STANDING COMMITTEE ON HUMAN
RESOURCES DEVELOPMENT AND THE STATUS OF PERSONS
COMITÉ PERMANENT DU
DÉVELOPPEMENT DES RESSOURCES
HUMAINES ET DE LA CONDITION DES PERSONNES HANDICAPÉES
[Recorded by Electronic Apparatus]
Tuesday, May 2, 2000
The Chair (Mr. Peter Adams (Peterborough, Lib.)):
I'll begin by asking the cameras to leave. This
meeting is going to be televised on CPAC, but as you
know, under our regulations, the other cameras are
supposed to leave the room. I'd be grateful if they
would do that. Other journalists of course can remain.
I'd be grateful if the cameras would leave so that we
can proceed with our hearing today.
Colleagues, before we begin—and I would ask the
witnesses to excuse me for a moment—I would like to do
a couple of things.
First of all, as it's our first meeting following the
break, I'd like to give you a sense of where we're
proceeding in the next meetings. On Thursday, 4 May,
at our next regular meeting, the proposed witnesses are
Allan Broadbent of the Maytree Foundation, Julie White
of Private Foundations, and Tom Brzustowski of the
Natural Sciences and Engineering Research Council.
This goes back to the questions we posed at our last
meetings. Here we're dealing with groups that are in
the business of giving out grants of various types and
have expertise in it but are either in the private
sector or at least at arm's length from government. So
we're dealing with one aspect of the questions we were
Then next Tuesday, which is 9 May, the proposal is
that we have Arthur Kroeger, whom some of you know from
his long involvement in government; Gilles Paquet of
the University of Ottawa; and Sean Moore, public
policy adviser at Gowling, Strathy & Henderson. Again,
these are people who have some sort of external view of
grants programs and that kind of thing. I believe one
of them at least has written books on this subject.
Again, it's part of our questioning that has to do with
how grants and contributions should be handled in
government, and in this case we're trying to get some
vision from outside government.
So that's next Thursday and the following Tuesday.
Mr. Paul Crête(Kamouraska—Rivière-du-Loup—Témiscouata—Les
Basques, BQ): Mr. Chairman, I am beginning to worry a little bit.
I am wondering when we will be able to hear the witnesses that had
been suggested to you by the Bloc québécois, including those who
are impacted on by the management of the Transitional Jobs Fund. I
cannot find their names on the list that you have given us.
Moreover, according to that list, the last sitting would be on June
1st. I was wondering whether you had heard that the House would
adjourn on that date. I want to make sure that you have contacted
these witnesses and that we still intend to hear them.
The Chair: As you can see, our regular clerk is
away at the moment. I'm hoping on Thursday we'll be
able to address all the meetings up to and including
our meeting with the minister, which will be on 18 May.
Is that okay?
Ms. Libby Davies (Vancouver East, NDP):
Chairperson, at the next meeting then, will we have a
list of all the future meetings up to the end of the
The Chair: It is my sincere hope that at that
point it will be blocked out, the same way as we've
done here, with suggestions, and then there can be
discussion in the committee.
Ms. Libby Davies: Because as you know, I submitted
a motion on Canada student loans and the service
providers, and at some point I'd like to know whether
or not we're going to have any time to deal with any
other kind of business.
The Chair: I would be glad to discuss that, and as
you know, I for one have been very, very frustrated.
This is important work we're doing, but we've in fact
neglected the area of disabilities, the area of higher
education, and a variety of things. But my thought on
the list, Libby, is that the list will be to do with
these hearings. As you can see, we have your motion on
our agenda, and I was in fact going to mention it
Is there anything else on that? So we have the next
two meetings fixed.
Now could I ask you, colleagues—and again, my
apologies to the witnesses—to look at the budget
submission, which I believe you all have? Although
this is further down our agenda, this is very important
to us. As you know, we have two subcommittees, one for
persons with disabilities and the other for children
and youth at risk. They have been carrying on their
work while we've been conducting these hearings, and
it's very important they continue to do so. That's
one. Two, it's important we have funds to cover the
remainder of these hearings and perhaps do some other
work. That's what this budget submission intends.
You'll see it's a submission for $64,000. Virtually
all of those moneys are for witness expenses for people
appearing either for our hearings or before our
subcommittees. So you'll see, for example, under item
6, of the $64,000 or so, $61,000 is witness expenses.
We have there for the continuation of these hearings 24
witnesses and a round figure of $28,800. Then below
that, for our subcommittee on the status of persons
with disabilities, we have 17 witnesses at $20,000.
Again, as you understand, for that subcommittee we
have very particular witness expenses. It's a bit
different from our main committee. Then for the
children and youth at risk, you see the figure there.
I'll go to Larry McCormick for discussion in a moment,
but I'd like to ask someone soon to move this budget so
that I can attempt to get it through the liaison
committee and to the House of Commons in order that we
can have the funds.
Mr. Larry McCormick (Hastings—Frontenac—Lennox
and Addington, Lib.): Mr. Chair, I do move acceptance
of this budget as proposed.
The Chair: Thank you. Is there any discussion on
(Motion agreed to)
The Chair: Colleagues, I'd now like to proceed to
our main item of business, if I might. The order of
the day is, pursuant to Standing Order 108(2), a study
of HRDC grants and contributions.
We welcome as our witnesses today, first of all, the
president of CCAF, Jean-Pierre Boisclair; and
representing Deloitte & Touche, Colin Potts and Susan
Mingie, who are partners in Deloitte & Touche.
We appreciate you all coming here to share your
expertise with us on this important matter.
The way we proceed in this committee is we have a
statement from the witnesses. Usually we would take
both of them now, if that's okay with you. We hope
those are fairly short statements, but do take your
time. We then proceed to questions from both sides of
the committee. I do have a system—some members think
I do not—of allocating time, but when you're replying
to our members, please simply bear in mind that your
reply, which the member wants to hear, is a part of the
member's time. So from time to time I'll have to
interrupt members, and from time to time I'll have to
interrupt you, but I hope you'll engage in the
I think, Mr. Potts, it's been agreed that you will
begin, and then we'll go to Monsieur Boisclair.
Mr. J. Colin Potts (Partner, Deloitte & Touche):
Thank you, Mr. Chairman and members of
the committee. Good morning. Thank you for the
invitation to meet with you today.
For the information of members, as the chair has
indicated, I'm a partner in the Ottawa office of
Deloitte & Touche, chartered accountants. I received
my chartered accounting designation in 1971 and was
elected a fellow of the Ontario Institute of Chartered
Accountants in 1991. I became a partner in Deloitte &
Touche in 1976, and for the past twenty years I've spent
considerable time working with public sector and
I have with me Ms. Susan Mingie, CA, also a partner in
the Ottawa office of Deloitte & Touche. Ms. Mingie
received her CA designation in 1990. She is a member
of the financial and special services group of the
Mr. Chairman, it's my understanding that we are here
today at the request of the committee to respond to
questions the committee may have concerning the report
Deloitte & Touche provided to HRDC on the draft action
plan in response to an internal audit report concerning
grants and contributions made by the department. I was
the partner responsible for this assignment. I was
assisted by Ms. Mingie and another staff member.
I also understand copies of our report have been made
available to committee members. However, I thought it
might be helpful if I were to take a few minutes to
make a few observations on the nature and scope of our
assignment and our findings.
Page 3 of our report describes the purpose of our
assignment. In essence, Deloitte & Touche was asked by
the department to provide comments on a draft action
plan developed by staff and dated January 27. The
action plan was designed to address and correct the
issues raised in the internal audit report.
We developed a framework in order to analyse the draft
action plan. This was used to assess completeness
and cohesiveness of the proposed activities. This
framework can be found on page 6 of our report.
We reviewed the internal audit report and interviewed
the head of internal audit and selected senior
officials to gain an understanding of the issues. Our
findings can be found in the report. I will not take
up the committee's time by repeating them. However,
the main messages in our report, which we conveyed to
management, are contained in our overall comments,
which can be found on pages 4 and 5. I would like to
highlight just three.
Firstly, we thought the draft action plan was a good
start and addressed the immediate issues identified in
the audit report. However, it did not address the root
causes of the problem, these root causes being the
underlying issues that caused the problem.
Secondly, we recommended that leadership,
accountability, and responsibility for implementation
of the action plan be clearly identified.
Implementation is key. You can have a comprehensive,
well-articulated, and well-written plan, but if there's
no senior management commitment to the plan and it is
not implemented, then nothing changes.
