Briefing binder created for the Deputy Minister of Finance on the occasion of his appearance before the Standing Committee on Public Accounts on December 9, 2024 on the Auditor General of Canada's report 8, entitled “Canada Emergency Business Account” - Annex E

Report on standing committee meeting

Name of Committee: Standing Committee on Public Accounts (PACP)

Date and time: December 2, 2024 (11:15 a.m. – 12:15 p.m.)

Subject: 2024 Reports 8 to 12 of the Auditor General of Canada

Report Prepared by: Kalina Waltos, Parliamentary Affairs Analyst, Department of Finance

This summary is being sent for information purposes only and should not be quoted, as it may contain transcription errors. // Cet aperçu est envoyé à titre d'information seulement et ne devrait pas être cité car il pourrait contenir des erreurs de transcription.

Witnesses / Témoins

Office of the Auditor General

• Karen Hogan, Auditor General of Canada
• Andrew Hayes, Deputy Auditor General
• Mélanie Cabana, Principal
• Nathalie Chartrand, Principal
• Jean Goulet, Principal
• Sami Hannoush, Principal
• Gabriel Lombardi, Principal
• Nicholas Swales, Principal

Summary / Résumé

The Standing Committee on Public Accounts (PACP) met from 11:20 a.m. to 12:32 p.m., to hear from the Auditor General (AG) in the context of the reports 8 to 12, which were tabled in the House of Commons earlier today. The tone of the meeting was professional with questions focused on government oversight and contract management over the Canda Emergency Business Account (CEBA).

In her opening remarks, the AG said that the CEBA was not managed with due regard with value for money. She spoke to weaknesses in Export Development Canada's (EDC) contract management related to noncompetitive, sole source contracts awarded to Accenture. She also said the Department of Finance (DoF) and Global Affairs Canada (GAC) did not provide oversight on value for money, which created an "accountability void" that resulted in program elements being delayed or not completed. Lastly, she expressed concern that EDC partially agreed with her recommendations around repayments.

Conservative Party (CPC)

Jasraj Singh Hallan sought confirmation that the government provided inadequate oversight and safeguards on taxpayer money related to CEBA loans. The AG noted that the program was delivered very quickly but questioned limited payment control, validation and post-payment work done by EDC. MP Hallan then asked about the impact of a sole source contract with Accenture and program delivery. The AG said the CEBA differs from other COVID-19 programs because it was delivered through a Crown corporation. Her preference would have been greater oversight by GAC and the DoF over EDC.

Kelly McCauley asked a series of questions about Accenture's contract scope and pricing with little challenge from EDC. The AG concluded that EDC gave too much control to Accenture. She noted that Crown corporations are not subject to government procurement rules and raised concerns that the contracts were paid on an hourly basis over a fixed price. MP McCauley then sought comment about Accenture's role in determining its contract price and parameters. The AG responded that the DoF and GAC identified the need to have a competitive process given the overreliance on Accenture. In the end, EDC turned to Accenture to run a competitive process, which the AG said was unacceptable.

Luc Berthold asked which department should have monitored EDC. The AG noted that DoF was responsible for the CEBA's policy and GAC for EDC. She said both organizations should have reached an agreement on their responsibilities. MP Berthod said EDC is facing allegations of a conflict of interest because they did not manage Accenture and asked if the AG was concerned that EDC is not recognizing their responsibility. The AG spoke to the challenges of delegating contracts to Crown corporations. While they need to be independent from government, she said better monitoring is required.

Anna Roberts focused his questions on the performance audit of Programs to Assist Seniors.

Brad Vis asked whether EDC respected the conflict-of-interest rules. The AG said the DoF and GAC failed in their oversight responsibilities because the program was given to a Crown corporation. She further said the value for money was compromised by an extremely poor lack of oversight, citing decisions in contract management and a lack of spending limits. MP Vis then asked how to prevent this situation from happening again. The AG said she expected better monitoring once EDC had asked for oversight when they were tasked with this program. She added that all parties involved should have turned to competitive contracts.

Philip Lawrence asked whether Accenture was contracting itself with taxpayer dollars. The AG explained that EDC asked Accenture to run the CEBA program and a wholly owned subsidiary of Accenture was given the contract for loan accounting software. She said she would have expected EDC to manage that conflict of interest better.

Bloc Québécois (BQ)

Nathalie Sinclair-Desgagné focused her comments on Accenture's accounting practices, call centre charges, and data collection and management. In response, the AG said the contract valued $36 million with $7 million in licensing fees. She noted that Accenture IT system hold propriety over the management of the system. MP Sinclair-Desgagné then stated that the DoF did not make sure there was an open contracting program, which allowed Accenture to continue using public money. The AG said some basic controls were missing, noting that a number of bills that were paid without questioning fees or supporting evidence.

In the next round, MP Sinclair-Desgagné spoke to delays and confusion around the CEBA's management, noting that many businesses were deemed ineligible after receiving funding.  She asked who has access to business data. The AG said it took a year to advise businesses that they were ineligible, which attributed to delays in decision-making and a lack of clear roles and responsibilities. Regarding data, she said financial institutions hold the data because of their agreements with businesses. The Canada Revenue Agency had access to data on eligibility and salaries.

New Democratic Party (NDP)

Richard Cannings spoke to a lack of oversight over the CEBA and asked whether it is difficult for the government to determine the status of the loans because financial institutions managed them. The AG said delays in decisions by the DoF about ongoing maintenance and recovery of defaulted loans resulted in a continual reliance of EDC on Accenture. She expected better oversight from the government because EDC had initially indicated they were missing capacity, skills and tools to manage the program. She mentioned further recommendations on preventing further reliance on a vendor, noting that the government is contractually bound to Accenture until 2028.

MP Cannings' remaining questions focused on Programs to Assist Seniors and Canada Summer Jobs.

Liberal Party (LPC)

Nathaniel Erskine-Smith asked the AG to speak to her concern that EDC partially disagreed with her recommendation to confirm whether the $1.5 billion in CEBA loans that went to ineligible businesses was accurate. The AG said that EDC believes they need to do a cost benefit analysis around a viable recovery process but does not have the mandate of the government to do the work. She said the program could have been delivered for less money if not delivered through a single vendor. MP Erskine-Smith then asked what commitment the AG expected to see on that recommendation, given that Finance agreed to work with EDC to recoup loan forgiveness. The AG clarified that the recommendation goes on to say that EDC will only undertake the work if there is a viable recovery of funding and if they receive policy direction to do so.

Jean Yip asked how GAC and EDC were involved in the CEBA. The AG noted that EDC manages the Canada Account, which allowed the government to quickly deliver money to Canadian businesses. GAC provided direction because EDC falls under their portfolio. MP Yip then asked if there was any precedence of a program needing to get out as quickly as the CEBA. Referring to other COVID-19 program audits, the AG said it was unprecedented to see so much income support. The government followed international best practices around emergency that had few pre-payment controls but expectations on post-payment work.

MP Yip's remaining questions focused on Canada Summer Jobs.

Iqra Khalid asked about the process for competitive contracts in the public service including timelines. The AG said the process is complicated; however, EDC does not follow government procurement processes. The MP then asked about the capacity of the public service to deliver programs quickly in an emergency and whether there is a need to improve contracting. The AG said there are exceptions to a competitive process in emergencies. That said, the CEBA was carried out in a way that created an overreliance on contracting, adding that the government is bound to Accenture until 2028 for loan accounting software.