New Report of the Independent Review Panel on Modernization of … · 2016. 10. 17. · ness planning, modernization of financial infor-mation and accounting systems, re-orientation

Report of the Independent Review Panel on

M o d e r n i z a t i o n o f C o m p t r o l l e r s h i p

i n t h e G o v e r n m e n t o f

C a n a d a

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Report of the Independent Review Panel on Modernizationof Comptrollership in the Government of Canada

Catalogue No.: BT22-52/1997E

ISBN No.: 0662-26179-8

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Report of the Independent Review Panel on

M o d e r n i z a t i o n o f C o m p t r o l l e r s h i p

i n t h e G o v e r n m e n t o f

C a n a d a

dd

Independent Rev iew Panel on

Modernizat ion of Comptrollership in

the Government of Canada

J E A N - P I E R R E B O I S C L A I R – ChairPresident, CCAF–FCVI

J . D O U G L A S B A R R I N G T O N

Group Managing Partner, National Services, Deloitte & Touche, Chartered Accountants

W I L L I A M R.C . B L U N D E L L

Chairman, Manulife Financial

W I L L I A M A . D I M M A

Chairman, Monsanto Canada Inc.

R AY M O N D P R O T T I

President and Chief Executive Officer, Canadian Bankers Associaton

K A R N D. S A N D Y

Chief Operating Officer, Workers’ Compensation Board of Manitoba

E D WA R D J . WA I T Z E R

Partner, Strikeman, Elliott

Secretary to the Panel - Michael S. Weir

Key Top ics Compris ing the Panel ’s

Terms of Reference :

• Current comptrollership—its character, underlying assumptions, and key stages of evolution.

• Changes in the way in which the Government goes about the conduct of its business(es) andpotential impact thereof on operating environment, risk and comptrollership.

• Nature and role of modern comptrollership, to ensure that it is relevant, robust and responsiveto changing conditions and risks.

• Characterization of comptrollership in the year 2000 and beyond—defining a reasonable endposition.

• Critical success factors needed to modernize comptrollership.

• Approaches to change and an agenda for action.

The review was mandated to look at comptrollership at both the central agency level of the govern-ment and in operating departments, but not Crown corporations or other arms-length agencies.

Table of Contents

Foreword .............................................................................................................................................................i

Executive Summary ..................................................................................................................................1A new philosophy and approach is needed.......................................................................................................2A new understanding of comptrollership is needed.........................................................................................4Value of modern comptrollership .....................................................................................................................4Benchmarks of modern comptrollership ..........................................................................................................4Leadership by key players .................................................................................................................................5Conditions for modernizing comptrollership ..................................................................................................6Successfully implementing change....................................................................................................................7Making progress—an agenda for action ...........................................................................................................8The role of the Auditor General.......................................................................................................................8

Part I—Modernized Comptrollership ................................................................................11What was the panel’s task? ..............................................................................................................................12How has comptrollership been understood in the past?................................................................................12Do traditional assumptions need to be reappraised?......................................................................................14What major factors should affect a modern approach to comptrollership?..................................................15What is modern comptrollership? ..................................................................................................................18How much of an advance is needed? ..............................................................................................................20

Part II—Anchoring Comptrollership in Management Thinking ..............23A way of thinking and a state of mind ............................................................................................................24A management-centered function...................................................................................................................24An integrating function ...................................................................................................................................26

Part III—A New Direction for Comptrollership ....................................................29Some key principles.........................................................................................................................................30Departmental responsibility and capacity.......................................................................................................31Central responsibility and capacity .................................................................................................................31

Part IV—A Framework of Responsibilities for Comptrollership ........35Deputy Heads ..................................................................................................................................................36Senior Financial Officers.................................................................................................................................44Internal Audit...................................................................................................................................................47Central Agencies..............................................................................................................................................48Clerk of the Privy Council ..............................................................................................................................48The Treasury Board ........................................................................................................................................49Secretary of the Treasury Board/Comptroller General of Canada ...............................................................52Deputy Comptroller General of Canada........................................................................................................60Department of Finance ...................................................................................................................................61Public Service Commission.............................................................................................................................61Receiver General for Canada (Deputy Receiver General for Canada) .........................................................62Parliament........................................................................................................................................................63Parliament’s Auditor—The Auditor General of Canada ...............................................................................63

Part V—Modernizing Comptrollership - The Way Forward ........................67Measures of success .........................................................................................................................................68Conditions for modernizing comptrollership ................................................................................................69Change management .......................................................................................................................................74Champions for change—a modernization task force .....................................................................................75Making progress—an agenda for action .........................................................................................................75

Appendices ......................................................................................................................................................79Appendix 1. Guidance on the nature of comptrollership responsibilities .....................................................80Appendix 2. Agenda for action—summary of recommendations ..................................................................84Appendix 3. Terms of reference & approach..................................................................................................87Appendix 4. Organizations and individuals who contributed to the work of the Panel ...............................90

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The challenges of allocating scarce resourcesand getting a better return from the money

it spends are leading the government to searchfor innovative approaches to management andaccountability. These initiatives are diverse andsignificant. They include, for example, improvedreporting to Parliament, new approaches to busi-ness planning, modernization of financial infor-mation and accounting systems, re-orientation ofTreasury Board to become a management board,the adoption of alternative approaches to deliver-ing services, and a significant investment inrenewing the public service and developing pub-lic servants.

The government recognizes that one key toimproving its performance is to modernize thecomptrollership function. To help achieve this,the Hon. Marcel Massé announced the formationof the Independent Review Panel onModernization of Comptrollership in theGovernment of Canada on November 25, 1996.This report is the product of the work of thatPanel.

The initiatives referred to above, when they cometo fruition, will be critical underpinnings to, andelements of, modernized comptrollership.

We believe it is imperative for the government totake a bold approach to comptrollership, to under-stand what modern comptrollership is about, toprovide leadership and develop champions, and todevelop the culture and capacity for comptroller-ship that is required for substantial progress to bemade in achieving the government’s objectives.This approach is essential if the above initiativesare to provide a good return for the investmentbeing made. Comptrollership that supports bothpolicy development (or strategy) and high opera-tional performance is a hallmark of successfulorganizations. This kind of support is one of thekeys to the stated objective of “getting governmentright”— and being seen to do so.

Throughout our work we were faced with choicesin the approaches that we might recommend toachieve our vision for modern comptrollership.

The options varied significantly. All, however,have been proven in the comptrollership prac-tices of large public and private sector organiza-tions, both in Canada and abroad and have been,for the most part, supported in the submissionswe received.

We began our work with no predetermined con-clusions. Our aim is to be practical. In determin-ing which course to advocate we have been opento and influenced by the views expressed by themany people and organizations we consulted as towhat will likely be most effective in shaping andachieving the vision.

Generally, these views reflect the desire of execu-tives and professionals throughout the system todo the right thing. These people both recognizethe need for, and want to move ahead with, mod-ern comptrollership. They recognize that it is intheir interests to do so. As tempting, or even astraditional, as it might be to espouse courses ofaction that force rather than lead, such approach-es were rarely suggested as the preferred courseof action, nor do we consider them to be appro-priate.

The overwhelming impression we formed wasthat modernizing comptrollership is not some-thing that has to be forced on people. It is alreadyrecognized as needed, and the issue now is howbest to move forward. We are very encouraged bythis.

Two aspects of our report are important to note.

First, what is proposed is an integrated set of sug-gestions. To achieve success they should be takentogether and not addressed piecemeal.

Second, we have predicated our approach on ourconfidence in:

Foreword

Jean-Pierre Boisclair, Chairman

J. Douglas Barrington

William R. C. Blundell

William A. Dimma

Raymond Protti

Karn D. Sandy

Edward J. Waitzer

• the basic good faith and core values of pub-lic service managers

• the expressed will of elected and appointedofficials to achieve fact-based, results-ori-ented, open and accountable government

• the importance of sustaining and improv-ing trust between elected and appointedofficials.

We think that this is the right time for the gov-ernment to move ahead with vigor to achieveexcellence in comptrollership and that our pro-posals are in line with both the overall manageri-al directions that the government has adopted foritself, and the important initiatives that arealready underway.

We believe that success in modernizing comptrol-lership will also ultimately contribute to the trustCanadians have in their national government.

During our work we benefited from receivingthoughtful submissions from a number of profes-sional organizations and interested individuals.Our consultations reached out to include electedofficials, executives, and professionals in theGovernment of Canada, from academe, privatesector corporations, and other governments fromboth Canada and abroad—in all more than 230individuals. All gave unstintingly of their timeand wise counsel. Our debt to all these peopleand organizations is great and we acknowledgeand thank them for their contribution.

Although we cannot mention all those who helpedus, we would be remiss were we not to acknowl-edge the generous help that we received from J.Colin Potts, Deputy Comptroller General, his col-leagues, the staff of CCAF, Viviane Dunn our mostcapable and energetic administrative assistant, andthe generosity of L. Denis Desautels, AuditorGeneral of Canada, for his contribution. Theunremitting support of V. Peter Harder, Secretaryof the Treasury Board, has been invaluable.

Hugh R. Hanson contributed in great measure tothe drafting of this report, and NicolePlamondon is responsible for the excellent trans-lation. Suzanne Seebach and Paul Edwards

brought their considerable creativity to the pro-duction of this report.

We reserve our last and most special appreciationto Michael S. Weir, who served as Secretary tothe Panel, for his tireless work, professionalismand good humor throughout. He has made amajor contribution to this report and our taskwould have been immensely more difficult with-out him.

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E x e c u t i v e S u m m a r y

This section presents a highly condensedsummary of the main points of this report.

The ideas presented in this report are the productof the deliberations of the Panel and take intoaccount careful and extensive consultation with awide range of executives and professionals in theGovernment of Canada, and the advice of rele-vant professional associations.

The Government of Canada is undergoing rapidand significant change in the ways in which itboth goes about its businesses, and chooses tomanage itself. In recognition of and in responseto this change, the government has implementedreforms to the ways in which it manages expendi-tures. It continues to make important changes inthe areas of business planning, resource alloca-tion, financial management, financial and non-financial reporting, executive development andrenewal, and service delivery methods.

Comptrollership is not new to the government.Over the years its face has changed in response tothe growth and complexity of government, tech-nology and managerial philosophies and tools.

Fundamentally, comptrollership in the govern-ment has focused on financial controls andaccounting, and has been regarded largely as thepreserve of functional specialists. Helping man-agement to ensure that spending is withinapproved levels and for authorized purposes, andthat revenue collections are properly processed,has been the stock in trade of comptrollership.

Many of the fundamental conditions and assump-tions of the past no longer apply. Managementneeds are different and comptrollership has toadapt. Much has been done or is underway; nev-ertheless, embracing modern comptrollershipwill involve dramatic further change and a quan-tum leap.

A N E W P H I L O S O P H Y A N D

A P P R O A C H I S N E E D E D

Fundamental change is the key message of thisreport.

Comptrollership is a management

responsibility

Comptrollership goes to the heart of executive andmanagerial responsibilities at the top, and through-out the organization. Comptrollership is not some-thing that can be delegated entirely to specialists.

It is important to understand where comptroller-ship is situated in the work and responsibilities ofmanagement. The work of managing consists offour elements: planning, organizing, integratingand measuring.

Executives and general managers and their sup-porting specialists and professionals throughoutthe government are being challenged in all of theabove areas. In particular they cite the followingas areas that increasingly demand managerialexcellence:

• the accomplishment of solid results usingnew delivery approaches and working withfewer people

• identifying priorities and assigningresources to them

• adopting and deploying new approaches tomaintain meaningful control and account-ability, both in their own departments andwhen using alternative service deliveryarrangements

• ensuring that appropriate values attendthese new arrangements

• managing, receiving and using meaningfuland reliable performance information

• reporting, explaining and being account-able for results as well as processes andinputs

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Execut ive Summary

• matching more creative and client-drivendecision making and business approacheswith solid risk management and ethical values

• creating an environment in which takingrisks, with the resulting consequences, arehandled within an appropriate frameworkof delegation, rewards and sanctions.

Comptrollership is a set of principles under-pinned by a guiding philosophy that describeshow management wishes to carry out the stew-ardship dimension of its responsibilities to theinstitution and its governing body. Accordingly, itmust be embedded, in some measure, in everymanagement activity.

Comptrollership needs to be put into

harmony with the overall

management direction of the

government

The single most important change proposed inthis report is a move to a new guiding philosophyfor comptrollership. In very general terms, it isproposed that the philosophy guiding comptrol-lership move from a “command/control” orienta-tion to a more contemporary one, sometimescalled “loose/tight.” A “loose/tight” orientationcombines a strong commitment to central stan-dards and values and achievement of plannedresults, with flexibility regarding processes andoperational approaches.

Comptrollership is an integrating

function

Comptrollership should be understood and orga-nized to contribute an important element of inte-gration in management’s diverse responsibilitiesin the areas of financial and non-financial perfor-mance information, budgeting, resource alloca-tion, control and risk management.

Comptrollership involves:

• seeking out and bringing together relevantinformation from different sources—bothwithin and without the departments andfor the government as a whole

• assembling this information into a suffi-ciently comprehensive whole that supportsthe results-oriented approach of the gov-ernment

• relating information to the needs of differ-ent decisions

• supporting performance reporting respon-sibilities.

Integration is not an easy task. It has its technicaldifficulties, and they are significant. It also hassignificant behavioral and organizational dimen-sions, and may involve changing past informationflows and attitudes.

Comptrollership is management

centered but should also contribute to

effective governance

While comptrollership is a management respon-sibility, virtually all of the senior executives andprofessionals with whom the Panel came intocontact share the view that effective comptroller-ship should also provide a measure of value insupporting the interests and responsibilities ofmembers of the governing body. An importantaspect of this support is the information thatelected officials receive in discharging theirresponsibilities.

The above observation was always accompaniedby the comment that care should be taken not tothink of comptrollership as a governance func-tion. This is an important caution and one withwhich the Panel strongly agrees.

Comptrollership must be embedded

in the management culture

Comptrollership has a philosophical underpin-ning and an important cultural dimension.Therefore, for the proposed change to succeed, afundamental change in the “culture” of the orga-nization as it relates to comptrollership is essen-tial. This requires a clear articulation of this newphilosophy in the institution’s mission, and acommitted “buy-in” by all of the players. In verysimple terms it requires a new mind-set for how

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each individual goes about his or her job. Thereshould be an expectation that every manager willhave a comptrollership mind-set.

Comptrollership needs to be strong at

the departmental level and at the

center

Comptrollership is more than a new mind-set. Itrequires an appropriate level of capacity andeffective distribution of responsibilities betweenthe center and departments.

The Panel recommends strength at both the cen-ter and in line departments. The Panel believesthat deputy heads of necessity will be in the van-guard in the shift to modern comptrollership. It isdeputy heads who are responsible to put in placeappropriate organizational arrangements and tocreate the mind-set of executives, managers andother employees in their departments. The realbattle to achieve excellence in this field will befought and won in the departments.

At the center the Government of Canada providescorporate direction and control through severalcentral agencies, each of which has critical anddistinct responsibilities—in effect a sharedresponsibility environment. There is, therefore, aneed for clear responsibilities and, similarly, effec-tive capacity in each of the central agencies. Theresponsibilities of the center should focus on stan-dards and government-wide information, and it isin these areas in which the center’s strength lies.

A N E W U N D E R S T A N D I N G

O F C O M P T R O L L E R S H I P

I S N E E D E D

There are four key elements of modern comp-trollership. They are:

• performance information—financial andnon-financial, historical and prospective

• risk management • control systems • ethics, ethical practices and values (beyond

a focus on legal compliance).

It is these elements, taken together, that consti-tute the comptrollership mind-set referred toabove. They mean that executives and employeesof the government are:

• purposeful—focused on mission andobjectives

• information driven—using historical factsand solid projections

• proprietary in the use of resources—think-ing like an owner or taxpayer

• risk attuned—not only identifying but alsomanaging risks

• action oriented—doing analysis and provid-ing advice that influences action

• integrators—bringing together informationneeded to support decision making

• ethical—acting with integrity and probity.

V A L U E O F M O D E R N

C O M P T R O L L E R S H I P

Modern comptrollership as described abovedelivers one overall key benefit: the increasedeffectiveness of the government in fulfilling itsmission and achieving its objectives. Moderncomptrollership represents better managementwhich will produce:

• balanced excellence in policy developmentand administration

• an enhanced ability to adopt newapproaches to conducting public business

• an enhanced ability to achieve the govern-ment’s policy agenda—to define and attainpublic objectives

• a better administrative capacity to serve thepublic interest

• support for the governance responsibilitiesof elected officials.

B E N C H M A R K S O F

M O D E R N


The Panel was asked to indicate its view on how toascertain whether modern comptrollership has

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been attained. The following should be consideredas three results-oriented benchmarks that wouldindicate when modernization has taken place:

• rigorously prepared comprehensive perfor-mance information and problem-solvingsupport is provided to decision makers andis accepted by them as credible

• standards—for performance information,budgeting and control—exist which areadaptable to the needs of departments andthese standards have been implemented inways that respond to their businesses andcircumstances—strength without rigidity.

• managers and professionals have availableto them centers of excellence to developand maintain their capacity to deal effec-tively with key aspects of comptrollership.

