Transcript Proposal for Establishment of “Departmental Comptrollers”

Federal Government
Comptrollership
FMI Ontario
25 February 2009
Richard Charlebois
Public Service Commission of Canada
Mandate
 Independent agency reporting to Parliament that:
• appoints persons to and within the Public Service
(delegated to Deputy Ministers)
• conducts investigations and audits in accordance
with the Public Service Employment Act (PSEA)
• administers PSEA provisions relating to political
activities of employees and deputy heads
2
Public Service Commission – Striving for Excellence
• The Public Service Commission is dedicated to building a Public
Service that strives for excellence. We protect merit, nonpartisanship, representativeness and the use of both official
languages.
• We safeguard the integrity of staffing in the Public Service and the
political impartiality of public servants. We develop policies and
guidance for Public Service managers and hold them accountable
for their staffing decisions. We conduct audits and investigations to
confirm the effectiveness of the staffing system and to make
improvements. As an independent agency, we report our results to
Parliament.
• We recruit talented Canadians to the Public Service, drawn from
across the country. We continually renew our recruitment services to
meet the needs of a modern and innovative Public Service.
3
Organizational Structure
Commissioner
Manon Vennat
(part-time)
President
Maria Barrados
Commissioner
David Zussman
(part-time)
General Counsel
Legal Services
Gaston Arsenault
Senior Vice-President
Policy Branch
Vice-President
Audit, Evaluation
and Studies Branch
Vice-President
Staffing and Assessment
Branch
Donald Lemaire
Jean Ste-Marie (Acting)
Gerry Thom
Vice-President
Corporate Management
Branch/CFO
Richard Charlebois
Vice-President
Investigations Branch
Denis Bilodeau (Acting)
4
Federal Government Context
• Magnitude of federal public sector management:
– Annual budget over $250 Billion
– Over 94 departments/agencies offering 1,600 programs
and services
– Over 2,000 points of service across Canada and abroad
– Nearly 300, 000 employees
• Federal government contributes to the country’s
economic competitiveness, social and cultural
infrastructure, health of the environment and well
being of communities and Canadians
5
Public Sector Financial Management
• One of Canada’s leading authorities:
Professor Graham Andrew of Queens University
– Published book: “Canadian public Sector Financial
Management”
• Comments from the book:
– It’s all about the money!
– All public-sector managers are financial managers to
some degree.
– Program Manager – Financial Expert partnership
6
Public Sector Financial Management
(cont’d)
• Comments from the book (cont’d):
– Creating public confidence
– Public funds do not belong to the government: they
belong to the people.
– Financial information often serves as a surrogate for other
performance data
– No “bottomline”
7
Challenges
• World economic situation
• Like other countries, government is continuously being
challenged to improve and adopt efficient practices oriented
toward results. Canada is seen as a leader.
• Several
incidents have eroded public confidence, eg,
Sponsorship Scandal or Gomery enquiry.
• In December 2006, the Federal Government introduced a new
Federal Accountability Act (FAA) which provided increased
importance and clarity on roles including the Accounting
Officer.
8
Key Financial Management Initiatives
•
•
•
•
Federal Accountability Act
Grants and Contributions
Financial Management Community Development
Evolving Role of the CFO
•
•
•
•
Not covered today:
Financial Management Policy Suite renewal
Internal Audit function
Audited Financial Statements
Financial Systems
Meaningful results in public service cannot be achieved without some
degree of risk. A culture of risk aversion comes at a cost: a web of
rules, reporting burden and reduced scope for intelligent risk taking.
9
FEDERAL
ACCOUNTABILITY
ACT (FAA)
Context – FAA & Action Plan
• The Federal Accountability Act was granted Royal
Assent on December 12th, 2006
• Through the Federal Accountability Act and Action
Plan, the Government of Canada has brought forward
specific measures to :
– Help strengthen accountability;
– Increase transparency; and
– Provide oversight in government operations.
11
FAA: Overview
The elements of the Federal Accountability Act
Political
reform
Procurement
reform
Parliamentary
reform
Making the
public sector
more open
Moving to a
culture of
accountability in
every area
Public sector
reform
12
Parliamentary Reform – Some key
measures
• Expanded the role for the Auditor General to “follow the
money”.
