HANSARD

Printed and Published by Nova Scotia Hansard Reporting Services

Ms. Maureen MacDonald (Chair)

Mr.Chuck Porter (Vice-Chairman)

Mr. Alfred MacLeod

Mr. Keith Bain

Mr. Graham Steele

Mr. David Wilson (Sackville-Cobequid)

Mr. Keith Colwell

Mr. Stephen McNeil

Ms. Diana Whalen

[Mr. Leonard Preyra replaced Mr. Graham Steele]

[Mr. Michel Samson replaced Mr. Stephen McNeil]

In Attendance:

Ms. Rhonda Neatt

Legislative Committee Clerk

Mr. Jacques Lapointe

Auditor General

Ms. Elaine Morash

Acting Deputy Auditor General

Mr. Alan Horgan

Acting Deputy Auditor General

Mr. Terry Spicer

Assistant Auditor General

Ms. Ann McDonald

Assistant Auditor General

MADAM CHAIR: Good morning. I would like to call the committee to order. Today we have an abbreviated meeting of the Public Accounts Committee. We all received a copy of the Strategic Plan for the Auditor General. Today we have the Auditor General and members of his staff to walk us through the strategic plan and give us an opportunity to ask questions. This is a good opportunity for us to look at the work of the Auditor General's department and particularly sort of the forward-looking nature of what the Auditor General's Office anticipates for the future. So, good morning, Mr. Lapointe.

We will start with introductions in the usual fashion just so we get Hansard to have the levels. We'll start with introductions from Mr. Bain.

[The committee members and witnesses introduced themselves.]

MADAM CHAIR: Thank you and good morning.

The floor is now yours, Mr. Lapointe.

MR. JACQUES LAPOINTE: Thank you, Madam Chair, and thank you all for letting us take a bit of your time to bring you up to date on my office's new strategic plan. I am accompanied today by my senior management team, who have just introduced themselves, Alan Horgan and Elaine Morash, and behind me, if you didn't catch their names, Ann McDonald and Terry Spicer.

You should all have received a copy of the plan, as the Chair mentioned. If you need them, we also have a few extra copies of that, and also this information card, sitting back here, I believe. If it is acceptable to you, Madam Chair, we will review the key parts of the plan in a short presentation and then, of course, we will answer any questions that you may have.

We began our strategic planning process last Spring with senior management discussions in the office, deciding what we wanted to achieve in laying out a process and a timetable. We hired consultants with skills in strategic planning and legislative audit to assist us, Anna Stuart and Bill Rafuse, and you may have met them at some point in the process. We surveyed and interviewed some key stakeholders, Public Accounts members, some ministers, some deputies, other public servants such as a controller, asking their opinions on the role of the Office of the Auditor General. I want to thank all the members of the Public Accounts Committee for your input into the plan at that time.

We interviewed, as well, all our staff. We held working sessions with a full manager group, analyzed with them the consultation results and developed goals and key strategies. Then, in a two-day retreat with our staff in December, we developed a vision, a mission, strategic goals. These were fine-tuned and finalized by senior management last winter. Specific actions were then developed and assigned to staff in order of priority, with projects being scheduled over the next three years. You can see more detail on those activities on our Web site at any time.

The plan talks about changes taking place in the practice of auditing around the world. We have seen in recent years a drop in public confidence in corporate and government leadership as a result of a number of high profile scandals from Enron and WorldCom, through to the sponsorship scandal. This has led to a growing recognition of the importance of audit as a key part of good governance in any organization. Auditors, too, have learned to focus more attention on corporate governance, including ethics and values, accountability, risk management and control. Government auditors today practice what you might term modern performance auditing. They assess governance, they assess value for money, the economy, efficiency and effectiveness of programs, and they assess, as always, compliance with the law, and stewardship of public funds. The expected results of this work is to provide assurance to the House on government financial management and operational performance, to hold a government to account for its use of public funds and to help improve the operations of the Public Service.

As the Auditor General, I am independent and non-partisan. I report only to the House, and as a chartered accountant, I comply with professional standards and codes of conduct.

Under the Act, the Auditor General, with the powers and privileges of a commissioner, can require the provision of information needed in performing his duties, and

public servants are required to provide that information. The office's files and everything in them, as well, are protected from disclosure under FOIPOP.

I am mandated to audit the whole broader public sector, following the money as far as transfer payment recipients outside the public sector, including all agencies and boards. This does not, however, necessarily include non-profit or private sector organizations delivering public programs under contractual agreement. Our access there depends on the contracts.

I am required by the Auditor General Act to report to the House on the work of my office at least annually - I currently do so twice a year - and to report on the reasonableness of government financial statements and revenue estimates, and on the management of public funds.

I provide two primary services to the House - an annual opinion on the reasonableness of the Public Accounts and of the revenue estimates in the budget, and performance audits of selected public sector operations. These are our core businesses.

The financial test audit is a traditional realm of the external auditor of an organization. It provides assurance via formal opinions on the reasonableness of financial reporting. Performance auditing, on the other hand, is focused on the organization's operations. It is a complex field, ever evolving. It covers a spectrum, from investigations of transactions for compliance with the law, to higher level reviews of corporate governance. This especially is where a legislative audit group can add considerable value by exposing critical risks and weaknesses in the organization and by finding ways to improve operations.

The office's strategic plan was developed to help us to better deliver our core businesses. The vision and mission defined the office, they define our intention to be a relevant, valued, and independent audit office serving the public interest as a Legislature's primary resource of assurance on government performance, and to serve the people of Nova Scotia and the House of Assembly by making a significant contribution to enhance public sector accountability and performance. They are focused on making a difference in the public sector on serving the public interests.

