2017 Spring Reports of the Auditor General of Canada

Opening Statement to the Standing Committee on Public Accounts

2017 Spring Reports of the Auditor General of Canada

17 May 2017

Michael Ferguson, Chartered Professional AccuontantCPA, Chartered AccountantCA
Fellow of the Order of Chartered AccountantsFCA (New Brunswick)
Auditor General of Canada

Mr. Chair, I am pleased to present my Spring 2017 Reports, which were tabled in the House of Commons yesterday. I am accompanied by Richard Domingue, Nicholas Swales, Joanne Butler and Andrew Hayes.

In the past I have said that departments need to understand the way people interact with their programs as a way to improve their services to people.

With this series of audits, I see a very clear theme that how government programs are described on paper is often different from how the departments put those programs into practice.

And that matters to people.

Report 2—Customs Duties

Let’s start with our audit that focused on whether Finance Canada, Global Affairs Canada, and the Canada Border Services Agency carried out their roles to collect customs duties on the many goods imported into Canada each year. In 2015–16, federal government revenue from those duties was more than $5 billion.

We found that the Canada Border Services Agency and Global Affairs Canada did not adequately control the entry of certain goods, such as dairy products, chicken, beef and eggs. As a result, some goods were imported without appropriate permits. Had they been properly controlled at the border, these goods would have been assessed $168 million in duties in 2015.

We also examined the $20 minimum value for customs duties on imports by mail or courier. This amount has not changed since 1992, but the volume of incoming parcels has increased significantly. The Agency did not have the staff to inspect them all. This means that duties were not assessed in all cases where they should have been.

Overall, in our view, the way Canada assesses customs duties and controls goods coming into the country is complex and difficult to administer, which means there is a different system on paper than in practice.

Report 3—Preventing Corruption in Immigration and Border Services

In another audit we looked at what the Canada Border Services Agency and Immigration, Refugees and Citizenship Canada did to manage the risk that their staff could be corrupted.

We concluded that while the Agency and the Department recognized their employees could be vulnerable, they need to better train their staff and use the information they already have to identify potential inappropriate actions.

For example, we were able to use the Agency’s information to estimate that over the course of a year, border services officers did not collect the information they were supposed to collect on the people who entered Canada in some 300,000 vehicles.

We found that Immigration, Refugees and Citizenship Canada appropriately processed visas at Canada’s overseas missions. However, Global Affairs Canada should make sure that all locally hired staff have completed their mandatory ethics training.

Report 5—Temporary Foreign Worker Program—Employment and Social Development Canada

Let’s turn now to the Temporary Foreign Worker Program, where there has been some progress, but where differences remain between what is done in practice and how the program is described on paper.

This program is meant to help employers fill job vacancies when qualified Canadians are not available. Employment and Social Development Canada is supposed to make sure the program is used to respond only to real labour shortages.

Overall, the reforms that the Department introduced in 2014 have helped to reduce the number of temporary foreign workers needed in Canada. However, those reforms fell short of ensuring that employers only hired temporary foreign workers as a last resort.

In many cases, the Department just took the word of employers that they could not find Canadian staff. And, again, the Department did not use its own information—such as employment insurance data—to determine whether Canadians could fill the jobs. We saw indications that unemployed, experienced Canadians may have been available to work at fish plants, but temporary foreign workers were hired instead.

Report 4—Mental Health Support for Members—Royal Canadian Mounted Police

Let’s turn now to our audit of mental health support in the Royal Canadian Mounted PoliceRCMP. In May 2014, the RCMP was one of the first federal organizations to roll out a mental health strategy. It was meant to contribute to a psychologically healthy and safe workplace, and to better support employees.

We found that the RCMP’s implementation of its strategy fell short of meeting members’ mental health needs. The RCMP did not allocate enough resources to implement the strategy. Sixteen percent of members had to wait too long to access the services they needed. In a few cases, members waited more than two years.

This strategy is important for the RCMP, for Canadians, and for the government as a whole, and it has to succeed. The RCMP has to fix the problems we identified and ensure the successful implementation of its Mental Health Strategy.

Report 6—Civil Aviation Infrastructure in the North—Transport Canada

In another audit, we looked at civil aviation infrastructure in Canada’s north, where air travel is the only year-round way for many remote communities to connect to the rest of the country.

In our view, Transport Canada was not actively engaged to deal with known infrastructure challenges at Canada’s remote northern airports.

Challenges include insufficient runway lighting and navigational aids. Given that windows to land and take off are more restricted in the north, such gaps can make a critical difference, for example in a medical emergency.

Report 1—Managing the Risk of Fraud

Let’s turn now to our audit on the risk of fraud. We looked at how the Canadian Food Inspection Agency, Global Affairs Canada, Health Canada, Indigenous and Northern Affairs Canada, and Public Services and Procurement Canada managed their risk of fraud.

We saw good practices in each organization. Some conducted fraud risk assessments and properly justified their sole-source contracts and contract amendments. However, no single organization covered all the basics.

We are concerned that controls to manage the risk of internal fraud were not always implemented. For example, few employees had received mandatory training on values and ethics, and cases of potential conflict of interest took too long to resolve.

Report 7—Fossil Fuel Subsidies

In another audit, our goal was to examine Canada’s progress on its 2009 commitment to phase out inefficient fossil fuel subsidies. We found that Finance Canada still had not defined what an inefficient fossil fuel subsidy was, nor could the Department tell us how many inefficient fossil fuel subsidies there could be.

We asked Finance Canada to provide us with its analyses of the social, economic and environmental aspects of these subsidies. The Department did not give us that information. Therefore, I cannot give Parliament or Canadians assurance about Finance Canada’s work on this file.

As a result of this, we provided with our spring reports a message from the Auditor General that describes the trouble we had accessing certain information we needed to complete our audits. Overall, I am very concerned that Finance Canada did not give us all the information we needed to do our work. Hopefully, the recently issued order-in-council signals that the government is willing to work with us to ensure that we do not encounter similar problems in the future.

Special Examinations of Crown Corporations

Our spring reports to Parliament also include our audits on three Crown Corporations - the Canadian Museum of Nature, Defence Construction Canada, and the Freshwater Fish Marketing Corporation.

Overall we found that both the Canadian Museum of Nature and Defence Construction Canada managed their operations well.

In the case of Freshwater Fish Marketing Corporation, however, we found problems in Board oversight, at the management level, and in day-to-day operations that were so extensive that the Corporation is at a high risk of not meeting its mandate. Fundamentally, we would expect a Crown Corporation to do much better, and there is room for significant improvement at the Freshwater Fish Marketing Corporation.

Commentary on the 2015–16 Financial Audits

Lastly, I am pleased to introduce a new product that we also released. It is not an audit, but rather a commentary on our audits of the financial statements of federal organizations. These audits account for almost half of our workload.

Financial audits provide parliamentarians with information that is useful to oversee government organizations that spend taxpayer dollars to serve Canadians.

The federal public sector produces hundreds of complex financial reports each year. We developed this new product to help parliamentarians understand and navigate the mass of financial information that is produced by individual organizations and by the government as a whole.

To close, I want to go back to the theme that weaves many of these audits together.

Government departments must make sure that they implement their programs in the way that they were designed and communicated to Canadians. Programs will not produce their intended results if departments do not put into practice what they said they were going to deliver.

Furthermore, we again see examples where departments did not use their own data to help them understand and improve their results.

So while many of the issues we have raised in these audits are concerning, I also think that many of them can be fixed, and that fixing them will lead to better results.

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