PACC Committee Report

RECOMMENDATION 4

That Treasury Board Secretariat complete the evaluation frameworks that will be used to guide the formal evaluations of the effectiveness of the Policy on Internal Audit and the Evaluation Policy and submit copies to the Committee by 1 December 2001.

RECOMMENDATION 5

That formal evaluations of the Policy on Internal Audit and the Evaluation Policy take into account the observations and recommendations of any audits performed by the Office of the Auditor General of the internal audit and evaluation functions of the Government of Canada over the next five years.

Mr. Neville told the Committee that the new policies “reinforce the government’s commitment to transparency by ensuring that completed internal audits and evaluation reports are made available to the public, with minimal formality, in both official languages.” This requirement is expressed as a policy statement referring to departments in the new internal audit policy, and as a policy requirement directed towards departmental heads of evaluation in the new evaluation policy. The new internal audit policy adds that deputy heads must “ensure that their internal audit function in its operations respects the spirit and intent of the Access to Information and Privacy Acts.” The two acts are listed in the References section of the two new policies.

These requirements are not new; instead they expand and reinforce requirements set forth in the (now lapsed) Review Policy, which stated that it was government policy that:

Once completed, review reports, including reports of evaluations and audits, be accessible to the public with minimal formality, in accordance with the spirit and intent of the Access to Information Act.

In his 1996 Report, the Auditor General commented on the impact of the Access to Information Act on internal audit. He reported that the requirement to make the results of audit work available to the public “affects the timing of audit work, the issues addressed and the reporting of the results.”[1] He indicated as well that Treasury Board Secretariat had begun a study to assess the impact of the Access to Information Act on the internal audit function in government departments and agencies. The Committee notes that Treasury Board Secretariat intends to discuss these issues with the Access to Information Task Force. The Committee approves of this intention and looks forward to the release of the Task Force’s final report due in the fall of 2001. The Committee also believes that the issue is sufficiently important to deserve consideration as part of an evaluation process and therefore recommends:

RECOMMENDATION 6:

That the formal evaluations of the Policy on Internal Audit and the Evaluation Policy assess the impact of requirements governing the public release of internal audit reports and evaluation studies and the impact of the Access to Information Act on the internal audit and evaluation functions in departments and agencies.

The Committee believes, as well, that this aspect of the two new policies must be monitored and the results reported to Parliament on an ongoing basis. The Committee therefore recommends:

RECOMMENDATION 7

That Treasury Board Secretariat monitor the release, by departments and agencies, of internal audit and evaluation reports and report the results to Parliament in its annual report on the implementation of results-based management in the federal government (Managing for Results), beginning with the report for the fiscal year ending 31 March 2002. In conducting this monitoring activity, Treasury Board Secretariat should pay particular attention to, and report on, the timeliness of release, and the depth and breadth of the issues audited and evaluated.

Internal Audit

Mr. Desautels told the Committee that he was pleased to see that progress was being made in addressing changes to the policies and standards for internal audit. He noted that the success of the new policy depended on the availability of adequate human and financial resources and on strong support from Treasury Board Secretariat and senior departmental management.

The last several years have witnessed a reduction in the funding allocated to internal audit. For example, the Government spent about $48 million in 1994–95 and employed about 590 internal auditors in 39 departments and agencies. This represented a decrease since 1993 when Government had spent $56.6 million on internal audit units and employed 700 internal auditors. Mr. Neville testified that by fiscal year 1997–1998, the Government employed only 240 internal auditors and spent $34 million on the function.

With the introduction of the new policy, the Government will increase spending on internal audit. Mr. Neville informed the Committee that departments will be allocated an additional $7.2 million in fiscal year 2001–2002, and an additional $15 million in fiscal year 2002–2003 for internal audit.