Our values, as we articulate them in the plan, tell you what you can expect in our behaviour. They tell you we intend to have an impact, to make a difference for the benefit of the people of the province, that we will always maintain our independence from government in our objectivity and our professionalism, and that we will always strive to be open and honest with you, and maintain the confidentiality of information we receive.

The plan identifies four strategic priorities. These priorities drive everything we do, and they identify what I want to achieve during my tenure as Auditor General. Firstly, we will focus the efforts of the office on the areas of high risk and high impact on Nova

Scotians. We will ensure that our work contributes to a more efficient, effective and better performing Public Service, and that is the effective reason for our recommendations.

We will seek improvements to government financial reporting and performance reporting to provide better information to the House and to the public. We will, of course, promote excellence in our own office to optimize our productivity and the quality of our work.

[9:15 a.m.]

To be able to deliver on these priorities, we need to ensure our organization is set up to focus on them. We have, therefore, reorganized the office around four key service areas: the audit of government performance; the audit of information technology systems; the audit of government financial reports; and internal quality. The organization looks like this. I don't know how well you can see the chart, but you can see the general outline. Some of the words are a little small to see from a distance. But in the new structure, there are four key areas, as you can see. In the structure we will focus our activity and our energy on the high-value-added performance audit service, creating two audit teams dedicated to conducting performance audits of departments, programs, government-wide processes, large projects, agency service delivery.

We will considerably expand our IT audit capability by creating a dedicated IT audit team of skilled and specialized IT audit professionals. This will enable us to better address the significant risks associated with IT systems across the organization. We will focus and rationalize our financial audit services, including Public Accounts, revenue estimates and the audits of agencies and boards, in order to achieve efficiencies in our delivery of this critical assurance service. We will, as well, focus on improving the quality of our service by consolidating the office's internal quality assurance, technical and administrative support services.

Staff are now organized in four audit teams, each under the leadership of a member of the senior management team. Elaine Morash currently leads the first performance audit team, as Acting Deputy Auditor General and as executive lead of the office's risk assessment function. Alan Horgan, on the other side of this chart, is the Acting Deputy Auditor General leading the IT audit team and leading the office's internal support function. Two Assistant Auditors General also lead teams: Terry Spicer leads the second performance audit team, while Ann McDonald is in charge of the financial audit group, auditing government financial statements, the budget revenue estimates and audits of various agencies.

Looking a little deeper at the performance audit portfolios, these are the current audit portfolios of the two performance audit teams and as you can see, the first team has responsibility for audits in Health, Community Services, Economic Development, Finance, Health Promotion and Protection, Intergovernmental Affairs, the Public Service Commission, Treasury and Policy Board, or what might be termed the central agencies. The

second team has responsibility for audits in Education and all the other departments as listed here, from Agriculture through to Transportation and Public Works.

Now, we have discussed the roles of the financial statement audit team and the IT audit team. We haven't listed all the various offices and agencies on here. There are a lot of them in government. Most fall clearly under specific departments and some don't necessarily. So we will be allocating responsibility for all of them, so it's quite clear, if there's a question, who has the responsibility for them. We'll be looking at that shortly. Also, I might add, any government-wide audits that we undertake could be led by any of these teams if they cover several departments.

Now we have developed a significant number of strategic goals and even more actions to achieve these goals. In the next while, you will see that we will take a number of actions to improve our communications with you and all our stakeholders. We will improve our products and we will improve the quality of our operations at all levels. In terms of communications, we will review ways and means to improve understanding of our role within the public sector. We will consult with the Public Accounts Committee, with deputies and others, in our assessment of risks in the public sector, and we will ensure our communication at all stages of an audit are effective.

In terms of product, our audits will be selected on the basis of risk and significance. Our reports will become clearer. We will ensure our recommendations are relevant and add value, and we will follow up on recommendations after two years, as you know, with the expectation that recommendations are substantially implemented in that time.

Elaine is now going to briefly discuss our risk assessment process with you.

MADAM CHAIR: Ms. Morash.

MS. ELAINE MORASH: One of the most common questions that we are asked is how do you select your audits. So this is where the risk-based audit planning concept comes in in terms of how exactly do we arrive at the programs and entities that we audit in a year. This focus on risk-based audit planning, I guess if you think about the audit universe that we have, it's huge, I mean, all the government programs, all transfer payment recipients, and we have to make some choices. So in order to do this, we went back to the CICA handbook, which has a section on value-for-money audits, and in that section it lays out some factors that you should look at when you are trying to pick audits, and those factors are focused on significance and risk.

So what we have done is just establish a huge spreadsheet where we lay out most of the government programs, the significant ones and entities, and we go through and we quantify how we rank these programs when it comes to both significance and risk. Significance is 40 per cent of our weighting and the factors that go into significance, it's defined as things like financial magnitude, importance, economic, social and environmental

impact, management action with respect to important issues that we previously talked about, political and media interest in the matters, the impact of a centralized function. Forty per cent of our scoring system is based on risk, where we talk about the diversity, consistency and clarity of the entities' objectives and goals, the complexity of their operations, the complexity and quality of management information and control systems, the nature and degree of change in the environment, its program delivery method, the nature of their transactions. So that's 80 per cent of the scoring.

The other 20 per cent is how this audit could contribute to achievement of the Office of the Auditor General's priorities. Specifically, does it serve the public interest to do this audit, would it enhance government performance if we came up with recommendations in the area, and does it promote good accountability?

