Federal Government Comptrollership FMI Ontario 25 February 2009 Richard Charlebois

1. Federal Government ComptrollershipFMI Ontario25 February 2009Richard Charlebois

2. Public Service Commission of Canada Mandate • Independent agency reporting to Parliament that: • appoints persons to and within the Public Service (delegated to Deputy Ministers) • conducts investigations and audits in accordance with the Public Service Employment Act (PSEA) • administers PSEA provisions relating to political activities of employees and deputy heads

3. Public Service Commission – Striving for Excellence • The Public Service Commission is dedicated to building a Public Service that strives for excellence. We protect merit, non-partisanship, representativeness and the use of both official languages. • We safeguard the integrity of staffing in the Public Service and the political impartiality of public servants. We develop policies and guidance for Public Service managers and hold them accountable for their staffing decisions. We conduct audits and investigations to confirm the effectiveness of the staffing system and to make improvements. As an independent agency, we report our results to Parliament. • We recruit talented Canadians to the Public Service, drawn from across the country. We continually renew our recruitment services to meet the needs of a modern and innovative Public Service.

4. Commissioner Manon Vennat (part-time) President Maria Barrados Commissioner David Zussman (part-time) General Counsel Legal Services Gaston Arsenault Senior Vice-President Policy Branch Donald Lemaire Vice-President Audit, Evaluation and Studies Branch Jean Ste-Marie (Acting) Vice-President Staffing and Assessment Branch Gerry Thom Vice-President Corporate Management Branch/CFO Richard Charlebois Vice-President Investigations BranchDenis Bilodeau (Acting) Organizational Structure

5. Magnitude of federal public sector management: Annual budget over $250 Billion Over 94 departments/agencies offering 1,600 programs and services Over 2,000 points of service across Canada and abroad Nearly 300, 000 employees Federal government contributes to the country’s economic competitiveness, social and cultural infrastructure, health of the environment and well being of communities and Canadians Federal Government Context

6. Public Sector Financial Management • One of Canada’s leading authorities: Professor Graham Andrew of Queens University • Published book: “Canadian public Sector Financial Management” • Comments from the book: • It’s all about the money! • All public-sector managers are financial managers to some degree. • Program Manager – Financial Expert partnership

7. Public Sector Financial Management (cont’d) • Comments from the book (cont’d): • Creating public confidence • Public funds do not belong to the government: they belong to the people. • Financial information often serves as a surrogate for other performance data • No “bottomline”

8. Challenges • World economic situation • Like other countries, government is continuously being challenged to improve and adopt efficient practices oriented toward results. Canada is seen as a leader. • Several incidents have eroded public confidence, eg, Sponsorship Scandal or Gomery enquiry. • In December 2006, the Federal Government introduced a new Federal Accountability Act (FAA) which provided increased importance and clarity on roles including the Accounting Officer.

9. Key Financial Management Initiatives • Federal Accountability Act • Grants and Contributions • Financial Management Community Development • Evolving Role of the CFO Not covered today: • Financial Management Policy Suite renewal • Internal Audit function • Audited Financial Statements • Financial Systems Meaningful results in public service cannot be achieved without some degree of risk. A culture of risk aversion comes at a cost: a web of rules, reporting burden and reduced scope for intelligent risk taking.

10. FEDERAL ACCOUNTABILITY ACT (FAA)

11. Context – FAA & Action Plan • The Federal Accountability Act was granted Royal Assent on December 12th, 2006 • Through the Federal Accountability Act and Action Plan, the Government of Canada has brought forward specific measures to : • Help strengthen accountability; • Increase transparency; and • Provide oversight in government operations.

12. FAA: Overview Politicalreform Procurementreform Making thepublic sectormore open Public sectorreform The elements of the Federal Accountability Act Moving to a culture of accountability in every area Parliamentaryreform

13. Parliamentary Reform – Some key measures Expanded the role for the Auditor General to “follow the money”. Provisions in funding agreements with recipients that support AG audits Appointment of Independent Parliamentary Budget Officer to provide financial analysis about Canada’s finances, estimates and on proposals by committees and in private Members’ bills. Parliamentary Budget Officer may request any financial or economic data in possession of department (Appointment effective March 25, 2008)

14. Clearer accountability of Ministers and Deputies Deputies designated as “Accounting Officers” with Legal obligation to appear before parliamentary committees and answer questions relating to: The measures taken to organize resources to deliver departmental programs in compliance with government policies and procedures The measures taken to maintain effective systems of internal control The signing of the departmental accounts The performance of other specific duties assigned by law or regulation in relation to administration of the department Public Sector Reform – Some key measures

