the answer I gave to Mrs. Brown earlier. I think that if agreements with partners are well thought through and if enough effort is invested in those agreements, you can end up with quite a satisfactory result. If you don't do it well, the risks are much higher than they would be if you were running the program yourself.

The Chair: John, I think you have time for a comment, but not a question.

Okay. Paul Crête, followed by Larry McCormick.

[Translation]

Mr. Paul Crête: Mr. Desautels, you say in your presentation that you are going to conduct an audit of the Transitional Jobs Fund. Are you going to examine the concentration of grants awarded in the 1997 election campaign, in terms of specific cases, or through sampling?

• 1235

Could the specific cases that you will examine include, for example, Placeteco, which was the subject of an incriminating television report, the case of the grant for Rosemont that ended up in the Saint-Maurice riding, the subjects that are currently under police investigation and more specifically the events in the Saint- Maurice riding?

Could your audit of the Transitional Jobs Fund go as far as specific studies done through sampling or by the identification of specific cases?

Mr. Denis Desautels: Mr. Chairman, we plan to do a random sampling. In principle, all projects having received a contribution during the period in question could be part of the sampling.

For the time being, we are not focussing on any region in particular. We plan to do a sampling on a standard basis. Some types of grants may require specific attention, and in fact, we are going to retain the possibility of doing a distinct sampling of certain types of grants, but there again, in an objective way, without singling out one region of the country or another.

Mr. Paul Crête: If your initial sampling, for example, shows that these phenomena are associated with the Prime Minister's office, with the Prime Minister's riding or with other ridings, could that lead you to focus your study in that area?

Mr. Denis Desautels: Mr. Chairman, we are going to examine the projects selected as part of our sampling in the same way, regardless of the riding they are in. So we are not going to make any detours and we are not going to avoid anything either. We are going to examine what we choose regardless of the region of the country or the riding in which it is located.

Mr. Paul Crête: Earlier on, you explained to Mr. Godfrey what had to be done for things to really change. In the 1994 report, which evaluates the recommendations from 1991, I identified eight that say more or less the same thing, in other words, that their implementation was unsatisfactory. That is almost a word-for-word account of what these eight recommendations say.

Is it not clear to you that there will not be a solution as long as the political will to remedy the situation has not been clearly expressed? Is it not surprising that, in the same department that collects $705 million from the Employment Insurance Fund, on the other side there is such terrible laxism in the management of grants and contributions? How can we explain this double standard within the same department?

Mr. Denis Desautels: Mr. Chairman, if there was no will to remedy the situation in the past, I think that the problems that the department has experienced over recent weeks have perhaps changed things. I have the impression that there is now a clear will to correct the problems identified in the most recent internal audit, which goes back over previous problems and recommendations.

So in my opinion, at any rate, there is a will to correct the administrative shortcomings identified during the internal audit. However, I would like things to go farther, and I would like to see a study of the structure of the programs put in place, the objectives sought, the way that they are managed in reality, and what criteria were used in the decision-making process.

We must go beyond the corrections needed to the administrative procedures and now examine the very architecture of the programs.

[English]

The Chair: Larry McCormick.

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

It's great to see the Auditor General's department here, because they have an excellent reputation as being an independent body, covering all facets of all ministries.

• 1240

We hear about these previous audits in 1991 and 1994, which I believe were internal audits of HRDC. Along about the same time, the Auditor General's department did audit Industry Canada and Heritage grants and contributions programs. Perhaps it's because of the size of HRDC, but I wonder and I ask why you did not perhaps focus on HRDC previous to this time, on the grants and contributions.

Mr. Denis Desautels: This audit we're starting now will not be the first one we do at HRDC. We did report, as you know, very recently on the TAGS program, which was an HRDC program, and we have in the past done fairly thorough work in other programs of HRDC, such as the EI account of course, which we look at thoroughly on a regular basis.

We had identified HRDC, as I said earlier, I believe, as one of those departments we wanted to look at in this multi-year review of grants and contributions across all of government. That's the plan we've laid in front of the public accounts committee and that's the plan we're sticking with.

Mr. Larry McCormick: Fine.

Thank you, Mr. Chair.

Also, when the audits are designed by your department, I'm wondering whether they're designed so very thoroughly that they would flush out any political interference at all. Would this be most evident for all people who read the audit to see and to sense?

Mr. Denis Desautels: Political interference in a file is usually very hard to find. We keep our eyes and ears open all the time for anything that could indicate anything improper in any file, and when we do our work, of course we don't rule anything out and we include that.