Finally, as a caution, our report noted that correcting
the problems raised in the internal audit report will
not happen overnight. While some of the issues can be
resolved in the short term, others will take
Thank you, Mr. Chairman. This concludes my opening
comments. We look forward to responding to questions
the committee may have.
The Chair: Thank you very much indeed, Colin.
Susan, do you have anything to add at this moment?
Ms. Susan Mingie (Partner, Deloitte & Touche): No.
The Chair: Thank you very much.
I now introduce Jean-Pierre Boisclair, the president
of the Canadian Comprehensive Auditing Foundation,
Mr. Jean-Pierre Boisclair (Chairman, Canadian Comprehensive
Auditing Foundation): Thank you, Mr. Chairman. I distributed a few
minutes ago a brief outlook of the CCAF. We had previously sent you
two other documents, namely The Modernization of Comptrollership in
the Government of Canada and Two Sides of the Same Coin, both
dealing with comptrollership.
CCAF is a neutral forum. We bring no particular
ideology, political perspective, or advocacy position
to bear in finding and championing approaches that will
help organizations—usually ones that operate in
complex accountability relationships—to exercise good
governance, management, and stewardship practices.
Neither I nor my organization has had direct
involvement with HRDC in the context of the hearings
you have been holding.
I've read your interim report, along with the
testimony of some of the witnesses who have appeared
before you, and I was struck by the question posed in
section 5 of the interim report, the question dealing
with the critical element of management and control for
the administration of public funds.
Just under two and a half years ago I completed a
mandate given to me by the secretary of the Treasury
Board of Canada to organize and chair an independent
panel of senior executives and professionals with both
public and private sector experience in large
organizations. The government recognized that
circumstances had changed and that change was needed in
comptrollership thinking and practice.
The purpose of this independent panel was to help the
government ensure that its understanding and approach
to and capacity for comptrollership is consonant with
the size, the business practices, and the risks that
face contemporary government. It was also to help
chart the course that will see comptrollership be a
vibrant support to Parliament for good governance and
to the public interest in the stewardship of public
The panel's members are listed on pages 87 and 88 of
the English version of the report and on pages 95 and
96 of the French version.
Mr. Chairman and members, I understand an important
focus for the work of this committee is on the
particular factors that attended the operations of HRDC
that were subject to an internal audit. While I don't
think I can be of help in relation to those, I am
impressed with the importance of the question in your
interim report, which really deals at a broader plane.
Throughout the work of the panel I developed a strong
sense that help and better understanding were wanted by
the executives and professionals of the public service,
in keeping with what I sensed was also a genuine and
very acute belief on their part in the importance of
conducting public business with rigour and with high
standards of ethics and values.
However, I was conscious during our work that the
government was living in or perhaps just emerging from
a period of very significant discontinuity, with fewer
people and less money; new business methods, such as
partnerships and privatization; the impact of
technology on work; and most of all, the challenge to
change the culture to focus on results.
As previous witnesses have indicated, these factors
can, and I believe in the case of HRDC did, contribute
to an environment in which control practices were not
in line with reasonable expectations for what they
Much can and should be learned from the experience,
but the need for control to be fundamentally rethought
in the current context of the government had been
recognized, and the path forward has to a very large
extent been identified. Now wisdom, energy, and
resources are needed to put into practice what is known
to be needed.
Modern comptrollership as advocated by the panel and
adopted by the Treasury Board is a set of principles,
underpinned by a guiding philosophy, that describes how
management wishes to carry out the stewardship
dimension of its responsibility to the institution and
to you, its governing body.
The panel suggested that key comptrollership
principles ought to focus on four things: one,
performance information, both financial and
non-financial, both historical and prospective; two,
risk management; three, control systems; and four,
values and ethics.
Fundamental change was the key message of the
independent panel's report. In fact, to quote our own
report on page 2, “a quantum leap forward” was
needed. Although comptrollership was not new to the
government, its narrower traditional focus is not
justifiable by the conditions and assumptions of the
past, which no longer apply.
The independent panel recognized the very strong
linkage between the elements of comptrollership I just
referred to and general management. The panel was of
the view that the four elements of comptrollership go
to the heart and soul of executive and management
responsibilities at the top and throughout the
The belief that comptrollership is not something that
can be delegated entirely to specialists is a major
change in approach and thinking from the past. It
cannot and should not be stovepiped. This is not about
hiring more accountants.
The convergence of key comptrollership principles with
general and specialized areas of management has
recently been formalized in Results for Canadians—A
Management Framework for the Government of Canada.
To my knowledge, until Results for Canadians was
produced, the overall management philosophy and
approach for the government had not been articulated by
any government. It's an important and critical step in
advancing the management and stewardship agenda. It
augers well for the future in that it ties control and
The single most important change proposed in the
panel's report was a move to a new guiding philosophy
for comptrollership, seeing it move from a
command-and-control orientation to a more contemporary
one, sometimes called “loose-tight”. A loose-tight
orientation combines a strong commitment to central
standards and values and to the achievement of results
with flexibility to tailor processes and operational
approaches to the particular businesses of different
In the current dialogue, there is a danger that
government will be forced back to a command-and-control
approach that we know does not work. The choice should
not be viewed as being between control and
responsiveness or service to the public; rather the
issue is the right kinds of controls focused on the
The panel report suggested that substantive and
enduring change depends on all key players
participating in the change process. It cited
Parliament, ministers, the heads of the public service
and the Treasury Board Secretariat respectively, and
above all deputy ministers, as well as others, as part
of what one parliamentary committee subsequently dubbed
“a circle of control”. The extent to which modern
comptrollership will be achieved rests to a large
extent on each of those individuals and groups making
their contribution. This wider view of who needs to be
involved is also a change in thinking from the past.
I want to be helpful to you and to your fellow
parliamentarians. Parliament is a very important part
of that circle of control, not simply in the sense of
the impact of the criticism that flows from your
oversight, but also in the sense of helping to create
the very environment for achieving excellence in
control and comptrollership. Parliamentarians can be
particularly effective by persistently focusing on some
key issues that underlie good control—that in effect
constitute the foundation for control.
In reading the proceedings and the interim report you
recently issued, I saw that a recurring theme was, why
does what appears to be needed change often not happen?
Perhaps in part the answer is because some important
questions about risk and control are not sufficiently
part of the control discussion or are not engaged by
all key parties whose understanding and agreement are
The sheet attached to the brief I distributed
this morning poses some but by no means all of the
questions I believe are important. I would like
to refer you to that. I won't run through all of those
questions now, but they are significant.
We must recognize that government business inevitably,
in certain circumstances of important programming, has
risks attached to it. It's not a zero-risk game. We
need to agree on what constitute acceptable levels of
risk and articulate them, not just after the fact when
something goes wrong and then attribute a zero-risk
threshold to it, but beforehand, we need to understand
what might go wrong and what is liable to go wrong.
We should ask ourselves whether or not we have
adequate human and financial resources to deliver
programs and to handle the choices we have to make.
We must aggressively and explicitly define reasonable
expectations to balance responsiveness and control.
And very important, does performance reporting to
government, Parliament, and the public consistently
focus on relatively few but important aspects of
performance, making performance reporting pragmatic in
the best sense of the word?
Other questions are listed on the sheet, but I want to
respect the time limit that was provided. They're
Above all, it's important that we have actions and
behaviour that sustain in practice the need to balance
sanction and criticism with the imperative to learn and
improve from failure and from errors. How we manage
the environment of continuous imperfection in this
regard is going to be an important key to our success
in enhancing control and modernizing comptrollership
into the future.
All of the key players committed to contributing to
and providing persistent and informed leadership for
the control system will be an important dimension.
Having the means in place to bridge the interests and
the imperatives of all of those different
groups—Parliament, ministers, public servants,
etc.—will be absolutely critical to fostering the
understanding and agreement that is needed around these
issues. In other words, these issues have to be put on
the table, they have to be discussed and debated, and
conclusions have to be arrived at.
If you look at the questions I've provided to you and
ask them as you gauge progress, “yes” answers ought
to give you some sense of comfort that substantive and
enduring change is taking place. If the answers
continue to be “no”, the potential for excellence in
comptrollership is greatly diminished, and you may be
looking only at marginal change.
I'd like to close my comments by going back to a
central thought of the independent panel's report: the
notion that what we were looking at was a quantum leap
forward, not a marginal change. In that context the
important commitment the government has made to
modernize comptrollership will very much need the
nurturing and support of Parliament.