Two further criteria will suggest whether thedesired modernization has taken place:

• decision-makers at all levels accept andadopt comptrollership attitudes and valuesand place a premium on supporting theirdecisions with meaningful information andanalysis—a climate to foster effectivecomptrollership has been created

• specialists and professionals who areengaged in comptrollership-related activi-ties have a sound understanding of theirdepartment’s programs and services accom-panied by managerial acumen.

L E A D E R S H I P B Y K E Y

P L A Y E R S

Appropriate organizational arrangements mustbe in place to ensure that there is a meaningfulframework for comptrollership. Responsibilitiesare widely shared. In this regard, key among therecommendations for leadership are thefollowing:

DEPUTY HEADS

Deputy heads must be in the vanguard of mod-ernizing comptrollership. The center has specificresponsibilities including standards and govern-

ment-wide information. The real battle toachieve excellence in comptrollership will, how-ever, be fought and won in departments. As man-agers with overall responsibility for his or herorganization’s performance, they should:

• create an appropriate environment forcomptrollership

• organize for effective comptrollership • report on comptrollership• report—with sufficient rigor to stand the

test of audit—on financial and non-finan-cial performance on an integrated and con-solidated basis.

Deputies should expect strong support from thecenter, particularly in the areas of:

• clear standards which are adaptable to theunique circumstances and businesses oftheir departments

• reasonable expectations with respect to thefulfillment of these standards

• cohesive direction from the Treasury BoardSecretariat

• excellent counsel that recognizes uniquecircumstances

• a center of excellence to help them, theirmanagement team and the professionalswho support them to maintain appropriatecapacity.

CLERK OF THE PRIVY COUNCIL

This officer should:

• maintain a consistent and strong emphasison comptrollership in the selection andmandating processes for the government’smost senior executives

• assess and reward, or if necessary sanction,performance in this area.

TREASURY BOARD MINISTERS

In order to provide leadership and supportTreasury Board ministers should:

• create a sustained demand for integratedperformance information and provideincentives for it to be supplied

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• create a meaningful forum for resolvinglegitimate differences of view among thosewho share responsibilities for comptroller-ship

• periodically assess the adequacy of organi-zational arrangements and their fulfillment

• report annually to Parliament on the stateof comptrollership in the Government ofCanada.

SECRETARY OF THE TREASURY

BOARD/COMPTROLLER GENERAL OF

CANADA

Modernizing comptrollership and then sustain-ing excellence in it on a government-wide basisrequires a champion—the Secretary of theTreasury Board/Comptroller General. This offi-cer should:

• establish appropriate standards (and keyframeworks) for financial and non-financialinformation reporting and budgeting forthe government as a whole

• establish appropriate standards for comp-trollership in the Government of Canada asa whole

• know the extent to which the above stan-dards are met government-wide

• act to preserve these standards when needed• give effective counsel to departments to

help them meet standards and achieve theirobjectives

• provide a center of excellence to helpdepartments maintain appropriate capacity

• supply government-wide financial and non-financial performance information.

DEPARTMENT OF FINANCE

The role of this department in comptrollership isprimarily to:

• set the overall fiscal framework• participate in resource allocation decisions• influence transactions with government-

wide implications• exercise a shared responsibility for account-

ing standards.

PARLIAMENT

Parliament and its committees are in a position todemand and use accurate, complete and timelyperformance information, and to create an envi-ronment in which good comptrollership practicesare encouraged.

C O N D I T I O N S F O R

M O D E R N I Z I N G


Success will require that hearts and minds becaptured—this is not a “technical upgrade.” ThePanel identifies the following conditions thatmust be met if the government is to achieve themodernization and the benefits it wishes toobtain:

Leadership in departments and

at the center

People at the highest executive and political lev-els must recognize the need for change, under-stand the resultant benefits, give it full support,and ensure cohesion of leadership and sponsor-ship throughout the change period.

The Panel’s consultations convince it that theneed for change is already accepted in the seniorlevels of the government, accompanied by anunderstanding of the resultant benefits.

Both the scope and the pace of change that isneeded suggest that it will take several years toachieve the excellence envisioned. Certain of therecommendations in this report recognize thatreality and are designed to provide for consis-tent and cohesive leadership during that periodof time.

Clear and understood responsibilities

The report proposes a framework of specificresponsibilities that provides the needed frame-work within which elected officials, executives,specialists and professionals can achieve moderncomptrollership in the Government of Canada.

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Competency and capacity

commensurate with needs

The capacity of existing people in the system whoare associated with comptrollership must beassessed and there will need to be a willingness tomake the necessary investments.

Modernizing comptrollership calls for attentionto the skills and capacity of both line managersand functional specialists. As the Clerk of thePrivy Council points out, people make the differ-ence, not systems. In order to work in differentways they will require appropriate skills develop-ment, both formally and, most importantly, on-the-job training and experience.

Throughout the Panel’s consultations it waspointed out by executives and professionals alikethat current capacity varies greatly among depart-ments. Capacity development will therefore haveto be a critical part of the modernization effort atevery level.

Incentives

The report discusses a number of entitlementsthat are proposed to recognize excellence incomptrollership. Quite distinct from these is aneed to provide incentives to those who will beexpected to lead the change process over the nextseveral years. This should form an important partof the government’s change strategy. The follow-ing suggestions would encourage excellence inthis facet of a deputy-head’s responsibilities:

• clear linkages to career progression • linkages to compensation• latitude to operate with less oversight and

intervention from the center• support from the center when the occa-

sional thing goes wrong in an otherwisewell-functioning organization

• audit and oversight approaches that recog-nize excellence.

Deputy heads should also be entitled to theearned benefits of trust flowing from excellencein comptrollership, particularly in areas of finan-

cial and non-financial performance reporting andbudgeting. Equally, where performance in comp-trollership falls below minimum acceptable stan-dards, sanctions should be brought to bear.

Similarly, appropriate entitlements and incentivesshould be provided for the Secretary of TreasuryBoard/Comptroller General.

S U C C E S S F U L L Y

I M P L E M E N T I N G C H A N G E

Achieving the kind of change envisaged requiresthree key catalysts: a compelling imperative forchange, a clear set of progress goals and measures,and sustained drive by top management. If thePanel’s challenge is accepted by the government,top management will have to step up to meet it.

Key determinants of success are:

• full acceptance at the political level of theimplications of the proposals and therequirements of modern comptrollership

• relentless and visible commitment by theClerk of the Privy Council to the initiativeand to holding deputy heads accountablefor discharging their comptrollershipresponsibilities

• patience and tolerance—while maintainingthe pressure for change—from those judg-ing performance

• acceptance by deputy heads of their comp-trollership responsibilities and their partici-pation in the modernization mechanismsproposed in the report

• strong and effective communications withall those who are affected by the change

• visible application of incentives and sanc-tions for performance at the individuallevel and greater management freedom forgood performance on the corporate level

• adherence to, and measurement against,the interim goals for implementation

• stability of leadership and sponsorship forthe initial implementation period.

All of the above are provided for in the recom-mended agenda for action.

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M A K I N G P R O G R E S S —A N A G E N D A F O R

A C T I O N

To embed modern comptrollership in theGovernment of Canada, the Panel recommendsthat:


• endorse and adopt a modern view of comp-trollership

• endorse the proposed allocation anddescription of responsibilities

• provide leadership for the modernization ofcomptrollership and report to Parliamenton the state of comptrollership.


• maintain a consistent and strong emphasison comptrollership capability and inclina-tion in deputy ministerial and aspirantdeputy ministerial selection, mandating andassessment processes.

SECRETARY OF TREASURY BOARD

AND COMPTROLLER GENERAL OF

CANADA

• develop and implement a plan for progress,including provision for the establishmentof a group of lead departments to spear-head the modernization effort

• establish and staff centers of excellence tosupport the capacity development and advi-sory needs of departments

• develop, in consultation with lead depart-ments, appropriate standards for comptrol-lership and for financial and non-financialbudgeting and reporting

• establish an implementation task force, astandards advisory board, and a comptrol-lership council .

DEPUTY HEADS

• embrace their responsibilities for moderncomptrollership

• assess their current comptrollership envi-

ronment, structures, processes and peopleagainst the vision set out in this report,their strategic priorities, and other depart-ments

• develop department-specific priorities formodernization

• secure commitment of their senior man-agement groups to action plans and timeta-bles for modernization

• communicate their priorities and plans formodernizing comptrollership to TreasuryBoard, the Auditor General, and to the rel-evant Parliamentary standing committee

• drive the modernization process and reporton progress.

T H E R O L E O F T H E

A U D I T O R G E N E R A L

Responsibility for managing and reporting, andfor modernizing comptrollership rests with theadministration. As Parliament’s auditor, theAuditor General of Canada is a natural championof effective comptrollership throughout the fullspectrum of the government’s organization andactivities. The work of the Auditor General hasfrequently focused on this area and the Panel’sconsultations with the Auditor General re-affirmed his strong, ongoing interest, in con-tributing to the advancement of modern comp-trollership. The Auditor General can supportelected officials’ governance and oversightresponsibilities by providing Parliament withassurance about:

• the reliability and completeness of theinformation it receives from managementrelating to performance; and

• the realization of progress in modernizingcomptrollership.

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Most of the change we think we see in life is due to truths being in and out of favor.

Robert Frost

Change the environment; do not try to change man.

Richard Buckminster Fuller

Service to Canada and Canadians … Public servants must constantly renew their commitment to serve Canadians by enhancing

the quality of service, by adapting to changing needs and by improving productivity.

Jocelyne Bourgon, Clerk of the Privy Council and

Secretary to the Cabinet

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Part I

M o d e r n i z e d C o m p t r o l l e r s h i p

This part of the report:

• explains the principal questions the Panelwas asked to address

• explains how comptrollership has beenunderstood in the past

• presents an assessment of whether the tra-ditional understanding of comptrollershipneeds to be reappraised and why

• suggests three major factors that shouldunderpin a modern understanding of, andapproach to, comptrollership

• proposes what comptrollership should beassociated with and should support

• creates a context for the balance of thereport, which deals with managerial andorganizational issues

• presents a view of the current status com-pared to the vision suggested.

W H A T W A S T H E

P A N E L ’ S T A S K ?

On November 25, 1996, TreasuryBoard President Marcel Masséannounced the creation of theIndependent Review Panel onModernization of Comptrollershipin the Government of Canada.

In his announcement he said: “We are creatingthe Panel because of the profound changes thegovernment is undergoing in how it operates, theresources available to it, and the challenges, risksand opportunities facing it. The government iscommitted to providing Canadians with moderncomptrollership to manage governmentresources.”

Key among the several questions that the Panelwas asked to address are:

Has/is anything changing in the way inwhich the government goes about theconduct of its business(es) that suggests

traditional assumptions need to bechallenged or changed?

What comptrollership needs are suggestedby the above?

What factors will be critical to successfulmodernization?

The Panel’s full terms of reference as well as adescription of how it approached its task are con-tained in Appendix 3.

H O W H A S C O M P T R O L -L E R S H I P B E E N U N D E R -S T O O D I N T H E P A S T ?

The first job of the Panel was to understand whatcomptrollership has been in the past and why itdeveloped that way.

Comptrollership is not new to the Governmentof Canada. Over the years its face has changed inresponse to growth and complexity of govern-ment, technology, managerial philosophy, etc.

Fundamentally, comptrollership in the govern-ment has focused mostly on financial controls andaccounting and has been regarded as largely thepreserve of functional specialists. Helping man-agement to ensure that spending is withinapproved levels and for authorized purposes, andthat revenue collections are properly processed,has been the stock in trade of comptrollership.This is an important benefit that managementdoes not want to lose.

Over many years a rules-driven and process-ori-ented approach has generally characterized theseactivities. Central agencies have played a domi-nant role in both developing detailed processesand administering the controls.

12

Part IModernized Comptrollership

Modernize

v.t. to change, in order to bringinto harmony with modern

tastes and standards.

The New Lexicon, Webster’s

Encyclopedic Dictionary of

the English Language

13

Canadian Comptrollership A Chronology of Key Events

1931 Government centralizes financial administration, creates Comptroller of Treasury to maintain commitmentcontrol, verify invoices

1951 Financial Administration Act (FAA) to promote prudence & probity in expenditures

1962 Royal Commission on Government Organization (Glassco) concludes that the methods found effective for themanagement of the relatively compact organization of the pre-war days cannot control without extensive alteration, the vastcomplex that has come into being in the last twenty years … It recommends that … Departments … be given thenecessary financial authority and be held accountable for … effective management of the financial resources placed at theirdisposal. (let the managers manage)

1966 Treasury Board Secretariat split from Department of Finance

1969 FAA amended to place primary responsibility for accounting, budgetary and financial control in hands of deputyheads of departments and agencies. Office of Comptroller of Treasury abolished. Cheque issue and paymentfunctions assigned to Receiver General

1969 Treasury Board implements Program Planning and Budgeting System (PPBS) to relate spending to results andgoals, to provide a resource accountability in departments and to Parliament, and to provide a three-year rollingexpenditure management framework

1976 Auditor General concludes Parliament and indeed government has lost or is close to losing effective control of thepublic purse. Government appoints Royal Commission on Financial Management and Accountability (Lambert)

1977 Government creates Office of the Comptroller General

1977 Government amends Auditor General Act, extends audit coverage to matters of economy and efficiency,measurement of effectiveness

1978 Government issues standards for internal auditing

1979 Lambert Royal Commission reports with over 160 recommendations. Some of these recommendations wereimplemented but many were not. Report cites growth in government is straining system of management andweakening accountability.

1979 Government introduces Policy and Expenditure Management System (PEMS) to replace PPBS

1981 Part III Estimates introduced to provide better departmental information for Parliament

1981 Government introduces Guidelines for Program Evaluation

1985 (Nielsen) Task Force conducts review of programs to ensure relevance, efficiency and effectiveness

1986 Government introduces Increased Ministerial Authority and Accountability Initiative, to relax level of detailedrules and pre-approvals in return for greater accountability

1989 Government announces Public Service 2000—a public service renewal initiative

1989 Changes to the Operational Planning Framework which describes how departments and agencies allocate resources

1993 Office of the Comptroller General combined with that of Secretary of Treasury Board

1994 Program Review initiated to confirm relevance and affordability of programs and appropriateness of programdelivery mechanisms. Key tests applied:

• Is the program still in the public interest?• Is its delivery a legitimate and necessary role for government?• Is the current federal role appropriate or should the program be realigned with the provinces?• Should it be delivered in partnership with the private or voluntary sector?• How can it be redesigned for efficiency?• Is it affordable, given fiscal constraints?

1994 New Expenditure Management System to provide better control of overall spending levels, more focus on long-term departmental plans, and better information for Parliament

1997 Government announces reorientation of Treasury Board to Management Board. Major implication is a re-focusing of attention from specific transactions to wider issues of direction and business plans.

In these circumstances and until recently, thisview of the role of comptrollership was generally,if not universally, considered to fill the needs ofthe government. Indeed, in some areas, such asfinancial reporting and related policies, Canadahas been viewed as a world leader.

Recent initiatives associated withcomptrollership are challenging itshistorical focus. For example, thecurrent trend engages comptroller-ship in non-financial as well as finan-cial performance reporting. Thelinkage of financial and non-financialinformation serves not only the pur-pose of understanding the past orkeeping score, but also, and moreimportantly, the purpose of support-ing decisions about the future.

As comptrollership moves in this direction, itnecessarily engages practitioners in areas wherethe level of precision with which they have been

comfortable is unattainable, both because of theuncertainties of the future, and because the mea-surement conventions for non-financial aspectsof performance are not as well developed. Inthese circumstances, the emphasis shifts fromaccuracy to the relevance of information—noteverything that counts can be measured, and noteverything that can be measured counts.

Simultaneously, there is a trend to more general-ized central controls and greater expectations fordepartments and agencies to fulfill comptroller-ship responsibilities. In short, there is a moveaway from reliance on detailed rules, centrallyprescribed processes, and central approval ofindividual transactions as the cornerstones ofeffective comptrollership.

D O T R A D I T I O N A L

A S S U M P T I O N S N E E D

T O B E R E A P P R A I S E D ?

The Government Canada is undergoing rapidand significant change in the ways in which itboth goes about its business and chooses to man-age itself.

There are a number of reasons for these changes,of which fiscal restraint is among the most obvi-ous and perhaps the most significant. Others,some of them related to this factor, include:

• significant public resistance to greater taxa-tion

• less confidence that government can meetperceived needs to the same degree as inthe past

• changing demographics—and consequentneeds

• greater interdependence between govern-ments

• a changed economy • opportunities and challenges arising from

changing technology.

In a recent speech, the President of the TreasuryBoard of Canada included the following points inhis vision of the government’s future. It will be:

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A M O N G T H E R E A S O N S W H Y

C O M P T R O L L E R S H I P H A S B E E N

W H A T I T H A S O V E R T H E

Y E A R S A R E T H E F O L L O W I N G :

• a relatively high degree of stability in management struc-tures, workforce, and in the level and type of services pro-vided by government

• the assumption that low-risk thresholds are desirable, if notessential, and that comptrollership will be exercised in, andshould promote, a relatively low-risk environment

• a related risk-management assumption that comptrollershipwill be exercised in the milieu of a vertically integrated poli-cy maker, service provider, and regulator

• the availability of personnel to maintain control systemswhose strength is characterized by a hierarchical approachto transaction control at every level

• an environment in which excellence in policy formulation wasthe predominant responsibility at the deputy ministerial level

• an environment in which, for the most part, the same rulesapply to all those involved in the system, regardless of per-formance.

