Review of the Estimates and Supply
Opening Statement to the Standing Committee on Government Operations and Estimates
Review of the Estimates and Supply
10 May 2016
Michael Ferguson, CPA, CA
FCA (New Brunswick)
Auditor General of Canada
Mr. Chair, thank you for inviting us to take part in the Committee’s study of the Estimates process. With me today are Richard Domingue, Principal responsible for audits of Finance Canada, and Karen Hogan, Principal responsible for the audit of the Government of Canada’s financial statements.
I would like to start by providing a brief overview of the mandate of the Office of the Auditor General.
We conduct performance audits of federal departments and agencies, and we conduct annual attest audits of the financial statements of the Government of Canada and of Crown corporations. On a cyclical basis, we also conduct special examinations of the systems and practices of Crown corporations.
In our performance audits, 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.
We report our performance audits to Parliament in the reports of the Auditor General of Canada and in the reports of the Commissioner of the Environment and Sustainable Development.
Mr. Chair, we are pleased to participate in the Committee’s study of the Estimates process. We are aware that the President of the Treasury Board appeared before this Committee and announced his intention to make some changes to the process.
The Budget and the Estimates processes are the first steps in the government’s financial reporting and accountability cycle that ends with the tabling of the Public Accounts of Canada. We provide an audit opinion on the federal government’s financial statements, which are included in the Public Accounts.
I would like to mention some issues related to the Estimates process. First, the Main Estimates do not include all of the expenses forecast in the Budget. For example, the 2016 Budget included expenses of $317 billion, while the Main Estimates total $250 billion. The Main Estimates do not include all of the expenses forecast in the Budget because the Main Estimates are finalized before the Budget. Planned expenses relating to new budgetary measures are included in Supplementary Estimates, which are tabled in Parliament after the start of the fiscal year.
Secondly, through some of our recent performance audits, we have identified that more information should be available to parliamentarians as part of the Estimate process. For example, in 2012, we audited the management of interest-bearing debt and observed that the public debt charges associated with the unfunded pension liability of Public Sector pension plans needed to be better reported in the Estimates. This has now been done. Also, in 2015, we noted that tax-based expenditures are not subject to scrutiny through appropriation bills and are therefore not reviewed by parliamentarians. Finally, we recently reported on the $400 million Venture Capital Action Plan, which was a non-budgetary transaction. This highlights the importance of all types of expenditures, budgetary and non-budgetary.
In the past, we have also commented on the fact that the Estimates are prepared on a cash basis while the Budget and the Financial Statements are prepared on an accrual basis. Under the accrual method, financial transactions and other economic events are recorded when they occur rather than only when the entity receives or pays cash.
Mr. Chair, parliamentary committees play a crucial role in government accountability. To help members of Parliament, a number of years ago, we produced a reference guide called Examining Public Spending, which we have provided to parliamentarians after every general election as recommended by this committee in 2003. We provided an Internet link to this guide to all members of Parliament in November of 2015. The guide includes a description of the supply process and suggests some questions that committee members may wish to ask when reviewing the Estimates documents.
Mr. Chair, this concludes my opening statement. We would be pleased to answer your questions.