The role and mandate of the Office of the Auditor General of Canada and summary of recent audit work of interest to the Committee

Opening Statement to the Standing Committee on Aboriginal Affairs and Northern Development

The role and mandate of the Office of the Auditor General of Canada and summary of recent audit work of interest to the Committee

19 April 2016

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

Mr. Chair, we are pleased to be here today to provide an overview of our role and mandate, and to outline some key points from our past audit work that may be of interest to your Committee. Joining me today are Jerome Berthelette, Assistant Auditor General, and Joe Martire and Glenn Wheeler, principals responsible for many of our audits on First Nations issues.

Our Office has the mandate to audit operations of the federal and territorial governments, and we provide Parliament and the legislative assemblies with independent information, assurance, and advice regarding the stewardship of public funds.

We conduct performance audits of federal departments and agencies, and we conduct annual attest audits of the financial statements of the government and of Crown corporations. On a cyclical basis, we also conduct special examinations of the systems and practices of Crown corporations.

For the three territories, my Office reports performance audits directly to each legislative assembly. We also conduct annual audits of the financial statements of territorial governments, and annual audits of territorial corporations.

In our performance audits, which we hope help the work of your Committee, we examine whether government programs are being managed with due regard for economy, efficiency, and environmental impact. We also look to see if there are means in place to measure the effectiveness of programs. Although we may comment on policy implementation, we do not comment on policy itself.

The Auditor General Act gives our Office discretion to determine which areas of government to examine through performance audits. Our selection of audits is based on risks, significance, and relevance to Parliament.

The performance audit process takes between 12 and 18 months to complete. The results of our audits are usually presented to Parliament twice a year, in the spring and fall.

Mr. Chair, in the past 15 years, the Office of the Auditor General has audited a broad range of federal programs and activities that affect First Nations and Inuit communities.

In 2011, we published a status report on the government’s progress toward achieving the commitments it made to address recommendations from seven reports we issued between 2002 and 2008.

Although we found that progress had been made in implementing some of our recommendations, we noted that many conditions and challenges faced by First Nations communities had worsened. For example,

Mr. Chair, that situation led us to consider some of the factors that inhibited progress.

In the preface to our 2011 audit report, we identified four structural impediments that we believed had negatively affected the delivery of programs and services to First Nations individuals and communities.

The first impediment was a lack of clarity about service levels. The federal government supported services on reserves that were provided by provincial and municipal governments off reserves, such as education and drinking water. However, it was not always clear what the federal government was aiming to achieve, because it had not clearly defined the type or level of service it committed to supporting.

The second impediment was the lack of a legislative base. Unlike similar provincial programs, the programs on reserves were not supported by legislation in such key areas as education, health, and safe drinking water. Instead, the federal government developed programs and services for First Nations on the basis of policy. As a result, the services delivered under these programs were not always well defined, and there was confusion about federal responsibility for funding them adequately.

The third impediment was the lack of an appropriate funding mechanism. The federal government used contribution agreements to fund the delivery of many programs on First Nations reserves. Often, the contribution agreements had to be renewed yearly, and it was not always certain whether funding levels provided to First Nations in one year would be available the following year. This situation created a level of uncertainty for First Nations and made long-term planning difficult.

The fourth impediment was the lack of organizations to support local service delivery. There were often no organizations in place—such as school boards, health services boards, and social service organizations—to support local delivery of programs and services. In contrast, provinces had established such organizations. Indian and Northern Affairs Canada, now Indigenous and Northern Affairs Canada, had started to work with groups that represented more than one First Nation, but much remained to be done.

Mr. Chair, since 2011, we have audited several programs for First Nations and Inuit communities, including the Nutrition North program, policing programs, emergency management, access to health services for remote First Nations communities, and the implementation of the Labrador Inuit Land Claims Agreement. We found that the structural impediments continued to hinder effective service delivery. I should note, however, that we have not followed up on whether the recommendations made in these audits have been implemented. Currently, we are conducting audits on First Nations’ specific claims and on the reintegration of Aboriginal offenders. For your convenience, we have attached to this statement a list of our most recently tabled federal and territorial audits, along with a brief summary for each.

You will also note that in 2015 we tabled a report on the efforts of British Columbia First Nations, Health Canada, and the Province of British Columbia to overcome the impediments in establishing the First Nations Health Authority in British Columbia. For example, the funding agreement between the federal government and the Authority provides a level of funding certainty—it covers a 10-year period and includes an annual escalator to account for rising health care costs. In addition, the Authority has increased support to local service delivery through training and expansion of access to electronic health services.

In addition, we identified two factors that contributed to the successful negotiation of the agreement. The first factor was a sustained commitment from leaders from First Nations as well as from the federal and provincial governments to the development of a new model for providing health services to First Nations in British Columbia. The second factor was the decision by First Nations to establish a single point of contact for negotiations with the federal and provincial governments.

Mr. Chair, if First Nations are to experience more meaningful outcomes from the federal funding of programs and services they receive, these structural impediments will have to be addressed.

Doing this requires the political leadership and will of all involved—the federal government, the First Nations leadership, and provincial and territorial governments.

Mr. Chair, this concludes my opening statement. We would be pleased to answer any questions the Committee may have. Thank you.

