The Roles And Responsibilities Of The Treasury Board Secretariat

HOUSE OF COMMONS

CANADA

The Roles And Responsibilities Of The Treasury Board

Secretariat And The Tenure Of Deputy Ministers

Report of the Standing Committee on

Public Accounts

Hon. Shawn Murphy, M.P.

Chair

June 2007

The Speaker of the House hereby grants permission to reproduce this document, in whole or in part for use in

schools and for other purposes such as private study, research, criticism, review or newspaper summary. Any

commercial or other use or reproduction of this publication requires the express prior written authorization of the

Speaker of the House of Commons.

If this document contains excerpts or the full text of briefs presented to the Committee, permission to reproduce these

briefs, in whole or in part, must be obtained from their authors.

Also available on the Parliamentary Internet Parlementaire:

http://www.parl.gc.ca

Available from Communication Canada — Publishing, Ottawa, Canada K1A 0S9

THE ROLES AND RESPONSIBILITIES OF THE

TREASURY BOARD SECRETARIAT AND THE

TENURE OF DEPUTY MINISTERS

Report of the Standing Committee on

Public Accounts

Hon. Shawn Murphy, M.P.

Chair

June 2007

STANDING COMMITTEE ON PUBLIC ACCOUNTS

CHAIR

Hon. Shawn Murphy

VICE-CHAIRS

Brian Fitzpatrick

Jean-Yves Laforest

MEMBERS

David Christopherson

Mike Lake

Pierre Poilievre

Pablo Rodriguez

Jean-Yves Roy

Judy Sgro

David Sweet

John Williams

Borys Wrzesnewskyj

CLERK OF THE COMMITTEE

Georges Etoka

PARLIAMENTARY INFORMATION AND RESEARCH SERVICE

LIBRARY OF PARLIAMENT

Brian O’Neal

Alex Smith

Lydia Scratch

iii

THE STANDING COMMITTEE ON

PUBLIC ACCOUNTS

has the honour to present its

NINETEENTH REPORT

Pursuant to Standing Order 108(3)(g), the Standing Committee on Public

Accounts has considered the roles and responsibilities of the Treasury Board

Secretariat and the tenure of Deputy Ministers. The Committee as agreed to table this

Report as follows:

INTRODUCTION

The Treasury Board is a committee of the Privy Council with a statutory base set out in

the Financial Administration Act. The Treasury Board, supported by its Secretariat, functions as

the government’s management board and oversees the operations of the entire federal

government. It performs this oversight role from three perspectives: expenditure management,

management performance oversight, and as the principal employer of the public service.

The Public Accounts Committee decided to conduct a study into the roles and

responsibilities of the Treasury Board and its Secretariat and the tenure of deputy ministers

because the Committee had become concerned about accountability for financial management in

departments and agencies. More specifically, the Committee noted serious concerns with the

accounting for costs in the Canadian Firearms Program, the breakdown of management controls

in the Office of the Privacy Commissioner and the Office of the Correctional Investigator, and

the significant cost over-runs in large Information Technology projects. In each of these cases,

the Treasury Board Secretariat had an oversight role, which does not appear to have functioned

as rigorously as intended. Invariably, the Secretariat states that responsibility for financial

management lies with departments, which left the Committee wondering what the actual roles

and responsibilities of the Treasury Board Secretariat and deputy ministers are. It is not clear the

extent to which the Treasury Board Secretariat provides sufficient guidance to departments and

then holds them accountable for sound financial management.

The respective roles and responsibilities of departments and Treasury Board for financial

management have changed over the years, and the Committee did not form a broad opinion, or

philosophy, as to the appropriate balance between central direction and administrative autonomy.

Instead, the Committee noted a number of areas that need to be addressed, which, for the

purposes of this report, have been categorized in the following way: part 1, the roles and

responsibilities of the Treasury Board Secretariat—financial management, policy review, active

monitoring, and the management accountability framework; and part 2, the tenure of deputy

ministers.

The Committee held five hearings on this study and met with a variety of witness,

including: Sheila Fraser, Auditor General of Canada; Charles-Antoine St-Jean, Comptroller

General of Canada; Wayne Wouters, Secretary of the Treasury Board; Marc O'Sullivan,

Assistant Secretary to the Cabinet, Privy Council Office; Ian Clark, President of the Council of

Ontario Universities and former senior public servant; Denis Desautels, former Auditor General

of Canada; Arthur Kroeger, former senior public servant.

PART 1: THE ROLES AND RESPONSIBILITIES OF THE TREASURY BOARD

SECRETARIAT

A. Financial Management

At one time, financial controls within the Government of Canada were highly centralized,

with the Comptroller of the Treasury authorizing every expenditure. In an effort to make

departments more responsible and accountable for financial management, Treasury Board

decentralized this authority and gave departments substantial autonomy and control.

As the

Auditor General put it:

[T]here's this sort of pendulum that swings between centralization and decentralization.

Given the complexity and the size of the federal government, we have to recognize that

this has to be a shared responsibility. I don't think it can be totally decentralized; it would

be impossible. There has to be some central function, if not just to produce the financial

statements and to issue the policies and the guidance to the departments. To totally

centralize would also not be functional, given the complexities of these departments in

and of themselves. So there has to be a shared responsibility, and what there probably

needs to be is more clarity about what the role and responsibility of the central agency is.

Consequently, in order to ensure that public funds are adequately safeguarded and spent

appropriately, it is imperative that departments and agencies have strong financial controls,

reliable information systems, clear and consistent accounting practices, and robust internal audit;

and Treasury Board, as the management board for the government, must set policies and

standards in these areas, provide guidance where needed, and oversee financial management

within the government as a whole.

