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ARCHIVED - Review of the Governance Framework for Canada's Crown Corporations - Meeting the Expectations of Canadians

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Executive Summary

Crown corporations play a vital role advancing government policy priorities and objectives in critical sectors from transportation and agriculture to culture and communications. With a mixture of public policy and commercial objectives, they are extraordinarily diverse and range in size from less than five employees to more than 45,000. Strengthening Crown corporation governance is an important element in the Government of Canada's agenda to strengthen public sector management.

The government will take action in several key areas.

The government will clarify the accountability structure for Crown corporations. The responsible Minister will be identified as the government's representative and the Minister's accountability to Parliament for the discharge of responsibilities related to this role will be affirmed. Ministers are ultimately accountable to Parliament for the overall effectiveness of Crown corporations in their portfolio, in addition to being answerable for all activities of the Crown corporation, including its day-to-day operations. The Board of Directors is accountable to the responsible Minister for the stewardship of the corporation. The chief executive officer (CEO) of the corporation is accountable to the Board of Directors.

The government will reinforce the notion of active ownership. The responsible Minister, as the representative of the owner, will be required to provide Crown corporations' Board of Directors with a clear statement of the government's policy priorities and performance expectations for the corporation, which would form the basis of a periodic review of the corporation's performance.

Governance experts agree that a critical element of achieving sound governance is choosing qualified directors to sit on Boards. The government will further refine the appointment process for chairs, directors, and CEOs so that it is not only transparent, professional, and competence-based, but is also consistent with the ability of the government to exercise its responsibilities as owner.

In the arena of corporate governance, the government has drawn upon best practices including those from the private sector where their application to the public sector is desirable. Measures include ensuring that boards are independent from management, providing orientation and continuing education programs for directors, and mandating the use of evaluations. Audit committee composition requirements will also be revised to ensure that individuals chosen for audit committee work have the requisite qualifications. Audit committees will have direct oversight responsibilities for both external and internal audit functions.

To improve transparency, the government will extend the Access to Information Act to 10 of the currently 18 exempt Crown corporations and will examine means of including the remaining corporations under the Act in ways that protect their commercially sensitive information. Protection for journalistic sources will also be developed.

The government will also make significant changes to the audit regime of Crown corporations. The Auditor General of Canada will be made auditor or joint auditor of all Crown corporations and will be given the authority to conduct special examinations in all Crown corporations. With respect to the special examinations, the government will introduce a more flexible and transparent regime. The Auditor General will determine the frequency of special examinations for each corporation given their mandate, business lines, and risks. The special examination will be made available to the responsible Minister, Treasury Board, and Parliament.

Crown corporations will also be subject to the proposed Public Servants Disclosure Protection Act, Bill C-11, which will establish a mechanism for the disclosure of wrongdoing in the public sector and protect public servants who make disclosures. The proposed legislation provides substantial protection in law from reprisal for good faith disclosures and requires all federal institutions to establish their own codes of conduct and an internal disclosure mechanism.

These measures represent a significant step forward to strengthen the governance of Crown corporations. The government will act in a timely manner to implement the measures outlined in this report.