Comptroller General of Canada appearance before the Standing Committee on Public Accounts (PACP) - the Public Accounts of Canada 2023 – November 23, 2023

On this Page

• A. Opening remarks
• B. Financial instruments: prior-year reclassification, new statements and additional disclosures
• C. Foreign exchange accounts: reclassification in the Statement of Financial Position
• D. Asset retirement obligations and Auditor General observation
• E. COVID‑19 overpayments to be recovered
• F. Write-offs, remissions and forgiveness due to COVID‑19
• G. Debt write-off and forgiveness
• H. Office of the Auditor General observation: pay administration
• I. Office of the Auditor General observation: information technology general controls
• J. Office of the Auditor General observation: National Defence inventory
• K. Public Accounts Committee recommendations on the Public Accounts 2020, 2021 and 2022

A. Opening remarks

Notes for remarks by Roch Huppé, Comptroller General of Canada, to the House of Commons Committee on Public Accounts (PACP) on the Public Accounts of Canada 2023

November 23 2023

Ottawa

Check against delivery

Thank you, Mr. Chair and members of the committee.

I’m pleased to have this opportunity to say a few words about the Public Accounts of Canada.

[optional]

Before I begin, I would like to acknowledge that we’re gathered on the traditional unceded territory of the Algonquin Anishinaabe People.

I have with me today from the Treasury Board of Canada Secretariat (TBS):

• Diane Peressini, Executive Director, Government Accounting Policy and Reporting
• Blair Kennedy, Senior Director, Government Accounting Policy and Reporting

I would like to thank the financial management community of the Government of Canada, the Department of Finance Canada and the Receiver General, and the Office of the Auditor General for helping prepare the Public Accounts.

Importance of the public accounts

Mr. Chair, the government is committed to being open, transparent and accountable to Canadians and parliamentarians.

To that end, the Public Accounts are part of a series of reports that outline how the government spent the money it requested from Parliament and how it generated revenues.

The Public Accounts include the government’s audited consolidated financial statements and other detailed financial information for the fiscal year ending March 31.

By reporting on how taxpayer dollars were spent, they provide information to parliamentarians that enable them to understand and evaluate the financial position and transactions of the government and carry out effective oversight.

Another oversight measure is that, every year, as part of the Public Accounts, the Office of the Auditor General issues an audit opinion on the government’s financial statements and provides observations on key matters identified during the audit.

For the Public Accounts 2023, which were recently tabled, the government has received an unmodified or clean audit opinion on its consolidated financial statements from the Auditor General.

This is the 25th consecutive year we have received such an opinion from the Office of the Auditor General and means the financial statements were presented fairly and were consistent with accounting principles.

And Mr. Chair, I’d like to underline this is a testament to the high quality of Canada’s financial reporting and the work of my professional public service colleagues.

Highlights

Let me now turn to some of the highlights in this year’s consolidated financial statements.

Total revenues amounted to $447.8 billion in 2023, which represents an increase of $34.5 billion, or 8.4%, from 2022.

Total expenses amounted to $483.1 billion in 2023, which is down $20.5 billion, or 4.1%, from 2022.

One of the key reasons for the decrease in spending is related to the wind-down of temporary COVID‑19 support measures.

New accounting standards

For the fiscal year ending March 31, 2023, the government adopted two new accounting standards issued by the Public Sector Accounting Board related to asset retirement obligations (ARO) and financial instruments.

Amongst these changes, the new accounting standards increased the government’s obligation for asset retirement costs, recognized derivative assets and liabilities, and introduced a Consolidated Statement of Remeasurement Gains and Losses.

Further details regarding these changes can be found in Note 2 to the Consolidated Financial Statements in Section 2 of the Public Accounts of Canada.

I would like to recognize the work of the financial management community of the Government of Canada and the Office of the Auditor General for the successful implementation of these new standards.