So those three broad categories - significance, risk, contribution to achievement of the Office of the Auditor General's priorities - are 100 per cent of the scoring, and then we look at some additional considerations. We look at whether the cost of doing the audit would exceed the benefit, because sometimes, if we don't have the resources, we have to go out and acquire resources, which could be very costly. We try to match the audits to the resources that we have available. So that is another criteria that we have to look at, and we have to look at whether the entity is, in fact, something that is auditable. I mean, there are some certain kinds of things that we don't have the expertise to audit, and that we can't really audit.

So, at the end of the day, this is just sort of a snapshot of the process that we use. It's a much more robust process than we had been using in the past. So what we end up doing is taking all of the government programs and entities, assigning them a score, and the ones with the highest score are the ones that are the most risky and significant and the ones that we will focus on in the immediate future.

So now I am going to turn the floor over to Alan and he is going to talk a little bit about some of the internal strategies and actions.

MADAM CHAIR: Mr. Horgan.

MR. ALAN HORGAN: Thank you, Elaine. I am going to briefly lead you through six strategic initiatives that we have developed, each of them focused at improving the internal efficiency, quality and productivity of the Office of the Auditor General.

First, we want to improve and standardize our audit methodology and our quality assurance process. We happen to be living at a time of rapidly changing standards, standards both in the areas of accounting and in auditing. At times it's actually almost overwhelming how quickly and significantly standards are changing. It's been identified in the auditing profession as being one of the key risk areas in auditing, just keeping abreast of the standards. That's something we realize that we have to do very well.

We realize we must apply all these standards to each of the three different types of audits that we do - performance auditing, financial auditing and IT auditing. We also realize that we have to apply them consistently through the office because we have different teams focusing on different types of auditing but we have to be consistent in our use of methodologies. As well, we have to make sure that we maintain a very effective quality assurance process because this process is required to stay on top of changing standards and to ensure that they are implemented well and consistently throughout the office.

Another area of importance to us is the hiring of professional expertise. Other than at the student level, we have found in recent years that it's quite difficult to attract professionals. This is experienced by auditors clear across the country. There's quite a demand for audit professionals so we have to make sure our hiring processes are well tuned to attracting the kind of people and the kind of expertise that we need. Many of the areas we audit are technical in nature and, of course, as I mentioned, auditing standards are changing and requiring greater levels of knowledge so we have to attract top-ranked people to the office. We need to develop an office that can not only attract these people, but retain them afterwards, provide good careers for them, develop them and be a quality workplace.

One of the instruments we're using to be a quality workplace is an employee survey. It's very important to know what the staff of the office thinks and what they want. Many, many valuable ideas come from the staff. They were instrumental in the success of the preparation of the strategic plan, everyone in the office played a part and it's very important to provide an instrument for them to provide ideas and preferences and so we're going to be conducting a comprehensive survey of all staff in the summer and then develop ways to address the issues that come forward.

As well, we need to make sure that we maintain a very comprehensive, professional development program. As I mentioned before, hiring professional staff or students is just the start. After that, we have to train them and we have to provide them many good opportunities to develop themselves, both in terms of good experience on audits as well as training programs.

As well, we have to realize that training and development have to be focused on staff needs. In that way, it has to be individualized - every staff member is going to have different strengths and weaknesses and a development program has to realize that perhaps one size does not fit all. We have to make sure our professional development program has an individualized component to it.

We also realize that information technology is very much a key success factor to our office, both in the past and very much so in the future. We're going to be preparing a long-term information technology strategy. Right now we've identified four components to this initiative - one is we're redesigning our Web site to make it more useful, perhaps provide information that is of greater value to its users.

We're exploring better ways of using the technology we have now. We're definitely an office that uses information technology extensively, but there are always new and better ways of using what you have. On the flip side of that, we're also going to be looking at opportunities to use new technology, technology changes fast. There's always new software, new equipment, new approaches, and we must be always watching to see if adopting some of this stuff can be a cost-effective way of achieving what we want to achieve. As well, of course, IT audit is extremely important to us so we have to develop a long-term plan on how we want to approach IT auditing and to identify audits of value with respect to IT throughout government.

[9:30 a.m.]

Finally, we have to maintain our focus on reporting on our own performance and that's something that we highlight as being very important in government in general. It's rarely a performance audit goes by that we don't have some comment on performance reporting by our auditees and, of course, we have to walk the talk. We have been doing that and each of you probably has seen our performance reports in the past. We have to make sure we keep doing them, producing them at least on an annual basis, but now that we have a new Strategic Plan we have to make sure our performance reports focus on the strategies and the priorities in our Strategic Plan so that we are coming back to our stakeholders to indicate how we are doing with respect to what the Strategic Plan says we want to do over the next three- to five-year time frame. So that concludes what I want to say about those initiatives, back to Jacques.

MADAM CHAIR: Mr. Lapointe.

MR. LAPOINTE: While we're working on our action plans, we're also working with senior management to address issues to improve our audit process. There are a number of areas we're looking at. As you know, there have been issues recently on the issue of access to information. We have seen some significant improvements. We were able, for instance, to drop our qualification, the opinion on the review of the revenue estimates related to access issues as all the information was, in fact, given to us that we required. We're currently engaged in discussions with Treasury and Policy Board, Justice, and Finance to resolve these issues on a permanent basis. I will keep the committee informed of progress in this area.

As well, as we conduct our audits we're working with departmental management to improve the process for everyone. For instance, we are asking to be informed of any issues of confidentiality involved in information we receive so that we can take that into account in what we disclose, so that we're aware of it. As well, if problems arise during an audit, whatever they may be, we want to be able to deal with them quickly. When an audit is nearing completion, we encourage management to assist to bring it to a conclusion by reviewing our findings to make sure that, in fact, they are factually correct and by providing responses to our recommendations on a timely basis. As to the audit recommendations, we

try to ensure, on our part, that they are relevant, that they're realistic and add value, that they are in fact implementable, and we hope to see them being implemented.