To be relevant, thecomptroller must move

from being a reporter ofthe past to be more a

forecaster of a future thatis increasingly non-linear.

Vice President, Finance

Private Sector

Corporation

• smaller • focused on directions, values and results• a consensus builder and communicator of a

national vision around the public interest• focused on the client, the citizen and the

taxpayer• a more effective partner.

From the outset it was clear to the Panel that thegovernment has gone well beyond the stagewhere the need for change is being discussed—itis well into the process of implementing change.These changes are not marginal—they are signif-icant—and will have a profound impact on feder-al public administration. For example, the gov-ernment:

• is already a smaller organization with feweremployees to meet the still very high ser-vice demands and expectations ofCanadians

• is adopting alternative ways to deliver itsservices

• has changed the ways in which it goesabout expenditure management with tangi-ble and encouraging results

• has invested a great deal of energy inassessing the extent to which programsmerit continuation and funding, and whattheir directions should be

• has implemented important and difficultdecisions about programs and public ser-vants as a result of the above.

All of these and other factors—such as the demo-graphics of the public service itself—have led thegovernment to undertake not only fiscal andexpenditure management reforms, but also initia-tives to ensure strong management capacity forpresent and future needs. One of the most promi-nent and important of these initiatives is “LaRelève”, being spearheaded by the Clerk of thePrivy Council, to ensure the ongoing strength ofthe public service executive cadre.

No one with whom the Panel consulted failed topoint to the short and longer-term significance ofthe matters discussed above. Public servantsclearly recognize that these changes give rise to

new opportunities, and change the risk exposureof government. As the nature of the riskschanges, managers need more sophisticated toolsto manage them. They recognize that managingin today’s government context requires a boldnew approach. The fundamental conditions andassumptions of the past no longer apply.Management’s needs, are different and comptrol-lership has to adapt.

The changed circumstances and needs of manage-ment convinced the Panel that there must be aprofoundly different approach to comptrollership.

Adopting and internalizing a modern under-standing of comptrollership, followed by solidprogress in giving it life, will help the govern-ment, its executives and its employees to governand manage well and meet their goals and objec-tives. Most importantly it will help them to effec-tively serve the interests of Canadians and main-tain their trust and confidence in the nationalgovernment as it moves into the new century, as avery different organization from the past.

W H A T M A J O R F A C T O R S

S H O U L D A F F E C T A

M O D E R N A P P R O A C H T O

C O M P T R O L L E R S H I P ?

Having concluded that important change hastaken place that warrants reappraisal of how weinvoke comptrollership, the next question thatthe Panel engaged was what issues comptroller-ship should respond to or be driven by. Threeperspectives that ought to drive comptrollershipemerged from the Panel’s consultations:

• values• management imperatives • support to governance.

Each of the above is commented on briefly below,and each has been incorporated in the Panel’sview of matters that ought to be associated withmodern comptrollership.

15

E x t r a c t F r o m

Fourth Annual Report

toThe Pr ime Min ister

onThe Publ ic Serv ice of Canada

by Jocelyne Bourgon, Clerk of the Privy Council and Secretary to the Cabinet

F e b r u a r y 3 , 1 9 9 7

As we move forward, it will be important to protect the capacity of the Public Service to servethe public interest. The values of serving in the public interest and of supporting a parliamen-tary democracy will always remain central to the role of the public sector. In the past, as inthe future, these values are the foundation of the public sector.

Loyalty to the public interest as represented and interpreted by the duly elected government of the land -Loyally helping ministers, under the rule of law, to serve the public good. This requiresrespect for fundamental democratic values, such as accountability to ministers and, throughthem, to the citizens of Canada; support for the government of the day; and respect for therule of law and due process.

Service to Canada and Canadians - This is about values such as excellence, professional compe-tence, quality and efficiency. Public servants must constantly renew their commitment toserve Canadians by enhancing the quality of service, by adapting to changing needs and byimproving productivity.

Ethical values such as honesty, integrity and probity - While these values are no different fromthose found in other sectors of society, they take on a particular meaning in the PublicService, where they mean the ability to hold a public trust and to put the common goodahead of any private or individual self-interest.

People values such as fairness and equity - Because citizens in a democracy are equal bearers ofrights and duties, it is a principle of public service that citizens should be treated equitablyand not with special favor to some. Balancing the interests and preserving the rights of citi-zens in a fair and equitable manner is fundamental to public service.

VALUES

Comptrollership is first and foremost a manage-ment responsibility and, like all important man-agement responsibilities, it should be temperedby the basic values that an organization holds foritself, its management and its employees. It

should both respond to these values and reflectthem in its execution.

In her Fourth Annual Report to the PrimeMinister, the Clerk of the Privy Council andSecretary to the Cabinet summed up these values.

16

They engage notions of:

• accountability • service quality and efficiency • responding to change• stewardship and public trust• principles of fairness and equity in all deal-

ings with all Canadians.

All of these values depend for their practical ful-fillment on both people and the information thatthey have to support the exercise of their respon-sibilities. Comptrollership should contribute tothe attainment of these values in practice, withparticular emphasis on information.

MANAGEMENT IMPERATIVES

Executives and general managers, and their sup-porting specialists and professionals throughoutthe government, are being challenged in all of theabove areas. In particular, they cite the followingas areas that increasingly demand managerialexcellence:

• the accomplishment of solid results usingnew delivery approaches and working withfewer people

• identifying priorities and assigning scarceresources in support of them

• adopting and deploying new approaches tomaintain meaningful control and account-ability both in their own departments andwhen using alternative service deliveryarrangements

• ensuring that appropriate values attendthese new arrangements

• managing, receiving and using meaningfuland reliable performance information

• reporting, explaining and being account-able for results as well as processes andinputs

• matching more creative and client-drivendecision making and business approacheswith solid risk management

• creating an environment in which takingrisks and the consequences of doing so arehandled within a mature framework of del-egation, rewards and sanctions.

Each is a central concern of management.Ultimately, these matters are also of concern andinterest to ministers and Parliament. To be rele-vant and provide value, comptrollership shouldmake a material contribution to management’sefforts to deal successfully with these issues.

One such issue—risk and risk management—is ofspecial importance and concern. Executives andothers have to varying extents cited the followingas risk-related questions with which they must deal:

• Is capacity and ability to manage risk atevery level commensurate with fewer rulesand more discretion at the working level?

• Is there inherently a higher degree of riskassociated with the delivery of serviceswhen the government is not the direct ser-vice provider?

• What new risks does new technology intro-duce in how employees do their work, formjudgments, and make decisions?

• What new risks are introduced by limita-tions in the availability of human, fiscal orcapital resources?

• What risks, if any, do re-structuring anddownsizing introduce to the values andbehaviors of those who work in the govern-ment, or for it?

• Do decisions about divestment tend to beriskier (in terms of product, program orservice failures and inability to meet mis-sion objectives and public expectations)than ones dealing with investment?

• Do the pace of and pressure for changeincrease risks significantly?

SUPPORT TO GOVERNANCE

While comptrollership is a management respon-sibility, virtually all of the senior executives andprofessionals with whom the Panel came intocontact share the view that effective comptroller-ship should also provide a measure of value insupporting the interests and responsibilities ofmembers of the governing body. An importantaspect of this support is the information thatelected officials receive in discharging theirresponsibilities.

17

The above observation was always accompaniedby the comment that care should be taken not tothink of comptrollership as a governance func-tion. This is an important caution and one withwhich the Panel strongly agrees.

From the literature, five key responsibilitiesemerge for governing bodies of organizations ofall kinds. These have been cast in the context ofthe Government of Canada and, during thecourse of consultation, have received generalagreement. They are:

• ensuring the relevance of policies to theneeds of Canadians and the appropriatenessof the ways in which programs and servicesare provided

• ensuring an appropriate level of resourcesand leadership to implement policy andmanage the affairs of the government

• understanding the risks associated with thetype, level and quality of the services gov-ernment decides to (or not to) provide,whether directly or indirectly, and ensuringthat appropriate means are in place to man-age these risks

• explaining to Canadians what the govern-ment set out to accomplish, what has beenaccomplished, and the choices that havebeen made, and why

• ensuring that public affairs are managedwith an appropriate degree of care andcontrol, and within an appropriate frame-work of ethics and values.

In our system, Parliament, Cabinet and its com-mittees, individual ministers, and senior publicservants have distinct responsibilities.

Parliament’s role is to legislate and hold theadministration to account; ministers have theresponsibility of government; and public servantsadvise ministers and carry out their will. Thus ingeneral terms, ministers determine what is to bedone, and public servants are responsible for howthat happens.

In this context, it is inevitable and desirable thatmany of the interests of public servants and thoseof the governing body will converge, and a signif-icant interdependence will develop between thetwo. It’s not a matter of one intruding on theother’s distinct responsibilities, but rather recog-nizing the need for cooperation and trust in mat-ters having to do with stewardship.

To the extent they judge governance to includethe matters listed above, members of the govern-ing body will not only have an interest in them,but will wish to ensure that they have fulfilledtheir responsibilities for such matters with duediligence. Modern comptrollership must be in aposition to support these governance interests.

W H A T I S M O D E R N

C O M P T R O L L E R S H I P ?

There is no single definition of comptrollershipin the literature—there are many. The conceptsand methods of comptrollership and control arevaried and changing. As was once said of account-ing by one of Canada’s most respected CharteredAccountants, the late J.R.M. Wilson, “ …accounting, unlike a science, has no rules that arein the nature of fundamental truths … judgmentis necessary at every step.”

The Panel approached comptrollership from a“demand” perspective, working from the needs ofsenior public servants, ministers and Parliament.The Panel was influenced by the representationsmade in the submissions it received, and that forthe most part were consistent in suggesting whatmodern comptrollership in the Government ofCanada should comprise.

One area where the interests of senior managersand governors coincide is the need to have confi-dence in the effectiveness and integrity of the sys-tems used to administer programs, and in theaccuracy and completeness of information aboutthat administration. It is to foster such confidencethat comptrollership finds its role.

18

In one way or another, all of the views aboutmodern comptrollership that appear in the side-bar link it to the important values, managementimperatives and governance responsibilities citedearlier. Moreover, all who were consultedexpressed similar views. They also thought that itwas by successfully supporting these responsibili-ties that real value can be obtained from invest-ment in comptrollership.

Executives and elected officials all recognize andvalue the contribution that comptrollership hastraditionally provided in ensuring the integrity offinancial administration. They don’t want to losethis. At the same time there is a widespreaddesire on the part of executives and professionalsto transform comptrollership in ways that willensure that it helps them achieve their manage-ment and operational objectives. This change isthe value added that so many want to obtain.

It is not the intent of this report to either pre-scribe or identify all the specific activities that,taken together, comprise a modern comptroller-ship function. To do so would involve enumerat-ing hundreds if not thousands of specific tasks,activities and responsibilities, and would obscurethe view of the forest by the presentation of toomany trees. Moreover, to do so would be to runcontrary to the widely expressed view that what isneeded is a framework and not an instructionmanual. This recognizes the reality of differencesamong organizational units of the governmentand their businesses. The flexibility to adapt tospecific circumstances will be important.

The Panel believes modern comptrollershipis about ensuring that:

• management decision making has thebenefit of rigorous, complete and inte-grated financial and non-financial, histor-ical and prospective performance infor-mation as well appropriate advice, analy-sis and interpretation of this information

• the oversight, accountability and publicreporting responsibilities of elected offi-cials are supported by rigorous, com-

19

… the function of comptrollership has developed from financialcomptrollership to performance comptrollership … (with)responsibility for a wide range of stewardship, risk-management,performance measurement and accountability matters. Canadian Institute of Chartered Accountants

The Comptrollership function … should act as a key integrationmechanism by virtue of which importance is placed not only oncontrols, but also on having a rigorous approach to management.CGA Canada

Comptrollership refers to the capabilities that an organization musthave to provide accurate, relevant, understandable and timelyinformation that it can use to determine, report and provide advice on:

• its financial situation;• the results achieved for costs incurred; and• the management and mitigation of related financial and

operational risks.Office of the Auditor General of Canada

Comptrollership, in its current application, can convey a broaderconcept than the historical, financial, and regulation based controlconnotation of a couple of decades ago.Society of Management Accountants of Canada

The comptrollership function through the comprehensive strategicmanagement process provides a value-added approach and supportsorganizational alignment and effective decision making. Thestrategic management process identifies desired direction, buildscommitment and ownership, establishes strategic objectives, developsaction based on the need to achieve results, provides measurement tobalanced score cards and performance indicators, and supplies thenecessary accountability.The Association of Public Service Financial Administrators

Comptrollership is about vigorous stewardship of public resources, a high standard of ethics, and provision for appropriateParliamentary oversight.Hon. Marcel Massé, President of the Treasury Board of

Canada in Getting Government Right

We define comptrollership broadly . . . as the process of acquiringresources and using them effectively and efficiently in theaccomplishment of an organization’s purpose and objectives. Society of Management Accountants of Canada

plete and integrated financial and non-financial performance information

• a mature risk management environmentis created and sustained

• control systems are appropriate to man-agement needs and risks

• ethics, ethical practices and values (beyonda focus on legal compliance) are in place.

Successfully implenting the proposed approachto comptrollership requires first and foremost anunderstanding and acceptance of the implicationsthat such an approach involves. There are twoprimary implications. One has to do with howcomptrollership is perceived, and the other has todo with how its organized.

Managerial thinking: One important implica-tion will be that in a number of importantrespects, the proposed approach will require sig-nificant changes in thinking. Comptrollership ofthe kind proposed will come about and providevalue when executives, managers and personnel atall levels adopt “comptrollership attitudes”—when these attitudes become pervasive in the sys-tem and when they become a way of life. It is notabout “implementing a system” but in large partmoving to a way of thinking. There are threemanagerial considerations dealt with in part 2 ofthis report that have special importance:

• viewing comptrollership as a way of actingbased on a defined mind-set

• viewing comptrollership as being manage-ment-centered

• viewing comptrollership as an integratingfunction.

Organizational arrangements for assigning

comptrollership responsibilities: Achievingcomptrollership of the type proposed also meansensuring an appropriate framework of identifiedresponsibilities and their assignment to the rightpeople. The framework needs to include refer-ence to the respective roles and capacities ofdepartments and central agencies of government.

Part 3 of this report identifies the principalresponsibilities that should be associated with

comptrollership and presents the Panel’s view ofthe appropriate distribution of these responsibili-ties between the center and departments. Part 4of this report deals with the specific assignmentand certain key aspects of these responsibilities.

H O W M U C H O F A N

A D V A N C E I S N E E D E D ?

As stated earlier in this report, there are a num-ber of initiatives that are currently underway.These are in a variety of areas dealing with finan-cial and management control, performanceinformation and reporting, budgeting and esti-mates, information technology, capital assetmanagement, contracting management andother areas including human resource manage-ment. A list of certain of these is presented in theillustration on the next page.

Each of these initiatives will affect comptroller-ship in the Government of Canada. Each has thepotential to make an important contribution tothe modernization of comptrollership in theadministration. Each is integral to modern comp-trollership and will need to be implemented suc-cessfully. Indeed, it is fair to say that, were theynot already being acted on, this report wouldhave suggested many of these systemic and pro-cedural developments. It is also recognized thatmany important challenges still remain to be met.Some of these lie within the ambit of what havebeen the traditional comptrollership areas, suchas cost accounting (this is gaining new impor-tance in the context of user fee initiatives) or theincreased level of judgment involved in the pro-posed adoption of accrual accounting.

With these improvements underway, the ques-tion then is how best to characterize the nature offurther progress that will be needed. Will thedesired end point come as a result of successfullybringing to fruition these initiatives? The Panel isof the view that the answer to this question is no.A quantum leap forward is needed.

That leap forward will be mostly centered onachieving in practice the notion of management-

20

centered comptrollership and will have to beaccompanied by a commitment to new responsi-bilities. The challenge will lie in managerial andprofessional capacity development, the acceptanceof new responsibilities, and the development ofmaturity in acting on these responsibilities.

21

S O M E S I G N I F I C A N T

I N I T I A T I V E S

U N D E R W A Y

Transparency and open government

• Improved reporting to parliament • Annual report to Parliament on results

management and accountability• Government performance indicators

Improved services to citizens

• Alternative service delivery mechanisms• Integrated delivery methods• Quality service initiative and service

standards

Better decision-making

• Program reviews• New expenditure management system• Regulatory review

Managing inputs and processes

• Financial information strategy• Information technology management

Human resource management

• “La Relève”

23

Part II

A n c h o r i n g C o m p t r o l l e r s h i p i n

M a n a g e m e n t T h i n k i n g

A chieving the kind of comptrollership pro-posed requires that it be anchored in man-

agement thinking. The following are threeanchor points for modern comptrollership in theGovernment of Canada:

• view comptrollership as a way of actingbased on a defined mind-set

• view comptrollership as being manage-ment-centered

• view comptrollership as an integratingfunction.

A W A Y O F T H I N K I N G

A N D A S T A T E O F M I N D

Like so many other things, comptrollership mightbe described as both an art and a science. Aboveall, it is a human function, and as such might alsobe characterized as a defined mind-set. It con-notes commitment on the part of executives andothers to be prepared, not only to seek informa-tion and to countenance and encourage challenge,but also to act on the logical outcome of that chal-lenge. This willingness to act is as much a part ofsuccessful comptrollership as anything else.