The Government of Canada is continuing its ongoing work to improve the Public Accounts for parliamentarians and Canadians, and we thank committee members for their continued advice and work on the Public Accounts.

We would now be pleased to answer any questions you may have.

B. Financial instruments: prior-year reclassification, new statements and additional disclosures

Issue or question

What were the prior-year reclassifications to the Public Accounts of Canada related to?

Suggested response

• Prior-year reclassifications were made to amounts reported on the Consolidated Statement of Financial Position and the Consolidated Statement of Operations and Accumulated Operating Deficit.
• Reclassifications were made either to improve comparability (in light of the prospective adoption of the financial instruments suite of standards in 2023) or due to a change in accounting policy.
• More specifically, reclassifications occurred due to the application of the effective interest method, derivative assets and liabilities (as well as some portfolio investments) being measured at fair value, and a change in accounting policy to present foreign exchange accounts on a gross basis on the Consolidated Statement of Financial Position.

Background

• Accrued interest payable on market debt and derivatives, previously reported separately in interest and matured debt, was reclassified to the related financial instruments line items for consistency with the current year’s presentation due to the application of the effective interest method. Matured debt was reclassified into other accounts payable and accrued liabilities. As a result, interest and matured debt ($5,110 million) as at March 31, 2022, was reclassified to unmatured debt ($4,419 million), accounts payable and accrued liabilities ($827 million), and derivative assets ($136 million).
• For comparative purposes, the previously reported amounts for cross-currency swap revaluations ($2,247 million) were reclassified from unmatured debt to derivatives liabilities ($2,468 million) and derivatives assets ($4,715 million). These comparative amounts represented the net unrealized exchange gains and losses due to fluctuations in the foreign exchange value of the cross-currency swaps at March 31, 2022.

Issue or question

What are the new statements in the Public Accounts of Canada?

Suggested response

• The government introduced a new statement, the Consolidated Statement of Remeasurement Gains and Losses, which records the remeasurement gains and losses for financial instruments measured at fair value and other comprehensive income of enterprise Crown corporations and other government business enterprises.
• Any historical balance for accumulated other comprehensive income or accumulated actuarial gains and losses from government business enterprises were transferred from accumulated operating deficit to accumulated remeasurement gains (losses).
• Therefore, effective April 1, 2022, other comprehensive income is no longer reported in the Consolidated Statement of Operations and Accumulated Operating Deficit and is now reported in the Consolidated Statement of Remeasurement Gains and Losses.

Background

• Effective April 1, 2022, the government adopted the new accounting standards issued by the Public Sector Accounting Board that prescribe the accounting treatment for financial instruments. One of the new requirements of these standards was the introduction of a new statement, the Consolidated Statement of Remeasurement Gains and Losses. These standards include:
  • PS 3450 Financial Instruments
  • PS 2601 Foreign Currency Translation
  • PS 1201 Financial Statement Presentation
  • PS 3041 Portfolio Investments

  PS 3450 addresses the recognition and de-recognition, measurement presentation, and disclosure of financial instruments, including derivatives, while PS 2601 addresses the accounting for and reporting transactions that are denominated in a foreign currency. PS 1201 establishes general reporting principles for disclosure of information in the financial statements. PS 3041 replaces PS 3040 Portfolio Investments in order to conform the accounting for portfolio investments with the requirements in PS 3450.

• New risk disclosures include information that enables users to evaluate the nature and extent of any risks arising from financial instruments at the reporting date. This includes disclosures on credit risk, financial assets past due or impaired, collateral and other credit enhancements obtained​, liquidity risk, and market risk.

C. Foreign exchange accounts: reclassification in the Statement of Financial Position

Issue or question

What were the foreign exchange accounts reclassifications in the Statement of Financial Position?

