Chapter 18Financial Procedures

The Accounts of Canada

The financial role of the House of Commons does not end with voting supply or authorizing measures to raise revenue. The House also acts as a “watchdog” to ensure that federal money is spent in the amounts and for the purposes authorized by Parliament.⁴⁹⁵ This monitoring function (often described as “closing the loop”) is delegated largely to the Standing Committee on Public Accounts, which examines and reports on the Public Accounts of Canada, as well as on all reports of the Auditor General of Canada.⁴⁹⁶

The Public Accounts of Canada

Under the Financial Administration Act, the Receiver General⁴⁹⁷ is responsible for ensuring that accounts are kept for each department and agency of the Government of Canada. These accounts must show all expenditures made under each appropriation, all government revenues, and all other payments into and out of the Consolidated Revenue Fund,⁴⁹⁸ together with the assets and liabilities, the contingent liabilities of Canada and the related reserves that are deemed necessary to present a fair picture of the country’s financial position.⁴⁹⁹ The accounts of each individual department and agency are rolled up into the Accounts of Canada.

Each year, the President of the Treasury Board tables a detailed report of the financial transactions of all government departments and agencies, entitled the Public Accounts of Canada. The report must be tabled⁵⁰⁰ on or before December 31 following the end of the fiscal year to which the accounts apply or, if the House is not sitting, on any of the first 15 subsequent sitting days.⁵⁰¹ As a matter of tradition only, the Public Accounts are addressed to the Governor General.

The fundamental purpose of the Public Accounts of Canada is to provide information to Parliament and thus to the public, which will enable them to understand and evaluate the financial position and transactions of the government. Two constitutional principles underlie the public accounting system: that duties and revenues accruing to the Government of Canada form one Consolidated Revenue Fund; and that the balance of the Fund, after certain prior charges, is appropriated by the Parliament of Canada for the public service.⁵⁰²

Responsibility for the form and content of the Public Accounts of Canada rests with the President of the Treasury Board⁵⁰³ and the Minister of Finance.⁵⁰⁴ The financial statements are prepared under the joint direction of the President of the Treasury Board, the Minister of Finance and the Receiver General for Canada.⁵⁰⁵ By law, the Accounts must include, for the fiscal year to which they apply: a statement of all the government’s financial transactions; a statement of all expenditures and revenues; a statement of the assets and direct and contingent liabilities of Canada; the Auditor General’s opinion on the Accounts, pursuant to the Auditor General Act; and whatever other accounts and information the President of the Treasury Board and the Minister of Finance deem necessary to represent fairly the financial position of Canada at the close of the year.⁵⁰⁶

Since 2004, the Public Accounts of Canada have been divided into three volumes. Volume I presents: the financial statements of Canada on which the Auditor General has expressed an opinion and provided observations; an analysis of the financial statements and a 10-year comparison of financial information; analyses of revenues and expenses, and of asset and liability accounts; and a variety of government-wide summaries of revenues, expenditures, loans and investments. Volume II presents the financial operations of the government, segregated by Ministry. Volume III provides additional information and analyses, such as the financial statements for revolving funds, transfer payments and public debt charges.⁵⁰⁷

Until 1993, the third volume of the Public Accounts also contained financial information on Crown corporations. That volume was replaced by the “Annual Report to Parliament: Crown Corporations and Other Corporate Interests of Canada”, a consolidated report on the businesses and activities of all parent Crown corporations and other corporate interests of the Government of Canada.⁵⁰⁸ The annual report was prepared by the Treasury Board Secretariat for the President of the Treasury Board, who tabled it in the House.⁵⁰⁹

In 2012, Parliament adopted amendments to the Financial Administration Act which modified the reporting requirements for Crown corporations in an effort to improve the availability of quality and timely information to the public. The change eliminated the requirement to table the “Annual Report to Parliament on Crown Corporations and other Corporate Interests of Canada”, and to have it attested by the Auditor General of Canada. That information is now made public by the President of the Treasury Board in an online format on a quarterly basis.⁵¹⁰ Individual Crown corporations are still required to table their annual report on the operations of the corporation pursuant to the Financial Administration Act.⁵¹¹

