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Section III—Supplementary Information

Financial statements

Statement of Management Responsibility
Including Internal Control Over Financial Reporting

Management of the Office of the Auditor General of Canada is responsible for the preparation of the accompanying financial statements for the year ended 31 March 2011 and for all information contained in these statements. These financial statements have been prepared by management in accordance with Canadian generally accepted accounting principles for the public sector.

Management is responsible for the integrity and objectivity of the information in these financial statements. Some of the information in the financial statements is based on management’s best estimates and judgment, and gives due consideration to materiality. To fulfill its accounting and reporting responsibilities, management maintains a set of accounts that provides a centralized record of the Office’s financial transactions. Financial information submitted in the preparation of the Public Accounts of Canada, and included in the Office’s Departmental Performance Report, is consistent with these audited financial statements.

Management is also responsible for maintaining an effective system of internal control over financial reporting, which is designed to provide reasonable assurance that financial information is reliable; that assets are safeguarded; and that transactions are properly authorized and recorded in accordance with the Financial Administration Act and other applicable legislation, regulations, authorities and policies.

Management seeks to ensure the objectivity and integrity of data in its financial statements through the careful selection, training, and development of qualified staff; through organizational arrangements that provide appropriate divisions of responsibility; through communications aimed at ensuring that regulations, policies, standards, and managerial authorities are understood throughout the Office; and through an annual assessment of the effectiveness of the system of internal control over financial reporting.

The system of internal control over financial reporting is designed to mitigate risks to a reasonable level and may not prevent or detect misstatements. It is based on an on-going process designed to identify and prioritize key risks, to assess effectiveness of associated key controls, and to make any necessary adjustments.

The effectiveness and adequacy of the Office’s system of internal control is reviewed by the work of internal audit staff, who conduct periodic audits of different areas of the Office’s operations. As a basis for recommending approval of the financial statements to the Executive Committee, the Office’s Audit Committee reviews management’s arrangements for internal controls and the accounting policies employed by the Office for financial reporting purposes. The Audit Committee also meets independently with the Office’s internal and external auditors to consider the results of their work.

The Policy on Internal Control requires an assessment of the design effectiveness and operating effectiveness of internal control over financial reporting. For the year ended 31 March 2011, the Office conducted its first assessment and concluded that the internal control system over financial reporting is well designed and functioning effectively. No significant weaknesses were noted. The results and plan for on-going monitoring are summarized in the Annex to the Statement of Management Responsibility.

Welch LLP, Lévesque Marchand SENC, Chartered Accountants, the independent auditor for the Office of the Auditor General of Canada, has expressed an opinion on the fair presentation of the financial statements of the Office in conformity with Canadian generally accepted accounting principles for the public sector, which does not include an audit opinion on the annual assessment of the effectiveness of the Office’s internal controls over financial reporting.

 

John Wiersema, FCA Interim Auditor General of Canada

Lyn Sachs, FCA Assistant Auditor General and Chief Financial Officer

Ottawa, Canada
7 September 2011

Independent Auditor’s Report

To the Speaker of the House of Commons

Report on the Financial Statements

We have audited the accompanying financial statements of the Office of the Auditor General of Canada, which comprise the statement of financial position as at March 31, 2011, and the statements of operations and deficit, change in net debt and cash flow for the year then ended, and a summary of significant accounting policies and other explanatory information.

Management’s Responsibility for the Financial Statements

Management is responsible for the preparation and fair presentation of these financial statements in accordance with Canadian generally accepted accounting principles for the public sector and for such internal control as management determines is necessary to enable the preparation of financial statements that are free from material misstatement, whether due to fraud or error.

Auditor’s Responsibility

Our responsibility is to express an opinion on these financial statements based on our audit. We conducted our audit in accordance with Canadian generally accepted auditing standards. Those standards require that we comply with ethical requirements and plan and perform the audit to obtain reasonable assurance about whether the financial statements are free from material misstatement.

An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The procedures selected depend on the auditor’s judgment, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the entity’s preparation and fair presentation of the financial statements in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity’s internal control. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of accounting estimates made by management, as well as evaluating the overall presentation of the financial statements.

We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion.

Opinion

In our opinion, the financial statements present fairly, in all material respects, the financial position of the Office of the Auditor General of Canada as at March 31, 2011, and the results of its operations, the change in its net debt and its cash flows for the year then ended in accordance with Canadian generally accepted accounting principles for the public sector.

Report on Other Legal and Regulatory Requirements

In our opinion, the transactions of the Office of the Auditor General of Canada that have come to our notice during our audit of the financial statements have, in all significant respects, been in accordance with the Financial Administration Act and regulations and the Auditor General Act and regulations.

Welch LLP
Lévesque Marchand SENC
Chartered Accountants
Licensed Public Accountants

Ottawa, Canada
7 September 2011

Office of the Auditor General of Canada
Statement of Financial Position
as at 31 March

	2011	2010
	(in thousands of dollars)
Financial assets
Due from the Consolidated Revenue Fund	7,916	7,494
Accounts receivable	624	832
	8,540	8,326
Liabilities
Accounts payable and accrued liabilities
Due to employees	3,692	2,649
Due to others	3,090	4,055
Vacation pay	3,630	3,667
Post-employment benefits (note 5)	14,240	14,021
	24,652	24,392
Net debt (note 6)	(16,112)	(16,066)
Non financial assets
Prepaid expenses	292	358
Tangible capital assets (note 7)	2,858	3,509
	3,150	3,867
Deficit (note 8)	(12,962)	(12,199)
Contingent liabilities (note 12)
The accompanying notes are an integral part of these financial statements.