Suggested response

• In the 2022–23 fiscal year, the government changed its accounting policy for the presentation of the foreign exchange accounts in the Statement of Financial Position. The change had a net zero impact on Annual Operating Deficit, Accumulated Deficit, Net Debt or Remeasurement Gains or Losses.
• The change was to present the liability component of the foreign exchange accounts as a liability in a separate financial statement line item, “Foreign Exchange Accounts Liabilities.”
• Previously, the liability component had been presented net against the foreign exchange accounts asset component and reported in one financial statement line item, “Foreign Exchange Accounts.”
• This was considered a change in accounting policy, which was applied retroactively to comparative figures.
• The change only affected presentation, increasing liabilities and assets by the same amount.

Background

• In conjunction with the implementation of the new financial instruments standard (PS 3450 Financial Instruments), the government re-evaluated its policy for the presentation of the “Foreign Exchange Accounts,” a line in the Statement of Financial Position.
• Specifically, the government re-evaluated whether it was appropriate to continue to present certain foreign exchange account obligations (notes payable to the International Monetary Fund (IMF), Special Drawing Rights allocations) as net against foreign exchange account assets.
• The government determined that the foreign exchange account liabilities did not meet criteria in PS 3450 Financial Instrumentsthat prescribe when financial assets and liabilities can be presented net in the financial statements.

Previous presentation

• Historically, the “Foreign Exchange Accounts” line item (an asset) reported:
  • assets (the Exchange Fund Account, Canada’s subscription to the IMF, loans to IMF-related programs)

    net of

  • liabilities (notes payable to the IMF, Special Drawing Rights allocations)

New presentation adopted in 2022–23 (retroactively)

• The government now presents two line items in the Statement of Financial Position:
  • “Foreign Exchange Accounts Assets” line item (an asset) reports assets (the Exchange Fund Account, Canada’s subscription to the IMF, and loans to IMF-related programs)
  • “Foreign Exchange Accounts Liabilities” line item (a liability) reports liabilities (notes payable to the IMF, Special Drawing Rights allocations)

Effect of change in accounting policy

• The effect of the change in the accounting policy on previously reported results is shown in the following table.

Consolidated Statement of Financial Position - March 31, 2022

	As previously reported	Effect of change in accounting policy	As restated
Liabilities
Foreign exchange accounts liabilities	n/a	42,252	42,252
Financial assets
Foreign exchange accounts assets	104,031	42,252	146,283

D. Asset retirement obligations and Auditor General observation

Issue or question

What is the action plan to address the Office of the Auditor General’s observations?

Suggested response

• The Office of the Comptroller General will continue to work closely with impacted departments to improve data quality, gather more information, and, where required, refine methodologies, which will improve the accuracy of ARO estimates.
• As we will work to make these improvements and address the Office of the Auditor General’s observations, we would like to express our appreciation to departments, agencies and Crown corporations for their significant efforts.
• We’d also like to thank our colleagues at the Office of the Auditor General. We successfully implemented this standard and received an unqualified audit opinion for the 25th consecutive year.

Background

• The adoption of this standard required the government to identify tangible capital assets with retirement activities meeting the definition of ARO, estimate the cost to complete those activities, and determine when those activities will occur. This process was complex and required significant judgment and assumptions (for example, abatement of commercial asbestos, demilitarization).
• We accept that given the complexity of these estimates, a significant amount of work was required by all impacted parties to ensure that, despite these challenges, overall estimates were reasonably accurate.
• Office of the Comptroller General guidance on the application of this new accounting standard was critical. This work was an important step to ensure an unqualified audit opinion.
• The Office of the Comptroller General will work with departments to determine how incremental improvements can be made to improve the accuracy of overall estimates, particularly in common retirements anticipated across several departments (for example, abatement of commercial asbestos).

Issue or question

What guidance did TBS provide to the departments for the introduction of the new standard?