In recent years, the Treasury Board and its Secretariat have undertaken a number of

initiatives to improve financial management within the Government of Canada. For example,

they have:

• Re-established the Office of the Comptroller General, whose objective is to ensure

that departments comply with the Board’s expenditure and stewardship policies;

A brief history of the Treasury Board can be found in Auditor General of Canada, March 2004 Report, Chapter 7,

Managing Government—A Study of the Role of the Treasury Board and its Secretariat.

• Developed and adopted a new policy on internal audit, which was approved in

October 2005, and the Federal Accountability Act makes the deputy head responsible

for ensuring an adequate internal audit capacity;

• Created the Centre for Excellence on Internal Audit;

• Required large departments to have independent audit committees;

• Committed to have the 22 largest departments include audited financial statements in

their departmental performance report by 2009;

• Established in departments the position of Senior Financial Officers; and

• Undertaken a review of financial management policies (this is discussed in more

detail in the next section).

While this represents important progress, the Committee has several concerns with these

initiatives.

The Committee is pleased that the government has re-established a separate office of the

Comptroller General as this should help to provide stronger, more focused guidance to

departments on financial management. However, the Committee is somewhat concerned about

the extent to which departments must follow the Comptroller General’s guidance. The

Committee saw in the case of accounting for costs in the Canadian Firearms Program how the

accounting advice of the Comptroller General was ignored in favour of a legal opinion.

The

Government responded to the Committee’s recommendation for the Comptroller General to have

the final word on the interpretation and application of accounting standards and policies by

stating the following:

Policy proposals under consideration would require that, in cases where the Comptroller

General of Canada does not agree with an accounting treatment of a department, this

disagreement would be communicated in writing to the Deputy Head, the Secretary of the

Treasury Board and the President of the Treasury Board.

The Committee is not satisfied with this proposal because it would still allow deputy

heads to overrule the Comptroller General on accounting issues. The Committee still believes

that the Comptroller General should have the final word on accounting treatments. Failing this, at

the very least the Auditor General should be informed of these disagreements, and then he or she

can bring the matter to the attention of Parliament. The Committee recommends that:

See House of Commons Standing Committee on Public Accounts, Report 9 - Chapter on Parliament's Control of

Public Spending of the May 2006 Report of the Auditor General of Canada, October 2006, 39

Parliament.

Government of Canada, Government Response: Ninth Report of the Standing Committee on Public Accounts,

"Government Decisions Limited Parliament's Control of Public Spending of the May 2006 Report of the Auditor

General of Canada," February 2007.

RECOMMENDATION 1

Disagreements over accounting treatments between the Comptroller General of

Canada and Deputy Heads be communicated in writing to the Auditor General of

Canada, the Secretary of the Treasury Board, and the President of the Treasury

Board.

According to the Policy on Responsibilities and Organization for Comptrollership,

deputy heads must appoint a senior financial officer.

However, the Auditor General told the

Committee that only 16 of 22 senior financial officers of the largest departments currently have a

professional accounting designation. The Committee is astounded that it would even be possible

to appoint someone as a senior financial officer without that person having a professional

accounting designation, especially since the policy was approved in 1996, over ten years ago. It

is imperative that these officials understand the true nature of government finances and financial

management. The best way to ensure the competence of these officials is for them to have a

professional accounting designation. Consequently, the Committee recommends that:

RECOMMENDATION 2

All Senior Financial Officers within the Government of Canada have a professional

accounting designation by 31 March 2009.

The Office of the Comptroller General is leading efforts to strengthen the internal audit

function within government. As part of the Policy on Internal Audit, the Comptroller General has

the responsibility to conduct horizontal and other audits of small departments.

However, the

Office of the Comptroller General made several commitments on conducting internal audits

which appear to have not yet been kept. In Treasury Board Secretariat’s 2005-06 Report on Plans

and Priorities, the Office committed to conduct a government-wide horizontal audit on internal

audit by December 2005, and develop three-year plans for a) audits of small departments and

agencies and b) government-wide horizontal audits by March 2006.

However, these activities

Treasury Board Secretariat, Policy on Responsibilities and Organization for Comptrollership, February 1996,

section 6(a).

Treasury Board Secretariat, Policy on Internal Audit, April 2006, section 5.4.2, “The Comptroller General will

conduct horizontal and other audits on SDAs each year and will provide deputy heads with copies of all relevant

audit reports.”

Treasury Board Secretariat, 2005-06 Report on Plans and Priorities, page 20.

were not completed in time for the 2005-06 performance report.

The Committee supports

efforts to strengthen internal audit and would like to see more progress in this area. The

Committee would also like to see more transparency about progress made. The Committee

recommends that:

RECOMMENDATION 3

The Office of the Comptroller General provides the Public Accounts Committee

with its plans for horizontal audits and audits of small departments and agencies by

31 December 2007.

RECOMMENDATION 4

Audits conducted by the Office of the Comptroller General be made public as soon

as they are completed.

Lastly, while the government is moving to have the financial statements of the 22 largest

departments audited, the Auditor General expressed some doubt to the Committee that these

departments would be able to have their financial statements up to an auditable standard by

2009.

If there is any doubt whether or not this date can be met, the Comptroller General should

inform the Committee as soon as possible.

B. Policy Review

The Treasury Board has the responsibility for setting government-wide policy for

departmental administration and financial management. The Secretary of the Treasury Board,

Wayne Wouters, described this responsibility in the following way:

The Treasury Board management policies are the foundation for management

accountability in government. They ensure a consistent approach to management across

government, based on common standards that promote management excellence. They

define clear responsibilities and accountabilities of deputies for the management of

results, resources, and risks. They define incentives for management excellence, and

negative consequences for inadequate performance.