Advice and challenge

Comptrollership goes beyond generating infor-mation and analysis. It extends to advising onhow best to interpret the information and its lim-itations, if any.

Introducing into the management decision-mak-ing process the kinds of information contemplat-ed above will greatly facilitate constructive con-sideration and evaluation of management propos-als. Based on reliable information, such chal-lenges may come in part from those who providethe information and in part from members of themanagement team who have been provided withit. However they may arise, the purpose of suchchallenges is to ensure that the best available

decisions are made and that organizations contin-uously strive to improve performance. It followsas surely as thunder does lightning that an envi-ronment in which such challenges are viewed asboth healthy and helpful is essential if any value isto accrue from the investment in information andcomptrollership.

A M A N A G E M E N T -C E N T E R E D F U N C T I O N

Comptrollership goes to the heart of executive

and managerial responsibilities at the top and

throughout the organization

Comptrollership is not something that can bedelegated entirely to specialists.

It is important to understand where comptroller-ship is situated in the work and responsibilities ofmanagement. The work of managing consists offour elements: planning, organizing, integratingand measuring.

Comptrollership is a set of principles under-pinned by a guiding philosophy that describeshow management wishes to carry out the stew-ardship dimension of its responsibilities to theinstitution and its governing body. Accordingly, itmust be embedded, in some measure, in everymanagement activity.

The single most important change proposed inthis report is a move to a new guiding philosophyfor comptrollership. In very general terms, it isproposed that the philosophy guiding comptrol-lership move from a “command/control” orienta-tion to a more contemporary one, sometimescalled “loose/tight.” A “loose/tight” orientationcombines a strong commitment to central stan-dards and values and achievement of plannedresults, with flexibility regarding processes andoperational approaches.

24

Part IIAnchoring Comptrollership inManagement Th ink ing

Over the years, many executives and others in thefederal government have expressed similar viewsas those noted in the quotations in the sidebar,and government policies have reflected theseviews.

It is both interesting and significant that theseviews were expressed in the context of a muchnarrower understanding of comptrollership.That understanding was sufficiently narrow that,for all practical purposes, the function couldbe—and was—assigned to financial and reviewspecialists.

As noted earlier in the report, the governmenthas expressed a set of values and vision for itself.The nature of the matters that modern comptrol-lership deals with goes to the heart of achievingthe government’s vision, and hence goes to theheart of the responsibilities of its executives at alllevels.

The vision for comptrollership that is describedin this report goes far beyond the narrow viewthat was once sustainable. It affects the wholerange of management responsibilities.

Even without the pressure of fiscal restraint, thevalues and the management vision that the gov-ernment has adopted for itself suggest that comp-trollership is in every way an important manage-ment-centered function. Both general managersand specialists will have important roles to playand will need to work closely together.

Managerial and specialist professional compe-

tencies will converge

A corollary of a management-centered approachto comptrollership is that executives and man-agers at all levels will require an appropriateexposure to and understanding of the disciplinesof the specialists who are called on to support ordeliver certain facets of comptrollership.

It is also true that to be useful and effective, thespecialists will have to gain a substantial under-standing of the programs and issues with whichline managers deal.

Comptrollership must be embedded, in some

measure, in every management activity

An issue raised in many of the consultationsrelates to where comptrollership ends and man-agement begins. The reality is that there is nosimple answer as to where the border may be.The point has been made that comptrollershipsupports a wide variety of impor-tant management responsibilities.As with other important manage-ment activities, there are numerousinterrelations and interdependen-cies that make them hard to sepa-rate from the rest. Although somepublic servants may work exclusive-ly as comptrollers or have responsi-bility to integrate various elementsof comptrollership, the concept andmany functions of comptrollershipare not exclusive to any one indi-vidual in an organization—they areshared by all.

How can individuals working with the current comptrollershipenvironment not be fearful of dismissal by following a code of ethicsor applying integrity, policy and standards to work situations?The Association of Public Service Financial Administrators

Comptrollership is principally the job of managers, but it requiresthe support of performance and review specialists as well as financialmanagers.Hon. Marcel Massé, President of the Treasury Board in “Getting

Government Right”

Managers at all levels . . . are responsible for ensuring that there issound comptrollership in their responsibility centres.CGA Canada

As soon as you start to broaden your view of comptrollership, it startsto engage deputy ministers. They have to measure the links betweenmeans and resources, evaluate and interpret indicators against thelong-term context, and recommend changes in approach.Interview with Hon. Marcel Massé

Financial officers need to beseen by line managers aspeople who actuallyunderstand the operations,help operators get the jobdone, and who link dollarsand results—not solely as theones who hold them back.A statement repeated

frequently in

consultations with

financial officers

25

The key distinction pertains to operational orprogram-related decision making. Comptroller-ship helps people to make decisions, manage risksand demonstrate accountability, but it is not deci-sion making, strategic planning, or policy settingper se.

A N I N T E G R A T I N G

F U N C T I O N

Part of the answer to the above question lies incharacterizing comptrollership as an integratingfunction—one that seeks to bring together rele-vant information generated or obtained frommultiple sources both within and without anorganization. It should bring information togeth-er into a meaningful whole and communicate it toall those who have need of it to discharge theirmanagerial responsibilities. It should also ensurethat important gaps and deficiencies in informa-tion are identified and rectified. Few organiza-tions that are “information driven in their deci-sion-making processes” have reached this posi-tion without an ability to integrate and commu-nicate performance information.

26

E F F E C T I V E


C O M E S A B O U T

W H E N :

• decision-makers at all levels acceptand adopt comptrollership attitudesand values and place a premium onsupporting their decisions withmeaningful information and analysis

• specialists and professionals who areengaged in comptrollership-relatedactivities have a sound understandingof their department’s programs andservices while demonstrating man-agerial acumen.

29

Part III

A N e w D i r e c t i o n f o r

C o m p t r o l l e r s h i p

Before turning to the assignmentof responsibilities for comptrol-

lership, it is appropriate to first iden-tify keys principles governing mod-ern comptrollership, and second todiscuss the appropriate distributionof responsibility and capacitybetween line departments and thecenter, and within the center.

S O M E K E Y

P R I N C I P L E S

Modernizing comptrollership willaffect all those who play a part inand are affected by resource alloca-tion and management in theGovernment of Canada. They areall stakeholders, and will be affecteddirectly or indirectly.

The most directly affected stake-holders include both line managersand professional staff in depart-ments and the central agencies.Successfully modernizing comptrol-lership will significantly affect theculture within which they work, theexpectations against which they willbe assessed, and the tools and tech-niques they are expected to apply ona day-to-day basis.

The intensit, and success of effortsto modernize comptrollership will

be affected profoundly by the way in which seniorofficials—elected and appointed—adopt the fol-lowing key principles identified by the Panel.

• Leadership—creating and maintaining aclimate that fosters effective comptroller-ship

• Standards—establishing, applying, tailor-ing to unique circumstances and maintain-ing—clear, adaptable, performance-basedstandards and frameworks for acceptablecomptrollership, for financial and non-financial information reporting, and forbudgeting

• Reporting—formally reporting on the dis-charge of comptrollership responsibilitiesand on financial and non-financial perfor-mance

• Clear responsibilities—clearly understand-ing and respecting the responsibilities ofthe center and of departments and agencies

• Capacity—acquiring, developing, deployingand maintaining managerial and profes-sional capacity commensurate with respon-sibilities and needs

• Recognizing performance—matchingresponsibility and authority with individualcomptrollership performance

• Acting—responding to gaps between actualperformance and expectations.

In terms of organization, the challenge is to lookat the assignment of responsibilities to all of thekey players as a whole, and not just at individualunits.

There are a number of options for the design of acomptrollership regime. These options have todo with the relative strengths, influence and rela-tionships of various players in the system. Thereis no one approach that is right in all circum-stances. Large organizations have adopted differ-ent models with success. The choice of whichmodel to adopt is strongly influenced by the man-agement philosophy and culture of the organiza-tion in question.

What is critical is that responsibility and capacitybe well matched and clearly understood. ThePanel aims for strength at both the center and inline departments so that each can contribute in

30

Part IIIA New Direct ion for Comptrollership

Any individual orcollectivity of individuals

who participates in thedecision making process ofan organization to apply

resources to theachievement of objectives isexercising comptrollership.

Society of Management

Accountants of Canada

The move from a controlfunction towards a

comptrollership function isnot only the responsibility

of financial specialists, butalso a responsibility shared

amongst specialists andline managers.

CGA Canada

The people are rarely theproblem. The systems andorganizational culture in

which they work establishesand encourages behaviors

and results.



full measure to the attainment of modern comp-trollership where it is best suited to do so. Theneed to have considerable strength and capacityin the area of comptrollership at both the centerand in line departments is consistent with thegovernment’s own organizational vision.

D E P A R T M E N T A L

R E S P O N S I B I L I T Y A N D

C A P A C I T Y

The current operat-ing environment andthe demands of mod-ern governmentrequire a strongc o m p t r o l l e r s h i pcapacity in the oper-ating departmentsand agencies.

Devolution of autho-rity and closer linksto citizens placesconsiderable empha-sis on the develop-

ment and availability of performance informa-tion, risk management techniques, and otherquantitative and analytical support for setting andachieving citizen-focused goals. As decision-mak-ing authority migrates to the front line, appropri-ate comptrollership capacity should accompanythat authority to help obtain the necessary levelsof cohesiveness, control and accountability.

Unless there is a strong capacity to make comp-trollership effective in individual departments, itis unlikely if not impossible for the governmentto achieve the overall level of comptrollershipthat it needs.

Effective comptrollership requires a soundunderstanding of the specifics of the programsand activities in question. Such knowledge residesin the operating divisions; it is not realistic toexpect the center to have this required level ofknowledge.

Departments, and particularly theirdeputy ministers, should have theflexibility and capacity to decidehow best to meet key comptroller-ship responsibilities.

C E N T R A L

R E S P O N S I B I L I T Y

A N D C A P A C I T Y

Equally, however, there is a need forstrength at the center. This is nec-essary to provide for the corporateneeds of the government, to ensuresuitable government-wide organi-zation and standards, and to helpmaintain a government-wide viewof the allocation and use ofresources in pursuit of public policyaims. General responsibilities of“the center” include:

• recommendations to Cabinetfor resource allocation

• establishing government-wideadministrative standards andpolicies

• establishing and monitoring acontrol and accountabilityframework

• advising on the machinery ofgovernment.

Comptrollership is an importantpart of these central responsibilitiesand it is integral to each one.

Comptrollership should be man-agement centered, and the respon-sibility for ensuring capable man-agement throughout the system lieswith the center. Discharging theresponsibility to set meaningfulstandards and support continuousimprovement across the govern-ment requires strong central capac-ity and high levels of expertisegeared to monitoring, advising and

31

The same principle applieswithin departments. …Managers at all levels …are responsible forensuring that there issound comptrollership intheir responsibility centres.

CGA Canada

A higher central level isneeded to establish financialmanagement frameworksand to monitorgovernment-wide issuesand multi-departmentalactivities . . . a centralperspective is necessary toenhance the managementprocess overall . . . and itspowers should reflect thelevel of risks to be managed.

CGA Canada

Broader and moresignificant delegation ofauthority from centralagencies to departmentsand within departments isan exercise in powersharing. Because powersharing directly affectsindividuals inorganizations, changes tothe authority chain benefitfrom the use of an objectiveand independentinfluencer.



We have focused oncomptrollership capabilityat the departmental levelas this is where we believethat the capability is most

needed and must bedeveloped.

Transmittal letter

accompanying submission

from the Auditor

General of Canada

responding to departments. Finally, the responsi-bilities of elected officials for their stewardship ofthe government as a whole, depends on supportthat can only be provided by the center.

THE DISTRIBUTION OF

RESPONSIBILITY AND CAPACITY

AMONG CENTRAL AGENCIES

The Government of Canada provides corporatedirection and control through several centralagencies, each of which has critical and distinctresponsibilities—in effect a shared responsibilityenvironment at the center in the area of comp-trollership. Such an environment can work effec-tively when:

• distinct responsibilities are clear to all• the distinct responsibilities add up to a

meaningful whole• the distinct responsibilities and competen-

cies of each are respected by the others• there are suitable means to develop inte-

grated solutions to resolve tensions andconflicts.

Some of the advice given to thePanel recommended consolidatingcertain central agency responsibili-ties. This advice was usually offeredas a way of resolving perceived ten-sions and unclear accountabilitiesbetween central agencies and differ-ences in the directions they some-times give. While such tensions doexist, they are not necessarilyunhealthy, and in any event areprobably unavoidable in any humanorganization. On the positive side,these tensions, when properlyplayed out, often provide an addi-tional opportunity to challengeimportant decisions.

The desired results described above are achiev-able without having to vest central direction inone agency, or undertaking major realignment ofresponsibilities among these agencies.

Just as there needs to be a substantial capacity forcomptrollership in each of the operating depart-ments and agencies and the center, there is a needfor clear responsibilities and similarly effectivecapacity in each of the central agencies to fulfilltheir comptrollership responsibilities.

* * * * *

In practice, departments and central agenciesbecome bound together through the setting andinterpretation of standards, putting in place themeans to fulfill them by departments, and theprocesses of giving and accepting information,advice and counsel. In these circumstances,responsibilities and accountability could blurwhen tested in the crucible of relationshipsbetween officials at the center and in depart-ments, Parliamentary oversight, and media andpublic attention.

32

Cabinet needs to recognizethe Comptroller General

as their principal policyadviser on matters of

control and support theComptroller General’s

authority, particularly asit relates to other Deputy

Ministers.

Canadian Institute of

Chartered Accountants

35

Part IV

A F r a m e w o r k o f R e s p o n s i b i l i t i e s

f o r C o m p t r o l l e r s h i p

This part of the report des-cribes a series of interlocking

but distinct responsibilities for keyindividuals and organizationalgroups that, in the Panel’s view,provide the needed frameworkwithin which elected officials,executives, specialists and profes-sionals can achieve modern comp-trollership in the Government ofCanada. In some cases thearrangements proposed will benew and in other cases the Panel isproposing new emphasis on exist-ing responsibilities.

In addition, this part describes cer-tain of the results or outputs thatcan be expected from exercisingthese responsibilities and theirimplications for the system. Ineffect, it describes comptrollershipby focusing on results-orientedresponsibilities.

In every area there were choices tomake. What the Panel proposes is atight-knit framework designed toachieve the overall vision describedin the previous section of thisreport. Responsibilities are identi-fied for the following:

Departmental leadership:

• Deputy Heads• Departmental Senior Financial Officers• Internal Audit

Central leadership:

• Clerk of the Privy Council• Treasury Board Ministers• Secretary of the Treasury

Board/Comptroller General of Canada

• Deputy Comptroller General of Canada• The Department of Finance• The Public Service Commission of Canada• The Receiver General and the Deputy

Receiver General for Canada

Parliamentary leadership:

• Parliament• Parliament’s Auditor—The Auditor

General of Canada

In addressing the responsibilities that should beassigned for comptrollership, the Panel had todecide on what level of detail to deal with. As wasthe case for describing comptrollership, it wouldnot be helpful or even possible to spell outresponsibilities at every level of management andspecialists in the system. It is recognized that allmanagers and specialists and indeed all publicservants are involved in resource management.The diversity of their involvement makes it bothimpractical and unwise to attempt to identifyresponsibilities at any but the highest levels.

D E P U T Y H E A D S

The principle articulated in the sidebar on thispage is not new to the comptrollership regime inthe Government of Canada. Given the broaderunderstanding of comptrollership set out in thisreport however, it will have to be applied muchdifferently. While many people in the departmentwill be involved, comptrollership is somethingthat deputy ministers will have to expect fromtheir executive colleagues, including their seniorfinancial officer, working together at the seniormanagement table. While deputies must ensurethat there is someone responsible to bring it alltogether, a comptrollership ethos will have topermeate the whole organization and its deci-sion-making process—it falls to the deputy toprovide this leadership.

36

Part IVA Framework of Respons ib il it ies forComptrollership

… comptrollership forms apart of the responsibilities

of every manager in theorganization and the

ultimate responsibility forquality of control andcomptrollership in an

organization rests with itschief executive officer.



While various organi-zational arrangements are

possible, the deputy headmust always be directly

accountable for the comp-trollership capability in his

or her department or agency.

Auditor General of Canada

Every deputy ministermust feel that comptroller-ship is part of his or her job.

quoted from an interview

with a deputy minister

Deputy heads with whom the Panel consultedstrongly endorsed this view as an essential ele-ment of modernizing comptrollership. Somehave already started to establish managementpractices designed to bring life to this view intheir departments, but recognize that there is stillmuch to do and that progress is sometimes slow-er than what they think is desirable.

The Panel believes that deputy heads should beresponsible for, empowered to act on, and heldaccountable for the following comptrollershipresponsibilities. Deputies should:

• create a comptrollership environment• organize for effective comptrollership• report on financial and non-financial per-

formance on an integrated and consolidat-ed basis

• report on comptrollership performance.

By effectively carrying out these responsibilities,deputy heads will have considerably advancedstewardship and accountability and will havemade a major contribution to effective manage-ment and good government.