Federal Reports of the Auditor General of Canada

2015 Fall Reports

Report 3—Implementing the Labrador Inuit Land Claims Agreement

We concluded that federal government entities made progress implementing selected obligations in the Labrador Inuit Land Claims Agreement and two related side agreements. However, there were challenges that needed to be resolved. We found ongoing differences in interpretations between Fisheries and Oceans Canada and the Nunatsiavut Government over fisheries-related obligations. We also found that Parks Canada had acted upon commitments set out in the Labrador Inuit Park Impacts and Benefits Agreement, resulting in economic benefits including employment for the Labrador Inuit. Finally, we found that the Fiscal Financing Agreement signed by Aboriginal Affairs and Northern Development Canada provided financial support to the Nunatsiavut Government, which had been important for its self-government. However, the lack of a federal program for Inuit housing had affected the Nunatsiavut Government’s ability to fulfill housing responsibilities it received by signing this side agreement.

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

Efforts by Health Canada to work with First Nations in British Columbia to establish the First Nations Health Authority represented a different approach to resolving a long-standing health issue: the poorer health outcomes of First Nations people in British Columbia than those of other residents. Through sustained collaboration, First Nations and federal and provincial partners overcame the long-standing structural impediments to providing services to First Nations, which we identified in our 2011 report. However, we also found weaknesses in the Authority’s accountability and governance framework. Although the Authority had policies in place to guide its operations, there were some weaknesses in the Authority’s policies that we examined, and a lack of guidance surrounding how they were to be implemented. In addition, it did not fully comply with requirements set out in some of its policies.

2015 Spring Reports

Report 4—Access to Health Services for Remote First Nations Communities

Overall, we concluded that Health Canada did not have reasonable assurance that eligible First Nations individuals living in remote communities in Manitoba and Ontario had access to clinical and client care services and medical transportation benefits as defined for the purpose of this performance audit.

2014 Fall Report

Chapter 6—Nutrition North Canada—Aboriginal Affairs and Northern Development Canada

Aboriginal Affairs and Northern Development Canada’s Nutrition North Canada program replaced the Food Mail Program in April 2011. Departmental data showed that the weight of items subsidized under the Nutrition North Canada program in the 2012–13 fiscal year had increased by about 25 percent compared with the weight subsidized in the final year of the Food Mail Program. However, we found that the Department had not identified communities eligible for the subsidy on the basis of need, that it had not verified whether northern retailers passed on the full subsidy to consumers, and that it had not collected the information needed to manage the program or measure its success. We found that Aboriginal Affairs and Northern Development Canada had not managed the Program to meet its objective of making healthy foods more accessible to residents of isolated northern communities, as it had not identified eligible communities on the basis of need.

2014—Spring Report

Chapter 5—First Nations Policing Program—Public Safety Canada

Overall, we concluded that Public Safety Canada’s First Nations Policing Program was not adequately designed to deliver and did not adequately ensure that policing services on First Nations reserves were delivered in a manner that was consistent with the principles of the First Nations Policing Policy that we examined.

Chapter 6—Transfer Payment Programs—Canadian Northern Economic Development Agency

The Canadian Northern Economic Development Agency had not managed and delivered selected economic development transfer payment programs in accordance with key requirements of the Policy on Transfer Payments. The Agency’s administration of contribution agreements was weak, monitoring of recipients was inadequate, and the Agency had not measured and reported on whether its programs were achieving their objectives. However, the Agency had begun to address these issues. In 2012, it established a management control framework that set out expectations on how its transfer payment programs were to be managed, and it was implementing this framework. As well, it had started to harmonize its economic development programs.

When the Agency was created, the government determined that the headquarters would be located in the North, as part of the federal government’s Northern Strategy. However, the Agency was not able to fill some positions at its Iqaluit headquarters, and key corporate functions and senior management positions were in its Ottawa liaison office.

2013—Fall Report

Chapter 6—Emergency Management on Reserves

Aboriginal Affairs and Northern Development Canada had taken some steps and had plans to address some of the issues identified in the audit. However, we concluded that during the period covered by the audit (September 2012–August 2013), the Department had not taken sufficient steps to adequately manage those areas of emergency management support to First Nations on reserves that we examined. Except for not having clearly defined its roles and responsibilities and not being able to fully substantiate whether First Nations communities have appropriate pandemic plans, Health Canada had taken sufficient steps to adequately manage its emergency management support to First Nations on reserves.

2013—Spring Report

Chapter 6—Creating a Historical Record of Indian Residential Schools

Overall, we found that the Truth and Reconciliation Commission and Aboriginal Affairs and Northern Development Canada had not taken adequate steps in relation to the creation of as complete a historical record as possible of the Indian residential school system and legacy. The Commission and, on behalf of the Government of Canada, Aboriginal Affairs and Northern Development Canada could not find common ground upon which to cooperate and agree on answers to essential questions, including what constituted relevant documents, where to search, what time frame the documents would cover, what formats to use for long-term preservation and accessibility, when the documents would be provided, and who would cover what costs.

Territorial Reports of the Auditor General of Canada

Nunavut

2015—Corrections in Nunavut—Department of Justice

We concluded that the Department of Justice has not met its key responsibilities for inmates within the correctional system. We concluded that the Department of Justice did not adequately plan for and operate facilities to house inmates, and did not adequately manage inmates in compliance with key rehabilitation and reintegration requirements.

Northwest Territories

2015—Corrections in the Northwest Territories—Department of Justice

We concluded that the Department of Justice has not met its key responsibilities for inmates within the correctional system. We concluded that the Department of Justice adequately planned for its facilities. However, we concluded that the Department did not adequately operate facilities to house inmates and did not adequately manage inmates in compliance with key rehabilitation and reintegration requirements.

Yukon

2015—Corrections in Yukon—Department of Justice

We concluded that the Department adequately planned for and operated the Whitehorse Correctional Centre. However, it did not adequately manage offenders in compliance with key requirements. Therefore, we concluded that the Department of Justice has not met its key responsibilities for offenders within the corrections system.