Opening Statement before the Standing Committee on Public Accounts
Report and Observations of the Auditor General of Canada on the 2021–22 Consolidated Financial Statements of the Government of Canada
18 November 2022
Karen Hogan, Fellow Chartered Professional AccountantFCPA, Fellow Chartered AccountantFCA
Auditor General of Canada
Mr. Chair, thank you for this opportunity to discuss our audit of the Government of Canada’s consolidated financial statements for the 2021–22 fiscal year. I would like to acknowledge that this hearing is taking place on the traditional unceded territory of the Algonquin Anishinaabe people. With me today are Chantale Perreault and Etienne Matte, who are financial audit principals.
The government’s financial statements are one of its key accountability documents. Our audit of these statements provides information that helps Parliament exercise its oversight of the government, promotes transparency, and encourages good financial management.
Our audit of the government’s financial statements is the largest audit conducted by my office and involves the work of most of our 250 financial auditors.
You will find our audit opinion on the government’s consolidated financial statements starting on page 54 of Volume 1 of the Public Accounts of Canada 2022.
We found that you can rely on the information contained in the financial statements. In all material respects, the information is presented fairly and conforms with generally accepted accounting principles for the public sector. In other words, we issued a clean opinion.
Again this year, our opinion includes an emphasis of matter paragraph. It highlights the significant impact of the ongoing COVID‑19 pandemic on certain amounts presented in the government’s consolidated financial statements and related notes.
Every year, we provide Parliament with a commentary report that highlights important information about the results of our federal financial audits.
The commentary provides a summary of the government’s spending in response to the COVID‑19 pandemic and its effects on the government’s financial statements. The commentary also gives an overview of the government’s process for identifying overpayments or payments made to ineligible recipients of COVID‑19 benefits and its process for estimating recoverable amounts. In December, we will provide a performance audit report to Parliament on specific COVID-19 benefit programs. That audit report will contain our findings about overpayments, amounts paid to ineligible individuals and businesses, and the government’s collection efforts.
As in previous years, the commentary raises observations about pay administration and National Defence’s inventory. These are recurring issues that we continue to monitor.
For pay administration, we continued to note errors in salary transactions processed through the Phoenix pay system. While the error rate has improved over prior years, the percentage of errors is still concerning. We also noted that the outstanding pay action requests involving overpayments totalled over $500 million, which the government is at risk of not being able to recover. This indicates that more efforts are needed to process requests in a timely manner.
We have been reporting for nearly two decades on National Defence’s difficulties in recording its inventory. While the department has completed most of the commitments in its 10‑year action plan, the commitment to implement a barcoding and scanning capability in its inventory management system is delayed. This means it will take longer before the inventory management is improved.
The commentary also provides information about some emerging requirements that will affect our future financial audit work. Specifically, we highlight new requirements in legislation and government policies to report on environmental, social, and governance matters and a new accounting standard for the government to record asset retirement obligations.
Mr. Chair, I would like to thank the senior officials and staff of the many departments, agencies, and Crown corporations involved in preparing the government’s financial statements. We appreciate their ongoing collaboration.
This concludes my opening remarks. We would be pleased to answer the committee’s questions. Thank you.