 

Approved by

John Wiersema, FCA Interim Auditor General of Canada

Lyn Sachs, FCA Assistant Auditor General and Chief Financial Officer

 

Office of the Auditor General of Canada
Statement of Operations and Deficit
for the year ended 31 March

	2011	2010
	(in thousands of dollars)
Expenses (note 9)
Financial audits of Crown corporations, territorial governments, other organizations, and the summary financial statements of the Government of Canada	44,049	40,046
Performance audits and studies	41,162	42,947
Special examinations of Crown corporations	1,269	4,095
Sustainable development monitoring activities and environmental petitions	1,004	1,157
Assessments of agency performance reports	712	358
Total cost of audits	88,196	88,603
Professional practices (note 10)	13,496	11,627
Total cost of operations	101,692	100,230
Costs recovered
International audits	786	693
Other	219	219
Costs recovered not available for use	(912)	(894)
Net costs recovered	93	18
Net cost of operations	101,599	100,212
Government funding
Parliamentary appropriations used (note 4)	86,667	87,807
Services provided without charge (note 11)	14,169	13,952
	100,836	101,759
Annual (deficit)/surplus	(763)	1,547
Deficit, beginning balance	(12,199)	(13,746)
Deficit, ending balance	(12,962)	(12,199)
The accompanying notes are an integral part of these financial statements.

 

Office of the Auditor General of Canada
Statement of Change in Net Debt
for the year ended 31 March

	2011	2010
	(in thousands of dollars)
Annual (deficit)/surplus	(763)	1,547
Acquisitions of tangible capital assets	(503)	(1,267)
Amortization of tangible capital assets	1,154	1,255
	(112)	1,535
Acquisition of prepaid expenses	(292)	(358)
Use of prepaid expenses	358	283
	66	(75)
(Increase) decrease in net debt, during the year	(46)	1,460
Net debt, beginning of year	(16,066)	(17,526)
Net debt, end of year	(16,112)	(16,066)
The accompanying notes are an integral part of these financial statements.

 

Office of the Auditor General of Canada
Statement of Cash Flow
for the year ended 31 March

	2011	2010
	(in thousands of dollars)
Operating transactions
Cash paid for
Employee salaries, wages and benefits	(64,717)	(66,415)
Statutory contributions to employee benefit plans	(10,942)	(9,543)
Materials, supplies and services	(10,919)	(10,174)
Services provided by related parties	(2,114)	(1,449)
Other	(912)	(894)
	(89,604)	(88,475)
Cash received from
Salaries and benefits recovered for seconded employees	2,890	1,242
International Audits	628	691
Other	344	563
	3,862	2,496
Parliamentary appropriations used (note 4)	86,667	87,807
Cash provided by operating transactions	925	1,828
Capital transactions
Cash used to acquire tangible capital assets	(503)	(1,267)
Cash applied to capital transactions	(503)	(1,267)
Increase in Due from the Consolidated Revenue Fund	422	561
Due from the Consolidated Revenue Fund, beginning of year	7,494	6,933
Due from the Consolidated Revenue Fund, end of year	7,916	7,494
The accompanying notes are an integral part of these financial statements.

 

Office of the Auditor General of Canada
Notes to the financial statements for the year ended 31 March 2011

1. Authority and objective

The Auditor General Act, the Financial Administration Act, and a variety of other acts and orders-in-council set out the duties of the Auditor General and the Commissioner of the Environment and Sustainable Development. These duties relate to legislative auditing of federal departments and agencies, Crown corporations, territorial governments, other organizations, and one international organization.

The program activity of the Office of the Auditor General of Canada is legislative auditing and consists of performance audits and studies of departments and agencies; the audit of the summary financial statements of the Government of Canada; financial audits of Crown corporations, territorial governments, and other organizations; special examinations of Crown corporations; sustainable development monitoring activities and environmental petitions; and assessments of agency performance reports.

The Office is funded through annual appropriations received from the Parliament of Canada and is not taxable under the provisions of the Income Tax Act.

Pursuant to the Financial Administration Act, the Office is a department of the Government of Canada for the purposes of that Act and is listed in Schedule I.1, and is a separate agency for the purposes of Schedule V.

2. Significant accounting policies

a) Basis of presentation

The financial statements of the Office have been prepared in accordance with Canadian generally accepted accounting principles for the public sector (PSAS) instead of Treasury Board Accounting Standard 1.2 (TBAS). While there are differences, the Office and the Treasury Board of Canada Secretariat have committed to reviewing the current TBAS by 31 December 2011. This will allow time for the Office and the Secretariat to find a permanent solution to resolve the differences between PSAS and TBAS.

b) Parliamentary appropriations

The Office’s annual parliamentary appropriations are reported directly in the Statement of Operations and Deficit in the fiscal year for which they are approved by Parliament and used by the Office.

c) Costs recovered

The costs of audits are paid from monies appropriated by Parliament to the Office. Fees for international audits generally recover the direct costs incurred and are recognized in the period the audit services are provided. Amounts recovered are deposited in the Consolidated Revenue Fund. Other costs recovered represent audit professional services provided to members of the Canadian Council of Legislative Auditors (CCOLA), and other refunds and adjustments. Direct salary and other costs recovered from members of CCOLA are available for use by the Office.

d) Due from the Consolidated Revenue Fund

The financial transactions of the Office are processed through the Consolidated Revenue Fund of the Government of Canada. The “Due from the Consolidated Revenue Fund” balance represents the amount of cash that the Office is entitled to draw from the Consolidated Revenue Fund, without further appropriations, in order to discharge its liabilities.

e) Tangible capital assets

Tangible capital assets are recorded at historical cost less accumulated amortization. The Office capitalizes the costs associated with the development of software used internally including software licences, installation costs, professional service contract costs, and salary costs of employees directly associated with these projects. The costs of software maintenance, project management and administration, data conversion, and training and development are expensed in the year incurred.

