Federal Government Comptrollership FMI Ontario 25 February 2009 Richard Charlebois.

Federal Government Comptrollership

FMI Ontario25 February 2009

Richard Charlebois

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Public Service Commission of Canada Public Service Commission of Canada Mandate 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

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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.

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Organizational Structure

Senior Vice-President Policy Branch

Donald Lemaire

Vice-President Investigations Branch

Denis Bilodeau (Acting)

Vice-President Staffing and Assessment

BranchGerry Thom

Vice-PresidentCorporate Management

Branch/CFORichard Charlebois

CommissionerManon Vennat

(part-time)

PresidentMaria Barrados

Vice-President Audit, Evaluation

and Studies BranchJean Ste-Marie (Acting)

General Counsel Legal ServicesGaston Arsenault

CommissionerDavid Zussman

(part-time)

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Federal Government Context

• 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

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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

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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”

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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.

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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.

FEDERAL ACCOUNTABILITY

ACT (FAA)

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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.

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Public sectorreform

Making thepublic sector

more open

Procurementreform

Politicalreform

Parliamentaryreform

FAA: Overview

Moving to a culture of

accountability in every area

The elements of the Federal Accountability Act

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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)

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• Clearer accountability of Ministers and Deputies• Deputies designated as “Accounting Officers” with

Legal obligation to appear before parliamentary committees and answer questions relating to:

1. The measures taken to organize resources to deliver departmental programs in compliance with government policies and procedures

2. The measures taken to maintain effective systems of internal control

3. The signing of the departmental accounts

4. The performance of other specific duties assigned by law or regulation in relation to administration of the department

Public Sector Reform – Some key measures

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– 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

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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

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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

INDEPENDENT BLUE RIBBON PANEL

ON GRANTS AND CONTRIBUTIONS

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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

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Universe of Grants & Contributions

Total Net Government Expenses (2004/05): $197B

Source: Public Accounts of Canada 2004-2005 (breakdown of recipient categories conducted through a departmental survey)

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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)

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22

33

44

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Universe of Grants & Contributions (cont’d)

Grants & Contributions: $27B

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1010

99

88

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

11

22

33

44

55

66

77

88

99

1010

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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.

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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.

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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.

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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.

Financial Management Community Development:

A Priority

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Context

• Finance Officer (FI) population dropped by 20% during Program Review, recovered 1995 level in 2002

• Current FI population 36% increase over 1995 level

Change in FI Population, 1995 to 2008

0

500

1000

1500

2000

2500

3000

3500

4000

1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008

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Context (cont’d)

• 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

Distribution of FIs by Age Group, 1995 and 2008 Compared

0%

5%

10%

15%

20%

25%

30%

35%

40%

45%

under 25 25-34 35-44 45-54 55 and over

1995

2008

Larger cadre of

inexperienced FIs at junior

level

Smaller cadre of experienced FIs at mid-career level

Larger cadre of highly experienced FIs about to retire

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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

Distribution of FIs by Level, 1995 and 2008 Compared

31%

35%

23%

11%

27%

31%29%

13%

0%

5%

10%

15%

20%

25%

30%

35%

40%

FI-01 FI-02 FI-03 FI-04

1995

2008

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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.

Average Years in Position, FIs Compared to CPA

3.23.4

4.9

3.7

5.04.7

4.5

5.1

4.5

5.5

0

1

2

3

4

5

6

20082003199819931988

Ye

ars

FI

CPA

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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

Years in Position, FIs to CPA

29.3%

24.8% 24.5%21.5%20%

17%

26%

37%

0%

5%

10%

15%

20%

25%

30%

35%

40%

<1 1 to 2 2 to 5 5+

FI

CPA

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Program Review

DriverPrimaryImpact

Reduction in Finance Positions

Departure of mid career FIs

Demographics

Baby Boomer Retirement

More Competition for

Recruits

“Gen Y” Workplace Approach

Visibility and Accountability

Initiatives

Additional FI Tasks

SecondaryImpact

Same Core work, fewer FIs

More Complex Activities

Disrupted Succession

Planning

Unfilled Positions

Loss of FI Corporate Knowledge

Lower Commitment

Level

Diversion of focus from

Core Activities

Impact on Skills and Capacity

Lower Skills at Senior Level

Inadequate Capacity at junior level

Diminished Capacity for Core Work

Current Situation

Overall Diminished Capacity

Context (cont’d)

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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!

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• 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)

III) Capacity Building Initiatives

EVOLVING ROLE OF THE CHIEF FINANCIAL OFFICER (CFO)

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Financial Management Environment

1. Matter of interest for Canadians and Parliament

2. 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

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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

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CFO Model – Responsibilities

CFO – ADM

Support Deputy Minister: financial strategic leadership and advice; financial oversight; and internal control frameworks

Ensure compliance with Central Agency and Departmental Policies and Regulations.

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.

Implementation and monitoring of an integrated risk management framework

• Attesting to the completeness and accuracy of all financial reporting (external reporting to Treasury Board and Parliament and internal reporting to management)

Provide departmental financial policies, procedures, advice and guidance

Integrated financial management systems

Capitalization of Assets

• Build financial capacity and training

Strategic Advisor to Senior Management

Procurement & Contracting

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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

Conclusions

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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

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It is an exciting and challenging time

to be in the federal government, especially for the finance community.

Parting Comment