Thank you very much, Mr. Chairman.
The Chair: Thank you very much, Jean-Pierre. We
do appreciate it.
Colleagues, as usual I have a long list. I will try
to keep this thing moving. The first seven I have are
Maurice Vellacott, Bonnie Brown, Paul Crête, Bryon
Wilfert, Libby Davies, Larry McCormick, and Raymonde
Mr. Maurice Vellacott (Wanuskewin, Canadian
Alliance): I'm addressing my question to Mr. Potts and
I notice in your overall comments in the report you
did, you make a point of saying that in order for there
to be progress on rectifying things, senior management
sponsorship as well as acceptance and commitment from
all other parties involved is pretty critical. I key
in on the senior management sponsorship.
I think we're all interested in knowing how the
private sector would react in a similar situation if
problems were turning up over a ten-year span of time.
My question to both of you is, what would be done, or
what is your impression of what would be done, in the
private sector if over the span of a decade, ten years,
previous audits showed the same problems showing up and
they seemed to be systemic or endemic? What would be
done in the private sector overall and in respect to
those managers, if those were the same managers over a
period of time? What actions, what steps, would be
taken in respect to those managers?
Mr. Colin Potts: Mr. Chairman, I'll start the
response, and Ms. Mingie may wish to add to my
The private sector would react to these types of
comments in a report from an internal audit group
within the organization in a very swift way. But you
have to realize the private sector environment is quite
different. It's driven very much by the profit motive,
the impact on the bottom line. If these sorts of
comments coming from an internal audit report were
having a negative impact on the corporation's
profitability, obviously swift action would have to be
The nature of the action a corporation would take
would be very similar to the corrective measures the
department has taken in response to this latest audit
report, the one released in January of this year. A
corporation faced with that would want to identify the
real causes of the problem and put in place corrective
measures. They would probably seek advice from
knowledgeable sources to help them develop a response
to it, and they would certainly assign responsibility
at a very senior level for ensuring the necessary
procedures that had to be changed or the corrective
measures that had to be taken were put in place, and
that plan would be monitored. And I dare say the audit
committee of the corporation would be involved in that
Mr. Maurice Vellacott: To be specific then, Mr.
Potts or Ms. Mingie, my question to you is this. What
if, over a period of roughly ten years, previous audits
had shown some of the same problems and major flaws in
terms of lack of accountability, and what if there
wasn't an awareness by the senior executive people of
the previous audits or follow-through on changes or
corrections? Would possibly dismissals take place if
the problems had persisted over that long a time and
previous audits had clearly pointed out the same
problems? Would there be actions—in the private
sector, mind you—such as dismissal of CEOs or movement
out, and replacement of those people with others?
Mr. Colin Potts: In the private sector, yes, it is
possible there may be dismissals. Again, the
private sector environment is quite different. But it
would be a question really of the CEO looking at the
reasons for the problems. Had there been changes in
personnel since the changes happened? Who was
accountable? What other staff reductions or impacts
may have affected the performance of a particular group
where the errors were found? That would be taken into
consideration before any dismissals were made.
So it is very difficult to say yes to that particular
question. It depends on the circumstances.
Mr. Maurice Vellacott: Yes. If the same people
were in place for a significant number of those years
over that period of time—and obviously a knowledge of
previous audits would be assumed—am I to assume that
some pretty direct action would be taken in respect of
Mr. Colin Potts: I think it would be fair to say
that if a problem had been identified and the person
responsible for it, the particular employee, was aware
of it and perhaps given time to correct it, and if the
same problem arose again in another five years, that
particular employee would likely be under considerable
scrutiny, which may result in dismissal.
The Chair: Maurice, you have two minutes.
Mr. Maurice Vellacott: I'll pursue another line of
You make the point here, and it's a point well taken,
about the need to be addressing the underlying issues,
the root causes, of the audit findings, and you say
these have not been clearly articulated in the draft
action plan. I think I understand what you're saying,
and I agree with it. In order to get at and improve
things, you need to understand.
Sometimes it gets very embarrassing, and it can get
down-and-dirty in respect to digging up stuff to find
out what the problems are before you know the route or
the track you should be on to fix these things. Do you
have any inkling of what those root causes would be, or
are you just making a general statement here?
I have a sense within our committee as well that the
government members in particular want to just get on
with the future without really looking thoroughly at
what precipitated or caused these things. But I'm
convinced that for the good of taxpayer dollars, we
need to get at this. Was it partisanship? Was it a
slush fund? We need to know what were the issues
underlying this before we can get on and correct this
and rectify the situation.
The Chair: This should be a relatively brief
Mr. Colin Potts: I'll be brief, Mr. Chairman.
On page 7 of our report we list some of the
longer-term issues, what we've referred to as the
underlying issues, that need to be addressed. But our
report was at a level where we said, “These are the
sorts of areas you need to look at to identify the
underlying causes.” We did not in our work identify
specifically what were the underlying causes that
created the problems. But in our advice to the
department we have told the department they should
themselves look at the structure, human resource
issues, process, and information systems in order to
try to identify those.
Mr. Maurice Vellacott: Right. So if you don't
honestly look at the root causes, you'll never really
get at what the solution is. I suppose that's what
Mr. Colin Potts: That was our advice.
The Chair: Bonnie Brown.
Ms. Bonnie Brown (Oakville, Lib.): Thank you, Mr.
Thank you to our witnesses for coming. We're grateful
to Deloitte & Touche for the help they gave the
department at the beginning and to Mr. Boisclair's
group for the report they did for Treasury Board. Both
of you recognized the tremendous change that all
government departments, and I guess the private sector
as well, are going through at this time, trying to do
more with fewer people and new technology and the need
for training—all those complicating issues to moving
The first thing I wanted to talk about is what the
committee knows is a hobby horse of mine, and that is
the perils of partnership. Government is into
partnerships with small groups, such as in the grants
and contributions files, or with provinces, such as in
the labour market development agreements, whereby we
transfer large amounts to the provinces. There is some
concern in our minds about the accountability back to
us, having transferred the money to the group or to the
province, as to exactly how it's spent.
But I was thinking that in the private sector, many
companies are also into partnership. Some of them are
even in networks of people, networks of other
companies, to accomplish a certain project, perhaps
overseas. How do they track their investment when they
actually are not in total control of the decisions
being made by the project group, and how do they then
remain accountable to their shareholders? Do you have
any experience with that?
Mr. Colin Potts: Perhaps I could start to answer,
We do see in the private sector this environment of
consortiums, groups of companies coming together or
organizations who work together on specific projects.
But in all of those situations, an individual within
each organization would be assigned responsibility for
that particular project, protecting, if you like, the
particular organization's interests in that joint
venture, if I can use that as an example. It would be
a very clearly assigned responsibility.
The corporations would rely on monitoring, reporting
as to progress, reporting against benchmarks, and
perhaps reporting on performance in order to protect
Ms. Bonnie Brown: So that individual would
probably be part of the management team. In other
words, if the project were, say, in Taiwan, the company
that's investing a large amount of money would probably
have at least one person there doing oversight and
protecting their interests. Is that what you're
saying? It wouldn't just be somebody back at head
office who has a file with that name on it.
Mr. Colin Potts: It would depend on the nature of
the project, the significance of it, and the role the
particular company was playing in that project.
Sometimes there are silent partners who perform a very
passive role in monitoring their investments. In other
situations, in joint ventures corporations can play a
very active role, a more hands-on role. It changes and
varies depending on the nature of the project and the
nature of the investment.
Ms. Bonnie Brown: This whole thing ties into the
theme Mr. Boisclair introduced, the tolerance for risk.
It seems to me to accomplish good things, you have to
have some tolerance for risk. But of course we work in
an environment where any small negative result, whether
it be money- or performance-oriented, is latched onto
by the opposition. So you can say any government of
whatever political party has to have some tolerance for
risk, but I think most oppositions could be
characterized by having no tolerance, because in fact
whenever anything goes wrong, they pounce.