Amortization of tangible capital assets begins when assets are put into use and is recorded by the straight-line method over the estimated useful lives of the assets as follows:

Tangible capital assets	Useful life
Leasehold improvements	10 years
Informatics software	3 years
Furniture and fixtures	7 years
Informatics Hardware and Infrastructure	3 years
Office equipment	4 years
Motor vehicle	5 years

f) Accounts payable and accrued liabilities

i) Due to employees

Amounts due to employees represent obligations of the Office for salary and wages using the employees’ salary levels at year end and are funded through parliamentary appropriations.

ii) Due to others

Amounts due to others represent obligations of the Office for material and supply purchases and the cost of services rendered to the Office and are funded through parliamentary appropriations.

iii) Vacation pay

Vacation pay is expensed as benefits accrue to employees under their respective terms of employment using the employees’ salary levels at year end. Vacation pay liabilities represent obligations of the Office that are funded through parliamentary appropriations.

g) Retirement and post-employment benefits

i) Retirement benefits

All eligible employees participate in the Public Service Pension Plan, a plan administered by the Government of Canada. The Office’s contributions are currently based on a multiple of an employee’s required contributions and may change over time depending on the experience of the Plan. The Office’s contributions are expensed during the year in which the services are rendered and represent its total pension obligation. The Office is not currently required to make contributions with respect to any actuarial deficiencies of the Public Service Pension Plan.

ii) Post-employment benefits

Employees are entitled to severance benefits, as provided for under their respective conditions of employment. The cost of these benefits is accrued as employees render the services necessary to earn them. Management determined the accrued benefit obligation using the employees’ salary at year end. Severance benefits are funded through appropriations once employees’ departures are confirmed.

iii) Accumulated sick leave

Employees are entitled to sick leave benefits that accumulate but do not vest. No liability has been recorded in the financial statements in respect of these benefits as the impact is not significant.

h) Services provided without charge by other government departments

Services provided without charge by other government departments are recorded as operating expenses by the Office at their estimated cost. A corresponding amount is reported as government funding. These amounts include accommodation services provided by Public Works and Government Services Canada (PWGSC) and the costs of Public Service employee health, dental, disability, and life insurance plans as well as other payroll costs, which are administered through PWGSC and funded directly by the Treasury Board of Canada Secretariat.

i) Allocation of expenses

The Office charges all direct salary, professional service, travel, and other costs associated with the delivery of individual audits and professional practice projects directly to them. All other expenses, including services provided without charge, are treated as overhead and allocated to audits and professional practices projects based on the direct staff cost charged to them.

j) Measurement uncertainty

These financial statements are prepared in accordance with Canadian generally accepted accounting principles for public sector, which require management to make estimates and assumptions that affect the reported amounts of assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Tangible capital assets and employee severance benefits are the most significant items for which estimates are used. Actual results could differ significantly from those estimates. These estimates are reviewed annually, and as adjustments become necessary, they are recognized in the financial statements in the period in which they become known.

3. Change in financial statement presentation

The statement of financial position reports the net debt and accumulated deficit as the two indicators that together explain our financial position at the end of the accounting period. The statement of financial position reports financial assets and liabilities and the difference between them as the measure of the net debt. Below the net debt indicator, are reported the Office’s non-financial assets, which combined with the net debt, report the accumulated deficit. The statement of change in net debt report the acquisition of tangible capital assets in the accounting period as well as other significant items that explain the difference between the surplus or deficit for the accounting period and the change in net debt in the period.

4. Parliamentary appropriations

The Office is funded through annual parliamentary appropriations. Items recognized in the Statement of Operations and Deficit in one year may be funded through parliamentary appropriations in prior and future years.

The following is a reconciliation of appropriations provided to current year appropriations used:

		2011	2010
		(in thousands of dollars)
Appropriations:
Voted—operating expenditures		78,874	81,662
Statutory contributions to employee benefit plans		10,077	10,524
Proceeds from disposal of capital assets		1	–
Current year appropriations provided		88,952	92,186
Less:	Budget 2010—Cost containment measures	610	–
	Lapsed appropriations1	1,582	4,361
	Vote-netted revenues	93	18
		2,285	4,379
Current year appropriations used		86,667	87,807
1 The Office is allowed to carry-forward into the next fiscal year the lapsed appropriations (after adjustments) of up to a maximum of 5 percent of its main estimates operating budget. In the 2010–11 fiscal year, these adjustments increase the Office’s amount eligible to be carried-forward to the 2011–12 fiscal year to $4.3 million (maximum allowed for carry forward in the 2010–11 fiscal year is $3.8 million).

5. Retirement and post-employment benefits

a) Retirement benefits

The Office’s eligible employees participate in the Public Service Pension Plan, which is sponsored and administered by the Government of Canada. Pension benefits accrue up to a maximum period of 35 years at a rate of 2 percent per year of pensionable service, times the average of the best 5 consecutive years of earnings. The benefits are fully indexed to the increase in the Consumer Price Index.