• Provisions in funding agreements with recipients that support
AG audits
• Appointment of Independent Parliamentary Budget Officer
to provide financial analysis about Canada’s finances,
estimates and on proposals by committees and in private
Members’ bills.
• Parliamentary Budget Officer may request any financial or
economic data in possession of department (Appointment
effective March 25, 2008)
13
Public Sector Reform – Some key
measures
• Clearer accountability of Ministers and Deputies
• Deputies designated as “Accounting Officers” with
Legal obligation to appear before parliamentary
committees and answer questions relating to:
1. The measures taken to organize resources to deliver departmental
programs in compliance with government policies and procedures
2. The measures taken to maintain effective systems of internal control
3. The signing of the departmental accounts
4. The performance of other specific duties assigned by law or
regulation in relation to administration of the department
14
Public Sector Reform – Some key
measures
– Whistle blowing
• Public Sector Integrity Commissioner with power to enforce
Public Servants Disclosure Protection Act
• Protection for all Canadians who expose government
wrongdoing
– Comptroller General has the functional authority over
internal audit
15
Procurement Reform – Some Key
Measures
• New Procurement Ombudsman to review procurement
practices on an ongoing basis and submit an annual report to
Minister of PWGSC
• Inclusion of integrity provisions in all government contracts
• Code of Conduct for Procurement to apply to both suppliers
and government
• Public disclosure of basic information on goods and services
contracts in excess of $10,000
16
Streamlining Rules
• The Government has been clear that accountability measures
must not result in cumbersome layers of rules for public
servants and those who interact with government.
• As a result, the Action Plan also commits the government to:
– Reduce the number of TB policies by at least one half
– Undertake three reviews to reduce unproductive “rules” and
ensure a balanced approach to oversight:
• Grants and Contributions
• Procurement
• Financial Management
17
INDEPENDENT
BLUE RIBBON PANEL
ON
GRANTS AND CONTRIBUTIONS
Grants and Contributions
What are they?
• Used to transfer monies from the government to individuals,
organizations or other levels of government to achieve public
policy objectives as set out in the Speech from the Throne,
Budget or other policy outcomes
• Contributions are subject to Treasury Board approval
• Grants are subject to Parliamentary approval
• Provided only at the minimum level required to meet
objectives and expected results – normally not provided in
advance of need
They are not used to acquire goods or services, nor obtain a
direct benefit – contracts are used for these purposes
19
Universe of Grants & Contributions
Source: Public Accounts of Canada 2004-2005 (breakdown of recipient categories conducted through a departmental survey)
1
Other Program
Expenses
2
Public Debt Charges
Total Net Government Expenses
(2004/05): $197B
2
3
4
Major Transfer to
Persons (Employment
Insurance, Old Age
Security, Guaranteed
Income Supplement
and Spousal
Allowance)
Major Transfers to
other levels of
Government
(Canadian Health
Transfer & Canadian
Social Transfer Fiscal
Equalization)
$34.1B
1
$53.1B
3
$40.5B
Grants &
Contributions
$27.0B
$42.0B
4
20
Universe of Grants & Contributions
(cont’d)
Grants & Contributions: $27B
1
10
$3.0B
2
Other Aboriginal
Recipients
3
Universities &
Research Institutions
4
Provinces, Territories
& Municipalities
5
International
Governments and
Organizations
6
Veterans
7
Businesses
8
Farmers and Fishers
9
Other Not-For-Profit
Organizations
1
$4.9B
9
$2.9B
2
$1.0B
$1.9B
8
$2.2B
3
$1.5B
7
$1.8B
$4.8B
4
6
$3.0B
10
5
21
First nation
Communities
Remainder
Grants & Contributions: Definitions
Grants:
A transfer payment to a recipient that is not subject to being
accounted for or audited but for which eligibility and entitlement
may be verified and for which the recipient must meet preestablished eligibility criteria – e.g., Canadian Patient Safety
Institute Grant (Health).
