Strengthening auditing and accountability within departments

Why we are doing this

Under the doctrine of ministerial responsibility, ministers are responsible and accountable to Parliament for all powers vested in them, whether by legislation or otherwise. With respect to their departments, ministers are responsible to Parliament and the Prime Minister for their own actions and those of their officials, whether those actions pertain to policy, operations, or departmental administration. In particular, they are responsible for the management and direction of their departments. This accountability must be supported by appropriate systems of control, including appropriate communications between ministers and deputy ministers, who themselves have responsibilities for departmental management. It is vital that, within the framework of the minister’s overall responsibilities and his or her accountability to Parliament, the roles and responsibilities of deputy ministers are clear.

Independent, objective, and timely internal audit services within departments provide assurance to deputy ministers and reinforce good stewardship practices and sound decision making. They also enable Treasury Board to focus on Government-wide strategic matters dealing with risk.

The Federal Accountability Act will introduce the following changes:

• The Act will designate deputy ministers and deputy heads as accounting officers for their department, within the framework of ministerial responsibility. Deputy ministers and deputy heads will be accountable before the appropriate committee of Parliament to answer questions related to their responsibilities, which consist of the following:
  • ensuring that resources are organized to deliver departmental objectives in compliance with government policy and procedures;
  • ensuring that there are effective systems of internal control;
  • signing departmental accounts; and
  • performing other specific duties assigned by law or regulation in relation to administration of the department.
• The Act will require that a clear process be followed in the event that a minister and deputy minister are unable to agree on the interpretation or application of a Treasury Board policy, directive, or standard. In this case, the Act will require that:
  • deputy ministers seek guidance in writing from the Secretary of the Treasury Board;
  • if the matter remains unresolved, the minister would refer the matter to the Treasury Board for a decision; and
  • a copy of the Treasury Board decision be shared with the Auditor General as a confidence of the Queen’s Privy Council.
• It will require that deputy heads ensure an appropriate internal audit capacity and establish departmental audit committees.
• It will ensure that audit committees in Crown corporations are independent of corporation management by excluding officers or employees of the corporation from audit committee membership.
• The Act will separate the role of Chief Executive Officer and Chair of the Board of Directors within the National Capital Commission, Canadian Dairy Commission, and the Enterprise Cape Breton Corporation to bring these corporations in line with best practices in corporate governance.  Having different individuals carry out the duties of chair of the board of directors and chief executive officer respectively will clarify accountabilities: the board of directors will be accountable to the responsible minister for the stewardship of the corporation, and the chief executive officer to the board will be accountable for the management and performance of the corporation.
• It will allow members of Crown corporation boards of directors to be appointed for up to four years, up from the current three-year maximum. This measure will help ensure the continuity of expertise on boards of directors.
• It will make fraud involving public funds committed by officials an offence under the Financial Administration Act. The offence would have a maximum term of imprisonment of five years for fraud involving $5,000 or less and a maximum term of 14 years for fraud over $5,000. The Financial Administration Act, along with amendments to the Criminal Code of Canada, will also provide for the dismissal of any official convicted of this offence, and will prohibit any individual convicted of this offence from contracting with the Government of Canada. It will also create a similar offence for Crown corporations.

In addition, we will introduce the following measures:

• We will implement the new Treasury Board Internal Audit Policy, which came into force on April 1, 2006. The policy supports strong internal auditing across government by assigning respective responsibilities between deputy heads and the Comptroller General.  The Comptroller General provides functional leadership, monitors internal audit across government, and ensures horizontal audits of high-risk areas that transcend individual departments and agencies. The Government will bolster auditor independence by establishing audit committees with membership drawn largely from outside of the public service. Chief Audit Executives will be appointed to report directly to deputy heads and functionally to the Comptroller General.
• We will develop a compliance framework that will include:
  • training, certification, and tools for employees to enhance compliance, including for human resources specialists to support managers in areas such as discipline;
  • a deputy minister committee to ensure consistent application of disciplinary measures and appropriate follow-through; and
  • disciplinary codes in departments to provide clarity on types of misconduct and the corresponding range of consequences.