CREATING A COMPTROLLERSHIP

ENVIRONMENT

Deputy heads are not (nor should they beexpected to be) experts in all of the disciplinesand business-specific areas that ultimately needto come together for effective comptrollership.As with all other important aspects of manage-ment however, deputy heads should be respon-sible and accountable for setting the tone fromthe top. Only they can create the culture andenvironment within which comptrollership canmake its contribution to strategic and businessplanning, risk management, control, and perfor-mance reporting.

This is not a responsibility that can be delegated.

Setting the tone from the top starts with adeputy’s reaction, behavior and conduct as per-ceived by colleagues and ultimately all levels ofmanagers and employees.

The questions noted on page 38 help shed lighton how the tone from the top is set on a day-to-day basis.

ORGANIZING FOR EFFECTIVE

COMPTROLLERSHIP

Determining the best way to fulfill govern-

ment-wide standards

Deputy heads should be entitled to establish, andbe held accountable for, the comptrollershipregime that best suits their assessment of theirorganization’s circumstances and needs, whilemeeting government-wide standards. Theyshould be entitled to expect that the center willestablish standards in a way that recognizes that,when it comes to the diverse operations and busi-ness of the government, there may be diversity inthe ways in which a standard may be achieved—one size does not fit all.

Maintaining a plan and tracking its achieve-

ment and ongoing relevance

It is recognized that a department’s staff does notremain static, nor does its operating environ-ment, nor even necessarily its businesses. What

37

The Panel believes that deputy heads should beentitled to manage the affairs of their organi-zations with little procedural or transactionalintervention from the center. Deputies shouldbe encouraged to manage with creativity, toadopt new operating and service deliverymechanisms, and to acknowledge and assumethe risks that are associated with operatingwith fewer resources and these new mecha-nisms. In fact, it is axiomatic that deputies willneed greater latitude. Giving greater freedomto deputies is a measure of the trust they earnfrom those who delegate power to them.

We take the view that the effective fulfillmentof their comptrollership responsibilities is oneof the keys that will allow the government toaccord the deputies this greater latitude on asound basis—that is, a basis in which the trustplaced in them is demonstrably justified.

may work well for a particular management teammay be less effective if the team changes.

Accordingly, deputies should be responsible fordeveloping both a short and a longer-term planfor comptrollership most suitable for theirdepartments.

In addition, deputies should know the extent towhich their plans are being followed and withwhat results. They should be in a position to giveassurance to their ministers and, if asked, toParliamentary Committees, that their approachesare adapted to their departments’ changing cir-cumstances and conditions and that they deliverthe desired results.

Putting in place the right people

As part of their responsibilities for the organiza-tion of comptrollership in their departments,deputies should have the final say in the selectionand appointment of the key players who will haveparticular comptrollership-related responsibili-ties, including senior specialists who will be partof the management team and support their man-agerial colleagues.

In turn, deputies should be accountable for thesubsequent success of such individuals in meetingthe demands of comptrollership in their depart-ments. These individuals may, for example,include the “departmental comptroller” or the“senior financial officer”, and the departmental

38

The tone from the top

Does the deputy encourage an environment where business decisions on how best to deliveron the departments mission and policies are challenged? Is the absence of challenge a clearconcern? At what point in the decision-making process is analysis called for? In other words,is comptrollership integrated into decision making?

Who does the deputy invite to the management table? Are financial and non-financial infor-mation providers asked to interpret and analyze information and to contribute to the manage-ment decision-making process, or are they absent from the table, or is their voice otherwisenot heard?

Are individuals penalized for bringing bad news?

Does, and how does, the deputy put performance information, accountability and stewardshipitems on the agenda, and what weight are they given?

What kinds of questions does a deputy ask of colleagues? How openly does the deputy dis-cuss, assess and deal with risks?

Is delegation of authority a quid pro quo for excellence in comptrollership and accountability?Does the deputy insist that this condition be lived up to?

Does the deputy create opportunities for general managers to acquire appropriate knowledgeof the disciplines of various specialists who support departmental comptrollership?

Does the deputy create opportunities for specialists who support departmental comptroller-ship to obtain general managerial experience in program delivery and a sound understandingof the department’s businesses?

How does a deputy react to performance that is either below or above expectations?

How does the deputy lead a department in learning from its mistakes?

auditor or review head, by whatever designationsthey are known.

Deputy heads are entitled to receive cogentadvice from the center and counsel on the gener-al nature of competencies and qualifications tomatch particular circumstances, when they askfor it. They should also expect that the center willbe able to identify top people who meet thesecompetencies and qualifications.

Similarly, deputies should be entitled to expectthat the center has available such developmentalprograms as may be generically appropriate to

the comptrollership responsibilities of both spe-cialists and general managers.

Empowerment and comptrollership

Most of the executives consulted cited the impor-tance of a climate wherein creativity, risk taking,and the empowerment of program delivery per-sonnel and managers at all levels is encouraged. Itwas frequently noted that today’s administrationhas fewer levels of management who control oper-ations and transactions using rules and process-driven mechanisms. They feel that risk taking isimportant to modern government and an essential

39

Two important elements of adeputy ’s plan

Form of organization: This is the overall approach to the assignment of responsibility forcomptrollership and its integration into the department’s day-to-day processes, executiveand staff interactions, and decision-making and oversight processes.

For example, in the light of their particular department’s circumstances and their assess-ment of their top management team’s strengths, some deputies may wish to play a moreprominent role in those aspects of comptrollership that involve the extension of authority,or in due diligence challenge processes related to operating or business proposals.

Others, based on an assessment of their circumstances, may wish to exercise many impor-tant aspects of comptrollership through the office of the deputy, essentially bringing select-ed senior top management team members together with themselves in a more team-orient-ed approach where they speak and act as one.

There is no right or wrong solution, but the plan should trigger consideration of whatworks best at a particular point in time. Does the deputy’s plan address this area?

Cross-fertilization of managerial and specialists capacities: It is recognized that certainfacets of comptrollership will require specialists to support management at all levels. Forgeneral managers to deal effectively with the work of specialists, they need an appropriatedegree of knowledge of the specialists’ subject areas. By the same token, for specialists toproduce relevant support to the management team and to act as an effective part of it, theyneed a sound understanding of the department’s businesses as well as a measure of manage-rial acumen and experience. Ensuring that general managers and specialists have these abil-ities is key to successful comptrollership.

Providing career paths that engage general managers in specialist areas at points in theircareer, and that allow practical managerial development for specialists and ultimately chan-nels into general management positions will, in the longer term, be one of the most impor-tant determinants of achieving modern comptrollership in the Government of Canada.Does the deputy’s plan provide for continuous advancement along these lines?

element of achieving the government’s policygoals in a world of constrained resources.

All those who expressed such views think that theencouragement of risk taking and creativityshould not be indiscriminate, since that wouldintroduce a level of risk inconsistent with thestewardship responsibilities of public servants.They think that empowerment and the devolu-tion of authority, and the encouragement of risktaking should be accompanied by an understand-ing of what constitutes acceptable risks and anability to assess proposed courses of action inrelation to these. Comptrollership is needed.

REPORTING ON COMPTROLLERSHIP

The approach to comptrollershipthat is proposed is based on thenotion that the center needs toknow the extent to which the gov-ernment-wide standards are beingmet, and that deputies need toknow the extent to which the stan-dards are being fulfilled in theirown departments.

In practice, both the center’sresponsibility to understand gov-ernment-wide achievement of thestandards and the deputies’ identi-cal need in respect of their owndepartments are interests thatintersect and are linked.

In order that both interests beserved effectively, and that the cen-ter intervene as little as possible inthe operations of departments, it isproposed that deputies be responsi-ble to make a periodic representa-tion, likely on an annual basis, onthe extent to which they judge thatthe government-wide standard forcomptrollership has been met intheir departments. This representa-tion should be provided to the min-ister responsible for the departmentor agency, and to the center.

To be particularly useful, these representationsshould not be purely compliance oriented. Ratherit should be acceptable to represent deviationfrom standards, assuming that the deviation waspurposeful and appropriate. Similarly, deputiesshould be encouraged to suggest when and howthe existing standards can be improved.

Representations should be rigorous, fact-based,and transparent in terms of the criteria andachievement on which they are based. Such rep-resentations are not unlike those provided byexecutive officers of larger organizations in theprivate sector, and are consistent with similartrends in the public sector generally. This repre-sentation might most appropriately be made inconjunction with the finalization of the depart-ment’s annual financial accounts, or the prepara-tion and submission of its business plan.

Making such a representation is the logical out-come of a meaningful approach to the steward-ship responsibilities of the government’s execu-tives. It is also a key vehicle through whichdeputies can support their ministers in a way thatwill help ministers focus on their responsibilitiesin this regard without becoming unnecessarilyengaged in the day-to-day management andoperations of the department.

CONSOLIDATED AND INTEGRATED

PERFORMANCE REPORTING

What is proposed as a cornerstone element is toreinforce the traditional responsibilities of deputyheads for financial and non-financial perfor-mance reporting by giving them a responsibili-ty—and empowering them to fulfill this responsi-bility—to produce an annual consolidated andintegrated financial and non-financial perfor-mance report.

By being able to prepare such a report with rigorand fairness and then providing it to their ownministers and to the Treasury Board, deputies willhave simultaneously done two important things:

• produced more robust support for businessplanning, resource allocation, and theassessment of achievement through the

40

It is reasonable that adeputy minister shouldreassure their minister,and the Treasury Board

ministers that:

• the department isoperating in the

businesses that it issupposed to be in

• the policy framework issufficient to give clear

focus to administrationand operations

• delivery risks areknown and reasonably

managed

• there is sufficientinspection and

validation

• systems are adequate tosustain operations.



synergy associated with the linkage offinancial and non-financial performanceinformation

• provided a measure of assurance that thecontrol and information systems on whichthe reporting is necessarily based areappropriate and functioning well.

Several important issues attend such an approachto reporting:

• integrating financial and non-financial per-formance information

• consolidating reporting requirements• linking business cycles and performance

reporting• validation• the deputy head’s role in reporting

INTEGRATING FINANCIAL AND NON-FINANCIAL PERFORMANCE

INFORMATION

Performance information will be most valuablewhen it brings together both financial and non-financial (historical and prospective) informationand establishes the links between the two. Its use-fulness is enhanced when the information is pre-sented in the context of the department’s vision,mission, objectives, and direction of its programsand activities.

Successfully accomplishing the above will helpexecutive management to provide adequate direc-tion to all employees and will promote theirunderstanding of the department’s business.

Importantly, such reporting will also provide asound basis on which deputies can engage their owncolleagues, as well as their minister and centralagencies in matters having to with business planningand resourcing. Ultimately, it will support ministersin their communications with the public about thework and achievements of their portfolios.

Meaningful integrated performance reportingshould promote understanding without oversim-plifying, should interpret linked financial, non-financial and cost information, and should relatethis information to:

• the available alternativemeans of fulfilling the depart-ment’s mission

• the expectations for perfor-mance and results that havebeen established in businessand strategic plans or in otherplanning instruments

• a forward-looking perspectivethat can contribute to futurepolicy or strategic planningdecisions and illuminate theorganization’s ongoing capac-ity to sustain desired perfor-mance levels

• external as well as internalinformation to facilitate(where possible) comparisonsto other organizationsengaged in comparable pro-grams, activities or servicedelivery mechanisms.

CONSOLIDATING REPORTING

REQUIREMENTS

Departments and agencies are required to fulfillnumerous reporting requirements in relation tospecific government-wide functions and adminis-trative policies. A characteristic of modern comp-trollership is to direct as much of the time as pos-sible of executives, managers and professionals toconducting the businesses of their departments.

In this context, and while recognizing the impor-tance of communicating meaningful informationabout achievement in specified areas, the Panelthinks that there is an opportunity to undertake asubstantial consolidation of required reportingvehicles.

The benefits of doing so would be twofold:

• executives and professionals will have thetime they need to devote to the type ofintegrated reporting suggested above

• various elements of the diverse reports nowbeing prepared, usually for central agen-cies, will benefit from the synergy of being

41

You will know that yourestimates documents meetthe test when they obviatethe need for a minister’sbriefing book.



If you were to put out acorporate report like ourestimates, you would dropthe stock. We haven’tcommunicated well andthat has reduced the valueof the franchise.



presented in the context of other importantaspects of the businesses, operations,achievements and choices of the depart-ment or agency. A more meaningful picturewill emerge.

The majority of the operating andcentral agency executives consultedthink that consolidation of existingreporting requirements is possibleand necessary if they are to adoptthe type of integrated reportingdiscussed above. The Panel strong-ly agrees with this view.

These suggestions for an integratedfinancial and non-financial perfor-mance report might desirablyextend to incorporate the depart-ment’s business plan or vice versa—thus providing an additional oppor-tunity to benefit from the synergyof relating both past and plannedperformance, and to reduce thenumber of separate reporting vehi-cles required.

LINKING BUSINESS

CYCLES AND

PERFORMANCE REPORTING

Both financial and non-financialinformation respond to what areoften unique business cycles thatcan range from hours and days, tomonths and years, and longer.

In some cases, performance infor-mation will only have meaningwhen compared to planned resultsover a longer period. In other cases,it will be important to presentinformation about costs, risks andanticipated gains associated withnew initiatives. Information aboutresults early in such a period maynot be indicative of real impact orachievement.

Performance information should be useful for itsrecipients. To be most meaningful, it needs torelate to what is actually being done within thetime frame it is being done. It is most importantthat appropriate time frames for planned accom-plishment be selected in the first place. It is alsoimportant that the reporting not result in over-load for its recipients.

An annual integrated performance report shouldnot attempt to cover all dimensions of perfor-mance every year. Careful judgment will have tobe exercised to determine when to report on dif-ferent aspects of a department’s businesses and itsfinancial and non-financial performance.Departments and the center should work closelytogether to determine when to report on differ-ent aspects of a department’s businesses.

42

We will professionallyfulfill the requirements

placed on us, but … for thereporting to be meaningfuland substantive we need totake the time to do it welland avoid falling into the

trap of form over sub-stance. As such it can’t be

an add-on—there just isn’ttime for more add-ons.



Getting rid of multipleand overlapping reports

would be a majorcontribution.



[T]he problem ofinformation overload and

how to decipher it is anissue that we wish to bring

particular attention to.

“Completing the circle

of control”

Report of the

Subcommittee on the

Business of Supply

A P E R F O R M A N C E

R E P O R T I N G

F R A M E W O R K

There are many matters that need to betaken into account when considering theperformance of a department. Theseultimately have to be taken together tobuild an overall picture of performance.Among them are:

• the extent of achievement of specifiedobjectives or goals and the occurrenceof unexpected results

• the continuing relevance of programsor activities to public needs and interests

• the appropriateness of the ways inwhich the organization chooses to pro-vide such services either directly orindirectly, and the extent to which thosewho use or are affected by programs orservices are satisfied with them

• the quality of management directionand monitoring

• financial results and cost and produc-tivity considerations

• anticipation and response to change.

Some of the aspects of performance noted underthe heading “A Performance Reporting Frame-work” on page 42 are more amenable to annualreporting than are others. Among these are finan-cial results, costs and productivity information, andmatters having to do with anticipation and responseto change. Some—for example, the extent ofachievement of specified objectives or goals, thecontinuing relevance of programs or activities topublic needs and interests, and the appropriatenessof the ways in which the organization chooses toprovide such services—might more meaningfullybe reported toward the end of a multiple-year busi-ness plan. Others may fall somewhere in between.

In any event, each department should be recog-nized as unique, and the appropriate cycle deter-mined as to when different aspects of perfor-mance should be included in the consolidated,integrated, annual report.

VALIDATION

When reporting on performance, deputy headsshould be entitled to obtain assurance that theirreports meet appropriate standards. Deputiesshould have available to them evidence that wouldconvince those using the reports that they in factdo meet these standards and can be relied on.

The proposed regime will see the central agenciesmore dependent than ever on information provid-ed by line departments and agencies. It is crucial,therefore, that there be provision for ministers andexecutives at the center to have objective evidenceas to the reliability of the information coming fromthese sources.

Accordingly, thePanel takes the viewthat these importantreports should be pre-pared with rigor andbe demonstrable assuch.

They should be ableto meet the test of anaudit based onGenerally AcceptedAuditing Standards,

used in conjunction with the provision of assur-ance services by auditing professionals.

The regime should include provision for the testof audit to be applied periodically, at least onceevery several years. More frequent auditing couldtake place at the discretion of deputy heads orwhen judged appropriate by the center.

THE DEPUTY HEAD’S ROLE IN

REPORTING

The above advice is important to the considera-tion of performance information as a cornerstoneof modern comptrollership. Particular concernabout this issue was expressed by almost all of thesenior executives who were consulted.

It implies that deputy heads (and their top man-agement team), because of their experience andposition at the confluence of all key aspects oftheir department’s operations, are best able tointerpret performance information and to com-municate it. This is especially important in ensur-ing that appropriate judgment is applied in theselection of performance measures and indica-tors, their limitations, and their implications.

This does not imply that public servants at all lev-els don’t have critically important responsibilitiesfor developing and reporting performance infor-mation. It does suggest, however, that whilemuch can be delegated, ultimately this is a prior-ity that ought to engage deputies directly.