The Office’s responsibility with regard to the Plan is limited to its contributions. Actuarial surpluses or deficiencies are recognized in the financial statements of the Government of Canada, as the Plan’s sponsor. Office and employee contributions to the Plan are as follows:

	2011	2010
	(in thousands of dollars)
Office contributions	7,074	7,598
Employee contributions	3,281	3,443

b) Post-employment benefits

The Office provides severance benefits to its employees based on years of service and salary at termination of employment. The method used to estimate the liability reflects the salary at the end of the fiscal year and provides for one week of salary per year of service up to 30 years for non-management and 28 years for the management category. The cost of these benefits is accrued in the financial statements as employees render the services necessary to earn them. The Office’s severance benefits are not pre-funded and will be paid from future appropriations. Information about the severance benefits, measured as at 31 March, is as follows:

	2011	2010
	(in thousands of dollars)
Severance benefit obligation, beginning of year	14,021	13,465
Expense for the year	1,541	1,068
Benefits paid during the year	(1,322)	(512)
Severance benefit obligation, end of year	14,240	14,021

6. Net debt

The net debt is calculated as the difference between liabilities and financial assets. Post-employment benefits represent the most significant component of net debt as these obligations are paid from future parliamentary appropriations.

7. Tangible capital assets

	Cost				Accumulated amortization				2011	2010
	Opening balance	Acquisitions	Disposals	Closing Balance	Opening balance	Amortization	Disposals	Closing Balance	Net book value	Net book value
	(in thousands of dollars)
Leasehold improvements	3,568	88	35	3,621	1,954	367	35	2,286	1,335	1,614
Informatics software	2,179	275	54	2,400	1,373	313	54	1,632	768	806
Furniture and fixtures	4,729	86	254	4,561	4,227	245	254	4,218	343	502
Informatics hardware and infrastructure	1,159	35	268	926	820	156	268	708	218	339
Office equipment	1,127	19	28	1,118	890	67	28	929	189	237
Motor vehicle	31	0	0	31	20	6	0	26	5	11
	12,793	503	639	12,657	9,284	1,154	639	9,799	2,858	3,509

8. Deficit

The deficit represents liabilities incurred by the Office, net of capital assets and prepaid expenses that have not yet been funded through appropriations. Significant components of this amount are post-employment benefits and vacation pay liabilities.

9. Summary of expenses by major classification

Summary of expenses by major classification for the years ended 31 March are as follows:

	2011	2010
	(in thousands of dollars)
Salaries and employee benefits	77,650	76,284
Office accommodation	8,870	8,695
Professional services	6,840	6,673
Travel and communication	4,204	4,263
Informatics, informatics maintenance and repairs, office equipment, and furniture and fixtures	2,488	2,871
Materials, supplies, and other payments	984	889
Printing and publications services	656	555
Total cost of operations	101,692	100,230

The total cost of operations includes services provided without charge by other government departments as explained in note 11.

10. Professional practices

The Office works with other legislative audit offices and professional associations, such as the Canadian Institute of Chartered Accountants, to advance legislative audit methodology, accounting and auditing standards, and best practices. International activities include participation in organizations and events that have an impact on our work as legislative auditors. Peer reviews include the cost of participating in peer reviews of other national legislative audit offices and being the subject of a peer review.

	2011	2010
	(in thousands of dollars)
Methodology and knowledge management	8,713	5,831
International activities	2,733	2,798
Participation in standard-setting activities	999	966
Canadian Council of Legislative Auditors	679	893
Peer reviews	372	1,139
Professional practices	13,496	11,627

11. Related party transactions

The Office is related as a result of common ownership to all Government of Canada departments, agencies, and Crown corporations. The Office enters into transactions with these organizations in the normal course of business and on normal trade terms. As Parliament’s auditor, the Office is mindful of its independence and objectivity when entering into any such transactions. The Office conducts independent audits and studies without charge to federal departments and agencies, Crown corporations, territorial governments, and other organizations.

In 2011, the Office incurred expenses of $26.1 million ($26.1 million in 2010) and recovered expenses of $2.4 million ($1.7 million in 2010) from transactions in the normal course of business with other government departments, agencies, and Crown corporations. These expenses include services provided without charge as follows:

	2011	2010
	(in thousands of dollars)
Office accommodation	8,865	8,695
Employee insurance plans	5,304	5,257
	14,169	13,952

These amounts are included in expenses shown in note 9.

As at 31 March, the accounts receivable and payable with other government departments, agencies, and Crown corporations are as follows:

	2011	2010
	(in thousands of dollars)
Accounts receivable	195	564
Accounts payable	163	1,304

These amounts are included respectively in accounts receivable and “due to others” on the statement of financial position.

12. Contingent liabilities

In the 2000–01 fiscal year, the Public Service Alliance of Canada filed a pay equity suit against the Crown, alleging that discrimination based on sex had occurred between 1982 and 1997 in seven separate employers. The Office is one of the seven employers named in the suit. The Alliance requests that the Treasury Board of Canada Secretariat or the responsible employer retroactively increase the wage rates of employees of specific separate employers to remedy the discrimination. This pay equity claim was originally filed at the Canadian Human Rights Commission but was stayed. It is now before the Public Service Labour Relations Board as this organization is now responsible for pay equity complaints for the public sector. In the opinion of management, the outcome and the amount of the suit are not determinable at this time and, accordingly, no liability has been recognized in the financial statements.

13. Comparative figures

Certain 2009–10 comparative figures have been reclassified to conform to the presentation adopted in the 2010–11 fiscal year.

Financial tables

This table highlights the Office’s contracting activity for services in the 2010 calendar year.

Table 1—Total value of service contracts

	Contracts with original value less than $25,000			Contracts with original value greater than $25,000
	($)	Number	Percentage	($)	Number	Percentage
Competitive contracts	1,234,451	112	37.7%	3,044,967	43	95.4%
Non-competitive contracts	2,040,332	335	62.3%	146,600	1	4.6%
Total	3,274,783	447	100.00%	3,191,567	44	100.00%

Contracts are classified based on the total original value, which includes original fees, expenses and taxes. However, the amounts reported also include any amendments. Contracts with a total original value of less than $25,000 are sometimes amended in accordance with the Office’s contracting policy and in some cases the total amended value may exceed $25,000—these contracts are still included with “contracts with original value less than $25,000.” There were two non-competitive contracts with a total original value of less than $25,000 and an amended value greater than $25,000. The total value of the amendments to these contracts was $8,998. Further disclosure can be found on the OAG website where we report the total amended value (total original value plus any amended value) of contracts over $10,000.

