Leadership, Governance and Accountability

in the Saskatchewan Public Service

Doug Matthies Saskatchewan Finance September 25, 2007

Overview

 Introduction  Context – Financial Integrity / Public  Responding to the Challenge • Changes and Emphasis • Accountability Framework  Where to Next

Introduction

 FMI Vision: …best practices related to the management of public sector resources.

 Values: • Sharing: …creating opportunities for sharing of experience • Relevance: …perspectives on the current challenges and best practices in public sector management

Context – “Accounting Fraud”

 USA, UK, Australia, Canada, Italy, Belgium, India, Germany, France, Chile, Ireland, …  ENRON, WorldCom, Parmalat, AOL, Kmart, JP Morgan, Merrill Lynch, …  AIG (2005) • restated financial statements, reduction in book value of USD $2.7 billion • • agreed to a fine of USD $1.6 billion.

two executives plead guilty to criminal charges

Context – Japan

 

Sept 13

: Shinzo Abe, the Japanese prime minister, abruptly announced his resignation yesterday the

Mainichi

newspaper reported a further possible explanation for the unexpected resignation: a political funding scandal   

May 28

: Toshikatsu Matsuoka, Agriculture Minister, commits suicide hours before facing questioning in Parliament over money scandals

August 1

: Norihiko Akagi, another Agriculture Minister, resigns following an accounting scandal

September 3

: Takehiko Endo, who lasted one week as Agriculture Minister, resigns over misuse of farm subsidies

Context – Canadian Politics

 Gomery Commission ( sponsorship scandal )  Shawinigate (Jean Chretien)  Airbus (Brian Mulroney)  Bingogate / Fantasy Gardens (BC)  Constituency Allowances • Newfoundland (4 MLA’s / 3 parties)

Context – Saskatchewan

 Political level • MLA Constituency Allowances (16 members) • Caucus employee theft  Employees • Community Resources; loss > $1 million • • Sask Environment; loss > $300,000 Inappropriate expenses / CVA use; <$1,000 ->$3,500  Venders • Fuel dealer; fictitious billings > $75,000

Where Are We Now

 Public is frustrated, demands better  Public wants to know problems are being fixed  Public expects consequences  Not just fraud, money is spent wisely

How Do We Tackle This?

Leadership, Governance and Accountability

Three Interconnected Principles

Accountability Leadership Governance

Leadership (numerous concepts)

 Ability to inspire others to achieve more  Characteristics of good leadership • Integrity

(#1 quality in business survey)

• • • Clear vision Effective communicator Leads by example  Sets the moral culture of the organization

Leadership (?)

Governance (also numerous concepts)

 Determines who has what power  Establishes how decisions will be made  What checks and balances will exist  Sets out the institutions, rules and procedures  Determines accountability requirements  Reinforced by strong performance management system

Accountability

“Accountability…a broad concept that requires government to answer to elected officials and the public they represent to justify the raising of public resources and to explain the purposes for which they are used.” (

From the CICA Handbook)

“There are four major approaches to addressing an accountability problem: rules, oversight, structure and leadership…” Peter Aucoin,

“After the Federal Accountability Act”,

Winter 2007 FMI Journal

Rules

 Financial Administration Act, Financial Administration Manual  Stronger internal controls  Criminal record check policy  Emphasis: • not so much on new rules but on training and applying existing rules • Ensuring competent people

Oversight

  Internal or external scrutiny • Provincial Auditor • • • Public Accounts Committee Freedom of Information Various other officers of the Legislature Expanding internal audit functions  Quarterly Losses Report  Emphasis: Effective supervision

Structure

  “Balance / allocation of power” “Freedom from influence / negative consequences for doing the right thing”  New fraud policies being drafted • Focus on ethical, positive environment • • Expectations of individuals Mechanism to safely report

Leadership

 PSC • Statement of Organizational Culture • Code of Conduct  Improved Accountability • Enhance Accountability Framework  Accepting Responsibility  Emphasis: Culture of walk the talk

Accountability Framework Components PLANNING

Government-wide Planning Interdepartmental Planning Department Planning* Work Unit Planning Individual Planning Strategic Direction

PERFORMANCE MANAGEMENT

Performance Measurement Risk Management Program Evaluation Individual Performance Review Accountability for Performance

REPORTING

Financial Reporting Government-wide Performance Reporting Department Performance Reporting External Audits Results of performance measurement, program evaluations, and audits Feedback influences future planning and resource allocation * Includes human resources, information technology, capital and financial planning Updated December, 2002 Performance Management Branch

Saskatchewan’s Framework

Intended to :



Create a common approach



Focus on outcomes



Link policy objectives and expenditures



Monitor performance



Utilize program evaluation and risk management

Pace of Implementation

 Progress on the Framework is steady  Auditor as the keen observer:

“Saskatchewan’s accountability system compares well with most Canadian jurisdictions, and in some respects, leads others …” (PA 2005 Fall Report - Volume 3)

 Capacity and Timing  Challenge: Linkage between framework / budget

Financial Reporting

 Legislation: • Public Accounts / Quarterly Updates  Province’s Financial Statements – budget to actuals on both a GRF and Summary Financial Statement basis  Public Sector Accounting Board (PSAB) standards for Summary Financial Statements  Public Accounts payee list  Performance plan reporting

Where to Next?

 Ensure current problems addressed  Longer outlook and plans • Managing the growth • • Don’t repeat Calgary How are we managing the risks