To conclude, I will state again that we are here to serve the public interest, to serve the House of Assembly and the people of Nova Scotia by helping the House to hold the government to account for its use of public funds, and by helping to improve the performance of the Public Service, all with the ultimate goal of better government for the people of Nova Scotia. Our strategic plan is our guide in achieving that mission. So I want to thank you all again for your valuable contribution to our strategic plan and, Madam Chair, I would be pleased to answer any questions.

MADAM CHAIR: Mr. Samson.

MR. MICHEL SAMSON: Thank you, Madam Chair. Mr. Lapointe, I may have missed it at the start of your presentation but I'm curious, you talked about broad consultation, how do you determine year to year which specific departments, agencies or commissions that you're going to focus on? Maybe you've already indicated but I guess my question is, right now, which ones are you working on as we speak, specifically? So I guess two questions, how do you develop that and, secondly, which ones are you working on?

MR. LAPOINTE: In terms of the first question, that is handled by our risk assessment process. We are currently redoing that and are in the middle of looking at the various departments, agencies, and the programs to conduct a risk assessment, as Elaine described it, to see where our priorities will be for audits in the next two to three years. That will be completed over the next, say, two to three months and, from that point, we are then able to report back to you that we will have these areas of focus and priority over the next while, but it comes from our risk assessment. We are about to issue a report, so we are just wrapping up now, in fact, we have wrapped up, audits in the Departments of Health, Community Services and Justice, and that we will be reporting on in June.

MR. SAMSON: The reason I ask that is because, obviously, as members of this committee, as members of the House, there are specific programs that are of interest to us, and I don't know if this is the time to give those suggestions, but allow me to do so. One of the issues which is of great concern to me and to our caucus is the entire issue of gas regulation, and the fact that the government is, in itself, determining the price of gasoline for consumers here in this province.

Right now, there is a great cloud of mystery as to what formula is being used. There is a set formula, and then there is the mysterious forward averaging formula, which is not a formula at all but, apparently, three or four individuals sitting around trying to guess at what the prices will be.

This is a great cost to the consumers, which has already been determined. The fact that the government chose not to send this to the Utility and Review Board, an independent

agency, is of great concern to us, and therefore I would strongly suggest should be of concern to the Auditor General's Office as well, to determine whether public funds which are being used, and the determination by government of a price consumers will pay, is one that we would like to see your office reviewing in order to ensure that best practices are being used, which we question, but again a report from your office would be very helpful in determining for consumers as to whether the proper safeguards are in place.

One of the other issues, which I'm not sure if government has approached you to make comment on but certainly I believe would be helpful for members of the House, is the whole issue of the offshore accord, more importantly the new equalization agreement that has been proposed by the federal government. We have heard figures coming from economists, coming from the Department of Finance, but I believe your office certainly is one that Nova Scotians and members of this House hold in high regard as giving an independent opinion on such matters. I don't know if you have been approached, but I would certainly strongly suggest that if your office could undertake a review of the competing figures that Nova Scotians have been provided with in order to determine what exactly are the consequences for Nova Scotians, or the potential benefits based on the new equalization formula that has been proposed and whether we should remain with the offshore accord or what is being offered to us. I guess those are my two points in this regard - whether you will look at gas regulation and, second of all, whether you have been asked or are prepared to look at the offshore accord.

MR. LAPOINTE: Thank you, Mr. Samson, your timing is good on this. As I said, we are just embarking on our risk assessment and looking at all the programs and deciding our priorities. In fact, we are planning to come to the committee for your views on the key risks of government. If you don't mind, I will take this into account and talk to the other members, as well, and see if we can accommodate the committee's wishes - very good suggestions.

MADAM CHAIR: Mr. Wilson.

MR. DAVID WILSON (Sackville-Cobequid): Thank you, Madam Chair. Thank you for your presentation. Just a couple of quick questions. You stated earlier about the follow-up two years post audit, how will you present those findings? Will it be in your report and, if it is, what details will that contain and how will that look in your report?

MR. LAPOINTE: We will be presenting the findings, as you say, in our report, either the June or December report, at some point in there. We will be listing, at the least, each of the audits conducted and the recommendations presented and the status of those recommendations - quite a detailed listing - and then analyze those to see what kind of results we have and where we have no substantial completion of these or where some departments may be tardy in implementing, so that we'll attempt to make it (1) provide all the information on it and (2) make it fairly easy to grasp quickly what the situation is. We should do that, we will do that annually in one of the reports.

MR. DAVID WILSON (Sackville-Cobequid): Mr. Horgan mentioned earlier around the staffing levels and the difficulties around ensuring that you have trained personnel to do your audits and your work. Do you feel at this time that your budget is adequate for you to attract those individuals you need, plus to implement this strategic plan? Do you feel your audit at present is adequate? I know that is always a difficult one - or your budget, sorry, is adequate at this time to meet and implement these goals and this strategic plan?

MR. LAPOINTE: The plan is a little ambitious for the size of the office at the present time, I have to admit. We all, I guess, have to live within our budget, the budget is never enough, and we can always use more people. I'll be sitting down with my management team to look at that and to see if it is adequate to have the kind of impact we want to have. If it is not, then I'll have to have a discussion with the committee on that.

I know that one of the difficulties we have is not necessarily budget related but more in terms of providing public sector level salaries. The private sector responds quickly to supply and demand in the labour market and when there is a heavy demand for skilled professionals, the private sector firms, of course, salaries rise up pretty quickly and we can't compete on the basis of salaries with the big firms. So on that basis, it is very hard, not just for us, but for other public sector organizations to attract very skilled people. We can do so but not on the basis of salary.