Treasury Board Secretariat, 2005-06 Departmental Performance Report, page 51.

The Auditor General said, “Like you, I'm a little skeptical on the 2009 date.” Meeting 24, 15:55.

Meeting 26, 15:25.

For the past several years, the Treasury Board Secretariat has been undertaking a review

of its policy suite to simplify and streamline Treasury Board’s management policies. According

to Secretariat, the goals of this policy review are to:

• set out what is expected of ministers and deputy ministers to ensure the appropriate

control mechanisms are in place and monitored;

• provide the basis for increased use of authority and indicate the appropriate response in

cases of mismanagement;

• focus reporting requirements and ensure the provision of meaningful performance

information;

• strengthen the requirement to monitor compliance in key risk areas, notify the Treasury

Board in cases of mismanagement, and ensure a corrective response; and

• support deputy ministers and managers in meeting policy requirements through an

appropriate combination of tools, training, and internal communications.

One example of the newly revised policies is the Policy on Internal Audit, released in April

2006.

The Committee supports the policy review by Treasury Board Secretariat and the efforts

to clarify policy requirements. However, while moving in the right direction, it is not clear what

progress the Secretariat is making and how much remains to be done. Progress is reported in the

2005-06 departmental performance report by noting a few activities and this comment, “Plans

were developed for the renewal of the remainder of the policy suite, work commenced, and

progress was tracked against plans.”

This hardly represents clear, credible, results-based

performance reporting. In the interests of transparency and accountability, the Committee

recommends that:

RECOMMENDATION 5

The Treasury Board Secretariat provide the Public Accounts Committee with its

plan for the renewal of its policy suite by 31 December 2007, and that the

Secretariat provide a detailed account of its progress against this plan in its

departmental performance report.

The review of policies is also intended to clarify accountability and performance

expectations. Sheila Fraser told the committee how a lack of clarity often leads to confusion and

finger pointing when something goes wrong about who should have been responsible. She said:

Treasury Board Secretariat, Management in the Government of Canada, page 16.

Treasury Board Secretariat, 2005-06 Departmental Performance Report, page 33.

Where I think there needs to be more clarity, though, and we see it very often in our

audits, is with regard to the responsibility of the departments and the responsibility of the

Treasury Board Secretariat. Quite often when we see a situation where improvements are

needed, you will see the departments indicating that Treasury Board Secretariat guidance

isn't sufficient, or they haven’t been told what to do, and the Treasury Board will say,

well, it's the departments that should have been managing that, and there's a bit of finger

pointing that goes on.

The Committee is in agreement that more needs to do more to clarify the respective

responsibilities of departments and the Secretariat, as accountability depends upon clear roles

and responsibilities. In addition, if there are no clear consequences for failing to comply with

policies, then there is little incentive for departments to adhere to the directives of the Treasury

Board, except occasional embarrassment after an audit by the Auditor General. Mr. Wouters told

the Committee that the policy review would address these concerns. He commented:

There always are concerns raised about the lack of consequences if you don't comply

with the policies. And some of our policies are not clear on that. That’s why in our

review, bringing forward to Treasury Board the new policies, we want to, one, ensure that

the accountabilities are clear; two, ensure what is required of each party; and three,

outline the consequences in the event those policies aren’t complied with.

Linda Lizotte-MacPherson, Associate Secretary, added, “[I]n terms of the policies that we’re

currently renewing . . . we are also including explicitly consequences as part of each policy. So

we’re looking at the institutional sanctions down to individual consequences for non-compliance,

which is a big change.”

The Committee is encouraged that the Treasury Board Secretariat has recognized the

need to clarify consequences for failing to comply with policies. However, this would appear to

apply simply to the policies being renewed, and it needs to apply to all Treasury Board policies.

Consequently, the Committee recommends that:

RECOMMENDATION 6

All Treasury Board policies be revised by December 2007 to include appropriate

and meaningful consequences for failure to comply with the requirements of the

policy.

Meeting 24, 15:30.

Meeting 26, 16:25.

In addition to the Treasury Board Secretariat’s ongoing internal review of policies, in

July 2006 the President of the Treasury Board created a task force composed of deputy ministers

and former private-sector chief financial officers to review the Financial Management

Framework.

The mandate of the task force was to bring forward recommendations to:

strengthen and streamline financial management policies, change unnecessary or unproductive

policy or legislative requirements, and ensure the public service has the skilled financial experts

it needs. The task force was to report in December 2006, but no report has been made public to

date. As the task force should have long since completed its work and the Committee is quite

interested in the results of this review, the Committee recommends that:

RECOMMENDATION 7

The Treasury Board Secretariat provide the Public Accounts Committee the results

of the review of the Financial Management Framework by 30 September 2007.

In order to restore accountability and to ensure effective and efficient program delivery

by having fewer but more effective rules, the President of the Treasury Board also announced in

June 2006 the creation of an Independent Blue Ribbon Panel to Advise on Grant and

Contribution Programs.

Arthur Kroeger, a former deputy minister, told the Committee that

within the government, “you have too many regulations; you have too much red tape.”

He said

too many rules make the government cumbersome, awkward, and sclerotic. Often, rules are put

in place to try to prevent problems, but “[a]ttempts to get error-free government merely get you

bureaucratic government without necessarily making government any less prone to errors at

all.”

This has made it very burdensome for small, non-governmental organizations to receive

government grants. Mr. Kroeger told the Committee how the Canadian Policy Research

Networks was asked by a government department to reconcile a 64 cent difference.