The Auditor General’s power to enter into contracts for services is set out in subsection 16(2) of the Auditor General Act and the Office is subject to the Government Contracts Regulations.

The Auditor General’s Policy on Contracting for Services requires that contracts for estimated fees of $25,000 or more be awarded through competition, unless they meet one of the three criteria for exemption: the need is one of pressing urgency, it is not in the public interest to solicit bids due to the nature of the work, or there is only one person capable of performing the work. Contracts that exceed the North American Free Trade Agreement (NAFTA) threshold follow NAFTA rules.

In 2010, the service contract with a value greater than $25,000 issued on a non-competitive basis was for legal advice related to an audit.

Table 2—Travel and hospitality expenses

Disclosure of the travel and hospitality expenses for the Auditor General, the Deputy Auditor General, the Commissioner of the Environment and Sustainable Development, and the assistant auditors general as well as for corporate events is available on our website under Proactive Disclosure. The Office follows the Treasury Board Travel Directive and the Treasury Board Hospitality Policy, as appropriate for Agents of Parliament.

Table 3—Office memberships¹

	($ thousands)
Canadian Comprehensive Auditing Foundation (CCAF-FCVI Inc.)	455.0
Conference Board of Canada	11.2
Communication Community Office	10.0
Head of Federal Agencies Secretariat	7.5
International Organization of Supreme Audit Institutions	6.3
Public Policy Forum	5.5
Association des institutions supérieures de contrôle ayant en commun l’usage du français	1.0
1 The Office participates and supports professional organizations related to its legislative auditing program. The Office also pays individual employee membership fees to a variety of professional organizations.

Table 4—Compensation and benefits

The following is a summary of compensation and selected benefits paid to the Office employees by level. Office employees receive benefits comparable to other federal government employees, which are not included in this table.

Position	FTEs1	Salary ($)	Bilingual bonus ($)	Performance pay2 ($)	Automobile3 ($)	Membership ($)	Total ($)
Auditor General	1	318,6004			3,795	985	323,380
Deputy Auditor General	1	206,450–247,120		0–40,280			206,450–287,400
Commissioner of the Environment and Sustainable Development	1	162,885–213,680		0–34,830			162,885–248,510
Assistant auditors general	14	162,885–194,255		0–31,700			162,885–225,955
Senior principals	6	116,975–169,470		0–27,770			116,975–197,240
Principals	57	116,975–150,870		0–18,940			116,975–169,810
Senior directors	3	91,285–135,585		0–17,080			91,285–152,665
Directors	95	91,285–121,055		0–15,200			91,285–136,255
Auditors	257	45,867–101,811	800	0–3,000			45,867–105,611
Audit support services	194	34,437–92,391	800				34,437–93,191
Total FTEs	629
1 Full-time equivalents (FTEs) used in the 2010–11 fiscal year. 2 Amounts represent the range that levels are eligible to receive in performance pay. 3 Taxable benefit for the personal use of an automobile for the 2010 calendar year. 4 The salary of the Auditor General is set by statute under subsection 4(1) of the Auditor General Act and is equal to the salary of a puisne judge of the Supreme Court of Canada.

Performance pay

Every year, managers are evaluated on their product management and people management skills, with each counting for 50 percent of the total performance pay envelope. For the 2010 calendar year, 185 of the eligible managers (99 percent) received performance pay for product management, people management, or both. The following table shows the distribution.

Rating description	Percentage of eligible managers who received this rating in 2010
	Product management	People management
Did not fully meet expectations	2%	1%
Met expectations	52%	73%
Exceeded expectations	41%	25%
Exceptional performance	5%	1%

Performance pay for managers who met expectations may be in the form of a salary increase and/or a bonus, and can range from 7.6 percent to 11.4 percent of a manager’s salary, depending on their level. Managers who exceeded expectations are eligible for an additional bonus of between one and five percent of their salary, depending on their level and performance.

The Office’s performance pay guidelines differ from the Public Service’s Performance Management Plan, in the amounts paid to managers. Both systems provide for in-range increases and additional cash lump-sum awards. Public service executives can receive in-range increases and an additional amount for at-risk pay—up to17.6 percent (27.4 percent for executives at the EX-4 and EX-5 levels). The combined maximum performance pay for the Office, including in-range increases and bonuses, is 12.6 percent for directors and principals and 16.4 percent for senior principals, assistant auditors general, the Deputy Auditor General, and the Commissioner of the Environment and Sustainable Development. Details of performance pay by level are included in Table 4.

A total of $2,299,747 in performance pay (including in-range increases and lump sum bonuses) was awarded to managers for 2010. In addition, 58 non-management auditors (18 percent) received a fixed performance pay of $3,000 in keeping with the Audit Professionals collective agreement.

Report on staffing

The Auditor General has received the staffing authorities of the Public Service Commission directly through the Auditor General Act. Since the Commission must report annually to Parliament for the previous fiscal year on matters under its jurisdiction, the Office of the Auditor General believes it should also report annually on the Office’s staffing.

The following table takes into account the Public Service Commission’s Staffing Management Accountability Framework. It summarizes the eleven areas of accountability and identifies the indicators present in the Office. The framework is intended to ensure a values-based staffing system through which the core principles of merit and non-partisanship are applied in accordance with the core values of fairness, transparency, and access.

