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Speech in Senate Chamber: Inquiry—Role and Function of the Auditor General—Debate Adjourned


Role and Function of the Auditor General

Inquiry—Debate Adjourned

Hon. Anne C. Cools rose pursuant to notice of June 2, 2015:

That she will call the attention of the Senate to;

(a) the Auditor General of Canada, a statutory officer whose powers are limited to those expressly stated in the statute, the Auditor General Act; and, to his powers, by this Act, as "the auditor of the accounts of Canada," which powers do not include any audit of the Senate and senators; and, to the British House of Commons' great achievement, being the creation of the appropriation audit, to which audit all government departments were subject; and, to this appropriation audit, which inspired Canada's 1878 statute that created the Auditor General of Canada as an officer wholly independent of our finance department and most particularly of the government; and,

(b) to the auditor general's role in the appropriation audit, being to verify and to certify that government spending is as the House of Commons dictated and adopted in their appropriation acts; and, to the purpose and function of appropriation audits, which is the examination of the appropriation accounts of government departments, of which the Senate is not one, and therefore not subject to the Auditor General's audit examination; and,

(c) to the distinguished British Liberal Leader, William Gladstone, known for his constitutional acumen, and his defence of the powers of the House of Commons in the public finance and the control of the public purse, and who, as the Chancellor of the Exchequer, sponsored Britain's 1866 Exchequer and Audit Departments Act, which was the basis for Canada's 1878 statute, An Act for the better Auditing of the Public Accounts, which Act established the new independent Auditor General of Canada; and, to Britain's Commons House famous and powerful Public Accounts Committee and its 1865 Report from the Committee of Public Accounts, which Report clarified the role of audit in the public accounts of the departments of government; and,

(d) to this Report, that records the auditors' views and opinions on their role and proper function as never advising, controlling, or remonstrating, and also to never correct or prevent, but just to detect; and, to the fact that this great achievement of the appropriation audit is now largely unknown to Canadians, because recently, auditors general, by their own self-definition, have expanded their role away from the quantitative, arithmetic functions of audit, and have moved into the qualitative, policy spheres, to the extent that many Canadians now believe wrongly that the auditor general is the taxpayers' representative and guardian of their tax dollars, which function properly belongs to the Commons House, and not to the auditor general, who has absolutely no representative powers, which powers rightly belong to the elected members of parliament, chosen in representation by population for the purpose of no taxation without representation.

She said: Honourable senators, the appropriation audit was the unique audit examination of the public accounts, by which the Auditor General verifies and certifies that governments spend money for the purposes stated and adopted by the Commons House in their Appropriation Acts. The Constitution Act, 1867, sections 53 and 54, orders that these acts originate in the commons by Crown ministers. The appropriation audit, known for its accuracy and clarity, had been a great constitutional achievement. By its success and from its early stages, its application grew to include all government departments. On February 8, 1866, the Great Commoner, Exchequer Chancellor William Gladstone, moved Britain's Exchequer and Audit Departments Act. This applied the appropriation audit to all departments. This was followed in Canada when it adopted its 1878 Act to Provide for the Better Auditing of the Public Accounts, that also constituted the new independent Auditor General appointed during good behaviour. About Britain's use of the appropriation audit, Alpheus Todd's 1889 Parliamentary Government in England Volume II said, at page 63:

It is undoubtedly of the first importance that the appropriation audit should be extended to every branch of the public expenditure, inasmuch as the financial accounts which are annually presented to Parliament do not as yet exhibit the precise relation between the grants and the expenditure for each particular service; and Parliament has no means of comparing the expenditure actually incurred with any vote to which the appropriation audit has not been applied.

Honourable senators, this successful appropriation audit established a new unknown audit precision in verifying and certifying that government spending was as the British Commons House intended and decided. That their Auditor General would examine each government department and each appropriation account was a great advance. The schedules to the Appropriation Acts itemize all sums of money and list them as "appropriation votes." Each appropriation vote has its own account and its own number. Each account was audited. This perfected appropriation audit and its application to all departments, to all public expenditure, was a high point for their Commons House pre-eminence in the control of the public purse. The British 1866 act had replaced their Audit Board with the new independent Auditor General whose role was to verify and certify the public accounts. In Britain in 1865, the year before their new act, the base for our 1878 act, these issues were well-studied in their famous House of Commons Public Accounts Committee, their powerful engine that drove the power of the control of the public purse. On March 11, 1862, William Gladstone, then Chancellor of Exchequer, the master of the national finance and the control of the public purse, had moved the motion to establish their Public Accounts Committee as a permanent standing committee. Their 1865 Report from the Committee of Public Accounts clarified the role of audit and auditors, and led the way to their 1866 Act. This famous committee report disputed the erroneous idea held by many that audit and auditor's role is to be a control over the public expenditure. It upheld audit's proper role. Quoting Mr. Gladstone, it said, at paragraph 46, page 130:

The true mission of Appropriation Auditors is admirably described in the few observations which were made by Mr. Gladstone during the debate already adverted to on Lord Robert Montague's Resolution (para. 35).