The Committee fully supports the goal of the government to have fewer, but more

effective rules. In fact, the Auditor General has made it one of her priorities to contribute to good

practices in accountability, governance, and effective public service by addressing the issue of

Treasury Board Secretariat, News Release: Canada’s New Government Takes Action to Untangle Web of Rules,

20 July 2006.

Treasury Board Secretariat, News Release: Independent Blue Ribbon Panel to Advise on Grant and Contribution

Programs, 6 June 2006.

Meeting 30, 15:50.

Meeting 30, 16:20.

the weight of controls and reporting requirements. She believes that fewer rules, but consistently

applied, would be more effective.

The Independent Blue Ribbon Panel presented its report in December 2006, and in

February 2007, the President of the Treasury Board committed to develop an action plan to

reform the administration of grants and contributions.

However, no such action plan has yet

been made public. The Committee recommends that:

RECOMMENDATION 8

The Treasury Board Secretariat provide the Public Accounts Committee with a

detailed action plan for the implementation of the recommendations of the

Independent Blue Ribbon Panel on Grant and Contribution Programs by 30

September 2007. That the Treasury Board Secretariat reports progress on this

action plan in its departmental performance report.

C. Active Monitoring

While they are worthwhile efforts, it is not enough to just review policies, specify

consequences for not complying with policies, and have fewer rules. These policies, or rules,

must be effectively and consistently applied. Too much centralized control is not desirable, but if

departments are to be accountable for management and for following the policies of Treasury

Board, then there must be a means through which they are held to account. Treasury Board

Secretariat must have a means to monitor whether or not departments are following Treasury

Board policies and then take appropriate actions to ensure compliance.

Denis Desautels, the Former Auditor General of Canada outlined what he thought was

necessary for the Treasury Board Secretariat to be able to monitor effectively what is going on in

departments:

We want the Secretary of the Treasury Board to have available information systems

which would allow him to know whether the departments are properly implementing the

policies that it approved. It must have systems which indicate whether the departments

are respecting their objectives and properly managing the resources granted to them. The

systems must provide the central organization which is the Treasury Board Secretariat

with sufficient information to allow it to determine whether the departments and the

entities are doing their work properly.

Auditor General of Canada, 2007-08 Report on Plans and Priorities, page 12.

Treasury Board Secretariat, News Release: Canada’s New Government Acting to Improve Grant and Contribution

Programs, 14 February 2007.

Meeting 27, 16:20.

In his Reflections on a Decade of Serving Parliament, Mr. Desautels emphasized that the

Treasury Board Secretariat should be proactive in its monitoring of departments. He wrote, “I

firmly believe that the Secretariat should aggressively pursue active monitoring - with the

emphasis on ‘active.’”

While the Treasury Board does have a Policy on Active Monitoring, the current Auditor

General cast doubt on the extent to which the Secretariat is engaged in this activity. Sheila Fraser

told the Committee that, “At one point, the Treasury Board had an activity or an agenda that they

were calling “active monitoring” in departments of the various financial management policies

and others. I'm not quite sure where that is at any more.”

Wayne Wouters, the Secretary of the Treasury Board, described their current approach in

the following way:

We cannot police every single transaction—it’s simply not possible—but we do try to

monitor compliance, particularly in the areas in which there are significant risks to the

government. We expect the departments to basically follow our policies. We have a

number of different sources that we look at. As I said, we undertake an assessment of

their overall competency in the department through our management accountability

framework assessment, we review the Treasury Board submissions that come in, and we

review internal audits, so we make a determination of whether these departments are in

fact complying with the policies and directives and standards.

However, a review by the Treasury Board Secretariat pointed out weaknesses with the current

approach. It said, “The experts consulted for this review also agreed virtually unanimously that

information management systems and the data collection processes that feed them are not

serving the Treasury Board and its Secretariat well in the execution of their oversight role.”

The approach of Treasury Board Secretariat to the monitoring of departmental financial

management, control systems, and compliance with Treasury Board policies appears to be a

passive one. The Secretariat says that departments are accountable for adhering to Treasury

Board policies but seems to do little to confirm that departments are following these policies.

The Treasury Board provides rules and puts conditions on expenditures, yet the Secretariat has

very little follow-up or verification process. The challenge function at the approval stage of

Auditor General of Canada, Reflections on a Decade of Serving Parliament, 2001, paragraph 112.

Meeting 24, 15:30.

Meeting 26, 15:40.

Treasury Board Secretariat, Review of the Responsibilities and Accountabilities of Ministers and Senior Officials,

2005, page 49.

submissions to the Treasury Board is not sufficient. The Secretariat needs to have a mechanism

to monitor and verify the compliance of departments with its directives. It must be able to

identify when those policies have not been followed and not wait until the Auditor General

informs them, and by then it is too late to prevent poor management, the failure of internal

controls, and the waste of public funds. Several years ago, the Committee was surprised to learn

how the Treasury Board Secretariat failed to take action to prevent serious and persistent

management breakdowns in the Office of the Privacy Commissioner, which happened once

again with the Office of the Correctional Investigator.

Policies without monitoring and enforcement are just good suggestions. The Committee

strongly believes that the Treasury Board Secretariat needs to have sufficient capacity and

information systems to engage in meaningful active monitoring of departmental financial

management and compliance with Treasury Board policies. In order to provide better public

accountability for the Treasury Board Secretariat’s monitoring activities, the Committee

recommends that:

RECOMMENDATION 9

The Treasury Board Secretariat engage in active monitoring of departmental

compliance with Treasury Board financial management policies and report on the

results of this monitoring in its annual departmental performance report.