Perhaps you should consider taking the view that when it comes todepartmental information that will be truly useful to TreasuryBoard ministers in the business planning process it is usually the sortof information that only a deputy minister can write.

advice given to the Panel

We in the bureaucracy have a lot of work to do to make ourperformance intelligible to Parliament . . . we have to transform thenature and flavor of our documentation.quoted from an interview with a deputy minister

Performance reports contain onepotential drawback: they are self-assessments. As such, the tempta-tion to report only the good newsand to downplay difficulties and

shortcomings is ever-present.

“Completing the circle of

control” – Report of the

Subcommittee on the

Business of Supply

43

S E N I O R F I N A N C I A L

O F F I C E R S

The input received, and the Panel’sexperience, strongly suggests thatthere is no single best way for thedeputy to discharge the responsibil-ities described above in a mannerthat will meet the needs of very dif-ferent departments.

A key decision for the deputy, and alikely determinant of the quality ofthe discharge of his or her respon-sibilities, will be the selection andtasking of the senior financial offi-cer, sometimes known also as thecomptroller (these terms are usedinterchangeably in this report).

The Canadian Institute of Char-tered Accountants has recommend-ed the following:

… the departmental comptroller’s keyresponsibilities include:

• advising the deputy minister on theoverall structure for control withinthe department, for both financialand non-financial matters

• providing financial managementwithin the department and ensuringthat the financial implications of alldecisions and actions are considered

• developing and recommending tothe deputy minister any departmen-tal policies for control required tosupplement those of central agencies

• establishing and maintaining sys-tems, processes and procedures to:• implement government-wide

standards for control and comp-trollership

• translate departmental financialand performance objectives intoobjectives applicable to specificactivity managers, and measurableperformance indicators relative tosuch objectives and monitor perfor-mance against those objectives

• identify, assess and manage risks to theachievement of specific objectives

• provide both financial and non-financialinformation to support decision making with-in the department and accountability report-ing both within and without the department

• reporting periodically to the deputy minister andthe Comptroller General on compliance withgovernment-wide standards

• monitoring and evaluating the effectiveness offinancial and non-financial control throughoutthe department by means of activities such asoversight, program evaluation, internal auditand control self-assessment

• providing training to program managers in con-trol and risk management.

The Panel agrees with the thrust of the materialin the submission of the Canadian Institute ofChartered Accountants. The Panel recognizesthat the specifics of implementation will likelyvary from department to department, and possi-bly within the same department over time. It isupon the senior financial officer that the deputyhead should rely to:

• integrate financial and non-financial infor-mation, budgets and performance reports

• provide interpretation, analysis and advice,overall and on individual transactions

• set, communicate and refresh departmentalstandards consistent with those of the center

• manage the department’s comptrollershipcapacity and performance on a day-to-daybasis, and advise the deputy head.

While each department and deputy is unique,consideration of these responsibilities may helprefine expectations of, and qualifications for, thecomptroller.

AN INTEGRATOR

Integration of information is a key function ofcomptrollership and a prime responsibility of asenior financial officer. This involves:

• seeking out and bringing together informa-tion from different sources—both withinand without the department

44

Often, however, a seniorexecutive, usually the

senior financial officer, isdelegated the overall

responsibility for ensuringthat there are appropriate

systems and proceduresthroughout the organiza-

tion to provide completeand reliable informationfor decision-making and

accountability, to measureperformance and to man-age risks. In this submis-

sion, this executive isreferred to as the

comptroller.

While the deputy ministersbear the ultimate responsi-

bility for the effectivenessof control and comptroller-ship in their departments,they may delegate specificresponsibilities to depart-

mental comptrollers.



The organization andstaffing of the

comptrollership capabilitywithin each department

and agency will depend onthe particular needs and

circumstances of each.

Auditor General of

Canada

• assembling this information into a reason-ably comprehensive whole that will supportthe results-oriented approach of the gov-ernment

• relating information to the needs and inter-ests of specific managers

• supporting the deputy’s performancereporting responsibilities.

To this end, financial and performance budgetsand plans have to be related to actual performanceinformation, and financial and cost informationhas to be related to meaningful outputs that man-agers can understand and feel responsible for.Since perfect information is unattainable, limita-tions and gaps in the information have to beunderstood and their implications communicatedto decision makers. Relevance and timeliness mustbe balanced against accuracy and completeness.

Integration is not an easy task. It has its technicaldifficulties, and they are significant. It also hassignificant behavioral and organizational dimen-sions, and may involve breaking down past infor-mation flows and attitudes. Just as the deputyheads’ reactions and behavior strongly influenceorganization-wide attitudes, so too will those ofsenior financial officers in respect of performanceinformation and related control issues.

Obviously the integration function will require acombination of technical and people skills.

ADVISER AND ANALYST

Comptrollership involves questioning acceptedways of thinking and preconceived ideas. The aimis not to stop managers, or to usurp their deci-sion-making authority, or to constrain themunduly. Rather it is to help them fulfill theirresponsibilities, to provide managers with infor-mation that might suggest better ways to conductbusiness or better uses of scarce resources.

Comptrollership requires strong technical judg-ment tempered by maturity and an understand-ing of the management environment. Only inrare cases should effective comptrollers find itnecessary to over-ride an operating manager’sdecision or appeal it to a higher levels. Instead,

45

There is no reason for the [departmental] comptrollershipcapability to be necessarily in one place. In fact, withcomptrollership capability having at its core both financial andresults measurement expertise, it is quite likely that staff involvedin comptrollership activities will be located throughout theorganization. Auditor General of Canada

… in spite of the increased emphasis on overhead reduction, andthe obvious value of consolidation, in many departments there arestill too many resource management units in program andoperational branches which are allowed to function generally inisolation of the larger picture. Paul Gauvin, former Senior Assistant Deputy Minister,

Transport Canada

We are still unwilling to report bad news.Symposium of Departmental Comptrollers

(Corporate Assistant Deputy Ministers)

Because of the detailed process and information requirements ofdepartmental management systems, the behavioral implications ofeffective comptrollership are particularly significant. Society Of Management Accountants of Canada

In essence, every transaction, complex or simple, is a financialtransaction with resource implications.

Paul Gauvin

The extraordinary demands of multiple constituencies and interestgroups requires political judgment as well as quality analysis.

Society of Management Accountants of Canada

More often (than not) comptrollership support is offered“opportunistically” and with a great deal of “finesse.” They playdifferent roles in every situation depending on where the DM willlet you go.

Symposium of Departmental Comptrollers

(Corporate Assistant Deputy Ministers)

they work with managers, educate and persuadethem, and exercise careful judgment about howpersuasive to be.

The quotes on the previous page, and other evi-dence, suggest that managers increasingly recog-nize the need for such a constructive challenge,but that there is still some distance to go before itis embedded in day-to-day practices. Depart-mental comptrollers, in their day-to-day interac-tions, and in their longer-term developmentplans, play a key role in developing the skills andattitudes required.

RESPONSIBILITY FOR CONTROL

Deputies need to have an ongoing assessment ofthe effectiveness of the control mechanisms intheir departments. They should turn to senior

financial officers for this assess-ment.

It follows that the senior financialofficer needs to be able to:

• take a sophisticated approach tothe balances inherent in controland information systems

• assess objectively how well theyare working

• determine whether difficultiesare related to people or to thedesign of the system

• respond appropriately.

The above reference to controlmechanisms should reflect a con-temporary understanding of con-trol—one that goes beyond internalfinancial controls. The Canadian

Institute of Chartered Accountants has over thelast several years undertaken considerable workand provided important leadership in developinga contemporary understanding of control. ThePanel believes that it is this understanding thatshould be reflected in the assessments called forabove.

MAINTAINING AND DEVELOPING

COMPTROLLERSHIP CAPABILITY

There are comptrollership dimensions to the jobof every manager in government. The seniorfinancial officer plays a lead role in preparingmanagers to meet these responsibilities. He orshe must not only be expert, but able and willingto share the expertise with others throughout thedepartment. This can be done through the devel-opment and communication of departmentalstandards, through education and training, andthrough deployment of comptrollership special-ists in management teams.

ACCEPTING OTHER RESPONSIBILITIES

Departmental senior financial officers may becalled upon to undertake a variety of tasks, with-in or without the department, that are unrelatedto comptrollership responsibilities. Their back-ground and experience may position them well toundertake such responsibilities.

Too many other jobs could create a troublesomeconflict of priorities or even reduce the perceivedobjectivity of the comptroller. Provided suchother responsibilities do not detract significantlyfrom their prime responsibility for the integrityof information and the appropriateness of man-agement systems, there is no compelling reasonwhy they should not be so assigned.

46

Companies are assigningresponsibility for establish-

ing and maintaining theassessment process and

advising the CEO on con-trol issues to the comptrol-

ler or internal auditfunction, based on avail-

ability and competence.



C I C A D E F I N I T I O N

O F C O N T R O L

Control is a very broad concept. It encom-passes all of the elements of an organiza-tion—its resources, systems, processes,culture, structure and tasks—that, takentogether support people in achieving theorganization’s objectives. Control is muchbroader than the traditional internal con-trol over financial reporting, complianceand asset safeguarding.

Taken from Guidance on Control,

published in 1995 by the Canadian

Institute of Chartered Accountants.

I N T E R N A L A U D I T

There is a long history of internal audit in theGovernment of Canada, and throughout that his-tory it has been associated with comptrollership.

Like the other elements of comptrollership thatare described in this report internal auditing is anecessary part of management, most particularlyat the center but also in individual departments.

There are many factors that will determine thevalue of internal audit to management, but threeare of particular importance—clarity of role,achievement of a standard, and people. Thesefactors apply in respect of internal audit at thecenter and to departmental internal audit units,where established.

Clarity of role: The prime role and product ofinternal audit in serving modern comptrollershipshould be assurance—assurance both aboutfinancial and non-financial performance informa-tion used by management and about control. (Seedefinition of control on page 46.)

Assurance will be especially impor-tant in a robust performance report-ing and accountability environmentsuch as that suggested in this report.Deputies and others will need assur-ance about the information they useand report—the confidence andcredibility that results from suchassurance will be important whenthey report to their ministers and toTreasury Board on performance andon comptrollership.

Internal audit, by virtue of its verynature and its primary role, is wellplaced to provide additional benefitsto management. These benefitsusually arise from the observationsthat internal auditors make and theinsights they gain during theirwork. These insights can lead tochanges that enhance efficiency andeffectiveness.

Internal audit cannot and should not be thoughtof as being all things to all people—focus shouldbe maintained on its prime role described above.The Panel recommends that a clear distinction bemade between internal auditing and what are, ineffect, processes aimed at analyzing programswith a view to reporting on their results.

Just as financial accounting is not appropriatelythought of as an internal auditing activity, thisform of performance measurement and reportingshould be not be, either. While both are impor-tant management responsibilities and functions,their differences need to be recognized and pro-vided for with appropriate distinction by manage-ment. One is an assurance provider that requiresa measure of independence from managerial andoperational responsibilities, and the other is aninformation provider which must rely for successon close integration with managerial and opera-tional responsibilities.

The Panel recognizes that in the past there hasbeen a tendency to group these functions togeth-er. Nevertheless, the Panel recommends that the

Externally, the SeniorFinancial Officer should beacting as the departmentaladvocate in negotiatingapproval of proposals withexternal authorities, orrepresenting thedepartment’s interests innegotiations with theprivate sector related tomajor initiatives wherecost is frequently thecommon denominator, longafter policy or programdifferences have beenresolved.

Paul Gauvin

47

I L L U S T R A T I O N O F

R E Q U I R E D S E N I O R

F I N A N C I A L O F F I C E R

C O M P E T E N C I E S

There are a number of areas where seniorfinancial officers require depth of experi-ence resulting in mature competence inorder to play the lead role described.Illustrative, but not all inclusive, of theseareas of competency are the following:

• management accounting • risk management• budgeting• financial management, planning and

analysis• financial accounting• non-financial performance reporting• business planning.

requisite distinctions be made in the future toensure clarity of purpose and effectiveness in theachievement of these purposes.

Achieving a standard of excellence: Internalaudit, as any audit function, is all about the exer-cise of professional judgment and discipline. Bothof these must take place within the ambit of, andmeet the test of, appropriate standards. While itmay sound like a truism, the two fundamentalingredients for effective internal audit are havingthe right standards and the right people who havethe capacity to meet the standards.

The form of modernized comptrollership pro-posed will significantly challenge all thoseinvolved. This will be equally true for internalaudit. In the light of the significantly differentunderstanding of and approach to comptroller-ship that is proposed, it is recommended that thegovernment revisit the standards that it hasadopted for internal audit to ensure their appro-priateness in the proposed comptrollershipapproach.

Staffing: Respecting the staffing of internal auditgroups at the center and in departments, thePanel believes that the approach to comptroller-ship proposed will result in a need and an oppor-tunity to re-examine the skill sets required, andhow the function is staffed. Consideration shouldbe given to re-shaping internal audit functions,not so much as career destination points, butrather as waypoints where the best and thebrightest of operational managers can, for a peri-od of time, join outstanding audit professionals insupport of management, and in the pursuit ofaudit and managerial excellence.

The Panel considers that—as in other areas ofmanagement— there is no single solution for alldepartments and agencies of the government.Individual situations and priorities of depart-ments should determine what is most needed andwhat is reasonable in the circumstances. The cen-ter, however, requires a capacity to monitor stan-dards, provide advice and validate results andreports.

C E N T R A L A G E N C I E S

The proposed comptrollership regime has exten-sive implications for the government’s centralagencies. As indicated above, neither the Panelnor anyone that it consulted considers it desirableor practical to give one central agency exclusivedomain over comptrollership.

Clearly there will be some who are more involvedthan others, and clearly the involvement of sever-al central agencies will bring its own inevitabletensions that, as they have in the past, will need tobe managed to ensure a cohesive whole.

Nevertheless, an approach to comptrollershipthat will provide value to the government and toCanadians is predicated on the view that this is ashared responsibility at the center.

This section sets out a framework of responsibil-ities that is intended to utilize various centralagencies’ strengths and that identifies primaryroles in support of effective comptrollershipthroughout the Government of Canada.

C L E R K O F T H E

P R I V Y C O U N C I L

Deputy heads are at one and the same time thekey beneficiaries of a modern well-functioningcomptrollership, and the key drivers for its effec-tiveness. It follows that deputies, with both theinterest and capacity to provide sustained leader-ship in this area, are the keys to success.

Ensuring that this capacity in deputy heads existsand is maintained is something that can be nei-ther declared nor forced.

There is a capacity issue and a human issueinvolved, both of which in turn relate back to thevalues that have been cited by the Clerk of thePrivy Council as being the foundation of the pub-lic sector. (see extract from Fourth Annual Reportto the Prime Minister by the Clerk of the PrivyCouncil - page 16).

48

The Clerk of the Privy Council has the importantresponsibility to manage the most senior execu-tive ranks in the public service. In this context,the overall organization of the public service andits values depend on leadership from this office.On an ongoing basis the identification, recruit-ment, and development of the deputy ministercadre is a major responsibility for the Clerk, asare the mandating, assessment, advancement, andcharting career paths for the government’s mostsenior executives.

In respect of both of these areas, the Panelexpects that the Clerk of the Privy Council andthe Privy Council Office will have, as they do inso many other areas, an important influence onthe substantive and sustained achievement ofmodern comptrollership in the Government ofCanada.

The Panel identifies the following responsibili-ties of the Clerk of the Privy Council in respect ofcomptrollership:

• maintain a consistent and strong emphasison comptrollership in the selection andmandating processes for the government’smost senior executives

• assess and reward, or if necessary sanction,performance in this area.

The importance of these responsibilities isdemonstrated by the long tradition of consulta-tion between the Clerk of the Privy Council andthe Secretary of the Treasury Board/ComptrollerGeneral of Canada on matters having to do withmanagerial capacity for comptrollership.

T H E T R E A S U R Y

B O A R D

The Treasury Board is an important committeeof Cabinet and has a special role to play in thearea of comptrollership. There is a long historicalprecedent for this role, which, under the Board’ssupervision, is largely assigned to the Secretary ofthe Treasury Board and the secretariat he or sheheads as well as to the Comptroller General, aresponsibility that the Secretary of the TreasuryBoard has also been assigned by the government.

AN IMPORTANT TRANSITION IS

UNDERWAY—FROM TRANSACTIONS

TO BUSINESS PLANS

On June 11,1997, in his announcement ofappointments to the Cabinet, the Prime Ministerof Canada signaled an important change in theCabinet decision-making system: that Cabinetwill increase its focus on spending priorities. Inthe same announcement the Prime Minister indi-cated that Treasury Board has been re-oriented toplay an enhanced role as the government’s man-agement board.

The President of the Treasury Board and hissenior officials have characterized this reorienta-tion as one that will see Treasury Board ministersless occupied with the approval of specific trans-actions, and far more focused on the direction,priorities and performance of governmentthrough the medium of the business plans ofdepartments and agencies. There has alreadybeen considerable movement in this direction,and the Board is now dealing with far fewer trans-action-oriented items than previously.

The Panel recognizes that this reorientationshould have a profound and beneficial impact on

49

In the words of the Clerk of the PrivyCouncil: “Canadians and their electedrepresentatives have always been able torely on a public service that is one of thebest in the world.”

The priority and attention given to thisarea is currently the subject of a majoron-going initiative to ensure renewal andstrength of these senior public servants.

