Speech by Reg Alcock President of the Treasury Board to the Professional Development conference of the Financial Management Institute of Canada Check Against Delivery November 24, 2004 Ottawa Congress Centre Ottawa, Ontario Thank you, and good morning, ladies and gentlemen. You're in luck today. You get a "two for one" deal. Over the next hour, Charles-Antoine and I are going to do a sort of tag-team presentation. I'll begin with a high-level look at the Government's focus on strengthening financial control and oversight. Charles-Antoine will follow with a more in-depth consideration of the steps he's taking to meet those objectives. And finally, we'll round out the hour with a discussion period where you can comment and ask us both questions. This Government is committed to ensuring more rigorous stewardship of public funds and increased accountability for results. You've captured the essence of that challenge very well with your PD Week theme of "Transparency, Excellence, Confidence." That's a good snapshot of your challenges for the future. It also reflects many of my own priorities as Treasury Board President. This morning, I want to focus my remarks on two key issues: First, why and how our approach to financial oversight is changing; And second, the role of comptrollership - at TBS and throughout Government - in fostering stronger financial management. Let me begin with the big picture. Effective control, oversight and monitoring of public expenditures are essential to ensure that value for money is a core consideration in spending, review and management decisions. This applies to individual departments and agencies as well as to Government as a whole. As announced in Budget 2004, the Government has committed to: Re-establish the Office of the Comptroller General of Canada; Appoint professionally accredited comptrollers to sign off on all new spending initiatives in every government department; Reorganize and bolster the internal audit function on a government-wide basis, with the authority to delve into every corner of every portfolio; Introduce modern, timely, financial and human resource information systems to track spending; and Implement new corporate governance rules for Crown corporations and require them to submit five-year, special audits, conducted by the Auditor General, to be tabled in Parliament and posted on their web sites. I'm sure you'll agree, that's a pretty tall order - especially given that: Traditional government structures often cannot keep pace with changing public priorities. Programs and services are often poorly integrated across government and with other levels of government. Our management systems are in serious need of major overhaul. And, unlike the private sector, our "customers" are a mix of clients with service expectations, taxpayers who want better value-for-money, and citizens with both rights and obligations. Treasury Board Secretariat is playing a leadership role in driving change for you and your colleagues in the financial sector. As announced in December 2003, TBS has been re-mandated to focus on providing more rigorous oversight of government expenditures. In this area, TBS is now organized around three principal priority areas: Management Performance - to set and meet the highest standards of public management; Expenditure Management - to ensure resources are aligned to achieve government priorities; and Financial Management and Control - to provide more effective control, oversight and monitoring systems for public expenditures so that value for money is a core consideration in spending, expenditure review and management decisions. All three priorities are supported by the Secretariat's Corporate Management function, which oversees the restructuring and re-engineering of existing TBS business processes to deliver better results. To strengthen Treasury Board Secretariat's oversight function, we're working to: Strengthen the Management Accountability Framework to assess management practices and promote improvements; Create a new risk management assessment for individual departments and agencies; Reform the TBS policy suite to streamline reporting requirements, and provide greater policy clarity; Manage the development of a new "enterprise-wide" expenditure management information system; Establish a new business process for the Treasury Board to allow Ministers to focus more attention on broader management and expenditure issues; and Rationalize the management and administrative support of small agencies through the establishment of common management services. As I've said many times - and will say again today - the problem isn't the people, it's the systems. We have an urgent need for more "whole of government" financial control, both within and among departments and agencies. For example, TBS is working to make the Main and Supplementary Estimates Process less confusing. And then there's the Secretariat's new Expenditure Management Information System. EMIS will integrate government-wide information and provide a common database for all departments, agencies, and TBS. This will enable on-line sharing of expenditure management and performance information. EMIS, and the Management Resources and Results Structure that supports it, will allow us to link resources with results. They'll also generate significantly improved capacity for TBS to better support: Horizontal management of federal priorities; Improved alignment of results to resources for departmental management and accountability; Higher quality information for the Expenditure Review Committee on departmental and horizontal spending to identify opportunities for reallocation; and Improved transparency for Parliament. Canadians want to know that government programs are well managed. They want greater openness from the public sector. That's why we've launched a series of reviews to ensure our management practices are modernized and that our standards meet the expectations of Canadians. Three of the most important are focused on: strengthening the Financial Administration Act; better defining the respective accountabilities and responsibilities of Ministers and senior public servants; and improving the governance and transparency of Crown corporations. The Government of Canada is also working hard to enhance the proactive disclosure of information so that Canadians are better able to hold Parliament, their Government, and public sector officials to account. To this end, we've introduced the mandatory publication of: Travel and hospitality expenses for selected government officials; Contracts for goods and services over $10,000; and The reclassification of positions. A stronger comptrollership capacity is crucial for enhancing government-wide oversight and generating more responsible financial stewardship. I was very pleased when Charles-Antoine accepted the post of Comptroller General. I was even happier when he started on the job at the beginning of June. He's taken on quite a set of challenges. I don't want to spend too much time outlining his many responsibilities. But I'd like to do a quick overview because his priorities affect each one of you. His mandate is to "rigorously oversee all aspects of government spending, including review and sign-off on new spending initiatives". He's also guiding the modernization of our financial management policy suite, providing clear leadership and guidance, and ensuring that rigorous standards are set¿and met. I'm encouraged by the challenges Charles-Antoine has chosen to attack first. These include: Providing leadership to ensure that appropriate frameworks, and policies and guidance on controls are available across the federal public service; Promoting transparency and openness of financial activity; and Building financial management and audit capacity, including establishing