D: The Management Accountability Framework

To be fair, some positive steps have been undertaken. As the management board of the

government, it is the responsibility of the Treasury Board to provide general management

guidance to departments. The Treasury Board Secretariat recently began a method to monitor

departmental management by setting management performance expectations and soliciting

information from departments on their performance against these expectations. The Management

Accountability Framework (MAF) was introduced by the Treasury Board Secretariat in June

2003 partly in response to the October 2000 Auditor General report which urged the government

House of Commons Standing Committee on Public Accounts, Report 1 - Special Report of the Auditor General of

Canada - Audit of the financial management and administration of the Privacy Commissioner of Canada, October

2004, 38

Parliament; and Auditor General of Canada, November 2006 Report: Chapter 11, Protection of Public

Assets—Office of the Correctional Investigatorl.

to address the issue of maintaining public trust.

The MAF was also developed to clarify

expectations for deputy ministers because, “The means by which the Treasury Board identifies

how deputy ministers have exercised the authority delegated to them are not very precise.”

The MAF was originally developed for deputy ministers to provide them a clear list of

management expectations. Each year, the Secretariat goes through a list of indicators associated

with the management expectations and assesses how departments performed under each

indicator. At the same time, departments may assess their own performance using the same

indicators. After the Treasury Board Secretariat’s assessment, the Secretary of the Treasury

Board meets with the department’s deputy minister and they discuss the findings of the

assessment. Through this process, the MAF provides a basis of engagement with departments

and suggests ways for departments to move forward in problem areas.

The MAF assessments, among other things, are considered by the Clerk of the Privy

Council, in consultation with the Committee of Senior Officials, in making recommendations on

the performance ratings of deputies to the Prime Minister.

In December 2003, the government announced that MAF assessments would be

published on departmental websites for review by parliamentarians and Canadians.

This

followed a recommendation made by the Office of the Auditor General in its November 2003

report which stated that parliament should consider how committees could use the MAF as a

gauge when committees ask deputies to account for their departments.

As of March 2007,

departmental MAFs are not yet publicly available, even though departments and the Treasury

Board Secretariat have completed three rounds of MAF assessments.

The Secretary of the Treasury Board, Wayne Wouters, told the Committee that the MAF

process was “a work in progress.”

As such, he continued:

It’s been a learning process for us as to how we do this. We’ve had to establish the

indicators by which we can assess. We’ve had to ensure that we’re comfortable with that.

Auditor General of Canada, Chapter 12 – Values and Ethics in the Federal Public Sector, October 2000,

paragraph 12.127.

Treasury Board Secretariat, Review of the Responsibilities and Accountabilities of Ministers and Senior Officials,

2005 page 47.

Treasury Board Secretariat, Review of the Responsibilities and Accountabilities of Ministers and Senior Officials,

September 2005, p. 50.

Privy Council Office, Ethics, Responsibility, Accountability: An Action Plan for Democratic Reform, 4 February

2004, p. 8.

Auditor General of Canada, Accountability and Ethics in Government, November 2003, paragraph 2.50.

Meeting 26, 16:20.

We’ve had to ensure that we could get the evidence, so it’s evidence-based. We’ve been

working our way through this, so we’ve been somewhat reluctant to release this.

However, Mr. Wouters believed that, given the number of Access to Information requests that

the Secretariat has received for the MAF assessments, the MAF process has “moved far enough

along that we could begin to make this available publicly.” The Committee is very concerned

that, as of yet, the MAF assessments are not yet publicly available as was committed to in late

2003. Accountability depends upon transparency. If deputy ministers, as accounting officers, are

to be accountable before the Public Accounts Committee for “measures taken to organize the

resources of the department to deliver departmental programs in compliance with government

policies and procedures,”

then assessments of the extent to which they have done so must be

made public. Thus, the Committee recommends that:

RECOMMENDATION 10

The Management Accountability Framework assessments done by the Treasury

Board Secretariat be made publicly available as soon as they are completed,

beginning with the third round. That, if the Treasury Board Secretariat is not able

to do this, reasons be provided to the Public Accounts Committee by 30 September

2007.

PART 2: THE TENURE OF DEPUTY MINISTERS

While not directly related to the roles and responsibilities of the Treasury Board and its

Secretariat, one issue that continually arose during the hearings on this study was the tenure of

deputy ministers. It is very hard to maintain a focus on departmental administration and then to

hold the most senior departmental official, the deputy minister, to account for administration if

he or she only has a very short stay in a department before being moved to another department.

Deputy ministers are appointed by the Governor in Council based on the recommendation

of the Prime Minister, which is turn is based on advice from the Clerk of the Privy Council.

Their appointment is at pleasure, which means that it can be changed, or even terminated, for any

reason. The appointment of deputy ministers is considered to be the prerogative of the Prime

Minister; although, in effect the appointment process is managed on behalf of the Prime Minister

by the Privy Council Office, Senior Personnel and Special Projects Secretariat.

Federal Accountability Act, Section 259, which amends the Financial Administration Act, section 16.4.

A significant concern with the appointment process of deputy ministers is their regular

rotation and consequent short tenure in any one department or agency. The Privy Council Office

claims that a review of deputy ministerial assignments over the last ten years indicates that

deputy ministers have served on average almost 3.5 years per assignment. However, this can be

skewed by people who stay in their position for a long time. For example, the deputy minister of

Statistics Canada has been in his position for approximately 21 years.

If only the largest departments and agencies of the Government of Canada are

considered, the current deputy ministers

of these organizations have been in their post for an

average of just 1.7 years (see Appendix). The longest serving of these deputies have been in

place since May 2002. This means that every single one of these organizations has had at least

one new deputy minister within the past five years; eight organizations have had three different

deputy ministers in the past five years;

and 12 of the 27 deputies have been in place for less

than one year.

