It almost goes without saying that good governance requires fair and reliable performance reporting by public sector entities. Several OECD nations have developed performance reporting principles, while the Canadian government has called for concise, credible, reliable and balanced information. However, as Colin Talbot, a noted expert on performance has pointed out, these principles tend to fall into disuse if they lack institutional force or sanction.
This article looks at a possible exception, namely the requirement for the external auditor of three Canadian federal agencies to assess the fairness and reliability of performance information, from the late 1990s to 2012. My aim is to explore the nature of the assessment practice, and the lessons learned.
From 1997 to 1999, the federal government moved about 35 percent of the public service into three agencies to deal with revenue, food inspection and parks. Announced in the context of program review and alternative service delivery, these agencies were shaped as ministerial departments, but with administrative authorities (notably as separate employers). The aim was more effective service delivery. As reflected in their reporting requirements, accountability was also a concern; therefore a provision for Agency Assessments was added to the Auditor General’s existing mandate for financial and performance audits.
Unlike performance audits, which could examine agency performance, the assessments were limited to determining whether the performance information was reported fairly and reliably against the objectives in the corporate plan. Accordingly, they were carried out as review engagements, following generally accepted standards. They were reported in a section of the annual report authored by the audit office. As one agency noted, the assessments were “only a review level of assurance [and did] not constitute an audit”.
The new reporting requirements came into effect when the agencies were engaged in a complex transition process. For example, the Canada Food Inspection Agency (CFIA) was created from three different departments. In addition, in some cases the timeframe for completion of the assessments was compressed, since the performance information was not always available until a few weeks before the deadline for the completion of the annual report. These transitional issues suggested the need for a more gradual implementation of the assessments.
The state of departmental performance reporting was not well advanced at that time. In a government-wide audit, the Auditor General found a lack of balance: the agencies were reporting only the good news, with little reference to the fairness and reliability of their information. At times, the auditor’s assessments pointed out specific areas for improvement, revealing differences of view between the agencies and the auditor, particularly over the generation of adequate performance information.
In 2005, the five-year review of the creation of the Canada Revenue Agency (CRA) provided an opportunity for Parliament to review and consider the success of the legislation, including the assessment practice. The parliamentary committee that reported on the review supported the performance measurement regime, and recommended that it not be changed at that time. The committee cited the Auditor General’s view that there had been steady improvement in the agency’s performance information since 1995.
After that, the assessments received very little attention from parliamentary committees even though they were available for committee consideration and reporting to the House as part of the annual report.
In contrast, the Auditor General’s performance audits of departments and agencies are permanently referred to the Standing Committee on Public Accounts, which often takes them up. The Auditor General has even recommended that Parliament consider an enhanced role for standing committees to review departmental performance statements.
The assessment practice came to an end as a cost-cutting measure. The Office of the Auditor General actually made the recommendation because it was asked by the government to suggest economies. The government then amended the legislation for the three agencies, removing the assessment provisions, in the 2012 Budget Implementation Act. Since this was an omnibus bill, there was little debate of the many detailed changes. (In fact, the opposition later accused the government of reducing the Auditor General’s mandate, to no avail, since it was the audit office that had actually proposed the measure.)
This needs to be reconsidered. As an institutional arrangement, the independent assessment of agency performance information by the external auditor was innovative. While the assessments were not easy for either party, they held promise for improved performance reporting; and the 2005 review of the CRA gave some indication that this was taking place. This suggests the need to evaluate the assessment practice of the CRA, Parks Canada and the CFIA. It will benefit the agencies, Parliament, and undoubtedly inform and improve every aspect of government operations, including those of the Office of the Auditor General.
Tom Wileman is a retired Principal with the Office of the Auditor General of Canada. He is also an active Board Member of the Performance and Planning Exchange (PPX).