accreditation and certification standards and advising on the modules of the public service learning curriculum. These initiatives will go a long way to strengthening the government's objective of better financial oversight and stewardship and increased transparency. Nevertheless, we still have a host of additional challenges to address. Yesterday, the Auditor General released her last report for 2004. I'm pleased to say that some of the issues and concerns about internal audit raised by the Auditor General have already been acted on. And work is well underway to address her remaining concerns. TBS is absolutely committed to building the capacity needed for better independent and objective internal audit services. Budget 2004 announced the government's intention to "reorganize and bolster the internal audit function on a government-wide basis to ensure comprehensive audit programs, based on sound risk analysis of all departmental activities, with the authority to delve into every corner of every portfolio, no matter how small or seemingly 'special'." Last week, I announced a new program to strengthen the internal audit function across the federal public service. This multi-year initiative, developed by Charles-Antoine and his team, will greatly enhance the internal-audit capacity in the public sector, and will introduce standardized, proven audit processes. Our action plan consists of a comprehensive strategy that encompasses revisions to the Internal Audit Policy. It also includes changes to the role of the function itself and that of audit committees, their structure, resources, methodologies and tools. The Comptroller General will provide internal audit services to 63 small departments and agencies. This will strengthen internal control and performance measurement and improve the ability of these smaller organizations to meet policy and regulation requirements. We are conducting an assessment of the audit capacity in Government and launching consultations with key stakeholders such as the Canadian Institute of Chartered Accountants, the Institute of Internal Auditors, and other professional organizations on changes to internal audit policy and practices. The consultation process will focus on issues such as: The revision of the current Internal Audit Policy; The organizational independence of internal audit groups; A clear definition of roles and responsibilities of senior managers and departmental comptrollers; Guidance on best practices and training, The staffing of internal-auditor positions across the federal public service; and Creation of standardized internal methodologies and tools. Details on further steps in this multi-year initiative will be announced following the completion of consultations. In addition, we're creating the position of Assistant Comptroller General, Internal Audit Directorate, to assist the Comptroller General in the implementation of this multi-year initiative. On the Human Resources side, TBS is committed to working with departments to assist them in determining adequate levels of resources for their internal audit groups. The Internal Audit initiative will establish stringent accreditation and certification standards, strengthen the learning curriculum and work with learning institutions across Canada to make internal auditing in the federal government a highly professional and desirable career. The revamping of the internal audit function across government will enable senior managers to implement and enforce appropriate financial controls in departments and agencies, including some smaller institutions. This initiative is very much a part of the Government's commitment to ensure rigorous stewardship of public funds by providing value-added information for effective decision-making, government-wide. Charles-Antoine and his team are providing strong leadership for meeting these objectives. For example, the Comptroller General's Office is working closely with departmental comptrollers who have the responsibility to sign off on all spending proposals. In time, these reviews of the financial implications of policy proposals will help me and my colleagues on the Hill make better decisions. Cabinet will be better able to make the trade-offs necessary to ensure that Canadians get full value for their tax dollars. This, in turn, will enhance integrity and control consciousness throughout government. For example, departmental comptrollers will have a functional reporting relationship to the Comptroller General. They will also: Sign off on all new spending initiatives including submissions to Cabinet and Treasury Board to ensure financial estimates are sound and that they generate value for money; Provide guidance on sound financial management and better administration practices and procedures; Ensure government financial management policies are adhered to within their department; and See to it that financial and administrative officers and staff receive the appropriate financial management training. But just who is a "departmental comptroller"? For now, it's the Senior Financial Officer in each department. One of the challenges for the Comptroller General is to determine the nature and composition of future departmental comptrollers who are able to best serve the needs of Deputy Ministers in a rapidly changing environment that is more complex then ever before. The Comptroller General has already launched discussions with Senior Financial Officers and many other stakeholders, both inside and outside of the financial community, on key elements for a "departmental comptroller." But Charles-Antoine can't do the job alone. He - and I - need the expertise and commitment of you and your colleagues. This includes looking at the specific roles that need to be carried out; the professional accreditations and experience that are required and associated learning and recruitment strategies. We don't have all the answers yet, but we're working with the community to develop a transition strategy that can be implemented, using a phased approach, over the next several years. The key point is that it's no longer "same old, same old." We've begun a significant series of initiatives for public-sector innovation. Within the financial community, the new roles and accountabilities are complementary. And everyone has an important role to play. The payoff of this new strategy will include improved financial management and accountability. But as important as that objective is - and it's very important - clear and strong accountabilities and guidance can also improve your personal satisfaction and pride in what you do. After all, no one says, "It's only a job," when their team is winning. I'm looking to you to give Charles-Antoine your unqualified support and the benefit of your wide expertise. I expect you to understand the business of government, not just your particular area of responsibility. And I want you to be results-driven, and able to deliver timely information like "This is what our programs are achieving and what they are costing us, and here's where we can reallocate funds for higher priorities." I know that's going to take time. Serious change always does - especially in an organization with more than 1,600 points of service. We won't ever be perfect, but that's no reason to stop trying. Remember, if 99 per cent is good enough, then gravity will not work for 14 minutes each day. And to succeed in renewing comptrollership - and Canada's public service in general - we definitely have to keep our feet on the ground. In spite of the many challenges, I'm optimistic about the future. I'm looking forward to your commitment and contributions. And so is Charles-Antoine. So now, I'll let him take the microphone so he can give you some specifics on his priorities and your role in achieving them. Thank you.
