EdinburghNLP/nunavut-hansard-plusplus huggingface dataset:
This will require some research prior to providing the information. Thank you, Mr. Chairman.
Mr. Tootoo, thank you.
I would like to ask the minister if he could explain or clarify the relationship of the Internal Audit Committee to the Office of the Auditor General of Canada.
Hon. Louis Tapardjuk (interpretation): Mr. Ma will respond to that, Mr. Chairman.
I’m just going to step back a bit to answer the member’s question.
The Internal Audit Committee indirectly reports, if you will, or works with the Deputy Minister of Finance and is comprised of the Director of Internal Audit and other colleagues of my own, of the deputies.
The relationship between the Internal Audit Committee and the Office of the Auditor General is basically one of a professional relationship. For example, some of the work that we do in Internal Audit may be used by the Auditor General in their work, so it’s basically cooperation. I guess another recent example of cooperation between Internal Audit and the Office of the Auditor General would be the NBCC audit that happened I guess over a year ago.
As you know, unfortunately, the results weren’t what we had hoped for, but certainly, that was an instance where we worked together with the Office of the Auditor General.
I thank the minister and Mr. Ma. Reading in your business plan, one of your priorities for 2007-08 said, “... including independence of the Internal Audit Committee as recommended by the OAG.”
Could you clarify for the record what the OAG meant by that recommendation “independence”?
That’s an important word I think, independence.
I believe what the Office of the Auditor General is referring to in that phrase is as long as you were free of interference from the government itself in terms of the Internal Audit Committee being able to do its work.
I can tell you, at this point, being the Chair of the Internal Audit Committee, we basically have not had any interference from Cabinet or FMB in terms of the work that we’re doing.
Thank you, Mr. Ma. Could you describe the different types of audits that the Internal Audit Services Branch would undertake on behalf of the Government of Nunavut?
There are a number of different types of audits that Internal Audit can do. The most common one that we’re all familiar with is what we call compliance audits and that’s when you go in to make sure that a department or a particular organization does what it’s supposed to do in terms of following the rules.
For example, what Member Tootoo was referring to earlier about timing of payments to vendors; that would be a compliance type audit.
And, then there are operational audits and really what an operational audit does is we look at whether something is being done efficiently and effectively. I don’t know what an example is but maybe let’s say the fuel tax rebate, which is under our department; we would examine how quickly we’re turning around payments to harvesters for example.
So that would be an operational type audit.
Financial audits would then look at whether or not supporting documents are there to support claims that are made by the GN. A typical example would be what we call a Vote 4/5, where we have let’s say somebody like the Government of Canada provide us funding but then we would have to report back to them.
So that would be a financial type audit.
Fourthly, we have what we call forensic investigations and what a forensic investigation basically is, is to investigate an allegation of a possible fraud.
Lastly, I talked about the fact that we also assist the AG.
So those are the four main types of audits that we do in Internal Audits.
Thank you, Mr. Ma. Can you provide us with the numbers of different types of audits you have completed in the current fiscal year in each of those four categories?
As part of the information that we’re going to provide back to Member Tootoo tomorrow, I can provide that information to the member. I do have numbers here for 2006-07 if he is interested.
I thank Mr. Ma. Yes, I would be interested in the numbers you have and then if you could provide the numbers tomorrow when you provide the answer to Mr. Tootoo, I would appreciate that as well.
Hon. Louis Tapardjuk (interpretation): Mr. Ma will also respond to that.
In 2006-07, there were 11 compliance audits, four operational audits, six financial audits, seven forensic investigations, eight of what we call advisory consulting audits, and the one case I have mentioned of where we provided assistance to the OAG with respect to the NBCC audit.
Thank you, Mr. Ma. Could you tell us how the Internal Audit Branch chooses each of these types of audits to undertake?
Hon. Louis Tapardjuk (interpretation): Mr. Ma will also respond to that, Mr. Chairman.
In the past, we basically assessed where we thought the audit risk was within the GN and partly, it was also based upon reports of the Office of the Auditor General. Going forward into the next fiscal, we have changed that approach.
We are going towards what we call a risk-based assessment type audit. What that really means in plain English is that we have each department risk assess itself but at the same time, we also do our own assessment of that department.
Based upon the results of those assessments, we then determine which departments to go into in terms of an audit plan for the ensuing fiscal year. I won’t get into more detail; I could provide additional details to the member if he wishes.
I thank Mr. Ma. The forensic investigation audits; they’re the ones that really pique the interests of MLAs and we had seven in that fiscal year.
How did you identify those particular investigations to undertake?
Hon. Louis Tapardjuk (interpretation): Mr. Ma will also respond to that one, Mr. Chairman.
A number of those forensic investigations were brought to our attention by the particular department or the territorial corporation.
Thank you, Mr. Ma. When they’re brought to your attention, then what procedures or processes do you undertake to investigate?