15. Whistle blowing Public Sector Integrity Commissioner with power to enforce Public Servants Disclosure Protection Act Protection for all Canadians who expose government wrongdoing Comptroller General has the functional authority over internal audit Public Sector Reform – Some key measures

16. Procurement Reform – Some Key Measures New Procurement Ombudsman to review procurement practices on an ongoing basis and submit an annual report to Minister of PWGSC Inclusion of integrity provisions in all government contracts Code of Conduct for Procurement to apply to both suppliers and government Public disclosure of basic information on goods and services contracts in excess of $10,000

17. Streamlining Rules The Government has been clear that accountability measures must not result in cumbersome layers of rules for public servants and those who interact with government. As a result, the Action Plan also commits the government to: Reduce the number of TB policies by at least one half Undertake three reviews to reduce unproductive “rules” and ensure a balanced approach to oversight: Grants and Contributions Procurement Financial Management

18. INDEPENDENT BLUE RIBBON PANEL ON GRANTS AND CONTRIBUTIONS

19. Grants and Contributions What are they? Used to transfer monies from the government to individuals, organizations or other levels of government to achieve public policy objectives as set out in the Speech from the Throne, Budget or other policy outcomes Contributions are subject to Treasury Board approval Grants are subject to Parliamentary approval Provided only at the minimum level required to meet objectives and expected results – normally not provided in advance of need They are not used to acquire goods or services, nor obtain a direct benefit – contracts are used for these purposes

20. Universe of Grants & Contributions Source: Public Accountsof Canada 2004-2005 (breakdown of recipient categories conducted through a departmental survey) Total Net Government Expenses (2004/05): $197B Other Program Expenses Public Debt Charges Major Transfer to Persons (Employment Insurance, Old Age Security, Guaranteed Income Supplement and Spousal Allowance) Major Transfers to other levels of Government (Canadian Health Transfer & Canadian Social Transfer Fiscal Equalization) 1 2 2 1 3 4

21. Universe of Grants & Contributions (cont’d) Grants & Contributions: $27B First nation Communities Other Aboriginal Recipients Universities & Research Institutions Provinces, Territories & Municipalities International Governments and Organizations Veterans Businesses Farmers and Fishers Other Not-For-Profit Organizations Remainder 1 10 2 1 3 9 4 5 8 6 7 8 9 10

22. Grants & Contributions: Definitions Grants: A transfer payment to a recipient that is not subject to being accounted for or audited but for which eligibility and entitlement may be verified and for which the recipient must meet pre-established eligibility criteria – e.g., Canadian Patient Safety Institute Grant (Health). Contributions: A conditional transfer to a recipient for a specified purpose (used to reimburse specific expenditures) and is subject to audit and evaluation – e.g., Canadian Strategic Infrastructure Fund.

23. Independent Blue Ribbon Panel on Grants and Contributions June 2006: The president of the Treasury Board of Canada announced the creation of an independent Blue-ribbon panel to review grants and contributions. This commitment was part of the Federal Accountability Act and Action Plan. The panel was asked to recommend measures to make the delivery of grants and contributions more efficient while ensuring greater accountability. The objective was to make the nearly $27 B in over 800 grant and contribution programs work better for Canadians.

24. Key Conclusions The Panel arrived at three key conclusions: 1) There is a need for fundamental change in the way the federal government understands, designs, manages and accounts for its grant and contribution programs. 2) It is possible and necessary to simplify administration while strengthening accountability (better risk management) 3) Making changes will require sustained leadership at the political and public service levels.

25. Next Steps Treasury Board Ministers approved a new Transfer Payment Policy for Grants and Contributions (effective October 2008). Treasury Board Secretariat and departmental action plans implementation based on BRP recommendations, eg, risk management frameworks and sharing of best practices. Develop and roll-out directives, guidelines and training. Follow-up, e.g., scheduled review of policy, on-going consultation with recipients.

26. Financial Management Community Development: A Priority

27. Context • Finance Officer (FI) population dropped by 20% during Program Review, recovered 1995 level in 2002 • Current FI population 36% increase over 1995 level

28. Context (cont’d) Smaller cadre of experienced FIs at mid-career level Larger cadre of inexperienced FIs at junior level Larger cadre of highly experienced FIs about to retire • Overall drop in experience level since 1995 • Number of FIs in 35 to 44 age group fell from 42% in 1995 to 29% in 2006

29. Context (cont’d) • “FI inflation” has created a lower percentage of FI-1s and FI-2s, and higher percentage of FI-3s and FI-4s • Number of FIs in 35 to 44 age group decreased, but ratio of FI-3s and FI-4s increased

30. Context (cont’d) • Over past 20 years, the average number of years each FI has spent in their current position has decreased from 5 to 3.2, and continues to decline • Currently 1.5 years below the Core Public Administration (CPA) average.