Staffing: Areas of accountability and indicators

1. Delegation of staffing to deputy heads: The process of exercising authority and establishing a well-defined structure and administration in order to support the achievement of desired results.
Mechanisms are in place to ensure that sub-delegated managers comply with their sub-delegated authority	The Executive Committee approved a written delegation of authority for human resource management. Training was provided to all hiring managers. New appointees to the Management Group (directors and principals) are required to attend a half- or full-day transition session. Issues discussed include human resource responsibilities and delegated authorities.
2. Planning for staffing and monitoring of results: Staffing strategies are planned based on analyses of the workforce and of staffing trends and patterns.
Staffing strategies support organisational staffing priorities and align with current and future needs. The Office of the Auditor General (OAG) assesses the extent to which expected results for staffing are achieved and adjusted, as required.	Staffing needs are assessed annually. Based on these needs and on the OAG’s budget, full-time equivalent (FTE) positions are allocated to each assistant auditor general (AAG). The AAGs are then responsible, with the help of Human Resources (HR), for staffing their groups. The allocation of resources is monitored regularly by the Career Management and Resource Management Team in order to identify and resolve gaps between needs in specific audits and available resources. Each month, a Status Report on the overall staffing levels and FTE budgets is provided to the Executive Committee for monitoring. The Staffing Group and the Finance Group meet monthly to ensure that resources are allocated effectively and meet targets established in the plan.
3. Organizational human resource (HR) support systems: The OAG has access to a reasonable number of HR advisors with appropriate staffing expertise to support hiring decisions.
Capacity of HR Advisors by volume of staffing Learning activities undertaken by HR Advisors	There were 132 staffing processes in the 2010–11 fiscal year, which resulted in 241 appointments. Three staffing advisors, plus an assistant, met the demands. A benchmarking exercise supports the belief that these resources are sufficient.
4. Communication: The OAG is expected to respect the Public Service Employment Act (PSEA) and to monitor staffing activities to ensure accountability for staffing decisions.
Staffing performance deficiencies identified by internal audit are corrected in a timely fashion	An internal audit on staffing conducted in 2007 pointed out a few areas with deficiencies within the OAG staffing system. The HR team made a number of adjustments to processes to ensure that these deficiencies were addressed. The follow-up to this audit concluded that the appropriate measures were put in place.
5. Flexibility and efficiency: Resourcing approaches are adapted to the OAG’s needs, and our staffing system provides good value and is timely and effective.
Managers are satisfied with the OAG’s staffing processes; the length of time to staff. Candidates are satisfied with the duration of the processes	While this is not an area that the OAG has investigated through a formal survey, because we are a small organization, this information is regularly sought in ad hoc discussions with our hiring managers. The HR Principal regularly discusses performance of the HR team with AAGs and service leaders. Monthly reports are produced identifying open positions and positions staffed during the previous month. Regular meetings are held between staffing advisors and managers to review progress on open positions.
6. Merit: People who are appointed meet the essential qualifications, including official languages.
Managers and candidates are satisfied that the staffing process assessed merit. In-house investigations are conducted as required.	Only 18 percent of employees who responded to the 2010 employee survey indicated that they believed they were not given the opportunity to demonstrate their capabilities during a competition. It is fair to note that no employees sought recourse on staffing in the 2010–11 fiscal year. As we have not had to conduct any in-house investigations into the application of merit, we have concluded that there is no concern in this area. The majority of bilingual staffing processes (84%) were deemed bilingual imperative in the 2010–11 fiscal year. For these imperative staffing actions, all candidates met the Official Language qualifications of the position prior to being appointed. It should be noted that the Auditor General has the power to waive the imperative requirement if the position requires specific expertise(s)—such as senior financial audit positions.
7. Non-partisanship: Appointments and promotions are done objectively and are free from political influence.
Managers’ perceptions of external pressure to select a particular candidate Investigations related to political influence in staffing	The OAG has not had to conduct any investigations of political influence in the staffing process.
8. Representativeness: Appointment processes are conducted without bias and do not created systemic barriers.
Staffing related provisions or initiatives to increase representativeness	As the OAG’s overall representation is exceeding targets, this is not an area of concern. Data on promotions, departures, and new-hires is reviewed and monitored every year to ensure that the OAG has not inadvertently created barriers to employment.
9. Access: People from across Canada have a reasonable opportunity to be considered for employment at the OAG.
Percentage of external appointments that are advertised Percentage of these external appointments that were advertised nationally	During the 2010–11 fiscal year, about 55 percent of all processes were open to the public (external). Of those external processes, 100 percent were advertised nationally.
10. Fairness: Communication ensures the integrity of the appointment process by being transparent, easy to understand, timely, and accessible, and by including the relevant stakeholders.
Percentage of indeterminate hires converted from casual status Perception of fairness in staffing: “In my work unit, the process of selecting a person for a position is done fairly”	The OAG employed six casual employees in the 2010–11 fiscal year. No casual employees were converted to term employment during the period. Results of the 2010 employee survey indicate that only 19 percent of employees believe that the process of selecting candidates in their work unit was not done fairly.
11. Transparency: Information about staffing strategies, decisions, policies, and practices is communicated in an open and timely manner.
Organizational staffing priorities are communicated on the OAG website and contents are clearly communicated to managers, employees, and bargaining units, where applicable	The OAG produces an annual HR report that includes the number of hires, departures, and turnover rate, as well as reasons for departures and anticipated retirement rates. This document is made available to employees on the INTRAnet. All competitions are advertised in both languages. Competitions open to people outside the Office are advertised on our website ("Careers"). Most of them were also posted on the Government of Canada website (“Jobs Open to the Public”). The multi-year recruitment and retention strategy is available on our INTRAnet.