Suggested response

• TBS provided substantive support to departments, agencies and consolidated Crown corporations to support the introduction of the ARO standard, including:
  • instructions on how to transition to the standard, including technical guidance on retroactive application, how to determine opening balance sheet impacts, and how to complete comparative year reporting
  • all necessary new reporting instructions, ensuring consistency across all consolidating entities
  • a Government of Canada accounting standard, which provides specific guidance on how to apply the accounting standard
  • coding manual instructions, questions and answers, and Departmental Financial Statement guidance (including note disclosures)
  • guidance specific to Crown corporations, including specific guidance to Crown corporations to assure consistency of financial reporting (for example, discount rate and Atomic Energy of Canada Limited)
  • general guidance (for example, discount rates and inflation) and department-specific guidance (for example, scoping of international), online discussion groups, dozens of working group sessions, and so on
• The guidance above was critical to ensuring that this standard was successfully implemented.

Issue or question

What were the prior-year reclassifications to the Public Accounts of Canada related to?

Suggested response

• ARO liability balances previous to the adoption of ARO were almost entirely related to Atomic Energy of Canada Limited, a consolidating Crown corporation. This balance has historically been subject to audit from the Office of Auditor General of Canada and is related to the decommissioning of nuclear facilities.
• As at April 1, 2022, the ARO balance of $7.3 billion previously reported was removed and, with the expanded scope from PS 3280, a new ARO balance was determined. The new balance at April 1, 2022, was approximately $13.7 billion (an increase of $6.4 billion), broken down by the following major categories:
  • asbestos and other hazardous materials in buildings (+$2.8 billion)
  • decommissioning of nuclear facilities (+$9.3 billion, representing an increase of +$2.0 billion compared to previous balance of $7.3 billion)
  • demilitarization or disarmament (+$0.9 billion)
  • other (+$0.7 billion)

Background

• Public Sector Accounting Standard 3280 (PS 3280), Asset Retirement Obligations, is effective for all public sector entities in Canada starting April 1, 2022. As part of this transition, the Government of Canada decided to apply the modified retroactive application of the standard, meaning it removed from the Statement of Financial Position any liability for an asset retirement obligation and associated asset retirement costs and recognized:
  • a liability for any existing ARO, adjusted for accumulated accretion to that date
  • an asset retirement cost capitalized as an increase to the carrying amount of the related tangible capital assets
  • accumulated amortization on that capitalized cost
  • an adjustment to the opening balance of the accumulated surplus or deficit
• The amount recognized as an asset retirement cost was measured as of the date the asset retirement obligation was incurred. Accumulated accretion and amortization were measured for the period from the date the liability would have been recognized had the provisions of this standard been in effect to the date of transition.

Issue or question

What are the new disclosures related to ARO?

Suggested response

• The new disclosures related to ARO are:
  • a general description of the liability for an asset retirement obligation
  • the basis for the estimate of the liability, including the estimated total undiscounted expenditures, the time period over which the undiscounted expenditures are to be incurred, the discount rate used, and the long-term rate of inflation used
  • a reconciliation of the beginning and ending aggregate carrying amount of the liability showing the changes attributable to:
    • liabilities incurred
    • liabilities settled
    • revisions in estimated cash flow
    • change resulting from the passage of time (accretion expense)

E. COVID‑19 overpayments to be recovered

Issue or question

What overpayments were recorded in the Public Accounts 2023 due to COVID‑19?

Suggested response

• In the Public Accounts 2023, $7.0 billion COVID‑19 gross benefit overpayments were recorded. This amount was offset by a $2.3 billion allowance for doubtful accounts ($5.1 billion gross benefit overpayments and $1.3 million in allowance in 2022).
• Where overpayments have been determined, the government works with Canadians and businesses to recover these funds.