“La Relève” is an initiative designed toensure that the expectation noted abovecontinues to be fulfilled into the future.

the modernization of comptrollership in the gov-ernment. The importance of this change was sig-naled by a deputy minister who said: “The realindicator of successfully modernizing comptrol-lership is fewer proposals to Cabinet committeesfor approval of relatively modest funding requestsfor individual initiatives or transactions.”

The Panel understands that strong comptroller-ship cannot simply be the product of a desire onthe part of public servants. There needs to be aclient—ministers—who will be seen to want andto effectively use the product of good comptrol-lership. That product is, to some very largeextent, information that will help ministers tofulfill their responsibilities in the area of publicresource management.

It is axiomatic that, as the Treasury Board minis-ters focus their attention on the business plans ofdepartments, they will create, perhaps for the firsttime, a sustained demand for robust and mean-ingful integrated financial and non-financial per-formance information.

The Panel expects that executives throughout thesystem will respond positively to such a demand,especially if Board decisions reflect its confidencein the information provided.

CREATING THE COMPTROLLERSHIP

ENVIRONMENT

Although by no means exclusively, it is in the handsof ministers, and especially Treasury Board minis-ters, to create the basic environment in whicheffective modern comptrollership can thrive.

The questions in the following checklist (facingpage) pertain to the key components of such anenvironment.

Several of these matters are particularly importantto a substantive and sustained effort to modernizecomptrollership in the Government of Canada.

THE NEED FOR INCENTIVES

Treasury Board ministers have an opportunity toshow further leadership by providing incentivesfor executives throughout the system to supply

information and maintain control in support ofthe Board’s needs and interests.

The Panel very much favors an approach in whichdeputies who provide good information and effec-tive control are entrusted with greater latitude tooperate and are subject to less scrutiny and direc-tion from the center. At the same time, where thiscondition it not fulfilled to the satisfaction of theBoard, the system should have the flexibility torespond with a greater measure of scrutiny andoversight and, if necessary, intervention.

Achieving a workable regime of incentives will bechallenging—but pursuing it will be important tothe achievement of modern comptrollership.

CONSENSUS AND COORDINATION

At another level the Board enhances comptroller-ship by bringing ministers of key central agen-cies—including the Department of Finance andthe Department of Public Works andGovernment Services—together with other min-isters in a compact committee with a uniquefocus—one that allows it to exercise an importantintegrating role.

It is also positioned to be a meaningful forum anddecision-making body to resolve legitimate dif-ferences of view amongst those involved in shareddimensions of comptrollership.

It is suggested that the Board take on the role ofaddressing such matters particularly when theyrelate to the application of financial and non-financial reporting and related budgetary andbusiness planning instruments.

REPORTING CYCLES

As Treasury Board ministers focus on businessplans they will also develop progressivelystronger knowledge of the programs, services andkey strategies undertaken by departments. Thisknowledge will put them in a unique position todetermine what might constitute an appropriatereporting cycle for individual departments.

50

51

Creating the comptrollership environment—some key questions

Knowledge of programs

Are the programs of the government well understood and, are the goals of the government clearly stat-ed and internalized by all? Is the level of this knowledge sufficient to help ministers determine, withconfidence, whether the information brought forward by management covers all the factors that shouldbe taken into account in making decisions?

Leadership

Do the government’s executives consider that their efforts respecting governance information are appre-ciated by the Treasury Board and useful to it?

Board/management agreement

Is there clear agreement between the government’s executives and the Treasury Board that establishes abasis for reporting that serves the Board’s needs and recognizes management’s imperatives?

Appropriate reporting principles

Has the Treasury Board adopted an appropriate set of principles for reporting on performance thatallows both its members, as recipients of information, and management as suppliers of this information,to judge its relevance, utility, completeness and fairness? Do these principles allow flexibility while stillensuring that departures from what might have been expected are identified and adequately explained?

Stated levels of planned achievement

Have intended and acceptable levels of performance been stated a priori ?

Fair use of information

How is information used? Where performance is determined to be at variance with planned or desiredoutcomes, is suitable action taken? Is that action based on an assessment of past managerial trackrecords and reasonable risks associated with particular programs or initiatives?

Incentives

Does the Treasury Board lead/participate in creating appropriate incentives/sanctions for the govern-ment’s executives to develop and provide broad-based performance information? Do these incentivestake into account the possibility that rewards for providing useful information might include greater dis-cretion being placed in the hands of management who earn the trust of the Board?

Continuity

Is information an ongoing, long-lasting, important part of the government’s management process andculture? Has specific provision been made to avoid lapses followed by the inevitable reinvention of thewheel with all its associated costs?

Regular assessment and review

Does the Treasury Board undertake a regular assessment of the information it receives and the processesand mechanisms through which it is created and communicated?

Validation

Does the Treasury Board provide for meaningful, objective and rigorous validation of the information itreceives about financial and non-financial performance?

Adapted from CCAF-FCVI Inc. Governance Information Strategies for Success

PERIODIC REVIEW

As a final matter, the Panel takes the approach thatlegislative action to implement a modern effectivecomptrollership regime for the Government ofCanada is not a prerequisite. The regime shouldallow a measure of flexibility to adapt to evolvingneeds. This is especially important in the assign-ment of specific responsibilities and the specifica-tion of prerequisite competencies of individualssuch as the Comptroller General.

In the Panel’s view, providing this flexibility out-weighs the possible risks of inconsistency andpotentially widely fluctuating levels of leadershipand achievement for comptrollership. In thesecircumstances, the Panel thinks it would beappropriate for the Treasury Board, under theleadership of its President, to undertake periodicreviews of the adequacy of the current organiza-tional arrangements that support comptrollershipin the Government of Canada, and report thesefindings to Parliament.

REGULAR REPORTING

Three years ago, the President of the TreasuryBoard adopted the practice of reporting annuallyto Parliament on the state of performance infor-mation and review. This practice is a significantadvance in providing accountability to Parliamentin this important area of government manage-ment. The Panel thinks that this approach can andshould be extended to cover all of the importantcomptrollership responsibilities assigned to theTreasury Board and through it to its Secretary andComptroller General of Canada. These responsi-bilities are discussed in the following section.

To provide leadership, Treasury Board ministersshould therefore:

• demand sustained integrated performanceinformation and provide incentives for it tobe supplied

• serve as a meaningful forum and decisionmaking body through which legitimate dif-ferences of view among those involved inshared dimensions of comptrollership canbe resolved

• establish reporting cycles for differentaspects of performance

• periodically review and assess the adequacyof organizational arrangements and theirfulfillment.

The President of the Treasury Board shouldreport annually to Parliament on the state ofcomptrollership in the Government of Canada.

S E C R E T A R Y O F T H E

T R E A S U R Y B O A R D /C O M P T R O L L E R

G E N E R A L O F C A N A D A

As noted above, central agencies share importantresponsibilities for comptrollership on a govern-ment-wide basis. These can be characterized asbeing of two types:

• direction and leadership needed to main-tain an appropriate standard of comptrol-lership government-wide

• satisfying ministerial and Parliamentaryrequirements for government-wide consoli-dated and integrated financial and non-financial performance information.

Parallel to its thinking regarding operatingdepartments, the Panel is of the view that thelarge, diverse organization that is the Governmentof Canada needs to have a focal point for the exer-cise of the above types of responsibilities.

The Treasury Board Secretary and his Secretariatcolleagues have had and should continue to havean influential role in the area of comptrollership.

Over the last several decades it is they (includingthe Comptroller General of Canada in thisgroup) who have been most frequently looked tofor leadership.

The following considerations should attend:

ORGANIZATIONAL ARRANGEMENTS

In 1978 Parliament enacted legislation creatingthe position of Comptroller General of Canadaand staffed it with an officer who had similar rank

52

to that of the Treasury Board Secretary. This offi-cer reported directly to the President of theTreasury Board. Various considerations attendedthe selection of this reporting arrangement,including a desire for a measure of independencefor the Comptroller General from other respon-sibilities traditionally exercised by the Secretaryof the Treasury Board.

Since that time, people and circumstances havechanged. For the last several years the position ofComptroller General of Canada has existed inlaw, but the Secretary of the Treasury Board hasbeen appointed to that position and holds bothtitles as Secretary of the Treasury Board andComptroller General of Canada.

Given this situation, it was natural that one ques-tion that arose early in the Panel’s deliberationswas whether a separate Comptroller General forCanada was essential to achieving a comptroller-ship regime suitable to Canada’s needs both now,and in the years to come.

The Panel concluded that current arrangementsdo not impair the Treasury BoardSecretary/Comptroller General’s ability to pro-vide leadership and to fulfill the requirements ofthe position. Indeed, such arrangements can con-tribute to a greater degree of leadership, focusand support for comptrollership-related issues,than could separate incumbents.

Only one submission suggested a return to a freestanding Comptroller General—a caution istherefore warranted. The current arrangementcan be somewhat more fluid in the emphasis ulti-mately given to comptrollership matters thanwould be the case with a free-standingComptroller General. The past managerial expe-rience, attitude and interest of the incumbent willinfluence how much emphasis is placed on thecomptrollership part of the job.

What is important is that appointments to thisposition are made subject to agreement on anappropriate emphasis on comptrollership.

PRESENTING “ONE FACE” TO

DEPARTMENTS AND AGENCIES

Many of the Treasury Board staff and virtually allof the government executives consulted charac-terized a modern comptrollership regime asbeing one in which the Treasury BoardSecretariat presents one face to the operatingdepartments and agencies.

Over the years the Treasury Board Secretariat hasbeen organized along functional lines reflectingits various responsibilities. As a result, multipleinterventions and sources of guidance arebrought to bear on departments and agencies.This in turn has resulted in considerable burdenon departments and a question of whether con-sistent, coherent direction and guidance has beenprovided—guidance that considers and respondsto all of a department’s circumstances.

Currently the Secretariat is taking steps to createa more unified approach that is “departmentfocused” rather than “function or disciplinefocused.” Successfully completing this transitionwill be both challenging and key to achievingmodern comptrollership. The Panel very muchencourages the Treasury Board Secretariat toadvance further along these lines.

ACCOUNTABILITY

A hallmark of effective comptrollership is clearresponsibility and meaningful accountability forthe function at every level in the government.

This will mean that a focal point is needed on agovernment-wide basis. The Secretary ofTreasury Board/Comptroller General of Canadashould be that focal point.

The responsibilities associated with this positionare distinct from those of other deputy ministers.The focus of the Treasury Board Secretary/Comptroller General’s responsibilities andaccountabilities should be on the government as awhole.

As a manifestation of that accountability, theincumbent should provide an annual representa-tion to the President of the Treasury Board about

53

the extent to which the standards that have beenset for comptrollership continue to be appropri-ate and the extent to which the standards arebeing met on a government-wide basis.

RESPONSIBILITIES

The Secretary of the Treasury Board/Comp-troller General of Canada should be responsibleand accountable for:

• establishing an appropriate standard (andkey frameworks) for financial and non-financial information reporting and bud-geting for the government as a whole

• establishing an appropriate standard forcomptrollership in the government as awhole

• knowing the extent to which the abovestandards are met government-wide

• acting to preserve the above standards gov-ernment-wide when there is evidence ofdeterioration

• giving effective counsel to departments tohelp them achieve the standards and theirdepartment’s mission in the most effectiveway possible

• supplying Treasury Board, other centralagencies, and Parliament with government-wide financial and non-financial perfor-mance information appropriate to theirresponsibilities.

Each of the responsibilities noted above is largelyself-explanatory. In consultations, however, a num-ber of matters were frequently raised that meritconsideration here. These are dealt with below.

STANDARDS

R e s u l t s v e r s u s p r o c e s s

Standards connote the setting and meeting of rea-sonable expectations that will help executives, man-agers, and all personnel to attain their organization’sgoals—to succeed. Generally speaking, standardsshould not create roadblocks to taking reasonableaction or accepting reasonable risks—especially ifthe standards focus on results and not means.

Setting government-wide standards for bothfinancial and non-financial information is a vital-ly important function. Standards, if they are to bemeaningful and relevant, need to be set at a suffi-ciently high level in order to take into account thediversity of the government’s various operations,programs and organizational units.

A modern comptrollership regime should becharacterized, at least in part, by a relatively smallnumber of high-level standards as distinct fromprocess-oriented direction.

At the same time, standards should be robustenough to ensure that the principles they areintended to embrace are transparent to those whoare expected to apply them. A move towards amore standards-oriented approach will require acorresponding strong capacity in departmentsand agencies to interpret and apply them effec-tively. This will be somewhat more demandingthan the more process-oriented approach that hascharacterized comptrollership in the past.

D u e c a r e i n s e t t i n g s t a n d a r d s

Setting broad standards will also be moredemanding for the standard setters.

In some cases standards may be unique to theGovernment of Canada; in other cases they may bestandards that have been developed by outside bod-ies and adopted by the government for specific top-ics. Regardless of where they come from, it will becritically important to get the standards right.

The Treasury Board will need to ensure that ithas an ongoing capacity, commensurate with thisshift in emphasis, both to develop standards andto critically assess standards that it is consideringadopting from others. A modern, robust comp-trollership regime should be one in which thegovernment can credibly demonstrate that it hasbeen diligent in these matters, and that it hasmade the most appropriate choices for thosestandards that will guide its reporting as well asfor financial and related management systems andapproaches.

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At this stage in the evolution of comptrollership,it will be desirable to create a small but highlycompetent Standards Advisory Board composedof senior people with relevant experience fromoutside the government. Such a board would notso much consider the technical aspects of stan-dards, but would support the governmentthrough independent advice on the appropriate-ness of the available choices, and would facilitatethe process of setting standards.

E n g a g i n g d e p a r t m e n t s

Recognizing that the center should be responsi-ble for setting appropriate standards does notpreclude the involvement of executives and seniorprofessionals from operating departments.Indeed, another characteristic of a modernapproach to comptrollership is a highly focusedmethod of including the expertise and counselfrom operating departments in the central stan-dards development and adoption process.

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S M A L L A G E N C I E S — A N I L L U S T R A T I O N O F D I V E R S I T Y

The government houses a number of boards and agencies that perform regulatory, investigatory, or quasi-judicial roles. Their relatively small size (and budgets) belie their impact on:

• the health, safety and quality of life of Canadians • how citizens view their government, and their recourse to perceived unfairness and inequity• the competitiveness of Canadian industry and commercial organizations.

Such agencies pose special governance, management and comptrollership challenges. At their roots, thesechallenges stem from the interaction of and tensions between such factors as:

• their relatively small size—a $10 million operation can easily get “lost” in a $1 billion portfolio• the nature of their operations, which often involve• delicate balances between development and promulgation of standards, enforcement, education, and

adjudication of disputes• a high degree of specialization, with consequent limited mobility for staff between the agencies and the

rest of the government• the appointment of agency heads relatively distant from the minister to protect the independence of

the function and the need to maintain coherence between the directions of the agency and other partsof the government

• the need to provide administrative freedom while observing collective management standards of thegovernment and of the department within which the agency happens to be housed.

Techniques and approaches that can sustain comptrollership in larger departments may not work well in theseorganizations. For example:

• administrative mechanisms, such as the deputy minister’s mandate letter and performance evaluationby the Clerk of the Privy Council are frequently not available or not practical

• standard format of reports and resource allocation mechanisms impose a significant paper burden,without necessarily challenging or addressing the balance of activities, or the impact (results) of theagency

• it is difficult—and perhaps inappropriate—for departmental officials to assess the performance, or tochallenge (however constructively) the decisions of Governor-in-Council appointees, many of whomreport directly to Parliament.

There has been a long history of consultationbetween the center and the operating departmentsthrough various committees and mechanisms.What is needed now is a specifically focusedComptrollership Council to bring together anumber of senior financial officers. Chaired by theDeputy Comptroller General, and with member-ship drawn from those departments taking thelead in the modernization process, this councilwould provide internal advice on standards to theComptroller General. It would also provide aforum for discussion of best practices, feedback onprogress, and lessons learned.

In addition, it is recognized that from time totime departments and the center may wish tosupplement the standards with common operat-ing practices for specific subjects or areas.Creating the tools needed to support such com-mon operating practices may require resourcesthat the center does not have. It may be possibleto bolster the center by having certain of thesetools developed by the Council, an approach thatwould simultaneously foster greater acceptanceand spread the effort and resource burden.

C o n s t r a i n t s

There will inevitably be certain areas in which thegovernment chooses to restrict its employees’ lat-itude to act; it reserves the right to issue direc-tives. These directives may be prohibitionsagainst certain acts or behaviors, or requirementsto do things a particular way.

It is hoped that there need not be many suchareas. But where they exist it is expected that thecenter will provide clear directives and enforcethem. Modern comptrollership recognizes thisneed for discipline in the system.

SHARED RESPONSIBILITY

Other parts of this report refer to areas whereresponsibility is shared for establishing specificframeworks or approaches that are associatedwith comptrollership. One such important area isin respect of the Department of Finance andreporting of historical financial position andresults of the government’s operations.

The accounting framework and the fiscal frame-work and budget are interrelated; it would beinappropriate to suggest a system in which theDepartment of Finance and the Treasury Boarddid not each have a share of responsibility in thismatter.

Once a standard has been adopted, it should beclear who is primarily responsible to interpretthe application of the standard to the day-to-daytransactions and events that occur in the gov-ernment.

For financial and non-financial reporting, thisresponsibility should lie with the Secretary of theTreasury Board/Comptroller General. Such anapproach fulfills a need to ensure a reasonableseparation between those who have the primaryresponsibility to set budget targets for the gov-ernment as a whole and whose expertise lies inthis area and those who are primarily concernedwith accounting for results and whose expertise isin that area.