Unlike the business environment, where all
the players have to understand that business requires
risk-taking, we're in a different business here. I'm
thinking the comments you made about getting all the
partners to agree on what level of risk is acceptable
is almost a dream world for the political realm. I can
see that in the business setting and I can see various
departments of government partnering and deciding what
level of risk is acceptable, but how would you ever
achieve that when you consider a government and an
Mr. Jean-Pierre Boisclair: I'll try to answer the
question in this way: certainly not in any perfect
way, but certainly I think there's an opportunity to have
conversation around risk between members of the
governing body, parliamentarians, ministers, and public
servants, and indeed to do that not always in a
completely unalloyed political fashion. The truth is
that if you want a meaningful control system, there is
no control system in this world that will reduce risk
I worked in the aerospace industry for a number of
years, and we constructed aircraft parts. There is not
an airplane that is flying anywhere in this world that
is constructed to be 100% foolproof. That is not
economically feasible and it doesn't happen. That is a
very difficult discussion to have between people who
fly on airplanes, people who operate them, and people
who build them, and yet conventions develop around it.
I think quite frankly that if we're looking to operate
modern government with a reasonable control system,
we're going to have to develop somewhat greater
maturity in having those conversations, recognizing—and
I've been in Ottawa for 25 years—that this process will
never be perfect.
The Chair: Thank you.
Before I go to Paul Crête,
could I say, using this business analogy, that if, as
happens in my riding, a corporation gives $10,000, for
example, to a children's club—they obviously look very
carefully before they give it—do they devote
enormous amounts of resources
to tracking such a donation?
Mr. Colin Potts: Mr. Chairman, no, I don't
believe they would. If a corporation makes a donation
to a boys and girls club, or the YMCA or YWCA, it does
evaluate the organization before it makes the donation,
but it would then make the donation believing it to be
a worthy cause and something that corporation wants to
support. Once it's made the donation and assessed the
nature of the gift, there'd be no further monitoring,
although if it was a larger amount, a material amount
to the corporation, they may want to have some sort of
reporting as to how the money is being used. It
depends, again, on the nature of the donation and how
The Chair: Thank you.
It's Paul Crête, then Bryon
Wilfert, Libby Davies, and Larry McCormick.
Mr. Paul Crête: Thank you, Mr. Chairman. I would like
Mr. Potts to tell us the specific date of the contract awarded to
them by the Department of Human Resources Development to conduct
that assessment, as well as the initial deadline that had been
given to them for submitting their report.
Mr. Colin Potts: I'm going from memory, but I
believe it was on January 27 that we received the mandate
from HRDC to provide advice to them on the action plan
the staff had developed. We reported to them, as
contained here, on February 2. The work was done in
the space of about one week. It was a situation where
the department had prepared a draft, wanted advice—and
I understand they were seeking advice from other
parties as well—so they could take outside advice,
pull it together, and then finalize an action plan.
Mr. Paul Crête: January 27 is the date when the six-point
draft national action plan was made public. On that same date, you
were asked to prepare an opinion and to submit your report on
February 2. February 2 is also the date when Department officials
held a press conference regarding this six-point plan and during
that press conference, the draft plan was expounded at length. So,
on the very same day that you submitted your report, that is
February 2, there was a press conference to introduce the six-point
Have you seen a revised version of the plan, a version that
would include sections drafted after you submitted your report? Did
the Department give you a revised report or action plan?
Mr. Colin Potts: Yes, the department did provide
to us a copy of a revised action plan, which would have
been dated about February 3, 2000. They were
continuing to revise the plan. As I said, my
understanding was they received our report with
comments on an early draft. They received comments
from the Auditor General and his office on the draft
action plan. They received comments from the Treasury
Board Secretariat. So other groups were asked to
advise the department on the development of the action
Mr. Paul Crête: Mr. Chairman, would it be possible for us to
obtain a copy of this revised plan that was introduced by the
Department following the comments received from Deloitte & Touche,
as well as a copy of the new revised plan that the Department has
produced, given that on February 2, the same day you submitted your
report, the draft plan was being sold to journalists and that no
other report has been made public by the Department since then?
Mr. Colin Potts: My recollection of the sequence
of events was that on or about February 6, 2000, which
I think was a Monday, the minister released a
close-to-final, if not final, version of the six-point
action plan, which took into consideration all of the
comments received from the various people they had
consulted with. That is the action plan.
The Chair: So in your view, this document
has already been published.
Mr. Colin Potts: Yes.
The Chair: Paul Crête.
Mr. Paul Crête: Mr. Chairman, I would appreciate it if we
could peruse that document because this Committee has undertaken as
a priority to study this issue. I do not remember that document
ever being tabled. Perhaps my memory is failing me, but according
to the information that we have and the press releases that we have
received, the Minister has always held to the initial six-point
plan and we have not received any revised plan. If we could obtain
that document, either from the Department or from another source,
I believe it would be quite useful. In its report, the firm is
The Chair: As chair, I'll be glad to look into it.
My understanding is that it is on the website. It may
have been the report the minister brought with her. I
can contact Mr. Potts again to make absolutely sure
we're talking about the right thing. I'll follow up and
report at the next meeting on this version of February
6, 2000 or so. Is that okay?
Mr. Paul Crête: Agreed. Mr. Chairman, the first recommendation
is that this is a progress report, that it is a step in the right
direction, but that it does not deal with the underlying causes of
the problem. According to you, did the Department incorporate that
recommendation and did it take the necessary remedial action in
order to deal with the real underlying causes of the problem? For
my part, I have had no information to that effect.
Mr. Colin Potts: To the best of my
knowledge, the department has taken action to
incorporate, in the final version of the plan, the
recommendations Deloitte Touche made to
the department that they should look at the
underlying causes, along with other recommendations we
had and the advice and comments the Auditor
General's office had to give on the action plan,
the secretariat, and any others they may have
In terms of the specific mandate Deloitte Touche
was given, we were not asked to go beyond commenting on
the earlier draft. It would be natural then for the
department to take all of the advice received and
prepare a final action plan. I understand that is what
they've done. We have not, as part of our mandate,
examined that final action plan in the same detail as
the earlier draft. I therefore cannot say
anything further about that. It was not part of our
The Chair: Please ask only a very brief question.
Mr. Paul Crête: Yes, Mr. Chairman. Mr. Potts is saying that he
has not made any assessment of the final document. Could he comment
on this final report so that we may know whether the three main
comments that he made in his summary have been taken into account,
namely leadership, accountability and responsibility for the
The Chair: You may make a very short reply.
Mr. Colin Potts: Deloitte Touche do not have a
final report. The report you have in front of you is
our final report on an earlier version. As I have
said, the department consulted widely and took the
advice. From the information I have, I believe they
accepted the advice they were given from various
sources. They were certainly very receptive to the
comments and recommendations we made to the department.
If they've accepted this advice and incorporated it
into the final version of the plan, then I think you
have a good plan. But we have no detailed knowledge of
The Chair: Thank you very much.
Next is Bryon Wilfert, then Libby Davies, Larry
McCormick, Raymonde Folco, and then Maurice Vellacott,
Judy Sgro, and Lynn Myers.
Mr. Bryon Wilfert (Oak Ridges, Lib.): First of
all, on the document, Modernization of Comptrollership
in the Government of Canada, when
you look at this, you wouldn't normally consider it to
be a stimulating document that you'd want to stay up
late to read. However, I found it probably one of the
most interesting documents I've had the chance to
really go through. As I started to read it, I found it
to be quite—
The Chair: Does this reflect on your social life?
Mr. Bryon Wilfert: No, it doesn't reflect on my
social life. I don't have a social life these days.
Some hon. members: Oh, oh!
The Chair: That explains it.
Mr. Bryon Wilfert: One of the statements in here
was by the late J.R.M. Wilson, who said, “accounting,
unlike a science, has no rules that are” fundamental
truths. “Judgment is necessary at every step.”
Clearly, you spent a lot of time talking about
comptrollership and that fundamentally there needs to
be a change in the management culture.
The first question I would ask with regard to this
report—and obviously it has had its impact on the
whole HRDC issue—is I couldn't find in here, although it
was probably very late at night, when this was
Mr. Jean-Pierre Boisclair: The report was issued
in early November 1997.
Mr. Bryon Wilfert: Okay. What is the current
status, or the implementation, if any, of what I would
consider to be some sweeping suggestions in here, with
regard to the way government deals with finances, the
implementation of policies, and, in the end, making
sure there is clear accountability and transparency?
Mr. Jean-Pierre Boisclair: I can respond to that
question as an observer who is obviously
very interested to see what happened with our report.
In mid January 1998, Treasury Board ministers, through
the President of the Treasury Board, issued a press
release to the effect that they accepted the report and
its recommendations, and wanted to move forward, with a
sense of purpose, in implementing it. Since that
time—and I'm sure the officials from the Treasury
Board could respond to this a lot better than I—they
have recruited a number of departments to, in effect,
be lead horses
or vanguard departments in implementing
this whole approach to modern comptrollership that's
described in the report. That process is underway,
aided and abetted by the Treasury Board Secretariat.