We have been attracting good people, we have been doing it by offering good, meaningful employment and very meaningful work. In fact, people who are committed to public service are always good to see, who have opportunities for career development and for personal development in the work that they do. Those are the kinds of areas we need to focus on in order to attract the top candidates right now.

MR. DAVID WILSON (Sackville-Cobequid): Did you see an increase in this past budget to your office?

MR. LAPOINTE: Yes, there was a small increase in the last one, I forget the exact amount.

MR. DAVID WILSON (Sackville-Cobequid): That's okay.

MADAM CHAIR: Mr. Preyra.

MR. LEONARD PREYRA: Thank you, Madam Chair. I am the MLA for Halifax Citadel, I came in late. I'm filling in for Graham Steele.

I do have a couple of questions, mostly relating to sins of omission on the part of the government and how those are dealt with. I'm thinking in particular about two cases last week in my constituency, dealing with youth at risk and youth in care of Community Services, where they come in contact with the department, and a family comes in and asks

for help, or they come to the attention of the department through other means. Once they get in, they seem to disappear into the system and they only surface when something goes awry.

I'm wondering if there is any possibility for the Auditor General to look at children in care and youth at risk and how they are dealt with through the system because we seem to get more and more public reports of people who are well known to these departments, Community Services being an example here, but there just doesn't seem to be any way of tracking them if the government does nothing about them.

MR. LAPOINTE: I find it hard to say off the top of my head what we can do in the area but that's within government and we certainly can consider it when we're looking at the areas to go in. I don't recall if we've done anything in that area in the recent past. I don't know if Elaine - no, we haven't.

[9:45 a.m.]

MS. MORASH: No, I do know that the Office of the Auditor General of Ontario did something on children in care just recently. It was a major audit, but it dealt mainly with Children's Aid, and those kinds of organizations.

MR. PREYRA: We seem to have a particular problem where a variety of departments are involved. For example, someone would be involved with the Justice system and is transferred over to Community Services, and the two just don't seem to mesh. A recent case, for example, last month, where the court essentially said that the service didn't exist, they wanted to hold this youth, they wanted to provide mental health services, particularly in the area of mental health, but since the service didn't exist, they released him into the community. So he disappeared into it, and neither department knows where he is. Where things cross across two departments, the system seems to fail quite badly. I don't know about your capacity to audit across departments in one policy area.

MR. LAPOINTE: We can audit across departments, and do. This is a complicated area and maybe a little hard to get a handle on, but it's certainly worth us considering. Again, as I said to Mr. Samson, we are, right now, starting to look at our areas of priority. So I think what we'll do is keep this one in mind, and we may discuss it with you again.

MR. PREYRA: Just one more question?

MADAM CHAIR: A quick one, yes.

MR. PREYRA: A quick question. A similar issue on transitional care units, again, in my constituency, where you had a number of people in these transitional care units who do not really need that level of medical care but they can't be placed elsewhere, I'm wondering, is that the best use of the public money, and are you able to look at the situation

in transitional care units and the extent to which the money being spent there is good value for our money? I will pass on that, I will give up my time there. Just a suggestion.

MR. LAPOINTE: Again, that is an area we are capable of looking at. I'm making note of this because we'll need to consider the different areas, but that is something we'll look at, the possibility of that. If that's a satisfactory answer. These are good points.

MADAM CHAIR: Mr. Colwell.

MR. KEITH COLWELL: Thank you very much. Just a quick question, but the answer won't be quick. You alluded in your opening remarks that there's certain organizations that work sort of funded by government that you can't audit. I'd like to get a list of those organizations that you can and can't audit. Any place that money is put into from the government, except for private contracts that are let out for just strictly services, you should have the ability to audit those because it's an expenditure of funds, taxpayers' funds, usually, to do those. I would really like to see that list and see if there's some way we might be able to include those, and the things you have the ability to audit. Whether you do or not is another issue, but you should have the ability to do that.

MR. LAPOINTE: The areas that I was referring to that we don't really have access to are the areas where service is delivered through a contract. If you're going to get out of the core departments or agencies and you want to deliver a service, there are a lot of ways to do that. You can have transfer payment recipients who simply receive funds from government, like hospitals. We have access to all of these. These are on the fringe of a broader government.

If you go to a private or non-profit organization and have them deliver a service for the government and fund them, and the way you do it is to sign a contract with them, however you do it, either by tender or just by selecting somebody, that actually is not covered by the access that we have under the Auditor General Act. That is where the dividing line is. I'm not sure how many of these there are in the government. It might be kind of an interesting issue to try and make a list of all of these. It would be a bit of a research project but I suppose it can be done. That is a case where we don't technically have access, unless the department, in writing the contract, provides that access. We've run into this several times, and as a normal rule what tends to happen is, we wind up getting access one way or the other, but we don't have legal access, it's not automatic.

We feel, as a normal rule, that any contract the government makes for this kind of service delivery should have rights of audit access, not just for us to go in, but for the department to go in and audit, with internal auditors or external auditors or with their own people for that very reason, for monitoring the spending of public funds.

Aside from departments, normally as a rule, having a process to write in that kind of audit access and monitoring access in every contract we do, the only other way to ensure that

kind of access would be to write legislation or to rewrite the Auditor General Act to provide that access. Those are the two ways to remedy the situation. We have done one just recently, in fact, just wrapping one up in which that was an issue, with the ambulance services. That's a contract, we did conduct the audit, but we did not have the automatic right to go in.

