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GOVERNMENT RESPONSE TO THE TENTH REPORT OF THE STANDING COMMITTEE ON PUBLIC ACCOUNTS: PUBLIC ACCOUNTS OF CANADA 2008

RECOMMENDATION 1 – Comprehensive Treasury Board policy on management of fees

The Treasury Board Secretariat develop and present to the Treasury Board a comprehensive policy on the management of fees; and that the Secretariat report progress on this initiative to the Public Accounts Committee by 30 September 2009.

Effective user fee management encompasses a range of component practices including costing, stakeholder consultation, fee level analysis, the setting of service standard, service delivery, and reporting. The User Fees Act contains requirements and consequences with respect to these practices but pertains primarily to new fees or fees that are increased.

In March 2008, the Treasury Board Secretariat released the Guide to Costing and continues to work with departments to promote its use in user fee and other financial management settings.

In May 2008, the Auditor General recommended that additional guidance could support departmental user fee practices in the areas of calculating the costs of user fee activities and in understanding the range of factors to be considered in establishing the level of a charge.

In May 2009, the Treasury Board Secretariat released the Guide to Establishing the Level of a Cost-Based User Fee or Regulatory Charge that provides an approach and key considerations to assist departments and agencies in the area of fee level analysis.

The Government agrees with the recommendation of the Committee that a comprehensive Treasury Board policy could augment the recently released guides and provide additional consistency, oversight and direction in terms of user fee management practices for all user fees.

Therefore, by April 2010, an examination of the available guidance and policies relating to the practices supporting user fee management will be completed. The examination period will include an assessment of measures for improving oversight and transparency of fees set through contractual arrangement. The examination period will allow for input from key departments, agencies and stakeholders to be gathered and for the user fee management frameworks of other jurisdictions to be reviewed. Directly following the examination period the development of a comprehensive user fee management policy will commence. This policy will seek to clarify responsibilities and establish mandatory requirements in such areas as service standards, consultation with stakeholders, fee level analysis, the regular review of these practices, and financial and non-financial reporting.

RECOMMENDATION 2 – Comprehensive user fee reporting

The Treasury Board amend the Policy on Service Standards for External Fees to require departments and agencies to publicly report annually on the full costs, revenues, service standards, and performance results for all external fees; and that departments and agencies be required to regularly carry out and report on public consultations with those affected by fees.

The Government agrees with the Committee recommendation that mandatory reporting requirements related to external fees should be contained in Treasury Board policy and should cover a full complement of financial and non-financial information.

As described in the Government Response to Recommendation 1, the development of comprehensive policy on user fee management will be initiated in 2010‑11. It is anticipated that this new comprehensive policy will contain annual public reporting requirements for all fees covering such elements as full costs, revenues, service standards, performance results and consultation. In this way, the new comprehensive policy will incorporate and enhance the reporting provisions of the 2004 Policy on Service Standards for External Fees.

RECOMMENDATION 3 – Fee setting guidance

The Treasury Board Secretariat clarify the method of comparing fee revenues to associated costs when updating its guidance on factors to consider in determining the amount of a fee; and that the Secretariat report progress on this initiative to the Public Accounts Committee by 30 September 2009.

The Government agrees with this recommendation. In May of 2009, the Guide to Establishing the Level of a Cost-based User Fee or Regulatory Charge was released. The Guide provides departments and agencies with a process and main factors to consider when establishing an appropriate fee level. 

The Guide to Establishing the Level of a Cost-based User Fee or Regulatory Charge identifies full cost calculation as a fundamental input and recommends use of the Guide to Costing in every fee setting exercise. The Guide to Establishing the Level of a Cost-based User Fee or Regulatory Charge describes how cost-based fees should generally respect a level represented by the estimated full cost of the associated activities. The Guide also describes how the analysis of such factors as the mix of public and private benefit objectives and the impact of fees on stakeholders should also be considered in the fee level decision. The Guide recommends that departments and agencies review costs, revenues and the other fee setting factors on a regular basis.

RECOMMENDATION 4 – Calculation of costs

The Comptroller General work with departments and agencies to ensure that they are accurately calculating their costs associated with fees; and that the Comptroller General report progress on this initiative to the Public Accounts Committee by 30 September 2009.

The Government agrees with the recommendation and the Office of the Comptroller General (OCG) works regularly with departments and agencies to promote sound costing practices. Over the past year, the OCG has established a series of interdepartmental working groups to advance the costing capabilities in all departments and agencies. The lessons learned from those working groups have been shared with all departments and agencies and posted on the OCG website. One of the ongoing working groups is addressing the concerns of the Auditor General and the Committee by assisting departments and agencies to strengthen their costing practices in support of their user fees.  

The Guide to Costing was published in March 2008. Prior to its publication, the Auditor General reviewed the Guide and cited it as a best practice in a May 2008 audit report.  The Guide was released to all departments and agencies and is available on the Treasury Board Secretariat website. The Guide to Costing is based on seven costing principles and a consistent seven-step approach for all costing exercises. 

Deputy Heads are accountable for ensuring the accuracy of their calculated costs. The OCG will continue to work with departments and agencies by providing guidance and advancing strong costing practices through the use of the Guide to Costing.  This will enable departments and agencies to ensure that their costs associated with user fees are accurately calculated.

RECOMMENDATION 5 – Compilation of fees set by contract

The Treasury Board Secretariat provide a list to the Public Accounts Committee by 30 September 2009 of all the fees that are set by contract.

The Government agrees and will provide the Public Accounts Committee with a list of fees set by contract.

Current policies and guidelines do not contain provisions for the specific reporting of fees set by contract. The Government has initiated a plan to gather information on fees set by contract from individual departments and agencies. The Government will provide a report including a list of fees set by contract to the Committee by December 31, 2009.

RECOMMENDATION 6 – Reporting requirements for fees set by contract

The Treasury Board Secretariat clarify the review and reporting requirements for fees set by contract by 30 September 2009.

Fees set under contract are not subject to the User Fees Act or the Policy on Service Standards for External Fees. In effect, the mandatory requirements of these two frameworks, including review and reporting, do not apply when federal departments and agencies are establishing a new fee under a contractual arrangement for the provision of an external service to specific users.  

The Committee also raised concerns over the lack of information being reported on fees set by contract and over the absence of mandatory requirements to review fees set by contract.

The development of the new policy will include within its scope, practices and reporting related to fees set by contract.

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