Mr. Bryon Wilfert: Given the fact that this report
has now been in existence for a period of time, and
given the Deloitte and Touche analysis of the six-point
plan, of which one of the things, obviously, I'm
interested is in the follow-up... You know, Mr.
Potts, you've certainly made an indication that they
were on the right track, but taking the comments that
we see in this report and given the fact that this
should be, in my view, the nucleus for not only HRDC
but for pretty well every department... The report
talks about the fact that for government standards to
be accepted, deputies really have to have a handle on
what's going on in each of their departments, and given
all of the root causes we've talked about before at
HRDC, we understand why that clearly was not the case.
Through you, Mr. Chairman, is there a sense that there
is a marriage with the six-point plan and these
recommendations in terms of making sure that both are
fundamentally changing, that is, both the culture and
the application of how we are going to meet, on the one
hand, the demands of the grants and contributions with
clients, and on the other, the demands of proper
Mr. Colin Potts: I'll try to answer that, Mr.
Chairman. I believe there is a marriage of the two.
What the department is now trying to do, I believe, if
it gets to the underlying causes, if it looks at the
organization structure, the processes, the people
issues, all a part of what was included in the panel
report on modernizing comptrollership, which is a
report I also have read with great interest... Therefore,
if they can apply those principles to the
particular issue they have now with the grants and
contributions in making sure they have the right
organization structure, the right information
processes, etc., and the right control framework, then
I think we're on the right track.
The Chair: You have 90 seconds.
Mr. Bryon Wilfert: Again through you, Mr.
Chairman, to Mr. Potts, I guess, I always like to ask
this question because I always get different answers.
In terms of the size of the human resources
department—as you know, it was in fact a bringing
together of a number of departments—was part of the
problem, do you think, that it's not really the
manageability issue but that it's too large? Is it
simply that we can correct within the system, that
within the department there is the ability to do the
things we've just talked about, or should there be a
fundamental review as to whether or not the department
itself should be broken up in order to be more
I know you talk about agencies, Mr. Boisclair, and you
talk about whether or not that is in fact an
The Chair: A short reply, please.
Mr. Colin Potts: I don't believe the problems
indicate, Mr. Chairman, that the department is too
large and therefore should be broken up. I don't think
it's that situation at all. I believe the size is an
issue, but there are also a number of very large
corporations, etc., and other large departments. One
can't go by just the dollars alone or by the number of
the people: it's the nature of the responsibilities
they have to deliver to Canadians. In a department
with the right organization structure, with other
frameworks in place, I think it is manageable.
Mr. Bryon Wilfert: Thank you.
The Chair: Next are Libby Davies, Larry
McCormick, Raymonde Folco, Maurice Vellacott, Judy
Sgro, and Lynn Myers.
Ms. Libby Davies: Thank you, Chairperson.
First of all, I'd like to thank the witnesses for
coming here today to help us sort out what's going on
In response to an earlier question, Mr. Potts, you
were describing some of the differences in how the
private sector may respond to reports that have been
made about problems and management issues, compared to
the public sector. It seems to me that there are some
very key differences in terms of what drives the
private sector and what drives public decision-making.
Presumably in the private sector, market forces,
market demands, and, as you said, the bottom line,
drive that, whereas in government, and even in the NGO
community, what should drive decision-making is the
public good, the public interest.
Are there fair and equitable decisions in
terms of servicing the people of Canada?
The two things that have really concerned me and that
I'd like to ask all of the witnesses about are the
decision-making process itself and the impact of
cutbacks on human resources.
On the first question, clearly in the business of
government the political agenda is a factor, but I
think one of the issues for this committee, and
particularly for the opposition members, has been how
much the political objectives and the political agenda
influenced the decision-making and rules that existed
or didn't exist or rules that were bent. The reason
it's important is that at the end of the day we are in
the business of providing service to different
communities and to Canadians. There has to be a sense
of equitability about that, a sense that favouritism
wasn't the order of the day. That's one thing that
The second issue, which has been raised a number of
times, but, I don't know, doesn't seem to get much attention,
is the whole issue of cutbacks in human resources
within the department. We know that this department
has had a loss of about 5,000 people. We certainly
heard from the unions what the impact of that has been
in terms of the pressure that it puts front-line
service workers under. It puts them in a real pressure
cooker when there are increasing demands to get through
paperwork, to fulfil obligations, and they don't have
the resources to cope.
So here's the question I have. Do you feel that the
six-point plan, the so-called action plan, will
actually address both of those issues, which I think
are very systemic to the problems we are dealing
with at HRDC? Are they encompassed within the action
plan, and will those issues be addressed to your
I'd certainly invite both organizations to comment.
Mr. Colin Potts: Mr. Chairman, if I could respond
to that, I believe the action plan does
respond to those issues, yes. But let me first say that
you're right, first off, when you say the
environment is different in the private and public
In the public sector, there's that balancing of the
service delivery with the available resources a
department has to deliver the services to the Canadian
public versus the control framework we want them
to work within. That's all a part of trying to get the
right balance. As for the political agenda, yes, it's
a different world, again, and that does perhaps have
some influence. I do not know whether there was
influence at HRDC; it's not a part of our mandate.
But the bottom line is yes, I think that, again, the
six-point plan is going to address equipping and
supporting the staff. I heard the same rationale for
some of the problems when we were at HRDC in the
conduct of our work, that the staff reduction was an
issue, that there was loss of knowledge, that training
had to be improved. They're all issues that need to be
addressed as the department moves forward to correct
Ms. Libby Davies: If I could follow up, your
responses are that you feel both issues will be
addressed by the six-point plan. In terms of the
political environment and how decisions are made, how,
particularly, do you think the six-point plan will be
addressing that? I've had some difficulty in
determining how the six-point plan, which deals more
with management issues, is actually going to get at the
question of the decision-making process and what rules
or guidelines are applied to see that certain projects
are approved or not. From your point of view of having
had some comment on the original draft, where do you
feel that this will be addressed?
Mr. Colin Potts: Mr. Chairman, in the course of
our work we did not specifically examine that
My comment that it was an issue... I agree with you
that in any government organization, in the nature of
government, the political realities are sometimes an
influence. I don't believe that any plan would
necessarily be able to address those. I believe, if I
recall correctly, that the Auditor General did have a
comment in terms of the role of government and the role
of members. I think that was a very important comment
that he made and should be kept in mind in terms of
applying that principle to the HRDC situation.
Ms. Libby Davies: Thank you, Mr. Chairman.
Do you feel that question should be addressed? Is
that a matter of important management and public
interest consideration in terms of how decisions are
made by government and whether they're being
influenced by political considerations?
Mr. Colin Potts: Mr. Chairman, I'm not sure I'm in
a position or equipped to answer that particular
question as to whether or not it should be addressed. I
believe it's a reality of government operations.
The Chair: Libby, you have just less than a
Ms. Libby Davies: I would just invite Mr.
Boisclair to comment, if he would like to.
Mr. Jean-Pierre Boisclair: I'm not sure it's a
question that “has” to be addressed in an action
plan, but it's a question that has to be addressed in
the control, stewardship, and governance system. The
relationship between the governing body and the
administrators, the public servants, in decision-making
is an important one that does need to be addressed. And
if there is going to be a close relationship between
the two, the implications of that relationship need to
be recognized up front, so that we don't appear naively
surprised after the fact.
The Chair: Okay.
Libby, thank you very much.
I understand there's been a voluntary change here, so
Lynn Myers is going to take Larry McCormick's place,
and he's going to be very brief.
Mr. Lynn Myers (Waterloo—Wellington, Lib.): Thank
you very much, Mr. Chairman.
Mr. Potts, I want to go to HRDC's action plan,
specifically to ask whether or not you have had a
chance to review that—and I'm assuming you did—and to
see your points on this, whether or not you thought
there were gaps in that plan and concerns and problems
associated with it. I wonder if you could respond to
Mr. Colin Potts: Mr. Chairman, the action plan
that we reviewed is the one that was attached to our
report. It's dated January 27. In our view, that
particular action plan, which was an early draft, did
have some gaps, gaps we identified in our report.
Particularly, we felt it did not address the underlying
issues. It did not necessarily set time lines and
responsibility for actions, etc. Read our report.
We did address it and advise the department that we
felt the action plan should be changed to reflect this.