MR. COLWELL: The things I am really interested in are the things like the ambulance services. If someone sells tires to the province in an open, competitive bidding system, that corrects itself, if you're buying light bulbs or whatever it may be, but if there is some organization set up by government to provide some kind of service to somebody using taxpayers' money to do that, I have concerns about that if they're not audited, because it would be a way for government to filter off potential funds without accountability for them.

I'm not saying that happens, but it would be nice for the Auditor General to have the ability, automatically, to audit those as he saw fit, or is requested by this committee or whomever it may be requested by, providing you have the resources to do it. That is a great concern to me. I think you can't do a complete job if you don't have all those tools.

MADAM CHAIR: Mr. Porter.

MR. CHUCK PORTER: Thank you, Madam Chair. In the short amount of time, I will just make a couple of comments. One, thank you very much for the presentation today and for the Strategic Plan. I've had an opportunity to go through it. You certainly have clearly outlined your role and your priorities and your vision. I think that's good to see. I think your department is an asset to government. Regardless of what department, there's probably not a whole lot of chartered accountants in government, other than maybe in the bureaucracy, and I don't know how many there are there. It's good to have somebody doing the work for Nova Scotians, and that is very much appreciated by our caucus and I think by Nova Scotians, in general. I think it's a good thing, and we certainly look at it as such.

I want to thank you for an opportunity, over the last number of months, to meet and have some discussion and input as to what we think, this committee, should be part of that. I don't want to take a lot of time, but I did think it needed to be said and we do appreciate that. So thank you very much.

MADAM CHAIR: Ms. Whalen.

MS. DIANA WHALEN: Just a couple of questions. First of all, I was very glad to see that you had no difficulty with the revenue estimates this year in terms of access to information, and all of the paper that you needed to see and numbers. That was a concern last year, and I know it was raised in your audit and discussed here at the Public Accounts Committee. So it's great to see that sort of thing rectify itself, and perhaps because it was pointed out. So that's very important.

I'm wondering about accuracy. When there are differences noted, it's a very small thing, but last week at the Public Accounts Committee there was a difference in accuracy between the report - I think Mr. Horgan, you were there - and what was written. It had to do with the percentage of community services recipients who were getting their cheques through direct deposit. Is that something that you would go back and look at or clarify? I left that one open just because it was a bit of a mystery, they said you were wrong. It's small, but I thought it should be resolved.

MR. HORGAN: We treat numbers like that in our chapters in two different ways. When we get numbers, in this case it's the percentage of income assistance that was paid by way of direct deposit versus by way of cheque, when we gather information that's entirely background in nature, that it doesn't really impact on our finding, on what we conclude on a program, it's just something that sets the area in context, we will get this information directly from the department and we won't necessarily verify it. If it looks a bit unusual, then we will go back and ask why is it like this but we won't necessarily do much testing of it. If it's a number that really impacts on our findings, if the number was this, we would conclude something, if it was that, we would conclude something else. Then we do verify the number.

Now in this case, this was a background number so we got the information directly from the department. So there is definitely the chance that it may not be entirely accurate.

MS. WHALEN: I wasn't too sure but, as you say, it's not one of the material ones that had to do with the use of funds, though.

MR. LAPOINTE: Yes.

MS. WHALEN: Exactly. So that's a little bit different. I wanted to go back to your staffing component, if I could. Just interestingly, when you were introducing the staff, you indicated that you have Acting Deputy Auditors General. Are those positions not clarified yet for Mr. Horgan and Elaine?

MR. LAPOINTE: Exactly. The organization is still, to some extent, a work in progress and there are a lot of HR issues and we are working through the process of doing all of this or that. I'm waiting to clarify, once we get through the process, that's all.

MS. WHALEN: I just picked up on that because - just to say I know that it's important in terms of having the strategy in place now to align your organization and make sure that you have the people in the right positions but that would be a key thing to be moving forward, I'm sure, so I'm just asking about that.

I'm wondering how many staff you have. We haven't heard a number on the total number of staff.

MR. LAPOINTE: The total FTEs in the office are 34.

MS. WHALEN: Are there any vacancies at the moment among those 34 that you are looking for?

MR. LAPOINTE: Yes, there are. I'm trying to think of the vacancies now. There would be one in computer services, internal and we have a couple of manager vacancies.

MS. WHALEN: So it could be three?

MR. LAPOINTE: We will be competing to fill. Yes, we are still in the process of moving some people around and setting up the organization. We are still looking at the assignment of staff within so if there are vacancies, exactly where they might ultimately reside is hard to say because we are looking at people from best fit, still. As I say, we are coming to you when we are still putting the organization in place so that some people are still moving around but we will have potentially maybe three or so vacancies that we will go out to fill by the time all is said and done.

MS. WHALEN: So at the moment you are waiting until things become clearer before you do that recruitment.

MR. LAPOINTE: That's right, in the next few weeks.

MS. WHALEN: I just wanted to get a sense about what kind of magnitude there was in terms of the difficulty of filling empty positions and getting the right people in the right places.

MR. LAPOINTE: We find that it's easier to fill at the bottom ranks. We can hire CA students. We provide a pretty good environment for someone to go and get their CA. It's a supportive environment. They learn a lot and we have a high success rate so we are able to hire good people at the student level. At the higher level, we start to become uncompetitive with salary and there are few people around at the more senior level and that's where you get more difficulty as you start going up the organization.

MS. WHALEN: I appreciate that. Do I have time for one more? I know we are going a short time today. I just wanted to mention, I know several of the members have talked to you about areas they think they would like to see audited. I would like to go to an area that is of concern to me and, again, it is one of the non-profit groups. Across the province we contract with organizations to provide home care and I don't know what kind of assurance we have about the delivery of that care. Just anecdotally from constituents I understand that they are not ever asked to verify the care they have received.