31. Context (cont’d) • Almost 30% of FIs have been in their current position less than one year • Only 21% have been in their position over 5 years, compared to 37% for the CPA

32. Context (cont’d) Current Situation Impact on Skills and Capacity Secondary Impact Primary Impact Driver Additional FI Tasks Diversion of focus from Core Activities Visibility and Accountability Initiatives More Complex Activities Diminished Capacity for Core Work Reduction in Finance Positions Same Core work, fewer FIs Program Review Disrupted Succession Planning Departure of mid career FIs Overall Diminished Capacity Lower Skills at Senior Level Baby Boomer Retirement Loss of FI Corporate Knowledge More Competition for Recruits Unfilled Positions Demographics Inadequate Capacity at junior level “Gen Y” Workplace Approach Lower Commitment Level

33. Observations: • Program Review reduced FI staff by at least 20% which caused significant loss of expertise • Subsequent expansion shifted demographic profile, resulting in relatively more inexperienced FIs supervised by relatively fewer experienced mid career FIs • On average, FI-3s and FI-4s in 2008 have less experience than their counterparts of 1995 • There is less stability in the FI workplace, with the average time in position having fallen from 5 years to 3.2 years and continuing to fall. • There are answers to the challenges!

34. III) Capacity Building Initiatives • Office of Comptroller General has established Finance Officer (FI) Level 3 and Level 4 pre-qualified pools • Working on FI Level 2 government wide staffing processes • Executive Level 3 pre-qualified pool • Working on Executive Level 1 pre-qualified pool • CA Student Training Program (CAST) • Finance Officer Recruitment and Development program (FORD) • Finance Officer Classification standard review and modernization • Accelerated Executive Development Program – finance stream (AEXDP) • Modernize finance specialist training • Finance Officer to CFO Career Path (handout)

35. EVOLVING ROLE OF THE CHIEF FINANCIAL OFFICER (CFO)

36. Financial Management Environment • Matter of interest for Canadians and Parliament • Instances of failure of financial management control frameworks 3. Increasing complexity of transactions and reporting requirements 4. Call from stakeholders for increased transparency of financial and performance information 5. Insufficient financial management expertise and capacity (skills and number) to match increasing demand 6. High profile issue at the executive table in both public and private sectors

37. CFO Model Moving to: • Strengthen financial management to ensure support for Deputy Minister in new role of Accounting Officer required under the Federal Accountability Act • Develop effective systems for resource management and internal controls • Shift from transaction to strategic focus • Enhanced challenge function to reduce departmental risks • Integration of financial and non-financial information • CFO recognized as a valued partner/advisor • Departmental financial statements compliant with GAAP • CFO sign-off on financial, risk and performance of non-routine material departmental transactions • Building financial expertise and capacity

38. CFO Model – Responsibilities Strategic Advisor to Senior Management • Build financial capacity and training Support Deputy Minister: financial strategic leadership and advice; financial oversight; and internal control frameworks Integrated financial management systems • Attesting to the completeness and accuracy of all financial reporting (external reporting to Treasury Board and Parliament and internal reporting to management) Ensure compliance with Central Agency and Departmental Policies and Regulations. CFO – ADM Capitalization of Assets Senior departmental executive responsible for financial management and ensuring that resources are: aligned with departmental and Government objectives; fully identified and allocated; and compliant with applicable legislation. Procurement & Contracting Implementation and monitoring of an integrated risk management framework Provide departmental financial policies, procedures, advice and guidance

39. CFO Model - Benefits to Departments • Deputy Minister role aligned with Federal Accountability Act and Central Agency recommended accountability model • CFO with integrator and advisor role at executive table • Impartial, objective strategic advice to Senior Management • Improved alignment of resources with Government and departmental priorities • Reinforced financial accountabilities at all levels • Linkage of financial and non-financial information to assist with resource reallocation • Ensures level playing field for competing priorities and resources • CFO is lead on financial management agenda and financial policy framework • Supports enterprise approach to business delivery • Supports the global network of financial specialists • Promotes best practices from public and private sectors

40. Conclusions

41. The government’s management agenda is about: Delivering high-value programs efficiently, transparently, and accountably Ensuring that the Government of Canada has the capacity to make effective decisions and deliver on priorities. Public Sector Management Matters

42. It is an exciting and challenging time to be in the federal government, especially for the finance community. Parting Comment