Background

• The $7.0 billion gross ($5.1 billion in 2022) benefit overpayments recorded as a receivable relates to gross overpayments of $1.2 billion ($2.8 billion in 2022) reported within the Employment Insurance operating account for the Employment Insurance Emergency Response Benefit (EI-ERB). The remaining difference of $5.8 billion gross ($2.3 billion in 2022) relates to all other COVID19 benefit overpayments from COVID19 programs administered by the Canada Revenue Agency (CRA) such as the Canada Emergency Response Benefit (CERB), the Canada Recovery Benefit, and so on.
• For the CERB and EI-ERB payments, Employment and Social Development Canada (ESDC) and CRA relied on client attestation in order to deliver the financial support to Canadians as quickly as possible. Both ESDC and CRA will be undertaking integrity and compliance work in subsequent years to establish whether an overpayment was made.
• Where overpayments have been determined, the government works with Canadians to recover these funds.
• If pressed on questions related to post-payment verification:
  • CRA and ESDC would be best positioned to discuss plans for post-payment verification.

F. Write-offs, remissions and forgiveness due to COVID‑19

Issue or question

Were there any write-offs, remissions or instances of debt forgiveness due to COVID‑19 in the Public Accounts 2023?

Suggested response

• Debts that are written off, forgiven, remitted or waived are reported in Section 2 of Volume III of the Public Accounts.
• These are presented at an aggregated level by organization and don’t specify a reason for a debt deletion.
• Departments require different levels of approval or authority, depending on the nature of the debt and type of debt deletion being sought from the Minister, the Treasury Board, the Governor in Council or Parliament.
• Organizations would be better placed to provide specific information on their debt deletions related to COVID‑19.

Issue or question

What CERB and EI-ERB remissions have been reported in the Public Accounts 2023?

Suggested response

• Remissions are included in the Public Accounts for the fiscal year the debt is remitted, and remissions will be published in the fiscal year the remissions operationalized.
• The following COVID-19-related remissions were reported in Section 2 of Volume III under remissions of taxes, fees, penalties and other debts in the Public Accounts 2023 related to CERB and EI-ERB:
  • $0.6 million ($203 million in 2022) of CERB and EI-ERB remissions (for recipients who were ineligible based on the $5,000 net self-employment income threshold)
  • $0.5 million for a partial remission of overpayments to students found to be ineligible for the CERB or the EI-ERB who may have otherwise been eligible for the Canada Emergency Student Benefit (CESB) had they applied.

Issue or question

What other remissions are we are aware of related to COVID-19 (other than CERB and EI-ERB)?

Suggested response

• Remissions are included in the Public Accounts for the fiscal year the debt is remitted, and remissions will be published in the fiscal year the remissions operationalized.
• The following COVID-19-related remissions (other than those related to CERB and EI-ERB) were reported in Section 2 of Volume III under remissions of taxes, fees, penalties and other debts in the  Public Accounts 2023:
  • $43.4 million ($272.8 million in 2022) for Certain Goods Remission Order (P.C. 2020-304). The objective of this Order is to reduce the cost of imported medical supplies, including personal protective equipment, by waiving customs duties in order to support efforts to combat the spread of COVID‑19.
  • $1.6 million (nil in 2022) to remit debts owed by persons with disabilities, their caregivers or their estates resulting from overpayments made in error under the program to provide a one-time payment to persons with disabilities for reasons related to the coronavirus disease 2019 (COVID‑19). (P.C. 2022-0273)