The Auditor General of Canada

The Auditor General of Canada is an officer of Parliament appointed by the Governor in Council under the Auditor General Act to audit the Public Accounts of Canada and investigate the financial affairs of the federal government.⁵¹² The Auditor General holds office during good behaviour for a period of 10 years and the term is not renewable.⁵¹³ The position was first established in the Audit Act, 1878.⁵¹⁴ That legislation was replaced in 1886 and in 1931 by the Consolidated Revenue and Audit Act,⁵¹⁵ which, in turn, was repealed by the Financial Administration Act, 1951.⁵¹⁶ Initially, the Auditor General was responsible only for auditing expenditures, before they were made (prepayment audit) and after they were made (post-payment audit). In 1977, Parliament enacted the current Auditor General Act which broadened the Auditor General’s mandate beyond attesting to the accuracy of the government’s financial statements to examining how well the government managed its financial affairs.⁵¹⁷

In 2006, Parliament adopted the Federal Accountability Act, which gives the Auditor General of Canada the authority to audit recipients of funding from the federal government.⁵¹⁸ The Auditor General now has the authority to audit recipients of most federal grants and contributions to determine whether obligations under the funding agreement have been complied with, whether money has been used with due regard to economy and efficiency, whether satisfactory procedures to measure and report on the effectiveness of activities are in place, whether accounts and essential records have been properly maintained, and whether due regard has been given to the environmental effects of expenditures.

As auditor of the Public Accounts of Canada, the Auditor General examines the government’s financial statements to ensure that the information is presented fairly, in accordance with stated accounting policies, and on a basis consistent with the previous accounting year. Additional responsibilities for special examinations of Crown corporations are set out in the Financial Administration Act.⁵¹⁹ The Auditor General is empowered to undertake whatever examinations and inquiries are deemed necessary to produce the reports required under the terms of the Auditor General Act.⁵²⁰

The Office of the Auditor General carries out three types of audits: attest audits; compliance audits; and performance audits on value for money. Attest auditing verifies that the government is keeping proper accounts and records and that it is presenting its overall financial information fairly.⁵²¹ Compliance auditing ensures that the government collects and spends only those amounts of money authorized by Parliament and only for the purposes approved by Parliament. Finally, performance auditing assesses whether or not government programs were run with due regard for economy, efficiency and their environmental effects. The audits also assure Parliament that the government has the means in place to measure the effectiveness of its programs where it is reasonable and appropriate to do so.⁵²² Since 1995, the Office also has been responsible for evaluating the extent to which department activities meet their environmental and sustainable development objectives.⁵²³

Where such an assignment does not interfere with the primary responsibilities of the office, the Auditor General may also be asked by the Governor in Council to inquire into and report on any matter related to the financial affairs of Canada or to public property, or to inquire into and report on any person or organization that is seeking or has received financial aid from the Government of Canada.⁵²⁴

Auditor General Reports

The Auditor General must report annually to the House of Commons, drawing the House’s attention to any cases where:

accounts have not been properly maintained or money not properly accounted for;
the accounting procedures used are insufficient to safeguard the collection and spending of public money;
money has been spent without due regard for economy and efficiency, or other than for the purposes appropriated by Parliament;
appropriate procedures to measure and report program effectiveness have not been implemented; or
expenditures have been made without due regard to environmental and sustainable development issues.⁵²⁵

The Auditor General Act requires that each annual report be submitted to the Speaker of the House of Commons on or before December 31 in the year to which the report relates and that, upon receipt of the report, the Speaker table it forthwith. If the House is not sitting at that time, the annual report is tabled on any of the next 15 sitting days of the House.⁵²⁶ At the request of the Auditor General, the Speaker has frequently agreed to table the report in the House at a predetermined time.⁵²⁷ Once tabled, the report is automatically referred to the Standing Committee on Public Accounts.⁵²⁸ Prior to the tabling of the report in the House, the Auditor General typically gives a briefing on its contents to members of the Standing Committee on Public Accounts, at an in camera session. In addition, the Chair of the Committee will normally invite Members to a lock-up session,⁵²⁹ during which they may examine the report to be tabled later in the day and be briefed in advance by officials. A lock-up session for the media is also normally arranged.

Changes to the Act introduced in 1994 authorized the Auditor General to make up to three reports each year over and above the annual report, any special report on matters of pressing importance or urgency, or any special report on the funding of the Auditor General’s Office.⁵³⁰ Where such an additional report is to be tabled, the Speaker must be advised in writing of the subject matter and the report itself is submitted to the Speaker 30 days after the notice is sent, or after any longer period which may be specified in the notice.⁵³¹ The Speaker is required to table the report forthwith, or if the House is not sitting, on any of the next 15 sitting days of the House.