The Committee is very concerned about the constant rotation and short tenure of deputy

ministers because it makes it difficult for deputy ministers to master the complexities of their

departments and complicates their capacity to be held to account for their performance. It takes

considerable time for a new deputy minister to understand their new portfolio, and it also takes

time for any changes made by a new deputy have their full effect. A high turnover rate

undermines policy and administrative continuity. The implementation of longer term policy

initiatives or administrative innovations must be managed by subordinates, and deputy ministers

are long gone by the time the full consequences, positive or negative, of their decisions will be

felt. In short, a high turnover rate makes it difficult to have constancy of purpose.

The Committee first expressed its concern about the high turnover of deputy ministers in

its 10

Report of the 38

Parliament. In this report, the Committee recommended that deputy

ministers be appointed for a period of at least three years.

The Committee has had particular

The heads of departments are called deputy ministers, but the heads of agencies often have a different title, so

usually the term “deputy head” is used to refer to both. For the sake of continuity, this report will use “deputy

minister” to refer to the heads of both departments and agencies.

They are Indian Affairs and Northern Development Canada, Canada Revenue Agency, Human Resources and

Skills Development Canada, Canada Border Services Agency, Industry Canada, Natural Resources Canada,

Environment Canada, and Office of Indian and Residential Schools Canada.

The statistics in this paragraph are as of 15 April 2007.

House of Commons Standing Committee on Public Accounts, Report 10 - Governance in the Public Service of

Canada: Ministerial and Deputy-Ministerial Accountability, November 2005, 38

Parliament.

concern with the rotation of deputy ministers at Indian and Northern Affairs Canada,

which has

the second largest budget in the federal government and has responsibility for addressing the

pressing needs of Canada’s aboriginal peoples. Yet, rather than ensuring that the department has

strong, consistent senior management, the Privy Council Office rotated five different deputy

ministers in and out of INAC over seven years.

By continually changing deputy ministers, the

Committee wonders whether the Privy Council Office should share in the responsibility for the

pervasive and persistent management problems in this department, as pointed out by the Auditor

General.

Witnesses before the Committee also expressed concern about the rapid turnover of

deputy ministers. Wayne Wouters, the current Secretary of the Treasury Board admitted that it

takes time for a new deputy minister to feel comfortable in his position. He responded, “Yes, I

would say that when I first became a deputy it was probably a good year to two years [before I

felt comfortable].”

Arthur Kroeger, a respected former deputy minister of several departments,

told the committee that moving people more frequently than three years is not a good thing. He

said, “As a general rule in government, three years is a good period; four years is probably

better.”

Ian Clark, a former Secretary of the Treasury Board, compared the turnover of deputy

ministers to that of university presidents, “In the university world I work in now, the standard

term is five years. . . . It’s just unheard of to think of people leading major organizations on a

turnover of less than three years.”

The former Auditor General of Canada, Denis Desautels,

made the strongest statement by calling the turnover a significant weakness in government

management. He said:

The turnover of deputy ministers is much too quick. Not only is it quick, but most of

the time it’s not planned. So the succession from one deputy minister to the other is

not something that's been well done, and it's difficult to imagine how these huge

organizations can do this without paying a certain price for that. There are always

difficult files on which deputy ministers are working. There are issues that take some

House of Commons Standing Committee on Public Accounts, Report 17 - Chapter 5, Indian and Northern Affairs

Canada - Education Program and Post-Secondary Student Support of the November 2004 Report of the Auditor

General of Canada, June 2005, 38

Parliament; Report 6 - Chapter 5, Management of Programs for First Nations of

the May 2006 Report of the Auditor General of Canada, June 2006, 39

Parliament.

The deputy ministers of Indian and Northern Affairs Canada and their appointment date are : Shirley Serafini, 1

June 1999; Marc Lafrenière, 11 June 2001; Alain Jolicoeur, 12 August 2002; Michael Horgan, 12 December 2003;

Michael Wernick, 23 May 2006.

Auditor General of Canada, 2006 Status Report, Chapter 5: Management of Programs for First Nations.

Meeting 26, 16:05.

Meeting 30, 16:00.

Meeting 27, 15:40.

time to grasp as well. So changing leadership so frequently, in my view, is not

conducive to the good management on the organization, nor is it conducive to good

accountability, because people aren’t in there long enough to be held accountable for

very much.

Mr. Desautels also said that rapid turnover can undermine accountability, “It makes

accountability virtually impossible, if you're talking about that kind of personal accountability

for performance.”

This is by no means a new issue. The Royal Commission on Financial Management and

Accountability (the Lambert Commission) found that in June 1978, the median time for deputy

ministers in office was just 1.5 years. According to the Commission, this is a problem because

deputies don’t have a chance to settle into managing their department after an initial adjustment

period and are not required to live with the consequences of their actions. The Commission

noted, “The high rate of mobility among deputy heads of departments and agencies has become a

major management problem. If continued, excessive changes could undermine efforts to

strengthen management and accountability in government.”

The Commission then

recommended that on appointment, deputies should be expected to serve in a department for

three to five years.

In a wide-ranging review of the accountability of deputy ministers, Gordon Osbaldeston,

a former Clerk of the Privy Council, studied the tenure of deputies. He found that in 1987 the

average deputy minister had been in his or her current position for 2 years and 50% had been in

place for less than 1.5 years.

Nearly all the deputies interviewed for this review said that the

brief duration of their appointments was a problem because deputies were unable to know their

department as well as they should. Osbadelston wrote, “For many deputy ministers, a tenure of

less than two or three years in a department where they have had no previous experience means

that they will not have a chance to become fully effective before they leave their post.”

recommended that the government establish a target of three years as the minimum tenure of a

deputy minister.