Remember, this was an action plan dated January 27. It
was an early draft, and there have been subsequent to
our report... my understanding is the department has
taken our advice and the advice of others and revised
the action plan.
Mr. Lynn Myers: In terms of long-term issues, are
you satisfied that they have been addressed in that
Mr. Colin Potts: Mr. Chairman, the member, I
believe, is addressing the final action plan that would
have been dated February 6, which I do not have with
me. We did not perform any review or analysis of that
action plan, but I have had some discussion with
representatives from the department who have assured
me, who have told me, they valued our report, our advice,
and have taken action and incorporated our
recommendations in the final plan.
The Chair: Lynn Myers, quite briefly, is that
Mr. Lynn Myers: Yes. Thank you.
The Chair: Raymonde Folco, and then Maurice
Ms. Raymonde Folco (Laval West, Lib.): Am I next?
To the witnesses, I would like to come back to a subject that
we discussed briefly when you answered the question put by my
colleague Mr. Wilfert, regarding the size of that Department. When
you were asked whether the Department was too large, you answered
that you did not think it was.
Given the budgetary cuts that were made in the past 10 years
and the problems that resulted from them, each employee of the
Department has had to take up several responsibilities rather than
one. My question deals precisely with the workload and
responsibilities of the employees.
According to your analysis, what is the optimal period of time
that a program official should spend on the file of a given
I am trying to ascertain not the macro-profile, but rather the
micro-profile of the functioning of the organization. For example,
does the turnaround between regional directors help attain the
objective of an adequate management in an organization? In other
words, what were the impacts of the major cuts that have been made
in that Department as well as in other departments of the Canadian
government, the impacts on governance within that Department?
My question is for Mr. Potts, Ms. Mingie or Mr. Boisclair.
Mr. Colin Potts: The work we did at
HRDC did not get to the micro level, so unfortunately,
Mr. Chairman, and member, I am not in a position to
provide specific answers to your question.
But I would again direct the committee to our report.
When we talk about underlying causes, these are some of
the issues that need to be addressed, and they can be
addressed at the micro level. People can be brought in
to look at time and motion studies, etc. There are all
sorts of tools available for the department to retain
in order to address those issues. We did not address
them, but we tried to point the department in that
The Chair: Ms. Folco.
Ms. Raymonde Folco: Mr. Boisclair, don't you wish to answer
Mr. Jean-Pierre Boisclair: Mr. Chairman, I do not have any
personal knowledge of the operations of the Department, but when
you have to do more with less, on the longer run, it becomes a
problem that shows up in the control system. That is inevitable.
For me, it is a matter of knowing what level of risk you are
prepared to accept in a situation where you don't have all the
necessary resources to deliver a program and ensure a hierarchical
control. That is the question we must ask. It is a matter of trying
to determine what makes sense in such a situation. But in the end,
when you have to do more with less, it becomes an unsustainable
Ms. Raymonde Folco: Mr. Chairman, I think that my question has
been answered in part. Here is the true meaning of my question. We
are all concerned about the problems that have plagued the
Department and the way in which the Minister is trying to solve
these problems. I am more and more convinced that part of the
problems are not attributable to mistakes, although some mistakes
have certainly been made. I believe that in part, the number of
mistakes or even the scope of mistakes are first and foremost
attributable to the number of persons who are sharing the workload
and secondly to the lack of specialization of these people, because
of the staff reductions in that Department.
So I would say that the macro-level study is certainly
important, but I would also wish that we would examine the
situation and ask questions at the micro-level in order to see,
perhaps through time and motion studies, as Mr. Potts has
suggested, but in a less specific fashion, up to what point radical
changes in that Department prevented staff members from having the
necessary knowledge or the required time to adequately check on the
files. The consequence of this was that there were major errors in
the processing of these files. Thank you.
The Chair: Maurice Vellacott.
I'm picking up the pace now, okay? So Judy Sgro,
Larry McCormick, and Paul Crête.
Mr. Maurice Vellacott: My question revolves around
the whole issue of... we've had some talk about getting
quick response on things, and then there's the
juxtaposition of enforcing financial guidelines.
In the private sector... and I'm aware that no doubt
you do audits on the non-profits. When we talk about
the private sector, it might not be a bottom-line
business; there might be non-profit charitable groups
as well. Is that correct? I would assume that you do
audits on them.
Mr. Colin Potts: That's correct.
Mr. Maurice Vellacott: What happens or what do you
advise when it appears there's a bit of tension
between the two—that goal of getting a quick response,
a timely response, and the matter of having financial
guidelines? If push comes to shove, what do you tell
them to do? Do you just say, well, shovel the money out
the door anyhow and wink at the standards? Or do you
back off in terms of the dollars that are doled out?
How would you approach it, if you audit groups like
that and advise them?
I guess Mr. Boisclair would also want to respond.
Mr. Colin Potts: Mr. Chairman—
Mr. Maurice Vellacott: Do you understand what I'm
saying in terms of tension between the two here?
Mr. Colin Potts: I think I understand the member,
Mr. Chairman, in terms of the tension. There always
will be tension in not-for-profit organizations between
the desire for a level of service delivery to members,
vis-à-vis the resources that the particular
organization has to deal with, and with staffing
We work with our clients in that area by trying to
work with them to find what is an acceptable balance.
What is the extent of risk they are prepared to take by
relaxing perhaps certain controls in order to ensure a
certain level of service? That balance changes, and it
changes by organization and the nature of the
organization. There is no one answer to that
particular question. It's a matter of an evaluation by
the organization that they're prepared to accept this
amount of risk in order to meet this demand over here
by members. Another organization may say no, I can't
afford to take that amount of risk. So they perhaps
have to cut back on a service. There's a balance here
Mr. Maurice Vellacott: Are there groups that are
willing to take 85% of files being unaudited—the types
of things we found in this fairly scathing audit here?
Would you find that non-profit private sector groups
would be able to say, I'm prepared to take that amount
of risk—the kinds of things in terms of lack of audit,
lack of tracking, and so on that would have been here?
Mr. Colin Potts: Having 85% of files not subject
to audit sounds a little excessive, but again, what
other control mechanisms are in place? What is the
value of the contributions in some of these files in
terms of the total risk picture? It cannot be
isolated. You have to look at it in a broader context.
All of the issues surrounding the—
The Chair: I'm going to keep moving, if I might,
It's Judy Sgro, please, then Paul Crête.
Mr. Maurice Vellacott: Mr. Boisclair hasn't had a
chance to respond.
The Chair: I'm sorry. Excuse me, Mr. Boisclair.
Please go ahead.
Mr. Jean-Pierre Boisclair: My answer is somewhat
along the line of what Mr. Potts said, and that is that
I think you find more rigorous control being exercised
with respect to larger-risk items. And if you define
risk just in monetary terms, then the larger
transactions get the lion's share of the attention and
there's a willingness to understand that perhaps some
of the smaller things get less rigorous treatment.
Now, whether that means there is absolutely no control
over that, I don't think it goes down to that level.
But there's a hierarchy of control depending upon the
The Chair: Mr. Boisclair, I do apologize for
that. I didn't notice.
It's Judy Sgro, Paul Crête, Libby Davies, then the
Ms. Judy Sgro (York West, Lib.): Mr. Potts,
there's no comment in your report as far as structure
is concerned. You talk about clearly designing
overall leadership and responsibility for
implementation and so on. Given the fact that there
have been a lot of layoffs throughout the department,
is it your thought that our middle management levels
there are... how tight should they be in order to ensure
we're following through with exactly what the
government's intentions are, to put a tight regime in
place to ensure the system is being monitored properly?
Is it a level of management that we cut out that
allowed this to happen?
Mr. Colin Potts: We did not study the structure of
the department, Mr. Chairman, so I'm not in a position
to say if it's a level of management that's been cut
out that shouldn't have been, or what the cause was.
What we did in our report—again, I'll go back to
this—is direct the department to investigate and
examine these types of issues in order to determine the
problem and take the corrective action. I'm not in a
position, based on the work we did, to comment
specifically in answering that particular question.
Ms. Judy Sgro: I'm sure you've done many audits
and reviews, and I was very pleased with what I read in
here about the direction and the assistance you've
offered us as we become a government that wants to be
more accountable and make changes throughout the
I just want to make sure, on the ability to monitor
these things and the way the committee itself wants to
be involved on a fairly regular basis, if the reporting
structure is such that on a quarterly basis reports
come through the committee to give us a report on how
HRDC is doing with the administration of our grants and
so on, for example, is that another level that would
help us all to ensure accountability?