Sustainable development commitments

Sustainable development requires the integration of environmental, economic and social considerations in the development and implementation of government programs. Our latest Sustainable Development Strategy was tabled in Parliament in December 2006 and is available on our website. It included key commitments designed to further integrate environmental considerations into our audit selection and planning decisions. We continue to strive to achieve the targets set out in the strategy, and our progress is summarized in the following table.

Selected sustainable development commitments and targets

Commitment	Indicators and targets	2010–11 Actual
Prepare long-term audit plans and individual performance audits using the Office’s environmental risk assessment guide. (4th E Practice Guide).	100 percent of performance audit teams use the 4th E Practice Guide’s screening tool and consult with environmental specialists to identify and assess environmental risks when they are preparing long-term audit plans.	100%
	100 percent of performance audit teams use the 4th E Practice Guide’s screening tool and consult with internal environmental specialists to determine if there are any important environmental issues related to their audit topic.	100%
Provide enhanced support and advice to audit teams conducting special examinations where important environmental risks for Crown corporations have been identified.	100 percent of these cases receive enhanced support and advice starting in 2007.	100%

List of completed performance audits

The following is a list of the performance audits planned for in our 2010–11 Report on Plans and Priorities (RPP), including their planned and actual tabling. Names are based on titles of publication.

Federal performance audits

Auditor General of Canada	Included in 2010–11 RPP	Reported in the 2010–11 fiscal year
Electronic Health Records in Canada—Summary of Federal and Provincial Audit Reports	Spring 2010	April 2010
Aging Information Technology Systems	Spring 2010	April 2010
Modernizing Human Resource Management	Spring 2010	April 2010
Rehabilitating the Parliament Buildings	Spring 2010	April 2010
Sustaining Development in the Northwest Territories	Spring 2010	April 2010
Scientific Research—Agriculture and Agri-Food Canada	Spring 2010	April 2010
Special Examinations of Crown Corporations—2009	Spring 2010	April 2010
Managing Conflict of Interest	Fall 2010	October 2010
Animal Diseases—Canadian Food Inspection Agency	Fall 2010	October 2010
Management and Control in Small Entities	Fall 2010	October 2010
Facilitating the Flow of Imported Commercial Goods—Canada Border Services Agency	Fall 2010	October 2010
Acquisition of Military Helicopters	Fall 2010	October 2010
Registered Charities—Canada Revenue Agency	Fall 2010	October 2010
Regulating and Supervising Large Banks	Fall 2010	October 2010
Service Delivery	Fall 2010	October 2010
Canada’s Economic Action Plan	Fall 2010	October 2010
Unplanned	Included in 2010–11 RPP	Reported in the 2010–11 fiscal year
Public Sector Integrity Commissioner of Canada	No	December 2010

 

Commissioner of the Environment and Sustainable Development	Included in the 2010–11 RPP	Reported in the 2010–11 fiscal year
Environmental Petitions	Fall 2010	December 2010
Oil Spills from Ships	Fall 2010	December 2010
Monitoring Water Resources	Fall 2010	December 2010
Adapting to Climate Impacts	Fall 2010	December 2010
Assessing Cumulative Environmental Impacts	Fall 2010	Postponed—Currently planned to be reported in October 2011

Territorial performance audits

Territorial performance audits	Included in 2010–11 RPP	Reported in the 2010–11 fiscal year
Education in the Northwest Territories—Department of Education, Culture and Employment	April 2010	Postponed to May 2010
Yukon Health Services and Programs—Department of Health and Social Services	February 2011	February 2011
Children, Youth and Family Programs and Services in Nunavut	March 2011	March 2011
Unplanned	Included in the 2010–11 RPP	Reported in the 2010–11 fiscal year
Northwest Territories Deh Cho Bridge Project—Department of Transportation	No	March 2011
Northwest Territories Health Programs and Services—Department of Health and Social Services	No	March 2011

List of completed special examinations

Special examination	Original statutory deadline*	Revised statutory deadline*	Transmission date
Canadian Dairy Commission	29 June 2010	29 June 2015	16 March 2011
Freshwater Fish Marketing Corporation	3 March 2010	3 March 2015	15 December 2010
National Arts Centre Corporation	29 June 2010	29 June 2015	29 July 2010
Telefilm Canada	29 June 2010	29 June 2015	10 June 2010
* The Budget Implementation Act, 2009 changed the frequency of special examinations in the Financial Administration Act, from at least once every five years to at least once every ten years. The statutory deadlines and schedule of planned special examinations were revised following that change.

List of internal audits and reviews

Internal audits and reviews completed in the 2010–11 fiscal year
Name of internal audit	Audit type	Completion date1
Report on a Review of the Annual Audit Practice—Practice Reviews Conducted in the 2010–11 Fiscal Year	Compliance	December 2010
Report on a Review of the Performance Audit Practice— Practice Reviews Conducted in the 2010–11 Fiscal Year	Compliance	May 20112
Report on a Review of the Special Examination Practice—Practice Reviews Conducted in the 2010–11 Fiscal Year	Compliance	October 20113
Controls Over the Hospitality Spending—Internal Audit	Compliance	December 2010
Follow-up on actions taken by management on previous practice review and peer review observations and recommendations	Follow-up	December 2010
1 Reports will be posted on the website of the Office of the Auditor General once they have been translated. 2 The individual practice reviews were conducted in the 2010–11 fiscal year, and the summary report was presented to the Audit Committee in May 2011. 3 The individual practice reviews were completed in the 2010–11 fiscal year, and the summary report will be presented to the Audit Committee in October 2011.

Our performance indicators and measures

The Office has established a set of core indicators of impact and measures of organizational performance to help inform management decision making.

