The Auditor General and the $3.1 billion

Some of what the AG told the Public Accounts committee

The Auditor General appeared at the Public Accounts committee last week to testify about his latest report. Conservative MP Andrew Saxton asked him directly about the $3.1 billion.

Andrew Saxton: Some people have been claiming that the government lost $3 billion. Is this an accurate portrayal of your report?

Michael Ferguson: What we reported in the chapter on spending on public security and anti-terrorism initiative was that there was $12.9-billion worth of budget allocations to some 35 departments and agencies. When we looked at the reports that agencies made to Treasury Board Secretariat about their spending under these initiatives, it totalled $9.8 billion, so a difference of roughly $3 billion that we tried to get an explanation for why there’s that difference between the budget and the actual, and we were not able to get that explanation. So what we were trying to do was understand what that difference was and where it came from. That’s how I would characterize what that report included.

Andrew Saxton: Thank you.  Now, can you please tell me if the reports that were done by the public security and anti-terrorism initiative, or more commonly known as PSAT, if the PSAT reports were for internal government use or for external use?

Michael Ferguson: My understanding is that the reports were given to Treasury Board Secretariat as part of Treasury Board Secretariat’s role in monitoring these initiatives, and we expected that they would then be used as a summary reporting tool to Treasury Board itself. So all of that is internal reporting. There was never a summary report prepared for Treasury Board, however.

Andrew Saxton: During this period of time, did individual departments report their normal planned spending and actual spending to Parliament?

Michael Ferguson: Certainly there’s the normal process whereby departments report their budgets and actuals across all of their activities, and that goes on every year.

Later, Liberal MP Gerry Byrne asked for clarification.

Gerry Byrne: I have a quick question on chapter 8. Could you help clear up some confusion that I think exists in many people’s minds? If the government can’t readily identify specifics of what $3.1 billion was spent on, how can Parliament be confident it was spent properly and within statutory and policy guidelines?

Michael Ferguson: What we were looking for—Again, this was a very large initiative. This was a horizontal initiative. It included a lot of departments. It had specific identified objectives, things that were trying to be achieved. Also there was this mechanism put in place for Treasury Board Secretariat to collect information that could be used for monitoring purposes. We felt that would have been the important information to produce summary level data about what was spent, what was it spent on, and what was achieved. That wasn’t done so there’s no overall summary picture that can go forward to anybody. Now in general, of course, any dollar that goes out of the federal government’s bank account is subject to all of the controls in place in those departments. But that doesn’t mean that it’s captured in a way that it can reported against this type of initiative.

Gerry Byrne: Understood. Thanks. In this context, we had a situation not long ago where there was abuse of parliamentary authority. Parliament had voted and authorized certain expenditures for the Canada Border Infrastructure Fund . We later found out that it was spent on gazeboes, 200 kilometres away from the border. Is there a risk that some of the $3.1 billion may not have necessarily been spent on what Parliament had approved it for?

Michael Ferguson: Certainly the first part of trying to answer that question is to look at what the budget appropriation was, what was spent, and then trying to analyze that difference. The one thing that was occurring in this case was that there was this process for reallocation, and they were tracking when RIA allocations happened. There’s just nothing captured in terms of the total amount of the reallocations. What’s hard to say is how much of that difference was things that we just now spent, how much of it were things that were reallocated and went through the proper process to be reallocated. It’s not possible based on the information we have to answer the question of whether anything was spent on things outside of these initiatives.

Gerry Byrne: Mr. Auditor General, you would suggest to the committee that there is a risk, then?

Michael Ferguson: I guess I would have to say that there would be a risk because there is not enough information to answer the question completely.

For further information there is what Scott Clark and Peter DeVries, two former finance officials, wrote about the Auditor General’s report.

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