Auditing Transfer Payment Programs Office of the Auditor General of Canada

1. Auditing Transfer Payment ProgramsOffice of the Auditor General of Canada Ronnie Campbell, CMA Assistant Auditor General of Canada November 6, 2006 Office of the Auditor General of Canada

2. Canadian audit model • Westminster-style parliamentary democracy modelled after that of the United Kingdom • Parliament of Canada needs reliable and fact-based information in fulfilling its oversight role Office of the Auditor General of Canada

3. The Auditor General of Canada • Sheila Fraser, appointed Auditor General of Canada in 2001 • Appointed for a ten-year term • Auditor General is an agent of Parliament • National audit office is part of the legislative branch Office of the Auditor General of Canada

4. The Auditor General’s authority comes from Parliament • Parliament granted the Office of the Auditor General of Canada with specific powers and responsibilities, which are spelled out in the Auditor General Act, the Financial Administration Act (FAA), and many other statutes. Office of the Auditor General of Canada

5. About our audit office • Budget: about 78 million dollars (about 55 million Euros) • Number of employees: about 640 • We examine most areas of the federal government and Canada’s three northern territories. • Our staff is highly qualified and multidisciplinary. Office of the Auditor General of Canada

6. Types of transfer payment programs Grants • Unconditional transfer payments made to individuals or organizations that have met established eligibility requirements • Recipients of grants are not subject to audit. Office of the Auditor General of Canada

7. Types of transfer payment programs Contributions • Conditional transfer payments made to individuals or organizations that are based on a contribution agreement • Subject to audit and reporting requirements • About 17.5 billion dollars (about 12.3 billion Euros) spent a year on grants and contributions Office of the Auditor General of Canada

8. Types of transfer payment programs Contracts • The federal government also uses contracts to pursue public policy objectives. • Three large government contracts awarded to advertising firms Office of the Auditor General of Canada

9. Audits of transfer payment programs • October 2000 audit of grants and contributions in human resources department • November 2003 audit of sponsorship program involving advertising firms • May 2006 government-wide audit of grants and contributions Office of the Auditor General of Canada

10. Why auditing transfer payment programs is important • Canadians want to know why money is being transferred and for what purpose. • Transfer payments involve large amounts of public funds. Office of the Auditor General of Canada

11. October 2000 audit • Examined 40 transfer payment programs • Represents about 560 million dollars (about 394 million Euros) in transfer payments • Weaknesses in financial management and control, etc. Office of the Auditor General of Canada

12. May 2006 audit Objective • To determine effectiveness of government-wide management and control of the spending of public money through transfer payments Result • Government made satisfactory progress in responding to our past concerns of its management of transfer payments. Office of the Auditor General of Canada

13. November 2003 audit • Three large government contracts awarded to advertising firms • More than 250 million dollars (about 176 million Euros) in public funds were spent from 1997 to March 2003 in a program without clearly stated objectives • Sheila Fraser said the government “broke every rule in the book.” Office of the Auditor General of Canada

14. Our approach to auditing transfer payment programs Our audits examine… • Government is following its own rules • Compliance with the government’s Policy on Transfer Payments • Compliance with Financial Administration Act and delegations of authority Office of the Auditor General of Canada

15. Our approach to auditing transfer payment programs Our audits examine… • Equal access to public funding • Eligibility criteria linked to program objectives • Appropriate level of assurance that the program is properly managed Office of the Auditor General of Canada

16. How we ensure the quality of our audits • By following professional auditing standards • By conforming to our quality management framework • By clearly stating the objectives, scope and criteria of our audits • By putting in place controls that focus on results Office of the Auditor General of Canada

17. Our audits make a difference • Government acting on our recommendations • Government taking steps to strengthen controls on the use of grants and contributions Office of the Auditor General of Canada

18. Reporting to Parliament • Our audit reports are automatically referred to the Public Accounts Committee. • This committee plays a critical role by holding public hearings on our findings and ensuring that departments respond to identified concerns. Office of the Auditor General of Canada

19. Conclusion • Important that we report on government’s progress in improving its management of public programs • Important that we inform parliamentarians and Canadians when government does exercise sound stewardship of public funds Office of the Auditor General of Canada

20. For more information Please visit our Web site: www.oag-bvg.gc.ca Office of the Auditor General of Canada