Our indicators of impact help us to assess the extent to which

• our work adds value for the key users of our reports,
• our work adds value for the organizations we audit,
• key users of our reports are engaged in the audit process, and
• key users of our reports and the organizations we audit respond to our findings.

Our measures of organizational performance help us monitor the extent to which

• our work is delivered on time and on budget,
• our audit reports are reliable, and
• we provide a respectful workplace.

We use surveys to gather feedback from our clients and the organizations we audit on our performance. Information on the surveys can be found on our website.

Indicator Table 1—Summary of our indicators of impact

Objectives and indicators	2009–10 Actual	2010–11 Actual	2010–11 Target
Our work adds value for the key users of our reports.
Percentage of audit committee chairs who find our financial audits add value	95%	81%	90%
Percentage of parliamentary committee members who find our performance audits add value	93%1	N/A2	90%
Percentage of board chairs who find our special examinations add value	80%	See footnote #3	90%
Our work adds value for the organizations we audit.
Percentage of Crown corporation and large-department senior managers who find our financial audits add value	85%	89%	80%
Percentage of departmental senior managers who find our performance audits add value	56%	74%	70%
Percentage of Crown corporation chief executive officers who find our special examinations add value	90%	See footnote #3	80%
Key users of our reports are engaged in the audit process.
Number of parliamentary hearings and briefings we participate in	35	46	Maintain or increase4
Percentage of performance audits reviewed by parliamentary committees	68%	62%	Maintain or Increase4
Key users of our reports and the organizations we audit respond to our findings.
Percentage of reservations that are addressed from one financial audit to the next	28%5	26%6	100%
Percentage of performance audit recommendations examined in our follow-up audits where progress has been assessed as satisfactory		62%
Percentage of significant deficiencies that are addressed from one special examination to the next	50% (1 of 2)	100% (1 of 1)7	100%
1 The results shown for the 2009–10 fiscal year are from the survey of parliamentarians conducted in June 2010. 2 There was no survey of parliamentarians in the 2010–11 fiscal year, due to the federal election. 3 Due to the small number of respondents, percentage results are not presented. The feedback we have received has been positive and consistent with our targets. 4 There is no numeric target for these indicators since they depend on the number of sitting days there are in Parliament. Instead, the target is to maintain the percentage of parliamentary hearings and briefings we participate in, relative to the number of sitting days, and to maintain the percentage of audits reviewed by parliamentary committees. 5 This result has been restated to include only those reports that were issued in the current fiscal year. Previously, reports were included when the audit work was completed but the report not yet issued. 6 In completing our financial audits in the 2010–11 fiscal year, we found that only 8 of the 31 reservations contained in our 2009-10 financial audit opinions had been addressed by the organizations we audited. 7 For one of the four special examinations completed in the 2010-11 fiscal year there had been a significant deficiency in the previous special examination. This significant deficiency was addressed.

Indicator Table 2—Summary of our organizational performance

Objectives and indicators	2009–10 Actual	2010–11 Actual	2010–11 Target
Our work is completed on time
Percentage of financial audits completed on time1
federal Crown corporations with statutory deadlines	98%	96%	100%
other federal organizations with statutory deadlines2	100%	96%	100%
federal organizations with no statutory deadlines	86%	100%	80%
territorial organizations	64%	31%	60%
Percentage of performance audit reports completed by the planned tabling date as published in the Report on Plans and Priorities	96%	92%	90%
Percentage of special examination reports delivered on or before the statutory deadline	100% (10 of 10)	100% (4 of 4)	100%
Our work is completed on budget
Percentage of audits completed on budget3
Financial audits—federal Crown corporations	90%	69%	80%
Financial audits—other federal organizations with statutory deadlines	84%	65%	80%
Financial audits—federal organizations without a statutory deadline	89%	69%	80%
Financial audits—territorial organizations	60%	26%	80%
Performance audits	96%	88%	80%
Special examinations	90% (9 of 10)	50% (2 of 4)	80%
Our audit reports are reliable
Percentage of internal practice reviews that found the opinions and conclusions expressed in our audit reports were appropriate and supported by the evidence4	100% (18 of 18)	95% (18 of 19)	100%
External peer reviews find our quality management frameworks are suitably designed and operating effectively	Mostly5	n/a6	Yes
We provide a respectful workplace
Percentage of employees who believe the Office is an above-average place to work	78%7	n/a8	80%
Percentage of management who meet our language requirements
assistant auditors general and principals	85%	84%	100%
directors in bilingual regions	77%9	73%	75%
Percentage representation relative to workforce availability for
women	117%	115%	100%
people with disabilities	117%	120%	100%
Aboriginal peoples	137%	129%	100%
members of visible minorities	90%	109%	100%
Percentage retention of audit professionals	89%	89%	90%
1 “On time” for financial audits means the statutory deadline where one exists (usually 90 days after the year end), or 150 days after the year end where no statutory deadline exists. 2 The National Battlefields Commission is excluded from this calculation as its statutory deadline is only 60 days after the year end. 3 “On budget” means that the actual hours to complete an audit did not exceed the budgeted hours by more than 15 percent. 4 This indicator replaces “the percentage of internal practice reviews that find our audit in compliance with our quality management frameworks.” 5 An international peer review found that our quality management system (QMS) was suitably designed. It found that for the performance audit and special examinations practices, the QMS was operating effectively and that for the annual audit practice, the QMS was generally operating effectively (although made recommendations to address two implementation issues. 6 There was no external peer review in the 2010–11 fiscal year. 7 The employee survey results shown were received in May 2010. 8 There was no employee survey in the 2010–11 fiscal year. It is a biennial survey. 9 The 2009–10 result has been restated from 84% as previously reported due to a change in calculation method.

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