Background

• Remissions of $0.6 million ($203 million in 2022) related to the Canada Emergency Response Benefit and Employment Insurance Emergency Response Benefit Remission Order (P.C. 2021-363, April 30, 2021).
• The CERB’s eligibility criteria were made as broad and inclusive as possible so that workers who had at least $5,000 from employment or self-employment in 2019 or the 12 months prior to their application and were impacted by COVID‑19 could get support when they needed it. The intent was that self-employed individuals would qualify if they had $5,000 in net self-employment income (before taxes). However, in the early days of the CERB, some individuals were incorrectly advised that the qualification was based on gross income, before expenses, and applied for the CERB on this basis.
• On February 9, 2021, the government announced that it is allowing self-employed individuals who applied for the CERB through the CRA or Service Canada, and whose net self-employment income was less than $5,000, to keep their CERB payments, provided they meet all other eligibility requirements. This approach provides a targeted resolution specifically for self-employed individuals who applied in good faith and received benefits based on unclear eligibility information provided by the government.
• Remissions of $0.5 million allow for partial remission of overpayments to students found to be ineligible for the CERB or the EI-ERB who may have otherwise been eligible for the CESB had they applied (P.C. 2022-0617, June 2, 2022).
• As announced in the Economic and Fiscal Update 2021, the government had proposed to provide debt relief to students who received but were ineligible for the CERB but were eligible for the CESB by allowing their CERB-related debt to be offset by the amount they would have received from CESB during the same benefit period.

G. Debt write-off and forgiveness

Issue or question

What are the significant debt write-offs or forgiveness in the 2023 Public Accounts?

Suggested response

• The government takes the stewardship of all public money and property entrusted to it very seriously.
• Total write-offs this year were $3.3 billion ($3.1 billion in 2022).
• The main write-offs relate to amounts owed to the CRA under the Financial Administration Act: $2.3 billion in 2023 ($2.3 billion in 2022).
• During the 2022–23 fiscal year, there were also write-offs for the CRA under the Bankruptcy and Insolvency Act ($0.6 billion in 2023, $0.3 billion in 2022).
• In 2023, $2.0 billion ($1.4 billion in 2022) was forgiven.
• Key amounts forgiven in 2023 include:
  • $1.3 billion related to the Export Development Act (Canada Emergency Business Account (CEBA)) ($0.8 billion in 2022)
  • $0.2 billion related to the Canada Student Financial Assistance Act ($0.2 billion in 2022)

Issue or question

What is the process in place to write off or forgive debt?

Suggested response

• Departments require different levels of approval or authority, depending on the nature of the debt and type of debt deletion being sought. Generally, this is at the level of the Minister, the Treasury Board, Parliament or the Governor in Council.
• The Debt Write-off Regulations provide the procedures that must be followed for the control and write off of a debt. A debt that is written off is removed from the accounts but is not legally extinguished.
• Debt forgiveness under section 24.1 of the Financial Administration Act legally extinguishes the debt and requires parliamentary approval, most commonly in an appropriation act.

Background

• In accordance with the Financial Administration Act and the Debt Write-off Regulations, departments are responsible for ensuring that debts, obligations and claims written off or forgiven are accurately reported and that the appropriate approval process has been followed. Depending on the category, departments require different types and levels of approval or authority.
• When a debt is written off, it is removed from the Public Accounts of Canada. However, the government still has the legal right to recoup the debt if it becomes possible to do so in the future. In the case of debt forgiveness and debt remissions, the government waives its right to recoup any amounts in the future and removes the legal obligation of the debtor to repay the amount.
• Debt forgiveness applies only to non-budgetary debts and debts owing by a Crown corporation to a department and legally extinguishes the debt.
• Debts, obligations and claims written off or forgiven (including waiver and remission) during the fiscal year are listed in the Public Accounts of Canada, Volume III, Section 2.
• Procedures for the control and write-off of a debt in accordance with the TBS Guide to Debt Deletion are:
  • Debt is recorded in the appropriate department accounts and controlled through regular reporting to management until collected or written off.
  • A formal review process must be established by the appropriate departmental minister or deputy head on behalf of the minister.
  • If the amount to be written off is greater than $25,000, it must be referred to a review committee for recommendations. The committee will consist of at least three public officers.
• Write-offs can be performed in the following circumstances:
  • the debt has been determined to be uncollectible
  • the cost of collecting the debt outweighs the amount of the debt or the probability of collection, a full settlement at present value of the debt, or a compromise settlement
• There are multiple debt deletion authorities, which include:
  • write-off under section 25 of the Financial Administration Act (FAA) and the Debt Write-off Regulations, 1994
  • remission under section 23 of the FAA
  • forgiveness under section 24.1 of the FAA
  • waiver or reduction of interest and/or administrative charges under section 155.1 of the FAA and sections 9 and 12 of the Interest and Administrative Charges Regulations
  • Bankruptcy and Insolvency Act
  • Income Tax Act
  • Service Fees Act

H. Office of the Auditor General observation: pay administration

Issue or question

What progress has been made to the Auditor General’s observation on pay administration?