Contributions:
A conditional transfer to a recipient for a specified purpose (used
to reimburse specific expenditures) and is subject to audit and
evaluation – e.g., Canadian Strategic Infrastructure Fund.
22
Independent Blue Ribbon Panel on
Grants and Contributions
• June 2006:
The president of the Treasury Board of Canada announced the
creation of an independent Blue-ribbon panel to review grants and
contributions.
• This commitment was part of the Federal Accountability Act
and Action Plan.
• The panel was asked to recommend measures to make the
delivery of grants and contributions more efficient while
ensuring greater accountability.
• The objective was to make the nearly $27 B in over 800 grant
and contribution programs work better for Canadians.
23
Key Conclusions
The Panel arrived at three key conclusions:
1) There is a need for fundamental change in the way the
federal government understands, designs, manages and
accounts for its grant and contribution programs.
2) It is possible and necessary to simplify administration
while strengthening accountability (better risk
management)
3) Making changes will require sustained leadership at the
political and public service levels.
24
Next Steps
• Treasury Board Ministers approved a new Transfer Payment
Policy for Grants and Contributions (effective October 2008).
• Treasury Board Secretariat and departmental action plans
implementation based on BRP recommendations, eg, risk
management frameworks and sharing of best practices.
• Develop and roll-out directives, guidelines and training.
• Follow-up, e.g., scheduled review of policy, on-going
consultation with recipients.
25
Financial Management Community
Development:
A Priority
Context
Change in FI Population, 1995 to 2008
4000
3500
3000
2500
2000
1500
1000
500
0
1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008
• Finance Officer (FI) population dropped by 20% during
Program Review, recovered 1995 level in 2002
• Current FI population 36% increase over 1995 level
27
Context (cont’d)
Distribution of FIs by Age Group, 1995 and 2008 Compared
45%
40%
Smaller cadre of
experienced FIs at
mid-career level
35%
Larger cadre
of
inexperienced
FIs at junior
level
30%
25%
1995
20%
2008
15%
Larger cadre of
highly experienced
FIs about to retire
10%
5%
0%
under 25
25-34
35-44
45-54
55 and over
• Overall drop in experience level since 1995
• Number of FIs in 35 to 44 age group fell from 42% in 1995 to
29% in 2006
28
Context (cont’d)
Distribution of FIs by Level, 1995 and 2008 Compared
40%
35%
35%
30%
31%
31%
29%
27%
25%
23%
20%
1995
2008
15%
13%
11%
10%
5%
0%
FI-01
FI-02
FI-03
FI-04
• “FI inflation” has created a lower percentage of FI-1s and FI-2s, and
higher percentage of FI-3s and FI-4s
• Number of FIs in 35 to 44 age group decreased, but ratio of FI-3s
and FI-4s increased
29
Context (cont’d)
Average Years in Position, FIs Compared to CPA
6
5.5
5
5.1
4.9
5.0
4.5
4.5
4.7
4
Years
3.7
3.4
3
3.2
FI
CPA
2
1
0
1988
1993
1998
2003
2008
• Over past 20 years, the average number of years each FI has spent in their
current position has decreased from 5 to 3.2, and continues to decline
• Currently 1.5 years below the Core Public Administration (CPA) average.
30
Context (cont’d)
Years in Position, FIs to CPA
40%
37%
35%
30%
29.3%
25%
24.8%
26%
24.5%
21.5%
20%
20%
CPA
17%
15%
FI
10%
5%
0%
<1
1 to 2
2 to 5
5+
• Almost 30% of FIs have been in their current position less than one year
• Only 21% have been in their position over 5 years, compared to 37% for
the CPA
31
Context (cont’d)
Driver
Visibility and
Accountability
Initiatives
Program Review
Primary
Impact
Additional FI
Tasks
More Complex
Activities
Reduction in
Finance
Positions
Departure of
mid career FIs
Baby Boomer
Retirement
Demographics
Secondary
Impact
Diversion of
focus from
Core Activities
Impact on Skills
and Capacity
Current
Situation
Diminished
Capacity for
Core Work
Same Core
work, fewer FIs
Disrupted
Succession
Planning
Lower Skills at
Senior Level
Loss of FI
Corporate
Knowledge
More
Competition for
Recruits
Unfilled
Positions
“Gen Y”
Workplace
Approach
Lower
Commitment
Level
Inadequate
Capacity at
junior level
32
Overall
Diminished
Capacity
Observations:
• Program Review reduced FI staff by at least 20% which
caused significant loss of expertise
• Subsequent expansion shifted demographic profile,
resulting in relatively more inexperienced FIs supervised
by relatively fewer experienced mid career FIs
• On average, FI-3s and FI-4s in 2008 have less
experience than their counterparts of 1995
• There is less stability in the FI workplace, with the
average time in position having fallen from 5 years to 3.2
years and continuing to fall.