I know through MSI, occasionally, you will get a survey that would ask you, did you actually see the doctor on these days and was this what was provided? So it would seem to me that that would be a quality assurance that would be built into a system. People on home care are very vulnerable. They are not going to complain, and the reason is, particularly if

they are severely disabled, they have to have that care, they can't live without out it and they are not going to challenge or jeopardize their position. So this has been my experience anyway, as an MLA, and I am sure others would agree that there are vulnerable people who would not want to rock the boat but this is really important and I think a significant amount of money is spent on home care and we want to make sure that it's done in the right way. So I wanted to raise that with you to see if you could put that on one of your lists to have a look at as a possible area to audit.

[10:00 a.m.]

MR. LAPOINTE: Ms. Whalen, thank you, that is a good suggestion. I can tell you that we're already looking at this as one of the possibilities for our next round of audits. So it's already high on our part.

MS. WHALEN: On your radar?

MR. LAPOINTE: It certainly is, yes.

MS. WHALEN: Well, thank you very much.

MR. LAPOINTE: Thank you for the suggestion.

MADAM CHAIR: I also had home care on my list but I would also like to add another one and that's the Small Options Program through the Department of Community Services. There are a lot of both private and not-for-profit organizations that contract with the Department of Community Services to provide small options-community-based housing for people with intellectual disabilities or physical disabilities, mental health disorders, and sheltered workshops as well. Many of these organizations have not had funding increases for more than 10 years, which makes me wonder how have they been able to adapt to this situation given that we all see increases in our fuel costs, our electric bills, our grocery bills, our household insurance, all of these kinds of things.

I think the questions that have been raised about the ability of your office, in terms of the current Act, to audit not-for-profits is one that we really should give some consideration to here at this committee, absolutely. I will make a commitment to put this on the agenda for the Fall for a discussion in the committee to see what the views are of members from the various caucuses and how we might be able to advance some change that would be helpful for your work.

So, in closing, I would like to thank you for being here today. I think I speak for all members that we're always very pleased with the professionalism of your office and your staff and it gives us, as committee members, great confidence and also a source of pride. I think in many ways we exhibit the best practices of Public Accounts Committees across the

country in terms of our relationship with your office and I hope that will continue as this process unfolds. So thank you very much.

MR. LAPOINTE: Thank you, Madam Chair, and I would like to say thank you for letting us come today. It's always a pleasure to appear before the committee and while it wasn't part of our objectives, it's very helpful to us to get the suggestions for risks and priorities that we received today. We're always open to ideas from anyone on the committee at any time as well.

MADAM CHAIR: Thank you very much. We have one other item of business on our agenda for today. This is with respect to the motion that was passed by the committee last week. I had sent a letter last week to Mr. MacKay and we have not heard from Mr. MacKay. In reflecting on the request that he appear in front of the committee, it occurred to me that perhaps if we sent a letter to him that is signed by all members of the committee, it may encourage Mr. MacKay to respond and find some time in his agenda to meet with us. I have asked the clerk to prepare a letter which I have here today. I would be quite happy to, I don't know if we have copies for everyone, but I will read into the record what the letter says:

Dear Mr. MacKay:

As a follow-up to my correspondence of May 11, 2007, this letter is to again advise you that members of the Standing Committee on Public Accounts would like to meet with you, Nova Scotia's voice in the federal Cabinet, at your earliest convenience.

All members of the Nova Scotia Legislature are concerned with the poor choice that has been presented to Nova Scotia by the federal government with respect to the Atlantic Accord and the new equalization formula. There is unanimity among the three Parties in the Nova Scotia Legislature in ensuring that the federal government keep the promise it made to Nova Scotia.

Members realize the time pressures on your schedule and are willing to meet with you whenever your schedule permits. I note your availability today in our Legislature for the ceremony launching the 250^th anniversary of democracy in Nova Scotia, and regret that you were unable to make some time to appear before our committee, which also happened to be meeting today.

Please advise me of a date and time, as quickly as possible, that your schedule allows you to appear before the committee on this very important matter.

This letter was prepared late yesterday afternoon and I would like to circulate it for the signatures of members of the committee and have it available today for Mr. MacKay when he is here. Mr. Porter.

MR. PORTER: Madam Chair, I want to start by saying how disappointed I was this morning to hear on the news and read in the paper about the committee's agenda without any discussion taking place at this table with regard to this letter. I don't think it should go there, in speaking to at least one Liberal colleague who is a member of our subcommittee, he was not even made aware of that either.

My understanding is there are nine members of this committee, not one, and those decisions should come to this table for discussion. I realize we have sent a letter previously which, of course, we did not support. In saying that, I will say that our Premier has stated on more than one occasion, along with the Minister of Finance, that they are working diligently with the federal government, with their counterparts, Mr. Flaherty and Mr. Harper, to work out a resolution both with equalization and the accord. I would suggest that all business with regard to this committee's agenda should remain here until at least this committee and the members of this committee have had a chance to discuss and make some decision on which direction we will take.

So we are somewhat - and I want that on the record - disappointed that we are reading about it in the paper before we even had a chance in subcommittee, Madam Chair, to discuss it.

MADAM CHAIR: I would like to respond to this before I recognize other members. Yesterday morning, after the weekend, the first thing I generally do is come into the office before the Public Accounts Committee on Wednesday and the first thing I do is check with the clerk to follow up on any of the matters from the week before. I made contact to find out if we had had a response from Mr. MacKay to the letter I sent last week, which was a letter I was directed to send from the entire committee through a motion in this committee.

