2015 Fall Reports of the Auditor General of Canada

Opening Statement to the Standing Committee on Public Accounts

2015 Fall Reports of the Auditor General of Canada

18 February 2016

Michael Ferguson, CPA, CA
FCA (New Brunswick)
Auditor General of Canada

Mr. Chair, I am pleased to present my Fall 2015 reports, which were recently tabled in the House of Commons. The reports provide the findings of seven audits which we completed in the fall of 2015. I am accompanied by Nancy Cheng, Jerome Berthelette, Glenn Wheeler and Martin Dompierre.

Government departments and agencies are tasked with implementing programs and services that respond to the needs and issues that matter to Canadians. So if intentions are good at the outset, why is it that our audits often show that government programs fall short?

Report 7—Establishing the First Nations Health Authority in British Columbia

Let’s turn first to the creation of the First Nations Health Authority in British Columbia. Our combined study and audit showed that the First Nations Health Authority was the result of a successful collaboration, but that it now needs to make a greater commitment to accountability.

Our study showed that through sustained collaboration, First Nations, and federal and provincial partners overcame the long-standing structural impediments to providing services to First Nations that our Office identified in 2011, including uncertainties around funding and service delivery. We note for example that the Authority has in place a 10-year funding arrangement, in contrast with past practice where funding was typically allocated on a yearly basis.

However, in the audit portion of our work, we found weaknesses in the Authority’s accountability and governance framework. For example, the Authority did not consistently apply its policy to investigate allegations of workplace misconduct. The Health Authority will need to address these weaknesses to support the successful delivery of health services to First Nations in British Columbia.

Report 3—Implementing the Labrador Inuit Land Claims Agreement

Turning now to the Labrador Inuit Land Claims Agreement, we found that the federal government has made progress in implementing some of its obligations under the Agreement. For example, Parks Canada has managed the Torngat Mountains National Park to provide employment and business opportunities to Labrador Inuit.

However, we found that as a result of longstanding disagreements over the interpretation of obligations under the Agreement, challenges remain in some areas, such as fishing and housing. For example, Fisheries and Oceans Canada and the Nunatsiavut Government disagree over the share of the northern shrimp fishery that the Nunatsiavut Government is entitled to receive under the Agreement. Furthermore, the lack of a federal program for Inuit housing has limited the Nunatsiavut Government’s ability to fulfill its housing responsibilities.

The failure to resolve differences puts a strain on the relationship between the federal government and the Nunatsiavut Government, yet the dispute resolution mechanism contained in the Land Claims Agreement has not been used to help resolve these issues. The results of this audit should be considered by the new Deputy Minister’s Oversight Committee on Modern Treaty Implementation, announced in the summer of 2015.

Report 5—Canadian Armed Forces Housing

In our audit of military housing, we see challenges that are not uncommon when auditing how government programs are planned, and executed.

National Defence is spending millions on military housing without having clearly defined its needs. We found that the Department has not determined who among members of the Armed Forces should be receiving housing, what form this housing should take, and where it should be located.

We also found that the Canadian Forces Housing Agency, which manages military housing for National Defence, is working under constraints that limit its ability to cost effectively use funds to meet the current and future needs of Canadian Armed Forces members. For example, in 2015, the Agency received $6 million in capital funding from National Defence, with only two months to spend it.

Report 2—Controlling Exports at the Border

In our audit of the Canada Border Services Agency’s export control activities, we found weaknesses in the information, practices and authorities the Agency applies to assess export risks, assign its resources, and act on its priorities. As a result, the Agency has missed opportunities to stop some goods that did not comply with Canada’s export control laws from leaving the country.

For example, the Canada Border Services Agency relied on export declarations to identify and examine high-risk shipments, but was unable to review all the declarations it received. Even when the Agency flagged shipments as high-risk, it did not examine about one in five.

We also noted some systematic gaps in coverage. For example, as a result of staffing challenges, the Agency did not conduct any examinations of parcels leaving Canada at one large processing centre.