There are answers to the challenges!
33
III) Capacity Building Initiatives
•
•
•
•
•
•
•
•
•
•
Office of Comptroller General has established Finance
Officer (FI) Level 3 and Level 4 pre-qualified pools
Working on FI Level 2 government wide staffing processes
Executive Level 3 pre-qualified pool
Working on Executive Level 1 pre-qualified pool
CA Student Training Program (CAST)
Finance Officer Recruitment and Development program
(FORD)
Finance Officer Classification standard review and
modernization
Accelerated Executive Development Program – finance
stream (AEXDP)
Modernize finance specialist training
Finance Officer to CFO Career Path (handout)
34
EVOLVING ROLE OF THE CHIEF
FINANCIAL OFFICER (CFO)
Financial Management Environment
1.
Matter of interest for Canadians and Parliament
2.
Instances of failure of financial management control frameworks
3.
Increasing complexity of transactions and reporting requirements
4.
Call from stakeholders for increased transparency of financial
and performance information
5.
Insufficient financial management expertise and capacity (skills
and number) to match increasing demand
6.
High profile issue at the executive table in both public and private
sectors
36
CFO Model Moving to:
•
•
•
•
•
•
•
•
•
Strengthen financial management to ensure support for Deputy
Minister in new role of Accounting Officer required under the
Federal Accountability Act
Develop effective systems for resource management and internal
controls
Shift from transaction to strategic focus
Enhanced challenge function to reduce departmental risks
Integration of financial and non-financial information
CFO recognized as a valued partner/advisor
Departmental financial statements compliant with GAAP
CFO sign-off on financial, risk and performance of non-routine
material departmental transactions
Building financial expertise and capacity
37
CFO Model – Responsibilities
• Build financial
capacity and training
Strategic Advisor to
Senior Management
Integrated financial
management systems
• Attesting to the completeness
and accuracy of all financial
reporting (external reporting to
Treasury Board and
Parliament and internal
reporting to management)
Senior departmental executive
responsible for financial
management and ensuring that
resources are: aligned with
departmental and Government
objectives;
fully identified and allocated; and
compliant with applicable
legislation.
Support Deputy Minister: financial
strategic leadership and advice;
financial oversight; and internal
control frameworks
Ensure compliance with Central
Agency and Departmental
Policies and Regulations.
CFO – ADM
Capitalization of Assets
Procurement & Contracting
Provide departmental
financial policies,
procedures, advice
and guidance
Implementation and
monitoring of an integrated
risk management framework
38
CFO Model - Benefits to Departments
• Deputy Minister role aligned with Federal Accountability Act and
Central Agency recommended accountability model
• CFO with integrator and advisor role at executive table
• Impartial, objective strategic advice to Senior Management
• Improved alignment of resources with Government and
departmental priorities
• Reinforced financial accountabilities at all levels
• Linkage of financial and non-financial information to assist with
resource reallocation
• Ensures level playing field for competing priorities and resources
• CFO is lead on financial management agenda and financial policy
framework
• Supports enterprise approach to business delivery
• Supports the global network of financial specialists
• Promotes best practices from public and private sectors
39
Conclusions
Public Sector Management Matters
The government’s management agenda is about:
• Delivering high-value programs efficiently,
transparently, and accountably
• Ensuring that the Government of Canada has the
capacity to make effective decisions and deliver
on priorities.
41
Parting Comment
It is an exciting and challenging time
to be in the federal government, especially
for the finance community.
42