On the other hand, just to be quite clear, getting to the bottom of that on each case requires a police investigation every time, so it's practically impossible to do to that level of assurance. But we keep our eyes open for evidence, and if we see it, we note it and we take it into account.

Mr. Larry McCormick: Mr. Chair, the Auditor General did say he senses there's a real will today in HRDC, perhaps a greater will than what we've seen before, to get to the bottom of some of these situations and to be a better deliverer of programs with more accountability and so on. I just want to ask the gentleman if he can clarify that.

My last question is this. We see they're going to conduct audit work in four selected programs, including the Transitional Jobs Fund. I just wanted to make sure what the other selected program areas are and whether they've been decided on yet or not.

Mr. Denis Desautels: The determination of HRDC is quite evident. Given what they've lived through the last little while, I don't think they want to live through it again. So it's quite evident that they generally want to resolve those issues and be able to demonstrate that they've resolved those issues, and I hope they do. I hope when we finish our audit, we'll be able to tell you they have in fact achieved that objective.

In terms of the programs we've selected, there is of course the Transitional Jobs Fund, which has changed names now; it's the Canada Jobs Fund. We've also selected the youth internship program, the social development partnerships, and the sector partnership initiative.

Mr. Larry McCormick: Thank you very much.

The Chair: Could you give us an indication, Monsieur Desautels, of how you selected those?

Mr. Denis Desautels: Would you like to answer that, Mrs. Barrados?

Ms. Maria Barrados: We first made the decision that we had to look at specific programs to be able to answer a lot of the questions the members were putting in terms of how decisions were made and how projects were approved.

We looked at the internal audit and we looked at the specific programs that were part of that internal audit and made our own judgment on three of them where there was the greatest risk, where there was a problem in managing grants and contributions. Those were the first three.

• 1245

Then we asked the department to suggest a fourth and to give us one on which they thought they did in fact do a pretty good job in managing grants and contributions. That was the fourth program.

The Chair: Thank you very much.

Next are Maurice Vellacott, Rey Pagtakhan, Jean Dubé, Libby Davies, and Phil Mayfield. We're clearly well into the second round now, colleagues. We're going to keep it moving.

Maurice Vellacott.

Mr. Maurice Vellacott: Mr. Desautels, my question involves the whole issue of the involvement of members of Parliament in selecting and approving projects in the grants and contributions. I'd like, from a professional auditor point of view, your considered opinion on this whole issue of the role of a member of Parliament in selecting and approving projects.

On the one hand, a certain ranking MP has been quoted as saying with a shrug, “The more money I get into my riding, the better the MP I am. I'm perceived that way, and it's a good thing to get more money in.” From a more professional or outside private sector point of view, that might be regarded as a conflict of interest. I wonder where you would weigh in on that and what your considered professional opinion would be in terms of what is a good thing from an auditing point of view. Is it good to be saying, the more money I get, I'm a better MP, or is that a possible conflict of interest, for an MP to be involved to the extent they are in selecting and approving projects?

The Chair: Mr. Desautels and colleagues, these are short questions and answers.

Mr. Denis Desautels: This is a tough question that we could argue about for a long time.

The Chair: A tough, short answer.

Mr. Denis Desautels: The role of MPs in selecting projects has been commented on by some others before. I can refer you to an interview with Professor Donald Savoie, with which I would generally agree.

Involving MPs too much in the decision-making process blurs the lines of accountability. The traditional model is that governments govern and members of Parliament hold the government accountable, and when MPs get involved in the decision-making process, it can blur that particular relationship.

The Chair: We have to move on.

Maurice, Phil will be asking another question for your party.

Rey Pagtakhan, and then Jean Dubé.

Mr. Rey Pagtakhan: Thank you, Mr. Chair.

I would imagine the audit up until 1994 would be for the year 1993-94?

Ms. Maria Barrados: We'll have to get back to you on the exact scope of the 1994 audit.

Mr. Rey Pagtakhan: It's for the year before, right?

Ms. Maria Barrados: They would always be looking back, but I'm not sure what the exact timeframe is. We'll have to get back to you.

Mr. Rey Pagtakhan: That would make it really the audit of the previous Tory government, just for the record.

Mr. Larry McCormick: Thank you, Mr. Baker.

Mr. Rey Pagtakhan: Secondly, which of the departments has the best practice in terms of grants and contributions management control?