Since the enactment of the 1994 provisions, the Auditor General’s annual report is submitted to the House of Commons in several volumes. The first is usually tabled in the winter and follows up on progress made by the government in responding to recommendations contained in previous performance audits. The second volume is tabled in the spring, and the third in the fall.⁵³² Since 2010, it has become the practice to table two volumes, one in the spring and the other in the fall.⁵³³ Each volume contains individually numbered reports⁵³⁴ presenting the results of various performance audits (formerly known as value-for-money audits) of departments and agencies. Alongside the Auditor General’s reports there may also be reports from the Commissioner of the Environment and Sustainable Development.⁵³⁵

The Standing Committee on Public Accounts

Under the Standing Orders, all reports of the Auditor General, as well as the Public Accounts of Canada, are deemed permanently referred to the Standing Committee on Public Accounts as soon as they are tabled in the House.⁵³⁶ Since 1987, the Committee has also been responsible for scrutinizing the annual estimates of the Office of the Auditor General.

Since 1958, the Committee has been chaired by a Member of the Official Opposition, while the membership reflects the proportions of the various recognized parties in the House.⁵³⁷ The Committee’s main functions are to ensure that public money is spent for the purposes authorized by Parliament and that sound financial practices are encouraged in estimating and contracting, and in administration generally. The Committee does not concern itself with the appropriateness of government policy; rather, it focuses on the economy and efficiency of its administration. The Committee regularly reports its findings to the House. The reports typically state conclusions and recommendations on matters pertaining to the improvement of managerial and financial practices and controls of government departments, agencies and Crown corporations.⁵³⁸