Mr. Colin Potts: Yes, if the committee receives
reports on a quarterly or six-month basis—whatever the
committee decides—as part of its monitoring
activities, if that's appropriate, that's another level
of monitoring that may be desirable.
The Chair: Judy.
Ms. Judy Sgro: When we talk about government's
commitment to change, modern comptrollership and all
of the things that happen, is it unusual to have some
of the concerns that have been raised in your review,
or is it just part of when change is happening that
these things happen and the government is on
the right track, as far as putting the proper controls
Since 1977, apparently, we've been having these
problems, so it's not something that's just come up in
the last five years. I'm looking for assurances that
we're all heading on the right track, we're going to
put the right controls in place, and in 2020 there
won't be another bunch of parliamentarians still trying
to figure out how to get some controls in place that
will keep a tighter rein on things.
Mr. Colin Potts: I certainly believe the steps
being taken by the department in the action plan are
moving in the right direction. If they marry that with
the modern comptrollership initiative and the
principles of modern comptrollership, I believe we'll
be on the right track.
The Chair: Mr. McCormick.
Mr. Larry McCormick: Thank you very much, Mr.
Chair, and thank you to each of our witnesses for being
here. I have just a couple of questions.
I'm always concerned, of course, about the faults in
the system, and the fact that we all pay taxes and want to
get the most mileage we can for our money. But I'm
also concerned, in my small role as rural caucus chair
for the government, that these programs have been held
up now across this country.
Do you think that with the implementation of the
six-point action plan these programs can now proceed?
Too many things are being held up now and sitting there
for all the reasons, yet there is a great need for
these constructive programs across the country.
Mr. Colin Potts: Again, that's a difficult
question for me to answer, based on the extent of our
involvement with the department in helping them prepare
an action plan. I would comment that business has to
continue, and I understand the department has acted
quite quickly in terms of correcting some of the
short-term issues, so they can get back to business as
usual. I think it can continue while they address
Mr. Larry McCormick: Thank you, Mr. Potts.
This circle of control is certainly very interesting.
Circles go around in circles, yet we can include
people; people don't have to be excluded—ministers,
deputy ministers, top bureaucrats, all bureaucrats
perhaps, and parliamentarians. It hasn't happened very
often, of course, with this session, but sometimes we
hear about backbenchers and members of Parliament being
frustrated because they aren't part of what's
happening. I see some interesting challenges and
opportunities here, with this concept, for us all to be
I know the previous questioner asked about whether our
committee would make a difference for the long term.
But my overall question is whether there's any more
you'd like to add on this circle of control, whether
this should allow our committee to be more involved,
and how we could ensure that, Jean-Pierre.
Mr. Jean-Pierre Boisclair: To arrive at the kind
of control this committee and parliamentarians would
probably feel comfortable with requires them to be
involved. I just don't think you're going to get there
if you're not involved, ministers aren't involved, and
senior people aren't involved at every level. That's
been part of the problem in the past. We've defined it
too narrowly and just hived it off to some people on
the side and said, “Well, you're specialists, deal
with it”. That's not the way it works any more, and
the government can't operate the way it has to operate
and pursue that kind of an approach.
This is a governing body and this is a governance
issue, and my feeling is that if the governing body
members can provide understanding at a high level about
the key issues that they feel they need to be satisfied
on when it comes to control, the system will start to
respond to that. It's almost the absence of
parliamentarians and others in the system talking about
this that creates the problem. Everybody is guessing
at what might or might not be acceptable to the next
person, the conversation doesn't take place, and
everybody is disappointed at the end of the day.
I guess I'm just reinforcing what you said. I think
there's an opportunity for members of Parliament, not
to try to become specialists in control and
comptrollership, but to develop their knowledge of the
business and these issues in a way that they can
provide the kind of overall leadership and leave the
signal inside the system as to what they expect and
really think is reasonable and not reasonable.
The Chair: Larry, do you have a comment, perhaps?
Mr. Larry McCormick: Mr. Chair, under your
leadership I've heard it said, and believe, we control
the future business of this committee—the people
sitting around this table. I'm sure we will ensure we
are there to be part of this process to help solve the
situation. Thank you very much.
The Chair: Next is Paul Crête, then Libby Davies,
and two short interventions from Maurice Vellacott and
Bryon Wilfert. I will try to wind it up, colleagues.
Mr. Paul Crête: I am directing my question to Mr. Potts. One
can find a summary of the action plan on the Internet site. I will
quote to you the first three statements on point 5, entitled:
"Receiving the best possible advice". Here it is:
We have presented the plan to the Treasury Board's Advisory Group
on standards relative to comptrollership on February 3rd and we
have taken its advice into account.
We have asked the advice of the Auditor General on February 1st and
we have taken into account his suggestions for the plan.
We gave a short-term contract to Deloitte & Touche to obtain their
advice on the plan...
In the third statement, it says that a short-term contract was
awarded in order to obtain advice on the plan. Do you not see that
the Department has taken into account the Treasury Board's
recommendations and those of the Auditor General, but that in your
case, they have decided not to take them into account? At least, it
doesn't say so in the plan. Is this not sending the message that
your recommendations on the impacts and long-term modifications
have not been accepted by the Department?
Mr. Colin Potts: I can't respond to the question
of what's on the website of the department. I have not
looked at their website. My understanding is that they
have incorporated our advice.
Mr. Paul Crête: I do not question the honesty of the witness,
but I cannot help noticing that currently, at the Department, they
are saying that the advice of both the Treasury Board and the
Auditor General have been followed, while in the case of your firm,
they are saying that a short-term contract has been awarded to you
in order to obtain your advice on the plan, but there is no second
part to the sentence indicating that your suggestions have been
followed. This is an official document from the Department. Does
that not appear to you as though the Department has decided not to
follow your recommendations regarding the important measures that
are to be taken and decisions that must be made in the long term?
Mr. Colin Potts: Again, with all due respect to
the member, I believe this question should be addressed
to the department, in terms of their website and when
it was updated. I believe the member referred to
February 1 on the website. Our report was issued on
February 2. Certainly I'm aware they were consulting
with the Office of the Auditor General and the Treasury
Board Secretariat. All of that advice came together
within the space of two to four days. My
understanding, from the departmental officials
verbally, is they have accepted our advice, with the
advice of other groups, and have incorporated all of
the advice into the final action plan.
The Chair: Very brief comment, Paul.
Mr. Paul Crête: At Treasury Board, the consultation was made
on February 3. The advice of the Auditor General has been obtained
on February 1. These are the same dates as for your own firm. If
there was a reason to add a sentence saying that your suggestions
had been taken into account, according to me, the Department should
have put it in there, but I agree with you that it is up to the
government and the Minister to answer that question.
The Chair: As chair, I'll try to follow this
through, the website matter and these other matters, so
that we have some information. Colin, we might in
fact consult you to make sure we have the dates
correct. I'll see that by Thursday we have it as
clear as we possibly can.
Next is Libby Davies, then Maurice Vellacott very
and then Bryon Wilfert even more briefly.
Ms. Libby Davies: Thank you, Chairperson.
I certainly agree that it's important we clear
that point up, not only for the sake of the
committee, but also to inform the witness as to whether
or not their advice actually was taken up in the
revised action plan.
The Chair: We will have a circle of consultation
Ms. Libby Davies: Yes, we'll have a nice big
circle, one big happy family.
If you don't mind, Mr. Chair, I'd like to come back to
this issue of the decision-making process. It
really bothers me that there's sort of a reluctance to
get into that part of the discussion and debate, and I
find it a little bit frustrating that there's a sort of
reluctance to do that.
Some of us around the table today come from a
municipal background, which is also a very political
environment where political decisions are made, but it's
a much more transparent environment. Obviously, it's a
much smaller environment. You have members of council
representing sometimes different viewpoints and
different political groups, but the sense of
transparent decision-making is much more evident.
I know that certainly Deloitte Touche has done a lot
of work with municipalities, so I know you're very
familiar with that environment.
The question I'm trying to get at here, on which I
would really like to have some comment, because you're
here as well to give the committee input into its
future work, is how this issue of political decision-making
should be approached. I'm not saying it's
not right that it exists. We are in a political
environment. It seems to me that the issue is
transparency and whether or not there's a sense of
consistency and equity about decisions that are made.
We have a lot of information that shows us that is not
the case. I think it's a very key issue to get at.