Meeting 27, 15:40.

Meeting 27, 16:05.

Royal Commission on Financial Management and Accountability Final Report, March 1979, page 193.

Ibid., page 194.

Gordon F. Osbaldeston, Keeping Deputy Ministers Accountable, 1988, page 141.

Ibid., page 146.

Ibid., page 177.

In his inquiry into the Sponsorship Program, Justice John Gomery also identified the

turnover of senior public servants as a problem. The Commission stated that a short tenure does

not enable deputy ministers to fully understand the programs, policies and administration of their

department, to take effective control of its management, and to see innovations through to

completion. The Commission recommended that the government adopt a policy that Deputy

Ministers be appointed to their position for a minimum of three years, with the expectation that a

standard appointment would be for five years.

Despite the persistence of this problem and the repeated recommendations for change, the

government continues to maintain that they are doing all they can. In its response to the latest

recommendation by the Public Accounts Committee, the Government stated:

The appointment of deputy ministers and other senior public servants is based on a

range of considerations, including the operational and policy needs of the

government. . . . [T]he government does make efforts to place deputy ministers in a

department for a number of years to ensure stability and continuity for the

organization. In addition, flexibility is required. The government takes into account

the value of stability and continuity for government organisations as well as the

development of deputy minister's expertise and experience in making such

appointments.

This rather bland statement does not explain why the need for flexibility continually wins out

over stability. An official from the Privy Council Office, Marc O’Sullivan, told the Committee

that greater stability is desirable. “There have been some examples of too much turnover, and

everyone recognizes the need to have as much stability as possible.”

However, stability seems

to last as long as the next “operational or policy need.”

During the Committee’s hearings it became apparent that the reason that deputy ministers

are constantly rotated is that the Privy Council Office manages them as a population, so when

deputies are moved, it is part of the objective of developing the overall population of deputies.

Marc O’Sullivan told the Committee that deputies are moved for a variety of reasons:

A change of structure within the government can happen in such a way that certain

departments need to be reorganized. A deputy minister may retire and that can create

a domino effect: he is replaced by someone and another vacant post must therefore be

Commission of Inquiry into the Sponsorship Program and Advertising Activities, Restoring Accountability:

Recommendations, 2006, page 109.

Government of Canada, Government Response to the Sixth Report of the Standing Committee on Public Accounts:

Chapter 5, Management of Programs for First Nations of the May 2006 Report of the Auditor General of Canada,

October 2006.

Meeting 26, 16:40.

filled. In effect, a change to one deputy minister post generates other

changes. Changes can also occur because the government modifies its priorities

and/or policies. A deputy minister may be deemed to have the required qualities and

abilities to make the new issues progress or the new priority requires the hand of a

different deputy minister, who is then appointed to shepherd the cause.

In other words, the need for just one change in the ranks in deputy ministers can necessitate a

whole series of changes. In such a situation stability becomes impossible because an issue

involving one deputy minister, such as a retirement, may disrupt the management of numerous

departments.

As is evidenced by its three previous reports discussing this issue, the Committee is quite

concerned by the short tenure of deputy ministers and their regular rotation between departments.

A new deputy minister may reorganize a department, change its priorities, and then quickly

move onto another department to begin the experiment all over again. Any expertise or

knowledge deputies are able to develop about their department or policy area is quickly lost in

the next shuffle. With deputy ministers now the accounting officer for their department and

consequently accountable before parliamentary committees for departmental administration, the

committee believes that greater stability is imperative for accountability.

The Committee all too often finds that deputies have left a department long before a

problem with management is brought to light by the Auditor General. It thus becomes very

difficult to question the deputy minister who made the relevant decisions, and the new deputy

minister often has very little knowledge of the problem or even how the department operates.

The Privy Council Office has exacerbated this problem by asserting the following:

The responsibilities of an accounting officer belong to the office and not the individual.

Only the current deputy has the departmental support required to prepare properly for

appearances and the capacity to take corrective action. Therefore, it is appropriate for an

accounting officer to answer questions concerning matters that took place before his or

her tenure.

However, combined with the constant turnover of deputy ministers, this makes accountability for

departmental administration all but impossible. The Committee believes that the new accounting

Meeting 26, 16:45.

Privy Council Office, Accounting Officers: Guidance on Roles, Responsibilities and Appearances Before

Parliamentary Committees, 2007.

officer model can only work effectively if deputy ministers remain in departments for a longer

period of time.

The Committee is frustrated that it keeps getting the same response without any genuine

acknowledgement that a problem exists and that a solution needs to be found. Short of

recommending an entirely new system of appointing deputy ministers, such as placing the

responsibility of appointment with an independent agency, the Committee reiterates its previous

views by recommending that:

RECOMMENDATION 11

Assuming satisfactory performance, deputy ministers be appointed to a department

for a three to five year term.

The Committee notes that if a satisfactory resolution to this problem can not be found, it

may be necessary to consider legislative options, as was the case with the accounting officer,

which, after many years of discussion, was only recently put into place with the passage of the

Federal Accountability Act.

CONCLUSION

The Committee strongly believes that good financial management is essential to good

governance. Departments need to be as concerned about the means used as about results.

Canadians expect that their governments will use their funds in an economical, efficient, and

effective manner. They expect that governments will achieve value for their money.

The responsibility for good financial management lies both with departments and with

the Treasury Board and its Secretariat who provide general guidance and directives to

departments. The Committee is encouraged that the Secretariat has undertaken steps to

strengthen its efforts on financial management, especially by re-establishing the Office of the

Comptroller General. However, the Committee continues to believe that the Comptroller General

should have the final say on accounting treatments.