There had been no response and because it had been drawn to my attention that Mr. MacKay was going to be in the province and, in fact, in metro and, in fact, in our Legislature today, I took the opportunity to prepare a letter to have in advance - we didn't have an opportunity to have the discussion. I wanted to have this letter here today, this letter is here to have discussion. If, in fact, members of the committee don't want to sign the letter then that's your decision to make, however, the letter is here and that is why it is here.

In the meantime, I did not contact the media, but a member of the legislative media gallery contacted me to find out if we had had a response and what my thoughts were - in fact, the question was with respect to a subpoena and I thought that this may be a more constructive way to approach getting Mr. MacKay in front of our committee today , not today but getting him in front of the committee, than coming in and talking about a warrant. Frankly, I just want people to understand how that all unfolded, in my defence.

Mr. Colwell.

MR. COLWELL: Madam Chair, I was disturbed to hear it on the news as well. I, as you and hopefully all of our colleagues here want to see Mr. MacKay before this committee, there is no question about that whatsoever and no misunderstanding on my part. I don't think that he will give us any answers but it would be nice to have him come here and give our province and our committee the respect I think it deserves, as the sitting federal Cabinet representative who represents all of Nova Scotia.

I was a bit disappointed to hear about this on the news and I understand that the Chair does an excellent job here and that is not what I am saying, but it is important for the committee to decide these things.

For instance, if we could have served him today with a subpoena, I would have preferred to do that, personally, rather than send him a letter which he will probably ignore again and continue to ignore until he has no choice. I can appreciate what happens when you're off the cuff, talking to the media, it happens to all of us, but that part of it disturbed me a bit.

Again, I want to reiterate, I want to see him in here. I think we want to have a long session when he comes, he probably won't give us any answers, but at least he would give us the respect to come. I think that just your timing was a little bit off in this process and I would have liked to have come to the committee today to discuss it before it actually got out to the media. That's the only concern I have.

MS. WHALEN: I'd just like to add a little bit to that. I do think the important issue here - and I appreciate the comments that have been made by both the previous members - is that the accord has been broken and that $1 billion is going to be lost to Nova Scotia over a period of years. That's come from economists, it's come from before this committee from the Department of Finance. That is a very serious matter and personally I would like to see the minister responsible for Nova Scotia to come before us and give us an account and be accountable for that decision and accountable to Nova Scotians as well.

That's important to me. We have passed a motion in the House, which was all three Parties agreeing this was wrong and that we would work together. The Premier agreed to meet with the Leaders of both Opposition Parties to have a joint process to go forward with and I believe that this letter being a joint letter would follow in that same track. It would show the unanimity of the members of the House, which I think is important.

As I say, this is an issue that, as members of the Opposition, we do not want to be silent on. I believe members of the government as well have indicated their concern because you have to work within a very tight fiscal budget and when we lose this kind of capacity over the coming years, it's going to hurt everyone.

I would like to say that the idea of signing jointly I think is a positive one and continues the process that's begun in the House.

MADAM CHAIR: Thank you. Is there any further discussion? I would entertain a motion that we take this letter forward today and that members of the Public Accounts Committee sign this letter.

MR. DAVID WILSON (Sackville-Cobequid): I make a motion that the committee sign this letter.

MADAM CHAIR: Is there any further discussion? Would all those in favour of the motion please say Aye. Contrary minded, Nay.

Mr. Porter, Mr. MacLeod and Mr. Bain. Three nays.

The motion is carried.

MR. COLWELL: Just a question, I support the motion, it was just the process I didn't support. With the other three members of the committee voting against this, are they going to sign the letter? If they don't sign the letter, it's not going to carry the weight it should. That's a concern I have. Maybe the Chair could ask the members if they're willing to sign the letter now that's it's been passed by the committee?

MADAM CHAIR: I guess that does raise the concern. I think it's a fair question to put to the members. Mr. Porter?

MR. PORTER: No, just to be very clear, as I stated, the Premier is working daily as well as the Minister of Finance. It just seems like we're - I don't want to say going backwards. If Mr. MacKay's able to get here, that's fine. I don't see, in his busy schedule, as I've stated before, I'll be surprised if he's able to make it, at least any time in the near future. I think the action we're taking with the Premier and with our Finance Minister on a daily basis, working to resolving this issue.

As my honourable colleague opposite has stated, we do agree that this is a very, very important issue for Nova Scotians. We do not want to lose any. We have a deal, it's a good deal for Nova Scotia and we want to keep that deal and our Premier is delivering that message. We think that's the important issue here and that's the way we'll continue to go and we'll continue to move forward.

MADAM CHAIR: Mr. MacKay found time to plant trees yesterday in Point Pleasant Park. (Interruption)

MR. COLWELL: With the indication that our colleagues are not going to sign the letter, I don't think the letter will have the weight, so I'd like to make a motion we subpoena Mr. MacKay to the committee.

MADAM CHAIR: The motion is in order, but I'm going to ask that we postpone the discussion on the motion until we have Legislative Counsel here. If that's agreeable to people, we will have this discussion on Wednesday, when we convene. We may have to add a half hour of time to our schedule with the Nova Scotia Liquor Corporation coming in front of us, but we'll ask the clerk to ask Mr. Hebb to be here, because as I understand it, there are some conventions in terms of the practice to not subpoena Members of Parliament to provincial committees, when the federal Parliament is in session, et cetera. So, we need a little bit of guidance from Legislative Counsel on that.

Is that agreeable to people?

It is agreed.

Okay, thank you. Any further discussion of this matter?

We stand adjourned until next Wednesday, at 9:00 a.m., with the Nova Scotia Liquor Corporation.

[The committee adjourned at 10:17 a.m.]