495.: As early as 1341, Edward III had conceded the principle that grants to the Crown should be audited to ensure they were spent for the purposes intended. See Driedger, “Money Bills and the Senate”, p. 30.
496.: Standing Order 108(3)(g). See Royal Commission on Financial Management and Accountability, Final Report (Ottawa: Minister of Supply and Services, March 1979), in particular Part V, “Accountability to Parliament: Closing the Loop”, pp. 369–419. For further information, see Chapter 20, “Committees”.
497.: The Minister of Public Works and Government Services Canada also serves as Receiver General for Canada (Department of Public Works and Government Services Act, SC 1996, c 16, s 3(3)).
498.: Financial Administration Act, supra note 6, s 63(1).
499.: Ibid., s 63(2).
500.: The Public Accounts of Canada can be filed with the Clerk of the House and the tabling is recorded in the Journals. See, for example, Journals, December 1, 2008, p. 59. However, the report can also be tabled by a Minister in the House. See, for example, Journals, October 29, 2014, p. 1659. For further information on the tabling of documents, see Chapter 10, “The Daily Program”.
501.: Financial Administration Act, supra note 6, s 64(1).
502.: Constitution Act, 1867, supra note 1, ss 102–6. See also Receiver General of Canada, Publics Accounts of Canada, 2015, vol. 1, Section 2, “Preface to the Consolidated Financial Statements of the Government of Canada” (Ottawa: Minister of Public Works and Government Services, 2015), p. 2.2.
503.: The Treasury Board is a committee of Cabinet chaired by the Minister designated as the President of the Treasury Board. There are five other Ministers on the Board, including the Minister of Finance. The Treasury Board is responsible for the management of the public service, including administrative policy and financial management practices. The Treasury Board also acts as the federal employer and represents the government in all matters respecting the federal workforce. See McMenemy, The Language of Canadian Politics, pp. 392–3. As the administrative arm of the Treasury Board, the Secretariat has a dual mandate: to support the Treasury Board as a committee of Ministers; and to fulfill the statutory responsibilities of a central government agency. Its executive head is designated as the Secretary of the Treasury Board. From 1993 to 2003, the Secretary of the Treasury Board also bore the title of Comptroller General of Canada. In 2004, the position of Comptroller General of Canada was created and the Office of the Comptroller General became a separate entity within the Treasury Board Secretariat. The Comptroller General is responsible for standards of financial controls, reporting systems and program evaluation of federal departments and agencies. See McMenemy, The Language of Canadian Politics, p. 69.
504.: Financial Administration Act, supra note 6, s 64(2).
505.: Receiver General of Canada, Publics Accounts of Canada, 2015, vol. 1, Section 2, “Statement of Responsibility”, p. 2.3.
506.: Financial Administration Act, supra note 6, s 64(2); Auditor General Act, RSC 1985, c A-17, s 6 [Auditor General Act].
507.: Receiver General of Canada, Publics Accounts of Canada, 2015, vol. 1, “Introduction to the Public Accounts of Canada: Format of the Public Accounts of Canada”.
508.: A Crown corporation is an organization with the structure of a private-sector enterprise but which is established by legislation and is owned by the Crown. Although they report to the legislature through a designated Minister, Crown corporations are not subject to direct ministerial control. See McMenemy, The Language of Canadian Politics, pp. 93–4.
509.: Like the Public Accounts of Canada, this report was usually filed with the Clerk of the House and the tabling was recorded in the Journals. See, for example, Journals, December 16, 1999, p. 831; December 13, 2002, p. 311; June 12, 2003, p. 928 (revision), January 28, 2008, p. 345. This report was last tabled on December 9, 2011 (Journals, p. 640).
510.: Financial Administration Act, supra note 6, ss 151 and 152. For more information, see the Treasury Board Secretariat Web site (http://www.tbs-sct.gc.ca).
511.: Financial Administration Act, supra note 6, s 150(1). See, for example, Journals, March 26, 2015, p. 2294.
512.: McMenemy, The Language of Canadian Politics, pp. 9–10. An officer of Parliament is an appointed official who is responsible to Parliament for carrying out duties assigned by statute.
513.: For terms of appointment and tenure of office, see the Auditor General Act, supra note 506, s 3. In 2011, subsection 3(2) of the Act was repealed, removing the obligation for the office holder to retire at the age of 65.
514.: Audit Act, 1878, supra note 381, ss 11 to 56.
515.: An Act respecting the Public Revenue, the raising of loans authorized by Parliament, and the auditing of the Public Accounts, RSC 1886, c 29, ss 21 to 59; The Consolidated Revenue and Audit Act, 1931, SC 1931, c 27.
516.: An Act to Provide for the Financial Administration of the Government of Canada, the Audit of the Public Accounts and the Financial Control of Crown Corporations, SC 1951, c 12, ss 65 to 75.
517.: Supra note 506, ss 7(2)(b) to (f). In 1995, a point of order was raised in the House about the receivability of the Auditor General’s annual report on the grounds that the Auditor General had exceeded his mandate under the Auditor General Act, supra note 506, by including “politically biased statements” about the role of Parliament in relation to the national debt (Debates, October 18, 1995, pp. 15530–2). Speaker Parent responded that he had no authority in regard to matters of law, and therefore could neither interpret whether what was contained in the report was in conformity with the criteria set out under the Act nor, consequently, rule the report out of order (Debates, October 25, 1995, pp. 15812–3).
518.: Federal Accountability Act, SC 2006, c 9, ss 301 to 305 [Federal Accountability Act]. In this regard, the Act responded to Recommendation 24 made by the Standing Committee on Public Accounts in its Ninth Report entitled “Chapters 3 (The Sponsorship Program), 4 (Advertising Activities) and 5 (Management of Public Opinion Research) of the November 2003 Report of the Auditor General of Canada”, presented to the House on April 7, 2005 (Journals, p. 594). During its hearings on the Sponsorship Program, the Committee was frustrated by the fact that the Auditor General of Canada, unlike several provincial auditors general, did not have legislative authority to audit entities outside government that were in receipt of public funds.