Suggested response

• The government has made additional investments to improve its pay administration processes, such as funding in Budget 2023 for the pay centre to hire more compensation advisors.
• The government intends to replace the current pay system with the Next Generation Human Resources and Pay system and is preparing a report on the results of its testing and pilot programs completed in June 2023.
• The government is committed to resolving outstanding pay action requests and to meet the service standards established.

Background

• Not applicable

I. Office of the Auditor General observation: information technology general controls

Issue or question

Should we be concerned about the information technology general controls deficiencies noted by the Office of the Auditor General?

Suggested response

• The Office of the Auditor General did not identify any inappropriate changes made to data or data breaches as a result of instances where certain users had access to government systems and databases that they did not need in order to carry out their duties.
• The government has since reviewed the direct access permissions it had granted to users and removed them where necessary.
• Similar reviews are ongoing for users with indirect access permissions.

Background

• The Office of the Auditor General found deficiencies in controls over access to key systems that store and process data related to payments, receipts and accounting records.
• Certain users had access to government systems and databases that they did not need to fulfill their duties. This access gave these users the ability to make changes to the government’s systems and data, which increases the risk of fraud or wrongdoing.

J. Office of the Auditor General observation: National Defence inventory

Issue or question

Can you comment on the status of the implementation for National Defence’s (DND’s) 2016 Action Plan to address the Office of the Auditor General’s commentary observations on its inventory?

Suggested response

• At this time, DND has completed all of the commitments in its Action Plan except for the Automatic Identification Technology commitment.
• During fiscal year 2021–22, after consultation with stakeholders and industry, DND determined that a restructured Statement of Work (SOW) was required.
• The restructured SOW is expected to be released by fall 2023 and will facilitate the development of the Final Request for Proposal, planned for release in early 2024.
• The Office of the Comptroller General continues to support DND to resolve remaining issues related to quantity, value and classification of inventory items.

Background

• In its 28th report on the 2016 Public Accounts, the Public Accounts Committee (PACP) directed that, beginning in 2017–18, DND is to provide an annual one-page report on progress in implementing its long-term 2016 six-point Action Plan to properly record and value its inventory. The annual progress report on the 2022–23 fiscal year was presented on May 29, 2023.
• The 2016 Action Plan comprised six initiatives:
  1. Governance
  2. Automatic Identification Technology
  3. Enhanced Materiel Accountability
  4. Inventory Management Rationalization and Modernization
  5. Pricing
  6. Pricing Legacy Data Clean Up

Remaining commitment:

• As of March 31, 2023, the Automatic Identification Technology Initiative is experiencing some delays, particularly on its procurement activities. A draft Request for Proposal (RFP) was released in 2021 and again in 2022. Industry deemed that the draft RFP required additional detail to appropriately design and build an automatic identification technology solution.
• As such, refinement of requirements with multiple stakeholders has taken place, and follow-on industry engagement in February 2023 resulted in DND’s decision to restructure the SOW. The restructured SOW is anticipated to be released to industry by fall 2023 and will facilitate the development of the Final RFP, planned for release in early 2024.
• Pending further approval, DND expects to award the contract by the end of 2024.

K. Public Accounts Committee recommendations on the Public Accounts 2020, 2021 and 2022

Issue or question

What is the status of the Public Accounts Committee (PACP) recommendations on the Public Accounts 2020, 2021 and 2022?