Under the Financial Administration Act and a particular directive within the Financial Administration Manual, there are very clear policies and procedures that we have to follow within government.
The short of it is that if there is a suspected allegation of fraud, it must be brought to the attention to the Comptroller General. He or she would then make an assessment of whether that should be brought to the attention of Internal Audit. It goes towards Internal Audit and we then go towards an investigation based upon that assessment.
I thank Mr. Ma. Can Mr. Ma indicate the different types of fraud that they investigated in these seven investigations?
I actually don’t have the details in front of me, so I am going to guess by memory. In most of the instances that had to do with situations of theft, for example, a computer may have been stolen or a particular capital asset may have been misappropriated elsewhere, I think there were also a number of instances where people inappropriately used their position to influence a particular contract. That does come to mind.
Can Mr. Ma indicate if any disciplinary action resulted as a conclusion of your seven investigations?
I won’t confirm this but my memory at this point in time is no, there were none. There was one I think that was referred to the RCMP but in a majority of the cases that we investigated, the employee became former employees. In other words, they have left the employment of the GN. Thank you, Mr. Chairman.
I thank Mr. Ma. Did the former employees leave the employment of the Government of Nunavut before they were aware that they were being investigated or after they became aware that they were being investigated?
I would say that in the majority of the cases, the employees left because they knew we were likely about to do an investigation.
Assuming that, for example, they didn’t know they were being investigated or still remained an employee of the government when you had undertaken your investigation and prepared a report, where does the report go from there once it’s concluded? Thank you, Mr. Chairman.
The draft report would then go to the department that asked for the particular investigation and to the Comptroller General. Between the particular department, which I will call the sponsoring department, and the Comptroller General, the decision would actually be made at that point whether to proceed further either by way of laying charges or going to the RCMP. I am going with it by memory but I do seem to recall one instance where we did refer the matter to the RCMP.
Thank you, Mr. Ma. I’m just trying to establish in my mind the independence of the Internal Audit Branch. Now, if you initiate an investigation but the investigation shows that there’s fraud and you take it back to the department, does the department have the option of telling you or the Internal Audit Branch not to proceed with any disciplinary action or sending the file to the RCMP for further investigation?
Yes, the department does have that opportunity.
However, there is a significant amount of obligation on the part of the Comptroller General also to be part of the decision making. So if the comptroller general does not agree with the recommendation of the particular department, he or she may still proceed with referring the matter to the RCMP. Of course, as deputy, I could also step in.
Thank you, Mr. Ma. Does the department, if they disagree with your recommendations or investigation, can they engage external accountants or an audit firm to undertake a similar review of a particular investigation or report it if it led to fraud? Is that possible?
Yes, a department can certainly use other external resources but at this point, that has not happened. The departments have been satisfied with the services that we have provided.
Thank you, Mr. Ma. I know that one of your 2008-09 priorities is to “Perform an external and internal quality review of our Internal Audit Services Branch operations to ensure that they are current and in compliance with professional standards on quality assurance,” and we have asked the Auditor General of Canada questions. They’re out there auditing entities across Canada but we ask them, “Well, who’s auditing the Auditor General?” So they have a process in place to ensure that their standards are at the very highest.
Now, with that 2008-09 objective, I’m glad to see that in there but what kind of work do you plan to do to ensure that your review is well done and that you are complying with professional standards on quality assurance?
The member is quite correct.
As professionals, we have to uphold certain standards and part of upholding that standard is to have what we call a quality review from time to time. In our case, for next year, we’re intending to do both an external and an internal review.
With respect to the external review, we would probably bring in an outside organization. I know that if I was still in public practice, the particular professional body of the province or territory that I would be in would actually provide that review. We will likely ask an outside organization to come in and provide that quality review of our Internal Audit Division.
Thank you, Mr. Ma. It’s good to know.
Just going back to these forensic audits, I know you said you’re going from memory but one file has been sent over to the RCMP for investigation, do you know if their investigation has been completed?
I don’t believe it has but I will confirm that as part of the follow-up information that we will provide members.
Thank you, Mr. Ma. One final question: can you tell us how many internal auditors you have working in this branch?
Hon. Louis Tapardjuk (interpretation): I’m looking for that information.
Mr. Ma will respond to that.
As of December 31, 2007, we have nine approved positions.
There are five employees, so we have four vacancies out of the nine.
Thanks again, Mr. Peterson.
Total Operations and Maintenance, to be Voted. $13,924,000.
Under Comptrollership, I think that’s C-19 in our version of the business plan, there’s Accounting Policy and Financial Systems Management; it looks like it’s decreased by about $600,000 from the previous year. I’m just wondering if I could get an explanation for that. Thank you, Mr. Chairman.