Mr. Denis Desautels: There are models in place in the federal government for managing grants and contributions. The model I would look to for inspiration would be the one followed by granting councils. I believe that works well for their particular area of activity. I don't think it can work for every kind of granting program, because it may not be timely enough in some situations, but it could apply to more programs that are being run by departments. I think the model of granting councils has some useful principles.

Mr. Rey Pagtakhan: What are these user codes? Part of the six-point action plan relates to the user codes being deactivated by February and that the number of powered user codes within the financial system will be reduced from 193 to 30—an 85% reduction. All instances of users having more than one active user code will be eliminated. This is under the section of financial system security. Can you tell the committee what these user codes are and how the presence of these many in the past potentially could have been a source of problems in terms of management control of the financial security?

Mr. Denis Desautels: Ms. Duk can answer that.

• 1250

Ms. Theresa Duk (Principal, Audit Operations Branch, Office of the Auditor General of Canada): This relates to a finding in the internal audit on passwords giving access to the financial system. They found people who had unwarranted privileges to the financial systems. It refers to the cleaning up of that problem.

Mr. Rey Pagtakhan: Does the audit actually identify that some of the problems could be traced to the use of many numbers—too many people having this user code?

Ms. Theresa Duk: I don't believe there was a direct link. I think you might ask the department that, because I don't know the details.

The Chair: Okay.

Jean Dubé.

Mr. Jean Dubé: I have to agree with the Auditor General, in responding to John Godfrey's question. I am also worried that things are getting worse in government today, in this department.

But on my question, we've been at this for seven weeks. It's been all over the media. We've been on this very issue in question period every single day. But do flexibility and guidelines not have everything to do with this?

We look at ridings that received money for TJF. Listen, I received money for TJF; I received money for Canada Jobs Funds, but I qualify. I have a riding that has over 20% unemployment. We see ridings in Canada that qualified, like the minister's own riding, that did not have the numbers to back it up. So don't you think the guidelines—the rules and regulations—when TJF was brought in after the reform to employment insurance were not tight enough and were open to political interference?

Mr. Denis Desautels: I cannot agree or disagree with the member, because we will be looking at that in our plans. Clearly the eligibility rules, the conditions people have to meet and so on, will be a central piece of what we will be looking at. So I will be able to get back to the committee and to the House in October with a more precise answer to that.

The Chair: That's fine.

Jean Dubé.

Mr. Jean Dubé: But if I go back to different reports in 1991 and 1994—and you can go back to 1997 when Trudeau was in power, there were problems even then.

The Chair: Trudeau wasn't in power in 1997, but he was here in spirit.

Mr. Jean Dubé: Sorry, it was 1977. This has been going on for a long time. Here we are in 2000 with the same problems. So after all these years, would you not be in accordance with what I'm saying, that in most of these cases the rules were not tight enough?

Mr. Speaker, Mr. Chairman—

The Chair: Mr. Speaker is fine.

Mr. Jean Dubé: —I just got a comment from the Liberal side that maybe too much money went to Atlantic Canada. Is that possible? But I'll go back to Mr. Desautels.

The Chair: Mr. Desautels. Colleagues.

Mr. Denis Desautels: I think Mr. Dubé was referring to flexibility being the main issue. As I said, we will look at that when it comes to our review of these four programs, and particularly the Transitional Jobs Fund because that seems to have attracted the most attention.

In terms of whether or not it's the same issue going back to 1977, we will also be bringing a certain clarification of that, as part of our report. We will be doing a recap of all of that grant and contribution work and providing the House with some more general comments as to what are the common threads and persistent factors that are causing these problems.

The Chair: It's Libby Davies, Phil Mayfield, Paul Crête, John Godfrey, and then the chair.

Ms. Libby Davies: Thank you.

I'd just like to follow up on Mr. Dubé's question in a slightly different way. He's asking you about the so-called flexible rules, and you're saying you'll look at them. But I think it really begs the question of how you're able to do your work.

I don't want to sort of cast you in the role of a PI, but there's the whole nature of investigation and trying to find out actually what took place. As you have stated, the question of political interference is certainly not going to be evident in any file, so one has to look at other ways of finding out what happened.

• 1255

Like all departments, HRDC has a very strong culture. One should assume that the job of management is to protect their department. So how does your department get at other issues? How do you seek out other sources of information? For example, do you speak to the union?