I'm really sort of pushing you on this to get your
comments about how that question should be approached
through the action plan or other means so that the
Canadian public can be assured that public expenditures
are being dealt with fairly and openly and that it's
not just simply a political exercise. Could you
comment on that further please, Mr. Potts.
Mr. Colin Potts: Mr. Chairman, I'll try to comment
on that. The member referred to the environment within
a municipality, which from my experience is probably
different from the federal level, size being an obvious
issue there in terms of the involvement of councillors
around the council table, vis-à-vis Parliament and all
its members in the House of Commons and on the
committees. So the structures are quite different.
Therefore, it's very difficult to compare them, and I'm
not sure that one should.
I think, as Mr. Boisclair indicated, this is an
issue for debate but perhaps not a part of the action
plan. What should be debated at the political level is
what is the extent to which members wish to be
involved, again remembering the advice of the Auditor
General in terms of the role of government to manage
and the role of members of Parliament. You have to get
that debate on the table and keep that in mind.
Managers have to be able to manage and make decisions,
but they should be accountable.
As far as accountability reports are concerned,
that's when the
members can, I
believe, receive the information so that they can carry
out their responsibility in ensuring that due diligence
has been applied by the government.
The Chair: Is that okay?
Ms. Libby Davies: Yes.
The Chair: Maurice, would you be very brief,
please? Then we'll turn to Bryon Wilfert, then to the chair.
Mr. Maurice Vellacott: There has been a comment
made through the course of the committee here—and
again I'd say that I would feel that for the most part it's
members on the government side—that seems to imply
that the fault of this lies with employees down the
line, entry-level employees. My question here is
simple. If we just train no end the employees at
various levels but there's not a will in terms of the
senior level people
and their political
masters to make some changes, do we really have any
effective changes occurring?
It's a fairly basic
question. You can do video training, Internet training,
training no end, but how crucial is that? You make a
comment with regard to that in your report here, I see.
It's about the senior management sponsorship. So
just fill us in, in terms of all this
training, not to say it's unimportant, but where's the
Mr. Colin Potts: Mr. Chairman, I'm not sure one
can say one is necessarily bigger than the other. All
of these points have to be taken into consideration and
have to be applied.
Training is important. The staff on the front line
have to be trained so that they will know the programs
and rules with which they are working.
But you do need senior management commitment to
change, and we've identified that in our report. We
said that the success of the action plan is contingent
upon senior management sponsorship as well as
acceptance and commitment from all parties involved.
There's a significant change, therefore, being
suggested here that has to take place. Everybody has
to work in that direction.
Mr. Maurice Vellacott: It involves a change
in will and mindset to follow through—
Mr. Colin Potts: I think a change in will and
mindset is part of it, as well as the workload
issues, training, delegation of responsibilities, etc.
There's quite a wide spectrum of issues that need to be
addressed to correct the problem.
The Chair: Bryon Wilfert.
Mr. Bryon Wilfert: Mr. Chairman, again going back
to this report, some outstanding
comments are made in it. I found the one made
by a former departmental comptroller: “We are still
unwilling to report bad news.” That's interesting.
“In essence, every transaction, complex or simple, is a
financial transaction with resource implications.”
It would seem in reading this report that the key
element is the role of the financial officer, the
comptroller, and the advice and the
ability of the deputy minister to
receive that advice.
We heard earlier from the Association of Public
Service Financial Administrators that not
necessarily the right people are in place, because they
may not have either the professional or the educational
background to administer certain programs. Certainly
the role of the internal audit, I think, reflected much
of that. There's quite a bit of information in here
talking about the importance of it.
But going back to the fact that this report was
released back in the fall of 1997, I wish people had
taken the time to not only read it, but also
to implement it. What I think we need to do, Mr.
Chairman, is to make sure that we follow up on this
report and find out what the status is across all
I would address this question to any of the witnesses
here: in terms of the role of the financial
comptroller or financial officer, is it fair to say
that they are the linchpin with the deputy minister?
In terms of that relationship, how do you see it
evolving in terms of making sure that the kind of
things we have been going through can be hopefully
Mr. Jean-Pierre Boisclair: Mr. Chairman, I think
the member has touched on a very important point.
Part of the problem, quite frankly, that's existed is
that historically financial people have been viewed as
coming to the table with a very narrow set of
understandings that fit into an overall decision-making
process. So I think they've had a hard time making
themselves heard in that process.
What our report was talking about was the need to grow
financial people in the government, to give them a much
better understanding of operations, to make them
management mature, and to expose them, and at the very
same time to take people in the management cadres and
give them a little bit more so that they understand how
to use that financial product in a controlled context.
Then the two have a basis for talking to each other in
a meaningful way at the decision-making table. I think
that's an absolutely critical linchpin.
So it's not just one or the other; it's both. We
have to find that way of cross-fertilizing them.
They've been pigeon-holed for a very long time
now, and we need to pull them out of there.
It won't be easy, because it's
almost a generational thing at this point in time. This
is a very scary business, to take people out of a zone
in which they've been comfortable in a narrow sense and
then throw them into a much broader kind of
consideration. So this is one that is going to require a
lot of nurturing, a lot of care, and a lot of due
diligence to push ahead, yet I think it's absolutely
The Chair: Thanks, Bryon.
I'd like to ask a very brief question. I raised
before the point about a private corporation giving
$10,000 to a children's club and the sort of procedures
they would have in place for that. I wonder if I could
take that a little bit further.
Here's a corporation that
decides to give $10,000 to each of 100 children's clubs
across the country. In my mind, the way they do
that—and I'd like you to respond to this sort of as
auditors—is that somebody in
the organization looks at children's clubs and decides
that there is a need in the area of children's clubs.
They then come up with a large sum of money, which,
divided by 100, comes out to $10,000 each.
That corporation has branches in various places. So
then it goes down the system to some front-line person
and says, look, we're thinking of giving $10,000 to the
children's club in your community; what do you think of
the children's club? The person then reports back and
says, as far as I know, the children's club is fairly
good and the work they do is very good, they've
been in operation for ten years and are reasonable
citizens of the community, and so on. At that point,
somebody releases those moneys and the $10,000 is
Is it not true that this would really be the end of
the auditing process, and that if five or ten of those
clubs close the doors the day after—by the way, with no
criminal intent; they just close—then the
corporation would say, okay, we looked at this as
carefully as we could, we trusted our people on the
spot and we flowed those moneys, and that's the end of
If there was a criminal case, obviously there
would be a prosecution, but apart from that, once the
corporation has gone through those processes, it
releases those moneys and that's the end of it.
Is that a reasonable interpretation?
Mr. Colin Potts: That's correct, Mr. Chair. Given
the scenario you have just painted, that would be the
end of it.
The Chair: Yes, and the auditing stops. At some
point there has to be some trust in the judgment of the
person who finally delivers the $10,000, and there has
to be trust in the organization, which might prove to
be ill-founded in some cases, but otherwise the money
is out there.
For that corporation, it almost isn't worth their
while to go and look for $5,000 out of the $10,000 in
this place, and so on. So there has to be some
flexibility at that level.
Mr. Colin Potts: Yes.
The Chair: Okay, thank you very much.
Colleagues, on your behalf, I would like to thank our
witnesses today, Colin Potts and Susan Mingie of
Susan, we thank you in particular for
your contributions. Contributions like yours are
I'd like to thank Jean-Pierre Boisclair of the
Canadian Comprehensive Auditing Foundation.
Jean-Pierre, we thank you very much.
Colleagues, I'm going to adjourn the meeting. We meet
again at this same time on Thursday, when our witnesses
will be representative of the Maytree Foundation,
Private Foundations, and of the Natural Sciences and
Engineering Research Council of Canada.
We have one question. Libby Davies.
Ms. Libby Davies: Before you adjourn, could you
tell me what happens to these notices of motion that
are still remaining?
The Chair: I would be glad to come to them again,
but you will notice that yours was mentioned in the
budget that we just passed.
Ms. Libby Davies: Yes.
The Chair: So is that reasonable?
Ms. Libby Davies: I did notice that.
The Chair: Thank you. We can bring them up on
Thursday if you wish.
Mr. Maurice Vellacott: Which one was dealt
with, just the budget approval?
The Chair: Just the budget approval. That's all
we dealt with. It's a question of when we get them.
We're going to discuss the witnesses for the
An hon. member: I'm not going to be here.
The Chair: I'm sorry about that.
The meeting is adjourned.