As part of the Strengthening Financial Management Initiative, the FMB approved one-time funding for us last year, so a significant part of that would be the one-time funding of those contracts. Thank you, Mr. Chairman.
I noted in my opening comments yesterday and the minister mentioned as well, the $23 million in funding that was announced to assist the GN in strengthening their financial management and one of the things was to improve the timelines for productions of the annual financial statements. I’m wondering if the department could give us an idea of what strategy they have for ensuring that its public accounts are prepared and tabled on time.
The production of the public accounts is a somewhat specialized area so I would like to say that first. As members know, recruiting people has been difficult because of the economic conditions across Canada.
So that said, because of that sort of specialized expertise, if you will, at this time, we have brought in an individual that was the Assistant Auditor General of the Province of Nova Scotia. He obviously is very good in his profession; he has what we call an FCA, a Fellow Chartered Accountant.
I think we made some comments yesterday about the different types of accounts we have within our system. So that’s an honour that’s bestowed upon you because of other skills or other things that you have done in the public domain.
Having said that, the other thing that we have done in the past year and we’re still currently doing is we have put in writing a number of steps and processes to be followed in the production of the public accounts. In order to do that, we, of course, need the assistance of all of our colleagues across our departments and territorial corporations. So there is an actual year end plan for the production of public accounts that ties in all departments.
We have also initiated an internal quality review of the financial statements and draft statements before they get to the Auditor General.
That was one of their concerns is that the quality of our draft statements that were given to them were not at a level that they feel that they should be at, so we have done our own internal review of statements before they go there.
In some cases, because of a particular territorial corporation or whatever, and the sense of nature of it or whatever, I, myself, have actually undertaken some of those reviews.
I can get into the nitty-gritty but that’s the general sense of what we’re doing in terms of getting public accounts produced on time.
I don’t know if I should ask it under Financial Management or Comptrollership, but all of those positions that were re-centralized to the Department of Finance from the Departments of Health and Social Services and EIA, do they fall under the Comptrollership section?
There were 24 positions that were re-centralized into Finance and the member’s question is at the appropriate part of our main estimates. Four of those positions were from EIA and those positions went into the Corporate Services side of our operations. The remaining 20 positions from Health and Social Services went into the Financial Processing side of our operations, which is part of Comptrollership.
I think that was just last year that that was done and if that’s the case, in the main estimates under Comptrollership, the initial amount for 2007-08 was $11,620,000 for Compensation and Benefits and the revised amount was the same amount.
So I’m just wondering where; I thought we passed the supplementary appropriation to transfer those funds over and I would have expected to see an increase there in the revised amounts.
When we prepare the main estimates and the budgets, we try to prepare the main estimates like we do the financial statements on a basis consistent with that of the preceding year.
I would like to refer the member to Appendix V of the main estimates. In there is what we call the schedule of restatements and the schedule of restatements takes into account what he just talked about: different Supplementary Bills that have come forward.
So we’re actually comparing apples to apples and not apples to oranges.
If that number is still the same there, like it’s still $11,620,000 and if there are other positions that are in that division now, I think you said 20 positions or something like that, then how come there’s only a $50,000 increase in Compensation and Benefits for next year?
I don’t think I explained myself very well to the member and I apologize for that.
Appendix V restates last year’s budget and this year’s budget so that it takes into account the 20-odd positions that were moved to this particular of the discussion.
The difference of $50,000 from one year to the next is primarily due to increments that staff would be getting, so the budgets are adjusted for that.
I finally found Appendix V. It shows that those 20 positions and I think if I’m reading this right here, there was $1.7 million transferred over in 2007-08. I’m just wondering if that’s correct, or is it the $1.7 million plus the $418,000?
Mr. Ma: Mr. Chairman, it would be both numbers.
When we restate the 2007-08 main estimates, we basically assume or restate the numbers as if the 20 positions were there at the beginning of the year and then any subsequent supplementaries that affect those 20 positions. That’s basically what it is.
Mr. Curley: Thank you. (interpretation) I have a question under the main estimates on page C-9 regarding electricity subsidies that are provided by the Department of Finance.
Can the minister explain this program so that we can understand what that subsidy entails, who is eligible and where does the subsidy go to?
Hon. Louis Tapardjuk (interpretation): I will have Mr. Ma respond to that, Mr. Chairman.
I’m not entirely sure that I got the question that the member wanted answered, so I’ll attempt to answer it and if I’m wrong, then he can correct me.
I think what he was basically asking is how the Nunavut Electrical Subsidy Program works. The Nunavut Electrical Subsidy Program is a program that’s available to all Nunavummiut and that’s individual consumers as well as businesses, but primarily, it would be, of course, individual consumers or homeowners that would benefit the most.
The electrical subsidy, if I recall correctly, is based upon half of the Iqaluit rate and I have to really admit that I’m going by memory now, but I think the current rate is 39.5 cents per kilowatt-hour, so it would be half of that, and so that rate would then be used to subsidize all other communities across Nunavut, Mr. Chairman.