"The Noble Lord," he said, "and some other Honourable Members would seem to have got an idea of the possible powers of the Board of Audit, which is quite erroneous. They appear to think that that Board can become an efficient control over the public expenditure. But that is not the function of a Board of Audit. That Board is to ensure truth and accuracy in the public expenditure. In point of fact, it may be called, in one word, a Board of verification. But it would be perfect presumption in the Board of Audit, if it were for a moment to attempt to exercise a judgment as to any degree either of parsimony or of extravagance, which the Government might be thought to be adopting under the sanction of this House. As to the proposal of the Honourable and learned Member for Dundalk (Sir G. Bowyer), I confess I think it entirely impracticable and out of the question. He proposes to arm the Board of Audit with coercive powers of committal for contempt, powers of commanding the departments of the Government as to what is to be done, and what not to be done there. I venture to say that such a conception of a Board of Audit is wholly without precedent. Besides, the objection to it is, that it would be transferring to the Board of Audit what is really the function of this House. It is in the Committee of Public Accounts, . . ., it is in that Committee, and in its investigations, that the House will have the best security for the due, speedy, and effectual examining and rendering of the Public Accounts. To the principles which have been declared by the Committee of Public Monies respecting the Board of Audit, I cordially adhere."

Honourable senators, having cited Gladstone on the difference and the separation between the audit function and the Commons House function and on the great principles that found the national finance enterprise, this Committee Report, still relying on Mr. Gladstone, continues, at paragraph 47:

These are wise words. Considering the high administrative position of Mr. Gladstone, it might at first sight be supposed that his views on the matter in question would indicate a clearer perception of what is due to the Government, than of what is due to the Board of Audit. But the Auditors themselves, it is believed, will not think so. By them the speech of the Chancellor of the Exchequer cannot but be regarded as bearing powerful testimony to the virtue of a principle which they have for many years maintained, though in some cases unsuccessfully, against the disposition of the Executive to charge them with various kinds of administrative functions, the functions of controllers, of accountants, and of regulators of accounts. . . . In the elaborate Memorandum, which was laid before the Committee on Public Moneys by Sir G.C. Lewis, then Chancellor of the Exchequer, it was proposed that the Exchequer Office should be abolished, and that some of the more important functions of the Comptroller of the Exchequer should be transferred to the Audit Office. This Memorandum was referred by the Committee to Mr. Romilly, the Chairman of the Board of Audit; and Mr. Romilly, in a letter which will be found in the Appendix to the Committee's Report, after pointing out, in nearly the same words as those used by Mr. Gladstone, what the special duties of an auditor are, goes on to show the incompatibility between such duties and those of a comptroller. "In the event," he says, "of its being desirable that this direct Executive control should be maintained over the advisers of the Crown, it should not be exercised by those who are charged with the duty of auditing accounts." And again, "I cannot entertain any doubt that provided the Legislature come to the determination to be promptly and accurately informed as to the mode in which the grants of public money have been dealt with by the Executive, provided the Executive will cordially co-operate in instituting an effectual and permanent check upon its own proceedings, and provided the separation of the duties of the Audit Office, and the functions of the Executive is strictly preserved, there can be no insurmountable difficulty in practically carrying their wishes into effect.

(2100)

Colleagues, I shall repeat some of these critical words:

In the event . . . of its being desirable that this direct Executive control should be maintained over the advisers of the Crown, it should not be exercised by those who are charged with the duty of auditing accounts.

I repeat:

. . . and provided the separation of the duties of the Audit Office, and the functions of the Executive is strictly preserved . . . .

Colleagues, in this audit of senators, this separation has been trampled, just as the Senate has been in this audit by the Auditor General of Canada.

Honourable senators, I note that this British Committee Report was the year before their new independent Auditor General was enacted in 1866. These stated principles are most relevant today when the Auditor General's role is misunderstood and prone to violation. This is evident in the current union of interest and action of this government and the Auditor General, which union has been executed and embodied in the illegal and illicit audit of senators. A Senate motion, by a government minister, ordered senators to subject themselves to an illicit audit examination. The Auditor General, the government and their lawyers must know this, both from the law on the sovereignty of Parliament, and from the Auditor General Act itself, in which Parliament enacted no power whatsoever for this auditor to audit the Senate, and most particularly, not to audit prompted by a government motion, as government business.