Report 1—Implementing Gender-Based Analysis

Our next audit focused on gender-based analysis, an area we also examined in 2009. In our 2015 audit, we observed that gender-based analysis is still not fully deployed across the federal government 20 years after the government committed to applying this type of analysis to its policy decisions.

While we found that Status of Women Canada, the Treasury Board of Canada Secretariat, and the Privy Council Office have made progress in supporting the application of gender-based analysis in the federal government, we also found that the analyses conducted by departments and agencies were not always complete, nor of consistent quality.

This means that gender considerations, including obstacles to the full participation of diverse groups of men and women, are not always considered in government decisions. This is similar to what we found in 2009.

Report 6—Canada Pension Plan Disability Program

Turning to our audit of the Canada Pension Plan Disability Program, we observed that the backlog of Canada Pension Plan disability appeals is higher than it was before the creation of the Social Security Tribunal of Canada, which was created to increase the speed and efficiency of the appeals process.

In 2014-2015, as the backlog issues grew worse with the addition of new appeals, the average time it took to get a decision on an appeal exceeded 800 days. That’s more than twice the average time required three years prior. Close to three years after its creation, the Tribunal continues to struggle with providing timely decisions for appellants.

To alleviate the backlog, Employment and Social Development Canada further reviewed the files of some appellants who were waiting for a decision from the Tribunal, and determined that about a third of them were in fact eligible for benefits. This means that eligible applicants could have been approved sooner.

We found that Employment and Social Development Canada met its service standards for assessing initial applications and for reconsiderations. However, from the applicant’s point of view, we found that the process is long and complex. Applicants must complete many forms, and this can take several months.

Report 4—Information Technology Shared Services

As part of our Fall 2015 audits, we also looked at Shared Services Canada’s progress to date in transforming the federal government’s information technology services. The transformation of government IT services began in 2013 and is expected to be completed in 2020.

In our view, Shared Services Canada did not put in place fundamentals to achieve effective collaboration with its partners. The Department did not set clear and concrete expectations of what departments would receive in terms of ongoing service, support and information. As a result of these and other weaknesses noted in our audit, Shared Services Canada does not know, at this time, whether it is meeting its transformation targets. It is also unable to accurately demonstrate cost-savings achieved through the transformation of government IT services.

As this audit is a mid-transition review of the Department’s progress in implementing key elements of the government’s IT transformation, our recommendations provide concrete opportunities to look at what has been done so far, and to identify needed adjustments.

Special Examinations of Crown Corporations—2015
Canadian Tourism Commission
Canadian Air Transport Security Authority

You will notice that we are now including copies of the full special examination reports recently issued to Crown corporations, in lieu of the summary reports that were previously offered. This is in order to provide you with more complete information on the strengths of audited Crown corporations or on the areas they need to improve on.

In 2015, our Office completed special examinations of the Canadian Tourism Commission and the Canadian Air Transport Security Authority. We are satisfied that the systems and practices we examined were maintained by both organizations in a manner that provided them with reasonable assurance that their resources and activities were managed economically, efficiently and effectively.

Conclusion

As I indicated at the beginning of my statement, these audits show that the quality of government programs is inconsistent, with some results falling short of underlying intentions and others showing promise.

At the promising end of the scale, we have the creation of the First Nations Health Authority in British Columbia, where a different approach and existing information were used to come up with a new way of addressing long-standing impediments. As other governments and First Nations from across the country consider how to improve programs and services to Canada’s First Nations, we note that taking stock of what has worked, and why it has worked, may be an important place to start.

And at the other end of the spectrum, examples include the gender-based analysis initiative, which is still not fully implemented across the federal government 20 years after it was launched, and the creation of the Social Security Tribunal, where an ill-planned transition and unclear expectations caused delays in appeal cases to increase rather than decrease.

The audits suggest that government departments do not always pay enough attention to continuous improvement and learning, to considering what has worked and what has not, and to using that knowledge to lay the groundwork of better programs and services for Canadians. In other words, departments may be missing opportunities to work at improving the quality of their programs and services.

Mr. Chair, that concludes my opening statement. We will be happy to answer any questions you may have.