We know one of the issues is the huge impact of cutbacks in this department—in the public service. I'm sure that's had a big impact administratively, in the attempt to keep up with all the paperwork. But beyond that, in terms of political interference, if there are people in that department who have information but feel very intimidated about coming forward, what kind of mechanisms or protections do you provide to people? Is there confidentiality? Do you follow up leads that are given to you from people who work within the department, or from members of Parliament, for that matter? I'm just curious as to how you do that sort of investigative work.

The Chair: Ms. Barrados.

Ms. Maria Barrados: I'll be very brief. Yes, we try to do all those things. We make field visits and talk to people. We talk to everyone we can. Unless there is a criminal matter going on, we shield the individual's privacy and confidentiality.

The Chair: Philip Mayfield, Paul Crête, John Godfrey, then the chair.

Mr. Philip Mayfield: Thank you, Mr. Chairman.

In your 1998 report in chapter 27, paragraph 27.2, there's an enormous amount of information compacted. For example, in talking about the audits of the management of grant and contribution programs over the past 20 years, and in discussing very briefly some of the problems, you mentioned that problems ranged from decision-makers not following the rules governing expenditures on grants and contributions to weak management practices.

I guess the question I want to ask is who are the decision-makers you have in mind who broke those rules? Who was or is responsible for management practices you were referring to?

The Chair: Monsieur Desautels.

Mr. Denis Desautels: Each department, in my books, is responsible for the proper spending of their funds. So they have to put in place a management structure that makes it clear to people who are making the spending decisions how they are to make those decisions, how they're to manage those programs.

Over and above the department's responsibilities, there is a need to involve Treasury Board Secretariat or the Treasury Board itself, because they're the ones that approve the spending. They're the ones that manage the appropriation process and negotiate with departments the terms and conditions for individual programs. They can lay out certain terms and conditions the program has to meet. Then it's up to the department to put in place the management structure to properly meet not only the terms and conditions of Treasury Board, but also the other requirements of the FAA.

It is a layered structure, but it's fairly decentralized. At the end of the day, we should hold each department responsible for the management of its spending.

The Chair: Paul Crête.

Mr. Philip Mayfield: Can I just clarify a question very briefly?

The Chair: If it's only a comment.

Mr. Philip Mayfield: In your answer, are you saying the responsibility is layered, so Treasury Board is responsible in part of this situation here, along with HRD? Is that the nature of your answer?

The Chair: A very brief reply.

Mr. Denis Desautels: As I indicated earlier, there is a need to discuss the role Treasury Board should play vis-à-vis the grants and contribution programs across government. There is a need for Treasury Board to provide that upfront set of rules that departments then have to follow. I believe that's being worked on right now, but there is a need to make the rules clearer than they have been in the past, and there's also a need to have a good understanding between Treasury Board and the department on the terms and conditions of individual programs.

• 1300

The Chair: That's very useful material, because the President of the Treasury Board will be a witness before this committee.

Monsieur Desautels, do you have something else? No?

Paul Crête and then John Godfrey.

[Translation]

Mr. Paul Crête: At the stage you are at in your audit, and given that the procedures provide that you can refer cases requiring investigation to the police, have there been any such cases since the beginning of your work, or are you not yet far enough advanced for that to have happened?

Mr. Denis Desautels: Mr. Chairman, we are not yet far enough advanced in this audit to have been able to find such cases. However, if we do find any, we would refer them to the police.

Mr. Paul Crête: I would like to ask another question. We have heard a great deal of talk about political will. I would like to come back to the department that managed to recover $705 million from the Employment Insurance Fund. You had already found that there were staff assignment problems which had given rise to the social insurance number crisis, which we learned about last year in particular, following your request that the Human Resources Development Committee get involved.

Will your studies show whether, because of political or administrative will, more resources might have been assigned to other responsibilities of the department, rather than to grants and contributions? For example, might the setting of a quota or an objective for recovering money from the Employment Insurance Fund have led to more staff being assigned to this activity, thereby leaving too few staff for other programs?

Will this be included in your report, which is to be tabled in two weeks on local services in Canada Employment Centres? Will there be something in the interim report on this?

The Chairman: Mr. Desautels.

Mr. Denis Desautels: Mr. Chairman, the report we will be producing in two weeks will not cover the question raised by Mr. Crête. I am not in a position to tell you today to what extent we will deal with this issue in the report to be published in October.

The ability of an organization to deliver the goods is an issue that concerns us, and I must find a way of giving some indications about the extent of the problem. I'm not making too many promises, Mr. Chairman, but we will be looking at this matter.

[English]

The Chair: John Godfrey.