Suggested response

2020

• We are looking at opportunities to make the Public Accounts of Canada more user-friendly and accessible while ensuring a high degree of transparency and accountability.
• We have performed a thorough review of the form and content of the Public Accounts of Canada, surveyed users, and consulted with key partners.
• We have also started to implement improvements. For instance, effective in the 2023 Public Accounts of Canada, several links have been added to the HTML version that refer to the notes to the financial statements, to tables or to sections within the Public Accounts to make navigation easier for users.

2021

• We have engaged with key stakeholders and are finalizing our response, which will be provided by the December 31, 2023, deadline to address reopening of the books and tabling by October 15.
• TBS is also reviewing potential options for enhanced reporting mechanisms for Crown corporations that would align with Volume III. Consultations are underway with Crown corporations, and a response to the committee will be submitted by the due date of December 31, 2023.
• In addition, as requested by PACP, the Secretary submitted a progress report on October 31, 2023.

2022

• TBS agreed with Recommendation 1, and a report detailing the current reporting done by federal organizations in relation to environmental, social and governance as well as sustainable development criteria was annexed in the Government Response provided to the Chair on September 27, 2023.
• For Recommendation 2, the government commits to explore, including through stakeholder consultations, the potential for greater transparency in the Public Accounts, including the names of corporations that receive loan forgiveness. The government will report back to the committee by fall 2024.

Background

• PACP tabled a report on its review of the Public Accounts of Canada 2020 on March 25, 2021.
  • It was recommended that the Office of the Comptroller General, at TBS, in consultation with the Office of the Auditor General of Canada, PACP and interested parties, study potential changes to the Public Accounts of Canada to make them more user-friendly and accessible while ensuring a high degree of transparency and accountability.
• The action plan considers changes to the form and content of the Public Accounts of Canada. As per section 64(2) of the Financial Administration Act, potential changes to the form and content of the Public Accounts of Canada must be jointly approved by the Minister of Finance and by the President of the Treasury Board.
• PACP tabled a report on its review of the Public Accounts of Canada 2021 on October 20, 2022. The following three recommendations were included:
  • Recommendation 1: In the event that a decision has been made to revise the Public Accounts of Canada after they have been audited and signed off for the fiscal year, 1) the explanation of the revision be prominent in the presentation of the Consolidated Financial Statements of the Government of Canada; 2) the Auditor General of Canada comment on the revision in the Commentary on the Financial Audits as part of the study of the Public Accounts of Canada; and 3) the Secretary of the Treasury Board, the Comptroller General of Canada, and the Auditor General of Canada appear before the House of Commons Standing Committee on the Public Accounts to discuss the situation.
  • Recommendation 2: The Government of Canada amend the Financial Administration Act to change the deadline for the tabling of Public Accounts of Canada from December 31 to October 15, to align with the tabling date of some Canadian provinces and peers in the Organisation for Economic Co‑operation and Development.
  • Recommendation 3: The Government of Canada consider requiring Crown corporations to include all expenditures in the same manner as federal departments and agencies in Volume III of the Public Accounts of Canada; consult with interested stakeholders on the way this could be achieved, the advantages it would provide and the potential additional administrative burden this could cause; and that it provide the Committee with a report comprising of a comprehensive analysis of this matter, no later than April 30, 2023.
• PACP tabled a report on its review of the Public Accounts of Canada 2022 on June 1, 2023. The following two recommendations were included:
  • Recommendation 1: That, by January 31, 2024, the Treasury Board of Canada Secretariat provide the House of Commons Standing Committee on Public Accounts with a report explaining the measures taken to improve accounting practices requiring federal organizations to present detailed reports about their environmental, social, and governance as well as sustainable development criteria.
  • Recommendation 2: That the Government of Canada, in accordance with all applicable laws, disclose in the Public Accounts the names of any corporations that receive loan forgiveness from the government and Crown corporations and provide the value of loan forgiveness received in each case.