519.: Supra note 6, ss 134(1) to (3). In addition to annual financial audits of those Crown corporations for which the Office is responsible, the Auditor General may carry out special examinations which evaluate whether the systems and practices of Crown corporations provide reasonable assurance that assets are safeguarded, resources are managed economically and efficiently, and operations are carried out effectively. See Office of the Auditor General of Canada, 2013–14 Estimates: Performance Report (Ottawa: Office of the Auditor General of Canada, 2014), p. 6.
520.: Supra note 506, ss 5 and 6; Financial Administration Act, supra note 6, s 64.
521.: Office of the Auditor General of Canada, 2013–14 Estimates: Performance Report, p. 6. See, for example, Receiver General of Canada, Public Accounts of Canada, 2014, vol. 1, Section 2, “Independent Auditor’s Report” (Ottawa: Minister of Public Works and Government Services, 2014), p. 2.4.
522.: Office of the Auditor General of Canada, 2013–14 Estimates: Performance Report, p. 6.
523.: Auditor General Act, supra note 506, ss 15.1 and 21.1–24. Section 15.1 of the Act established the position of Commissioner of the Environment and Sustainable Development within the Office of the Auditor General of Canada. See also Office of the Auditor General of Canada, 2013–14 Estimates: Performance Report, p. 7.
524.: Auditor General Act, supra note 506, s 11. Such authority would be required for the Auditor General to undertake an audit assignment which did not otherwise fall within the statutory authority of the Office. The authority under section 11 is conferred by way of an Order in Council. See, for example, Report of the Auditor General of Canada to the Minister of Canadian Heritage, Use of Public Funds by the Former Lieutenant-Governor of Québec (Ottawa: Office of the Auditor General of Canada, June 2007), pp. 7–8, 20. For more information, see the Auditor General of Canada’s Web site (http://www.oag-bvg.gc.ca).
525.: Auditor General Act, supra note 506, s 7(2).
526.: Ibid., s 7(3).
527.: In the past, the Speaker has tabled the Auditor General’s reports just before Statements by Members. See, for example, Journals, November 23, 2004, p. 245; October 30, 2007, p. 112. Since June 2011, the reports have been tabled on a Tuesday or a Thursday during Routine Proceedings. See, for example, Journals, June 9, 2011, p. 35; April 28, 2015, p. 2423.
528.: Standing Order 108(3)(g).
529.: While Members are free to leave the lock-up at any time, they must agree not to give interviews on or divulge the contents of the report prior to its tabling. Members’ research staff are usually allowed to attend the lock-up; however, they must be sponsored by a specific Member and must remain in the room until the report has been tabled. For further information on lock-ups, see the section in this chapter entitled “Budget Secrecy”.
530.: Auditor General Act, supra note 506, ss 7(1), 8(1) and 19(2). The authority to submit several reports was conferred by way of An Act to amend the Auditor General Act (reports), SC 1994, c 32. The Office of the Auditor General views the authority for additional reports as an opportunity to improve the timeliness and relevance of the information it provides to Parliament, thus promoting accountability. Efforts are made by the Auditor General to plan the tabling of reports in accordance with the calendar of the House of Commons. In 2005, sections 7.1(1) and (2) were added to the Auditor General Act, supra note 506, granting the Auditor General the right to investigate and report on certain corporations that receive large sums of money. In 2006, section 7.1(1) was amended to expand the class of recipients of grants, contributions and loans for which the Auditor General could conduct inquiries. These changes were enacted in the following legislation: Budget Implementation Act, 2005, SC 2005, c 30, and Federal Accountability Act, supra note 518. Reports on such investigations may be included in the annual report or any of the additional reports that are tabled in the House.
531.: Auditor General Act, supra note 506, s 7(5). In the event of the prorogation or dissolution of Parliament during the notice period, the Auditor General must withdraw the notice in question and submit a new one to extend the reporting date of his or her report.
532.: See, for example, 2005 report (Journals, February 15, 2005, p. 432; April 5, 2005, p. 580; November 22, 2005, p. 1306); 2007 report (Journals, February 13 2007, p. 996; May 1, 2007, p. 1300; October 30, 2007, p. 112). In 2006, the general elections delayed the tabling of the February volume, with the result that the winter and spring volumes were tabled in May as Volume 1 (Journals, May 16, 2006, p. 179). Volume 2 was tabled in November (Journals, November 28, 2006, p. 820).
533.: See, for example, Journals, April 20, 2010, p. 244; October 26, 2010, p. 808; May 6, 2014, p. 883; November 25, 2014, p. 1833.
534.: Reports are numbered sequentially by volume.
535.: Auditor General Act, supra note 506, s 23. See, for example, Journals, October, 7, 2014, p. 1595.
536.: Standing Order 108(3)(g). For further information, see Chapter 20, “Committees”.
537.: A commitment to having a Member of the Official Opposition chair the Standing Committee on Public Accounts was made in the 1958 Throne Speech (Debates, May 12, 1958, p. 6). See the remarks by Prime Minister John Diefenbaker (Debates, May 13, 1958, p. 34). See also Ward, The Public Purse, pp. 218–9. This practice was codified in November 2002. The Standing Orders now require that the first Vice-Chair of the Committee be a Member of the government party, and that the second Vice-Chair be a member of an opposition party other than the Official Opposition (Standing Order 106(2); Journals, November 5, 2002, pp. 162–4). See also Eighth Report of the Standing Committee on Procedure and House Affairs, presented to the House and concurred in on October 22, 2004 (Journals, p. 136).
538.: See, for example, Fourth Report of the Committee entitled “The Expenditure Management System at the Government Centre and the Expenditure Management System in Departments”, presented to the House on February 25, 2008 (Journals, p. 460); Fifteenth Report of the Committee entitled “Chapter 6, Special Examinations of Crown Corporations – 2011, of the Spring 2012 Report of the Auditor General of Canada”, presented to the House on June 10, 2013 (Journals, p. 3355); Twentieth Report of the Committee entitled “Chapter 2, Required Reporting by Federal Organizations, of the Spring 2015 Report of the Auditor General of Canada”, presented to the House on June 17, 2015 (Journals, p. 2812).

For questions about parliamentary procedure, contact the Table Research Branch

613-996-3611

trbdrb@parl.gc.ca