Mr. John Godfrey: I have a brief question for Madam Barrados relating to the four selected programs you're going to be looking at.

First, I think it would be useful to put on the record precisely the one the department nominated as being, in its view, an example of good practice.

Secondly, am I to infer from their absence on the list—in other words, the ones you've decided not to look at more intensely right now, such as learning and literacy or aboriginal relations—that in your view, from all you know, they're less problematic? Or is it simply that they've received less attention, because the suggestion was, particularly with regard to the Transitional Jobs Fund, attention seemed to be one of the—

The Chair: Mr. Desautels or Madam Barrados.

Ms. Maria Barrados: The program the department suggested we look at because it had good practices in it was the sector partnership initiative.

In terms of our choices, we felt we had to take the Transitional Jobs Fund, because so many questions were being put in the House and to us about that particular program. So we felt that wasn't really a choice. As for the other two, it wasn't a question of saying there were no problems in the other areas. There clearly are problems in the aboriginal area and the aboriginal programming, but we have other audit teams that look at aboriginal grants and contributions, so we felt there was sufficient coverage there in the other work the office was doing.

I can't say the others don't have any problems. Our choices were those. We looked for diversity. We looked for a range of programs. We wanted something that included grants and contributions. We wanted some that were headquarters, some that were regional.

• 1305

The Chair: Thank you very much.

Before I conclude, I wonder, first of all, Mr. Desautels, if as we get closer to our final report and if the committee seems to consider it appropriate, you might consider coming back with respect to your views then on the action plan. Do you think that might be useful?

Mr. Denis Desautels: Mr. Chairman, if the committee would like us to come back, we'd be quite happy to come back, on that issue or related issues.

The Chair: Judy Sgro. Is it pertinent?

Ms. Judy Sgro: I just want to clarify that we don't want whoever will be sitting here 20 years from now looking at audit reports and saying, “Gee, you didn't go back to 1999, you went back to 1977.” I didn't move a motion, but in the recommendations, are we not only going to have the auditor come back for the quarterly reports, but also going to have ongoing communications as the department does the implementation?

The Chair: I think that's something we should discuss among ourselves.

Mr. Desautels, you've been here now for a couple of hours. Have you any general advice, or anything you'd like to add?

Mr. Denis Desautels: Well, Mr. Chairman, I would like to give you advice. I report to the House and to members of the House, but there are a number of areas that I would dearly welcome this committee or other committees to look into further, and I've already referred to some of them this morning.

For instance, I talked about looking into the role of Treasury Board Secretariat in relation to specific grants and contribution programs. I think that's an interesting area that warrants input from members of Parliament.

I think the whole issue of disclosure to Parliament of proper information on grants and contribution programs is also one that merits further consideration. What information does Parliament receive about specific grants and contribution programs to support its exercise of its responsibilities, both in terms of approving the estimates for them and holding the departments accountable for results? That's a second area.

I think a third area might be program effectiveness. Are grants and contribution programs systematically evaluated to assess their effectiveness? Are the results of these evaluations really used? For instance, when we went from the Transitional Jobs Fund to what is now the Canada Jobs Fund, was the result of the evaluation that was available then used in terms of reshaping the new program? I think that's a third area that would merit attention.

I think a fourth area is a subset of my earlier comment on Treasury Board. I think there's a need over and above specific programs for Treasury Board Secretariat to provide sufficient guidelines on grants and contributions generally. We'll be working with them, as I said, in the development of this framework, but I think they have to update their own directives to departments. I believe some advice from this committee might be helpful in their doing that.

I would leave those four comments with you.

The Chair: That's very useful.

Before I thank you—and I'm doing it this way because our members will disappear as soon as I do thank you—I will remind colleagues that for our next meeting, which is Tuesday, we have John Reid, the Information Commissioner of Canada; Bruce Phillips, the Privacy Commissioner of Canada; Ekos, and Consulting and Audit Canada. Then a week from today, it's the regional representatives from the Quebec region of HRDC, specifically Danielle Vincent and Suzette Perrault.

Libby, I do have some other dates here that I can share with you. You weren't here when I announced them.

I'd like to thank our witnesses: Denis Desautels, Auditor General of Canada; Maria Barrados, assistant auditor general, audit operations branch; Theresa Duk, principal, audit operations branch; Henno Moenting, principal, audit operations. I thank you all, and I thank Mr. Moenting in particular. His contributions were excellent.

The meeting is adjourned until Tuesday, at our regular time, 11 o'clock.