Common menu bar links
Breadcrumb Trail
ARCHIVED - Review of the Governance Framework for Canada's Crown Corporations - Meeting the Expectations of Canadians
This page has been archived.
Archived Content
Information identified as archived on the Web is for reference, research or recordkeeping purposes. It has not been altered or updated after the date of archiving. Web pages that are archived on the Web are not subject to the Government of Canada Web Standards. As per the Communications Policy of the Government of Canada, you can request alternate formats on the "Contact Us" page.
7. Reporting –
Making Transparency and Accountability Come to Life
Reporting on activities and performance is an important element of a governance system involving the delegation of authority. Reporting allows the party to whom authority has been delegated to demonstrate how they have discharged their responsibilities. To be effective, the information reported must be reliable, relevant, balanced and complete. In some instances, such as financial statements, an independent party such as an external auditor must provide assurance as to the information reported. In general, reporting should adhere to the principle of transparency. Those who have delegated authorities should have the ability to "see" into the activities of those to whom authorities have been delegated. Effective reporting mechanisms permit this to take place.
The government is of the view that existing reporting mechanisms have served Canadians well but could be improved. It proposes to add some additional features to the existing regime such as improved reporting, certification, the extension of the Access to Information Act to most corporations, and the adoption of legislation on the disclosure of wrongdoing that would apply to all Crown corporations. These features should make relevant reporting information more readily accessible to parliamentarians and the general public and strengthen the accountability of Crown corporation management when it comes to the accuracy of the information that is disclosed.
7.1 Reporting
The annual report with its core elements, the Management's Discussion and Analysis section and the audited financial statements, is the primary mechanism through which Crown corporations report to Parliament and to Canadians. Specifications on what must be included in the annual report are found in Part X, section 150 of the FAA. The Office of the Auditor General has observed that the quality of non-financial content in Crown corporation annual reports needs improvement. Organizations such as the Canadian Institute of Chartered Accountants have prepared guidance on the preparation and disclosure of non-financial information in reports (e.g., discussion and analysis). The government believes that information such as the governance structure of Crown corporations, their codes of conduct, and compliance with their own policy on ethics and values should appear more prominently in the annual reports produced by Crown corporations.
Measure #22To respond to the public interest in non-financial issues, the Treasury Board of Canada Secretariat will produce a guidance document for Crown corporations on annual report specifications, including the Management's Discussion and Analysis Section and issues pertaining to values and ethics. |
Measure #23In order to make the financing of Crown corporations more transparent, the government will also ensure that the Main Estimates document clearly identifies the funds allocated to each Crown corporation that receives parliamentary appropriations. |
Parliamentarians have the prerogative of inviting the Board chairs and senior management to appear before parliamentary committees to seek more information or clarification regarding information reported in the Crown corporation's annual report. The government invites Parliament to fully exercise its prerogative when it is of the opinion that it requires information in addition to what has been reported to effectively discharge its own responsibilities.
7.2 Certification
Certification refers to the requirement that senior officers of a corporation certify by signature that they have discharged certain prescribed responsibilities. Certification has been adopted recently by both the United States (Sarbanes Oxley Act and Securities Exchange Commission regulations) and several provincial jurisdictions in Canada.
Under the current private sector legal and regulatory regimes the CEO and Chief Financial Officer (CFO) of a corporation, or in cases where a corporation does not have a CEO or CFO, persons performing duties generally associated with these senior positions, are required to personally certify performance of a particular set of responsibilities.
Certification generally does not impose new responsibilities upon signatories. Rather it is a means to confirm performance of existing responsibilities. It is the position of the government that certification designed to respond to the specific needs of public institutions would enhance the Crown corporation governance and accountability regime. In addition to CEO and CFO certifications, it is the opinion of the government that accountability would be further enhanced by requiring chairs, on behalf of Boards of Directors, to certify performance of a set of key responsibilities accorded to them. This would be a departure from practice in the private sector, where board responsibilities related to corporate governance have traditionally been cast as best practices. Private sector corporations have been expected to comply with these best practices or explain why it is not feasible for them to do so.
The governance system for Crown corporations must be as robust as its private sector counterparts, therefore the government supports the use of certification. In addition to the certifications required by private sector regulators, the government believes that Crown corporations' senior executives should certify items that are of particular concern and interest to the public, such as the availability of reporting mechanisms for the disclosure of wrongdoing and the application of a code of conduct.
The use of certification is a very recent addition to the reporting requirements in the private sector. How it will be implemented and whether it will bring the expected results is still unclear. Further work is required before the government can finalize its decision on the specific elements that would be certified personally by CEOs, CFOs, and chairs of Boards of Directors.
Measure #24In principle, the government supports the use of a certification regime adapted to the reality of public institutions. The Treasury Board of Canada Secretariat will examine, in consultation with Crown corporations, the development of a certification regime that would be applicable to all Crown corporations. |
7.3 Access to Information
The Access to Information Act is built on the principle that Canadians have a right of access to government information. Access to information provides Canadians with a mechanism to scrutinize the activities of government. Currently 28 out of 46 Crown corporations(9) are subject to the Access to Information Act.
In line with the Task Force report entitled, Access to Information: Making it Work for Canadians released in June 2002, the government recommends that the Act not apply to information relating to critical interests of organizations such as journalistic sources and competitive commercial activities, where the current exemptions would not adequately protect this information. Two examples are the competitive commercial activities of the Canada Post Corporation relating to its courier business and program development at the Canadian Broadcasting Corporation.
The government will extend the Act to 10 of the 18 Crown corporations currently not covered by Order in Council. The other Crown corporations are of a commercial nature and will remain outside the legislation until legal instruments can be designed to protect their commercially sensitive information holdings. The government will develop these instruments in the context of overall review of the Act.
Measure #25The Access to Information Act should
|
7.4 Disclosure of Wrongdoing
On October 8, 2004, the government tabled in Parliament an Act to establish a mechanism for the disclosure of wrongdoing in the public sector and to protect public servants who make disclosures. The proposed Public Servants Disclosure Protection Act, Bill C-11, was referred to Committee on October 18, 2004. The proposed legislation provides substantial protection in law from reprisal for good faith disclosures and requires all federal institutions, including Crown corporations,(12) to establish their own internal disclosure mechanisms. The Bill also requires Treasury Board to establish a Code of Conduct for the federal public sector. However, chief executives of federal departments and organizations may go further and establish their own codes, provided that they are consistent with the Treasury Board code but adapted to the needs of their organizations.