Honourable senators, in this seminal 1865 British Public Accounts Committee Report, the auditors themselves speak to their audit role, at paragraph 48:

If, then, Parliament should ever be asked to confer upon the Auditors any Executive functions, or the right in any case of interrupting or questioning the free action of the Executive, it will be easy to show that though such proposals have been occasionally recommended by the doctrine and practice of the Executive Departments, and have been sometimes even sanctioned by Parliament itself, they have been repeatedly condemned by the Commissioners of Audit. If it is allowable to assume that the Auditors still adhere to the evidence which, during the last six or seven years has been laid before Parliament on behalf of the Audit Office, they may be represented as saying: — "The whole of our experience as Appropriation Auditors tends to satisfy us that we ought to have no further communication with the Executive Departments than may be necessary for the purpose of obtaining information. Whatever tends to associate us, either directly or indirectly, with the pecuniary transactions of the Government, cannot but tend to damage the credit of the reports in which we are required to submit those transactions to the judgment of Parliament. We conceive, therefore, that we should never be required to advise, to control, or to remonstrate."

The auditors themselves gave evidence, saying that they, "should never be required to advise, to control or to remonstrate." Colleagues, their evidence reveals the Senate audit problem, the audit dilemma. Why is the Auditor General advising that the Senate refer senators' files to the police, or to anyone? Why is he speaking about his report in the media, most particularly the Ottawa Citizen? Why is this auditor interpreting and defining Senate rules and policies and trying to enforce them? On May 26, Jason Fekete's Ottawa Citizen article reveals truths and facts that are denied, and unknown to senators, the last to know, and who often only learn from the media, of these Senate matters. Headlined "Expense claims of 30 senators problematic, auditor general says." We should haul him here and question him about this stuff. This is deadly.

Fekete writes, at page A6:

The auditor general's report on Senate expenses will be delivered next week to the Speaker of the upper chamber and publicly released shortly thereafter.

By whom, by the way?

Ferguson said there is enough concern with expense claims from roughly 10 current or former senators to refer their cases to the Mounties for further review.

"That number would be accurate," Ferguson said. "Expenses from approximately 20 other senators also will be flagged in the final report as problematic," he said.

Fekete records the Auditor General's words, again:

The total, including those (roughly 10 senators who should be referred to the RCMP) that we will be reporting on is about 30. . . .

Fekete cites the Auditor General's campaign message, quote:

A lot of our message around the Senate audit will be talking about accountability and transparency.

Some of this is to be pretty transparent to be quite frank.

Colleagues, his words are "accountability" and "transparency." That same day, Auditor General Ferguson appeared on CBC's "Power & Politics" with Evan Solomon, respecting details of his report not yet reported to the Senate. All this is out of order, and very sad. Pride and vanity in other peoples' misfortune is a tragic affliction of the human condition. This auditor's private opinions and messaging are no part of financial audit, and no part of the Auditor General's role in the public accounts, which role is to verify and certify the accounts of Canada, of which the Senate accounts are no part — no part whatsoever.

Honourable senators, this seminal British Public Accounts Committee's 1865 Report continues at paragraph 48:

We ought not to be invited to discuss questionable points with the Departments, or to aid them in the conduct of their business. Our functions should be neither preventive nor corrective, but simply detective. We should be instructed to try the accounts and vouchers of the several Departments, by the requirements of the Legislature, and to bring under the notice of Parliament any expenditure that might in our opinion be opposed to those requirements. It may no doubt sometimes appear to us that the expenditure which it will . . . be our duty to report is justifiable, or even commendable; but we should keep all such opinions to ourselves. It should be no part of our business to acquit or to condemn, but simply to report to Parliament every infraction of the law relating to the appropriation of the public money, leaving it for the Executive Departments to give such explanations as they might think fit, and for the House of Commons to pronounce the sentence.

I repeat, the auditors said that their functions are not to prevent or correct. They also said, "It should be no part of our business to acquit or to condemn." But the Auditor General has condemned many senators publicly, though the Senate and senators do not have his report. I haven't got it. I do not know about anybody else here.

The Auditor General has made statements in the media to wit that some 10 senators should be referred to the RCMP for investigation, and that 20 other senators have "problematic" expenses. This is a very sinister condemnation. It is a judgment, dressed and decorated as messaging. But it is a judgment that is not his to make. It is one which belongs to senators and to this Senate. The judgment that is his to make, and that he should make, is whether the monies granted to him by the Commons House Appropriation Act intended that he should spend $21 million to audit senators and publicly condemn them.

Senator Mockler: Order!

Senator Fraser: Order!

Senator Mockler: Order!

The Hon. the Speaker: Senator Cools.

Senator Mockler: Order! The Speaker is standing.

The Hon. the Speaker: Are there further senators that wish to speak on this?

(On motion of Senator Fraser, debate adjourned.)

The remainder of this day's Senate Debates are available here.