Recognizing a lack of clarity in its policies and the respective responsibilities of

departments and the Treasury Board Secretariat, the Secretariat is updating its policies in order to

help clarify accountabilities as well as consequences for non-compliance. The government has

also undertaken a review of the Financial Management Framework and appointed a Blue Ribbon

Panel to Advise on Grant and Contribution Programs. The Committee, though, is concerned that

the Secretariat provides very little information publicly about the progress of these reviews and

its proposed future actions. The Committee believes that it is incumbent on the Secretariat to be

fully transparent so it can be an example to others, as well as be held to account for its

performance.

It is vital that the “head office” of the government, the Treasury Board Secretariat, to

have sufficient information systems to know how departments are managing their finances, so

corrective actions can be taken before poor management becomes a preventable waste of public

funds. The Committee believes that in order to properly exercise its oversight role the Secretariat

needs to re-invigorate its activity of actively monitoring whether departments are doing their

work properly and complying with Treasury Board policies.

The Treasury Board Secretariat has begun to collect information about departmental

administration through its Management Accountability Framework (MAF), whereby the

Secretariat sets management expectations and then assesses departmental performance against

those expectations. Despite earlier commitments to do so, the results of these assessments have

not been made public. The Committee is of the opinion that full accountability for departmental

administration will be not obtained until the MAF assessments are publicly available.

The most significant concern to the Committee is the constant rotation of deputy

ministers amongst departments. Despite numerous studies and recommendations, this problem

continues to persist. The Committee believes that strong financial management and

accountability for departmental administration can only exist if the chief public servant in a

department, the deputy minister, stays in place for longer than a couple of years. More

importantly, the new system of accounting officers will be entirely ineffective without greater

stability. The Committee is committed to returning to this issue until the problem of the short

tenure of deputy ministers is resolved.

APPENDIX

Time in Office of Deputy Heads as of 15 April 2007

Department Deputy Head Date of

Appointment

Time in office as

of 15 April 2007

Agriculture and Agri-Food Canada Yaprak Baltacioğlu 5-Mar-07 41

Canada Border Services Agency Alain Jolicoeur 12-Dec-03 1220

Canada Revenue Agency William V. Baker 2-Apr-07 13

Canadian Food Inspection Agency François Guimont 12-Sep-05 580

Canadian Heritage Judith A. LaRocque 13-May-02 1798

Canadian International Development Agency Diane Vincent 30-May-05 685

Citizenship and Immigration Canada Richard Fadden 1-Jul-06 288

Correctional Service Canada Keith Coulter 8-Sep-05 584

Environment Canada Michael Horgan 23-May-06 327

Finance Canada Robert A. Wright 12-Jun-06 307

Fisheries and Oceans Canada Larry Murray 22-Apr-03 1454

Foreign Affairs and International Trade Leonard Edwards 5-Mar-07 41

Health Canada Morris Rosenberg 20-Dec-04 846

Human Resources and Skills Development Canada Janice Charette 1-Jul-06 288

Indian Affairs and Northern Development Canada Michael Wernick 23-May-06 327

Industry Canada Richard Dicerni 1-May-06 349

International Trade Marie-Lucie Morin 13-Apr-06 367

Justice Canada John Sims 20-Dec-04 846

Labour Munir Sheikh 2-Feb-06 437

National Defence Ward P.D. Elcock 5-Aug-04 983

Natural Resources Canada Catherine Doyle 10-Jul-06 279

Office of Indian and Residential Schools Canada Peter Harrison 22-Jan-07 83

Public Health Agency of Canada David Butler-Jones 24-Sep-04 933

Public Works and Government Services Canada David Marshall 16-Jun-03 1399

Transport Canada Louis Ranger 13-May-02 1798

Treasury Board Secretariat Wayne Wouters 20-Dec-04 846

Veterans Affairs Canada Suzanne Tining 22-Jan-07 83

Average

614 days

1.68 years

* This table only includes organizations of the Government of Canada whose budgets are over $500 million

(according to authorities to be voted in the 2007-08 Main Estimates), but does not include the Canada Mortgage and

Housing Corporation, Canadian Broadcasting Corporation, the Royal Canadian Mounted Police, Natural Sciences

and Engineering Research Council, or Canadian Institutes of Health Research. International Trade and Labour have

been added because they have deputy heads even though they are not technically separate departments.

Sources: Office of the Prime Minister of Canada, News Releases and 2007-08 Main Estimates.

Witnesses List

Review of the Roles and Responsibilities of the Treasury Board Secretariat

Organizations and Individuals Date Meeting

Office of the Auditor General of Canada 2006/10/31 24

Sheila Fraser

Auditor General of Canada

Office of the Auditor General of Canada 2006/10/31 24

Rick Smith

Assistant Auditor General

Office of the Auditor General of Canada 2006/10/31 24

Douglas Timmins

Assistant Auditor General

Treasury Board Secretariat 2006/11/02 25

Robert Fonberg

Senior Associate Secretary

Treasury Board Secretariat 2006/11/02 25

David Moloney

Senior Assistant Secretary

Expenditure Management Sector

Treasury Board Secretariat 2006/11/02 25

John Morgan

Assistant Comptroller General

Treasury Board Secretariat 2006/11/02 25

Charles-Antoine St-Jean

Comptroller General of Canada

Privy Council Office 2006/11/07 26

Marc O'Sullivan

Assistant Secretary to the Cabinet

Senior Personnel and Special Projects Secretariat

Organizations and Individuals Date Meeting

Privy Council Office 2006/11/07 26

Karl Salgo

Senior Officer

Machinery of Government