PACP Committee Report

MINISTERIAL ACCOUNTABILITY

While the Auditor General said the government had made some progress in improving foundation reporting to Parliament (see below), she said it was also important for the government to develop mechanisms capable of distilling broad policy changes down to the foundation level. Currently, a minister can only intervene and recover any remaining funds in the event of a default or through a dispute resolution mechanism if a foundation breaches the mandate spelled out in the funding agreement ^[5].

In the absence of an effective policy intervention mechanism, the government could find itself in a situation where some foundations work at cross-purposes to changes in government policy. Currently, the government can only effect these broad policy changes when it transfers new monies to existing foundations, a process which leads to a renegotiation of the existing funding agreement.

In keeping with its long-standing belief in the need for greater accountability throughout government, the Committee believes it is important to have a mechanism for ministerial intervention in the case of broad policy changes. The Committee therefore recommends:

RECOMMENDATION 5

That Treasury Board Secretariat, in consultation with the Auditor General, amend foundation funding agreements to include a mechanism that would empower the government to align foundation policy with major changes in its policy objectives.

The Committee is aware that such a mechanism could enter into the debate about whether, for accounting purposes, a foundation operates at arm’s length or is controlled. It therefore recommends:

RECOMMENDATION 6

That the Comptroller General and the Auditor General indicate how such a policy intervention mechanism might affect the question of whether foundations operate as controlled or arm’s length entities.

FOUNDATION TRANSFERS AND BUDGET TARGETS

The Auditor General has also expressed ongoing concern about the hasty manner in which some foundation transfers are put together. In her February 2005 Status Report for example, Ms. Fraser said that “some sponsoring departments informed us that they had first learned of the amount to be paid to foundations only when federal budgets were announced.” (Para 4.64) In her comments on the 2004 Public Accounts, she noted that decisions on funding and accountability should not be based on “the goal of achieving a desired accounting result” such as reducing the reported annual surplus. In her first comprehensive report on foundations in April 2002, the Auditor General further expressed concern that the Department of Finance was imposing a “demanding schedule” on sponsoring departments and that this demanding schedule compromised a full review of governance and accountability.

In their meeting with the Auditor General, some Committee members expressed concern that the federal government’s haste may be a means for achieving certain budgetary outcomes. The Committee therefore recommends:

RECOMMENDATION 7

That the government identify each proposed transfer to new and existing foundations in its Estimates documents.

REPORTING TO PARLIAMENT

According to the Auditor General, the federal government has made progress in its reporting to Parliament. Of the 11 foundations she audited ^[6], all but one (the Aboriginal Healing Foundation) were required by their funding agreements to provide corporate plans to their sponsoring ministers. Moreover, in 2003, the Auditor General found that all the foundations in her sample submitted their annual reports to sponsoring ministers and made them public.

On the other hand, Ms. Fraser said her Office also found that only one (Canada Foundation for Innovation) foundation was required to table its corporate plan in Parliament and even in this instance, the corporate plan summary was buried in the foundation’s annual report. Moreover, sponsoring departments for only 5 of the 11 foundations reviewed in the Auditor General’s audit tabled annual reports in Parliament. Finally, the Auditor General said there was room for improvement in the quality of information provided in foundation corporate plans and annual reports.

In its report on the Auditor General’s April 2002 review of foundations (14th Report, 37th Parliament, 2nd Session), the Committee recommended that the federal government require foundations with a legislative basis or with more than $500 million in assets to table separate annual reports, reports on plans and priorities and performance reports. The Committee now believes its earlier recommendation should be broadened. It therefore recommends:

RECOMMENDATION 8

That the government take the necessary steps to require all foundations to table in Parliament separate annual reports, reports on plans on priorities and performance reports and that these documents be referred to the appropriate parliamentary committee.