PACP Committee Report

Government Response to the Fifth Report of the Standing Committee on Public Accounts

2006-2007 ESTIMATES AND PERFORMANCE OF THE OFFICE OF THE AUDITOR GENERAL OF CANADA

DETAILED RESPONSES TO THE RECOMMENDATIONS

Recommendation 1

The Government of Canada establish a clear timeline for the production and tabling of departmental financial statements and present it to the House of Commons.

The Government has already initiated a process for the tabling of departmental financial statements in the House of Commons. Starting with fiscal year 2005-2006, departmental financial statements will be published in the Departmental Performance Reports for all departments as defined in schedules I, I.1, and II of the Financial Administration Act. The Departmental Performance Reports are normally tabled in the House of Commons during the fall session of Parliament and therefore, this is the Government timeline to table the departmental financial statements. The first set of departmental financial statements will be tabled in the fall of 2006. The Departmental Performance Reports are the final step in the Estimates process. They provide an account of results achieved against planned performance which was set out in the Reports on Plans and Priorities.

While the majority of these financial statements are unaudited at this time, work is underway, in consultation with the Office of the Auditor General, to enable more of them to be ready for audit in the future.

Recommendation 2

That departmental carry forwards be presented to the House of Commons in a separate Supplementary Estimate and be subject to a separate vote.

Since the early 1990’s, departments have been allowed to carry forward, from one fiscal year to the next, up to 5% of a department’s Main Estimates Operating Budget, based on lapses reported in the Public Accounts of Canada. The intent behind this practice is to provide departments with the additional flexibility they require to use good management and planning rather than to attempt to use up funds in their budgets as the fiscal year draws to its close. Departments have the option of drawing down their carry forward in the Supplementary Estimates.

The operating budget carry forward has always been identified as a separate initiative in each of the departmental Supplementary Estimates. In recent years (with the 2004-2005 Supplementary Estimates A), the Treasury Board Secretariat (TBS) has introduced some significant changes to the format of the Supplementary Estimates to improve the transparency and clarity of the information provided. In addition to improvements in the display of departmental Estimates, TBS introduced a number of new features to the front end of the document including detailed overviews of major spending initiatives included in the Supplementary Estimates as well as a summary of “horizontal” initiatives. In both these sections, the operating budget carry forward is profiled. In particular, the summary of horizontal initiatives provides a description of the operating budget carry forward practice as well as a list of all departments who have taken advantage of the carry forward and the amounts they are requesting.

Given the improvements that have recently been introduced to the Supplementary Estimates, the Government does not believe at this time that separate Supplementary Estimates subject to separate votes are necessary in order to highlight the use of operational budget carry forwards. The Estimates process can be a complex matter, and it has been the practice of the Government to limit requests for Supplementary Estimates to two requests a year. Increasing the number of Supplementary Estimates tabled each year can create additional demands on Government, Committees and Parliamentarians that are not necessary in light of recent changes to the Supplementary Estimates.

The changes that have been introduced in the Supplementary Estimates have been recognized and complimented by Parliamentarians as a major step in improving the transparency of information being provided to Committees to assist them in their review of spending proposals. TBS will continue to work with Parliamentarians to build on these improvements in order to provide Parliamentarians with the information they require to review the Estimates.