Summary of Commentaries on Financial Audits and on Special Examinations

 

 

Highlights: To date, the Office of the Auditor General of Canada (OAG) has presented 4 commentaries on financial audits; the fifth will come out in November or December 2020.

 

We presented 1 commentary on special examinations in May 2018.

 

 

Commentaries on our financial audits

First report (May 2017): On the 2015–16 financial audits

·         Understanding financial information

o    Financial information is abundant.

o    Financial information can be hard to find.

o    Financial information can be difficult to understand.

o    Financial statements involve significant judgments and estimates.

·         Observations from the 2015–16 financial audits

o    Most financial statements audited by the OAG were credible.

o    The OAG did not note any significant compliance issues.

o    Most organizations provided their financial reports on time.

o    The financial statements of the Reserve Force Pension Plan continue to be problematic.

o    The Auditor General addressed the following 3 matters in his observations in the 2015–16 Public Accounts of Canada:

§  transformation of pay administration

§  the National Defence inventory

§  liability for contaminated sites

Second report (May 2018): On the 2016–17 financial audits

 

·         Results of the 2016–2017 financial audits

o    Most financial statements audited by the OAG were credible.

o    The OAG did not note any significant compliance issues.

o    Most organizations provided their financial reports on time.

o    The financial statements of the Reserve Force Pension Plan have been problematic.

o    The Auditor General noted the following 3 matters in his observations on the government’s consolidated financial statements in the 2017 Public Accounts of Canada:

§  transformation of pay administration

§  the National Defence inventory

§  selecting discount rates

 

·         Understanding financial information

o    Understanding financial health goes beyond the numbers in the financial statements.

o    Contingent liabilities and contractual obligations are significant and complex.

o    Finding financial information about income security programs and their long-term sustainability is not straightforward.

o    Decisions about infrastructure and other major capital assets affect the government’s financial position.

o    The government’s financial statements discussion and analysis has improved, but its usefulness can still be enhanced.

 

Third report (October 2018): On the 2017–2018 financial audits

 

·         Results of the 2017–2018 financial audits

o    Most financial statements audited by the OAG were credible.

o    We noted 3 significant compliance issues.

o    The financial statements of the Reserve Force Pension Plan have been problematic.

o    Of the unresolved opportunities for improvements issued, 72% have been unresolved for less than 2 years and 28% have been left unresolved for 2 years or more.

o    The Auditor General noted the following 3 matters in his observations on the government’s consolidated financial statements in the 2018 Public Accounts of Canada:

o    transformation of pay administration

o    the National Defence inventory

o    selecting discount rates

 

·         Additional insights from our financial audits

o    The government’s financial statements discussion and analysis has improved but can be further enhanced.

o    Many significant ongoing or planned projects with information technology components represent risks for federal organizations.

o    Organizations can follow commonly used practices to manage the risks involved in undertaking significant projects with IT components.

o    Parliamentary approval of government spending

o    The planning, reporting, and authorization of government spending follows an annual cycle.

o    Two thirds of government spending was not voted on by Parliament through the Main Estimates process because it was authorized through other legislation.

o    The difference between amounts in the Main Estimates and Budget is significant.

 

Fourth report (December 2019): On the 2018–2019 financial audits

·         Results of the 2018–2019 financial audits

o    Most audited financial statements were credible and provided on time.

o    We noted 4 significant instances of non-compliance.

o    Information on the Trans Mountain pipeline was reflected in the government’s consolidated financial statements.

o    We noted opportunities for improvement in various areas, but the most common ones were

§  information technology general controls over systems supporting financial reporting, mainly related to access

§  financial reporting and accounting practices

§  compliance with government policies, legislation, and regulations

§  financial reporting processes and related controls

o    Follow-up on themes

§  Crown corporations must prepare corporate plans.

§  Delays persisted in Crown corporation board appointments.

·         Observations

o    Issues with pay administration.

o    National Defence inventory and asset pooled items—errors persisted but progress made.

 

·         Additional insights

o    Many significant ongoing or planned information technology projects represent risks for federal organizations.

o    How voted expenditures are managed by departments and agencies

o    Public sector pension plans have a large impact on the government’s financial statements.

 

Our fifth commentary report in November 2020 on the 2019–2020 financial audits.

 

Commentary on the 2016–2018 Performance Audits of Crown Corporations (tabled with the Auditor General’s spring 2018 reports)

·         The purpose of this report is to bring to Parliament’s attention to important problems occurring in more than 1 Crown corporation that have affected the corporations’ management and oversight.

·         We found problems in 5 important areas:

o    Some Crown corporations did not receive timely decisions on their long-term plans.

o    There were delays in filling vacancies on boards of directors.

o    There was an inherent conflict of interest for some board members.

o    There were anomalies in the compensation of top executives in 2 corporations.

o    All the Crown corporations we examined had weaknesses in managing risk.

·         Crown corporations included in the report:

o    Atlantic Pilotage Authority

o    Atomic Energy of Canada Limited

o    Canadian Museum for Human Rights

o    Canadian Museum of Nature

o    Defence Construction (1951) Limited

o    Export Development Canada

o    Freshwater Fish Marketing Corporation

o    Great Lakes Pilotage Authority

o    International Development Research Centre

o    National Capital Commission

o    Pacific Pilotage Authority

o    Ridley Terminals Inc.

o    VIA Rail Canada Inc.