Yes, I appreciate that response.
In view of the high world oil prices, because I think that’s the way we pretty well measure the cost of subsidies and energy prices in Nunavut, I wonder if it’s not a correct time now, I say it is, to evaluate the rationale. Are there any plans developed to re-evaluate as to how the rationale is normally arrived at?
You quoted the current rate in Iqaluit and I believe that is the lowest electrical rate in Nunavut.
Hon. Louis Tapardjuk (interpretation): Yes, the lowest electrical rate in Nunavut is in Iqaluit, Mr. Chairman.
Mr. Curley: Thank you. (interpretation) Yes, I already knew that Iqaluit has the lowest rate but there are 25 other communities in Nunavut, so I believe that we have 26 different rates.
Hon. Louis Tapardjuk (interpretation): Yes, each community has a different electrical rate, Mr. Chairman.
Mr. Curley: Thank you. (interpretation) I think the minister agrees that there are 26 different rates.
Instead of using the cheapest rate for this subsidy, why not use averages instead, and determine which is the better rate.
If you start considering those kinds of options, it would be more beneficial to our people. Because we cannot say much about it as regular members, but if the cabinet could at least discuss the issue. As we heard earlier the global oil prices increasing, 6.40 cents per kilowatt-hour we pay on top for the fuel rider even though we have a subsidy.
You stated that the subsidy was increased by 17 percent.
Now, I would like to ask you: how did you reach the figure of 17 percent increase and what’s the rationale behind that increase in the main estimates?
If I understand what the member said, I believe he’s asking why we have basically a $1.1 million increase in the 2008-09 budget versus the 2007-08 budget, I think is what he’s asking me.
Last year, I think we admitted to the Committee of the Whole that we had actually under-budgeted this particular item in our budget and I can give the members some historical information that will maybe assist as well.
In the 2005-06 fiscal year, the actual expenditures were $6.7 million, so you could see that’s about $600,000 more than what it was for the 2007-08 budget. With respect to 2006-07, the actual we have is $7.2 million and again, that’s pretty much in line with what we’re budgeting for this year in the 2008-09 fiscal year. Year-to-date, I believe at December 31 for the current year, 2007-08, the number is about $3.4 million.
Of course, it seems low, but as you know, energy consumption is at its highest point in the winter months and we still have three months to go.
I’m trying to get the Nunavummiut to understand a bit how the rationale is arrived at in proposing a bit of an increase to the fuel subsidy or the Electricity Subsidy Program.
I think you have already explained that briefly, it’s normally that subsidy provided to the kilowatt-hour or monthly bills of the NPC, or the Power Corporation.
So my point is: when you are actually considering increasing it from last year and you arrive at a 17 percent increase, how is that figure arrived at?
I know you alluded to other previous years but it’s not taken into consideration at all the energy increases that have occurred since last year.
There has been no actual increase to the subsidy amount from one fiscal year to the next. The increase in the budget from 2007-08 to 2008-09 is to take into account the actual amount that we’re paying out as subsidies as a government.
Mr. Curley: I understand that but my question still is: this 17 percent increase from the time I believe it was about three years ago, when it’s the last time I remember, I think it was called a ‘four-cent solution’ or a ‘six-cent solution’ at that time, but it’s not at all tied in with the high world energy prices. Am I correct in that?
I’m not entirely clear as to what the member is asking but I don’t believe that we tie in our electrical subsidy rate to fuel prices. It’s tied into the actual cost of producing electricity and the rates that we then charge our consumers.
So I think that’s what he’s asking.
Mr. Chairman, my thinking is that it should be tied in with the world oil price increases because it seems that we all believe that we can actually evaluate whether or not the subsidies are working based on a number of costs that are escalating and the only one that we see escalating every year is the fuel prices.
There doesn’t appear to be any real rationale as to how the 17 percent proposed increase is arrived at. That’s what I was getting at. It seems to be they are just picking up a figure, or maybe the 17 percent being the half of the current Iqaluit rate; I don’t know.
I think there should be a proper rationale to guide subsidies because I can tell the minister that, as of last April of 2005, the fuel prices, at least the household fuel prices have increased at least 55 percent to date; I think that was yesterday’s rate.
So this particular figure really is inadequate in view of the fact that we have two main prices that have gone up - the current market prices have gone up and our GN rate for electricity has gone up. The minister and the Premier just confirmed that today. Nunavummiut are not keeping up with the cost of electricity.
Is the minister prepared to consider evaluating this formula so that it reflects the true cost of energy in Nunavut, including fuel and electricity?
Would that be possible so that you have a real clear formula for arriving at a particular subsidy as well as with this energy subsidy? (interpretation) Would you commit to doing that?