In practice, accounting and budgeting—even atthe most macro level—are related. It is bothdesirable and to be expected, therefore, that bud-get setters not only will be concerned with theform of accounting and standards adopted forthat accounting but from time to time will alsofocus on how these accounting frameworks andstandards should most appropriately be applied tospecific transactions.

None of this impedes or detracts from modernor effective comptrollership—in fact it canstrengthen it—provided that each respects theother’s level of expertise in relation to these mat-ters, and that each party’s accountabilities areclear. If and when differences of opinion dooccur it is suggested above that Treasury Board,given its composition, is a suitable venue forresolving them.

As to accountabilities, it is suggested that theComptroller General of Canada receive from hismost senior officer concerned with the financialand non-financial reports (the DeputyComptroller General) a representation statingthe extent to which he or she believes that the

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standards for such reporting are appropriate andthe extent to which this officer is satisfied that thereports prepared at the center have been preparedin accordance with these standards.

COMMUNICATING

In the context of effective comptrollership, settingstandards should be understood to include commu-nicating these standards to those who are expectedto apply them and to those whose responsibilitiesmight be affected by their application.

Because comptrollership extends to matters thatgo to the heart of both executive and non-execu-tive responsibilities, the Treasury BoardSecretary/Comptroller should maintain anappropriate capacity to communicate these stan-dards and orient the government’s personnel atall levels to them.

In addition there should be a continuing capacityfor communicating the standards to ministers andParliament as well as external bodies who takesuch matters into account in judging the govern-ment’s financial and non-financial performance.

MONITORING GOVERNMENT-WIDE

STANDARDS

For the Treasury Board Secretary/ComptrollerGeneral to ensure that the standards are met on agovernment-wide basis assumes both an ability tojudge current overall performance against thestandard and an ability to act if performance fallsbelow acceptable levels or where there is a trendsuggesting that this may happen in the future.Several considerations attend this matter.

R e c e i v i n g r e p o r t s

In fulfilling monitoring responsibilities, the pro-posed annual representations from deputy headsabout the status of comptrollership in their orga-nizations will provide a rigorous addition toongoing impressions acquired through day-to-day interactions and observations. (The need tosupply such representations in a modern comp-trollership regime is discussed under the headingof deputy head responsibilities.) Together with

the annual financial and non-financial report onperformance that can, and periodically does, meetthe test of audit, such reports will provide a sub-stantive basis for the Treasury BoardSecretary/Comptroller General’s assessment ofthe extent to which government wide-standardsare being met in individual departments.

It follows that the Treasury Board Secretary/Comptroller General should be entitled to relyon these reports. Reliance on these reports can-not be blind, however, and needs to be derivedfrom rigorous assessments of the reports whenthey are received. Moreover, the ComptrollerGeneral should maintain a capacity to obtain fur-ther assurance about the reliability of thesereports if deputy heads have not provided satis-factory measures of assurance as to their validityor where their assessments are contrary to knownexperience. This capacity should desirably, butnot necessarily exclusively, be exercised whenthere is a question about the rigor with which thereports were prepared.

This is not to suggest that such reports should be

validated or be subject to the provision of addi-

tional assurance every year or whenever pre-

pared. The gearing of a cycle appropriate to each

department is discussed in an earlier section of

this report.

Maintaining such a capacity means two things.The first is the spelling out of the nature of assur-ance that the Comptroller General deems ade-quate. That depends on:

• the level of assurance required • the materiality or significance thresholds

on which it is based • the standards that would guide those who

are tasked to provide such assurance.

These standards would relate to the competen-cies of the people doing the work, their indepen-dence and objectivity, their freedom to determinethe required scope of their work, and other relat-ed matters that in large measure determine thereliance that can be placed on such assurance. Ifdeputies undertake to provide such assurance

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with their reports, they should be required toensure that these standards are met.

The second is that, if such assurance does notaccompany the reports, the Comptroller Generalneeds either a capability within his/her own orga-nization to deploy a validation effort that meetsthese standards, or an ability to acquire the requi-site assurance services from other sources.

R e m e d i a l a n d p r e v e n t i v e

i n t e r v e n t i o n

While it is not possible to anticipate all situationsin which the Treasury Board Secretary/Comptroller General should intervene directly indepartments, or the particular circumstances thatwould trigger such interventions, the Panelbelieves that there are two general purposes forsuch interventions:

• remedial interventions • preventative interventions.

The need for remedial interventions, thoughlikely infrequent, may come about where adepartment or agency has exercised its comptrol-lership responsibilities in ways that substantiallyfail to meet the standards set by the center, andwhere this is material to the attainment of a rea-sonable standard on a government-wide basis. Insuch cases the Treasury Board Secretary should,in consultation with his or her central agency col-leagues and the Treasury Board, direct and if nec-essary undertake such remedial actions as are nec-essary to rectify the situation.

Preventive intervention might occur when theSecretary of the Treasury Board/ComptrollerGeneral, having rendered advice to the operatingdeputy head, is convinced that a clear trend existsthat is likely to continue and that would eventual-ly lead to the need for remedial intervention.

In either of the above circumstances, theTreasury Board Secretary/Comptroller Generalshould be held accountable for having appropri-ately identified the need for intervention, and forthe appropriateness of the remedial action that heor she has directed. By the same token, the

Treasury Board Secretary/Comptroller Generalshould be held accountable for failing to inter-vene in situations where the integrity of govern-ment-wide standards is in jeopardy. As discussedabove, direct accountability for substandard per-formance in a department that warranted inter-vention should be that of the deputy head.

DEVELOPMENTAL RESPONSIBILITY

The Treasury Board Secretary/ComptrollerGeneral should be responsible for not simply pre-scribing standards, but also supporting the needsand interests of deputies and others by making apositive contribution to their ability to meet thesestandards.

While deputies and their management colleaguesin departments must be responsible for effectivecomptrollership, including having the right peo-ple in place to support it, the center needs to sup-port them in several important areas.

One such area is supporting the ongoing devel-opment and maintenance of professionals of var-ious disciplines who are looked to by generalmanagers to support them in their comptroller-ship responsibilities. Effective and sustainablecomptrollership will require that the professionalcapacities of these individuals are appropriate notonly when they come into the system, sometimesat entry level, but also as they mature and thejudgments that they are called on to makeincrease in difficulty, sensitivity and impact: pro-fessional development is required.

Analyzing and interpreting information, andforming and communicating sound judgmentsare skills that can be learned through an appro-priate balance of formal education and on-the-jobexperience. As they rise to more senior levels,these professionals will need these abilities; to alarge extent successful comptrollership dependson them. It is not sufficient simply to supply themwith techniques, rules or processes.

It is essential to develop people in such a way thatthose who merit it can, if they so desire, advancetheir careers through to the top levels of generalmanagement. It behooves the center to invest heav-

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ily in this form of development and in supportingprofessionalism. The consultations suggested sev-eral ways in which Treasury Board could do this.

One is to develop within the Treasury Board acenter of excellence where professionals fromoperating departments can spend a period (orperiods) of time during their careers. There theycould not only contribute their departmentalexpertise to the center, but also benefit from thecenter’s accumulated expertise as a place to honeprofessional skills.

Another suggestion is to have the Treasury Boardprovide, on a consistent basis, fora in which peerknowledge sharing and learning among profes-sionals can flourish. These fora would expose pro-fessionals to others, including professional andresearch bodies, and their counterparts in othercountries. Exposure to alternative but practicalsolutions to similar problems will go a long way toachieving the kind of development that is needed.

It would be useful to provide similar opportuni-ties to managers. This would bolster their abilityto deploy comptrollership and relevant profes-sionals to the best advantage.

It was also suggested that Treasury Board recog-nize and provide incentives—including financialones—to encourage the maintenance of profes-sional credentials. This will be particularly helpfulwhere the professional bodies that accredit suchprofessionals have relevant development pro-grams of which these people can avail themselves.

PROVIDING COUNSEL

Deputy heads are entitled to ask for and receiveeffective counsel and advice to help them meetcentral agency standards and achieve their goalsand their departments’ missions.

It can be expected that departments would needsuch help where the judgment to be made is par-ticularly complex or where there may be optionsor ambiguities for which no answer is clearly thebest. Moreover, many deputies will seek suchadvice when the required level of expertise is notavailable in their departments.

One of the most important responsibilities of theSecretary of the Treasury Board should be tomaintain a capacity to respond appropriately torequests for advice from operating departments.

There are a number of possible ways to fulfill thisrequirement. These may involve direct advicefrom senior members of the Secretariat, orobtaining a reliable outside source and makingthat source available to the executives of operat-ing departments.

The Panel recognizes that both setting standardsand providing advice carries with it a potential forsome subsequent conflict of interest or an irre-sistible urge to step over the bounds of givingadvice into prescribing the fix. On balance, how-ever, the value of robust and high-quality advicefar outweighs the potential for conflict. In addi-tion, it is reasonable to expect that the center candiscipline itself and not turn the provision ofcounsel into demands or pressure to adopt speci-fied solutions or processes.

When this kind of advice is given, both the TreasuryBoard Secretariat and those receiving counselshould recognize that it does not relieve the operat-ing department of its responsibility and accountabil-ity for meeting the center’s standards for comptrol-lership. For its part, the Treasury Board Secretariatshould be responsible and accountable for the qual-ity of the advice it has rendered.

SUPPLYING GOVERNMENT-WIDE

PERFORMANCE INFORMATION

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Under the heading of deputy head’s responsibilities on pages 36-44, this report addresses a number of matters having to do withthe provision to deputies (and by deputies to the center) ofintegrated and consolidated financial and non-financialperformance information.

These matters, which pertain to certain overall attributes of suchperformance information, have equal applicability whenconsidering the responsibility of the Treasury BoardSecretary/Comptroller General to provide government-widefinancial and non-financial performance information.

The Secretary of the Treasury Board/Comp-troller General has responsibility to provideTreasury Board, other central agencies, andParliament with government-wide financial andnon-financial performance information.

The Treasury Board Secretary/ComptrollerGeneral should be the overall integrator of thegovernment’s financial and non-financial perfor-mance information.

The specific responsibilities associated with thisinclude:

• preparing the government’s financial state-ments

• establishing the format for and consolidat-ing the government’s operating budgets(the estimates).

This should also involve consolidating the gov-ernment’s non-financial performance informa-tion and aggregating it to a level where it can beused for government-wide decision making.This can take several forms. One is the consoli-dation of information about policies whoseadministration is shared by more than onedepartment or agency. Another is the develop-ment and reporting of information that portraysgovernment performance in relation to evenbroader goals and expectations and at a veryhigh level.

To the extent that the Treasury Board is reorient-ing itself to the role of a management board withgreater emphasis on business plans, priorities anddirections, the availability of such informationwill assume increasing importance.

Modern comptrollership will depend on theavailability of such information. The TreasuryBoard Secretary/Comptroller General and hisSecretariat colleagues have recently givenincreased emphasis to this type of information.They should be encouraged to continue to do sowith vigor.

D E P U T Y

C O M P T R O L L E R

G E N E R A L O F C A N A D A

The Deputy Comptroller General plays a specialrole in the system.

In a number of areas of his or her comptrollershipresponsibilities the Comptroller General placesconsiderable reliance on the financial expertise ofthe Deputy Comptroller General. For example,in one of the traditional areas of comptrollership,the Comptroller General takes personal responsi-bility (jointly with the Deputy Minister ofFinance and the Deputy Receiver General) forthe integrity of the Public Accounts. In practice,as the Treasury Board’s most senior financial pro-fessional, it is upon the Deputy ComptrollerGeneral’s professional judgment that all who usethese accounts rely.

Similarly, in the integration of financial and non-financial information, the Deputy ComptrollerGeneral provides professional expertise andcounsel to the Comptroller General.

As the system integrator, with strong links to thefinancial management, audit and performanceinformation functions in government, as well asto the policy governing particular types of expen-diture (real property and contracts), the DeputyComptroller General is the focal point of profes-sional support for the whole gamut of comptrol-lership standards, policies and approaches.

SUPPORTING THE COMPTROLLERSHIP

FUNCTION IN GOVERNMENT

Traditionally, the Comptroller General’s officehas been associated with the professional leader-ship of the financial, audit and performancemeasurement communities in the government.These are significant contributing functions tothe broader scope of comptrollership describedabove. In addition, the Deputy ComptrollerGeneral has been assigned responsibilities in theareas of real property management and con-tracting. These are important areas with link-ages to comptrollership.

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P r o f e s s i o n a l e x c e l l e n c e / l e a d e r s h i p

The Deputy Comptroller General should beassigned the responsibility to develop and main-tain centers of excellence and expertise for thepurposes of both advising the Treasury Board onappropriate standards, and providing advice whenrequested by deputies.

As the leader of a number of professional special-ist communities, the Deputy ComptrollerGeneral has an important role to play in creatingand sustaining the professional networks that sus-tain them. These communities include, for exam-ple, financial officers, internal auditors, evalua-tors, and real property management specialists. Itshould be expected that this would extend tomaintaining an inventory of individuals andtracking their performance, careers and develop-ment. The current emphasis on entry-levelrecruiting and initial training should be extendedto more senior levels.

C o u n s e l a n d a d v i c e

The Deputy Comptroller General plays a specialrole in respect of counsel for deputy heads andsenior financial officers who seek technical advicefrom the Comptroller General on their comp-trollership responsibilities, approaches andappointments.

As in any advice function, the person seekingadvice retains the right—and the responsibility—to seek advice in the first place, and to accept orreject the advice. The advisor—in this case theDeputy Comptroller General—neither holds norseeks the power to make the decisions, and isresponsible for the quality of advice given in lightof the facts disclosed. Such relationships demandconsiderable mutual respect, restraint and trust.

GOVERNMENT-WIDE

RESPONSIBILITIES

As the Treasury Board’s chief financial and non-financial accountant, the Deputy ComptrollerGeneral should play a key role for the membersof the Board in integrating, analyzing and inter-preting, at the level of the government as a whole:

• financial and performance budgets, and thesubsequent reports

• financial and non-financial information.

As discussed above, the Comptroller Generalrelies on the Deputy Comptroller General in dis-charging his/her responsibilities. Accordingly, theDeputy Comptroller General should report for-mally every year to the Comptroller General forCanada on his or her satisfaction with the PublicAccounts of Canada and with government-wideperformance information.

D E PA R T M E N T O F F I N A N C E

The Department of Finance’s role in accountingand budgeting frameworks—two important ele-ments of comptrollership—is referred to above.

The role of this central department in comptrol-lership is primarily in:

• setting the overall fiscal framework• participating in resource allocation to

departments• influencing transactions with government-

wide implications• exercising shared responsibility for

accounting standards.

P U B L I C S E R V I C E

C O M M I S S I O N

The Public Service Commission has certainresponsibilities for recruiting and staffing of cer-tain positions that are important contributors todifferent aspects of comptrollership in the gov-ernment. For example, as part of the fulfillmentof these responsibilities the Public ServiceCommission, in consultation with the TreasuryBoard Secretariat and departments, developscompetency profiles that ultimately influencewho are appointed to both specialist and generalmiddle-management positions.

Its important role at the point of putting peopleinto such positions should be recognized in anyregime of modernized comptrollership in theGovernment of Canada.

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R E C E I V E R G E N E R A L

F O R C A N A D A ( D E P U T Y

R E C E I V E R G E N E R A L

F O R C A N A D A )

The government has chosen to assign certainresponsibilities that are part of the center’sresponsibilities to the Receiver General ofCanada and through him to the Deputy ReceiverGeneral of Canada. These include:

• maintaining a consolidated revenue fund(bank accounts), receiving deposits on behalfof the government, and issuing payments

• recording all financial transactions of thegovernment in accordance with a system ofaccount classifications set out by TreasuryBoard.

In the process of doing the above, they produceboth the departmental and consolidated financialinformation that appears in the Public Accountsof Canada.

The Deputy Receiver General of Canada is alsoone of the three parties—together with theDeputy Minister of Finance and Secretary of theTreasury Board—who make a management rep-resentation accepting the responsibility for thepreparation of the Public Accounts of Canada.

As a consequence of these responsibilities, theReceiver General of Canada operates large com-puter systems (systems that also serve otheraspects of the operations of the Department ofPublic Works and Government Services). This isnot altogether unlike the provision of these typesof services by an outside service bureau.

Also because of these responsibilities, theReceiver General of Canada provides anotherlevel of advice and guidance to departments whomust do the coding.

Some years ago, with the advent of computerizedaccounting systems (usually large centralizedmainframes) the Receiver General of Canada alsoemerged as the primary financial system designerand consultant for the government.

As the circumstances of government and technol-ogy have changed, some departments nowassume a much greater measure of responsibilityand capacity to design and operate the systemsthey need and the role of the Receiver General ofCanada is responding to this change. That officeand the Treasury Board, among other initiatives,are engaged in:

• a review of how they work together • a Financial Information Strategy designed

to support the government’s current andfuture accounting needs.

The trend in all of these initiatives is similar to thatsuggested by this report: that operating depart-ments have both the responsibility and capacity todeal effectively with key comptrollership activi-ties—in this case transaction processing andaccounting. For example, departments will beexpected to process their own transactions to thepoint of a trial balance, a function heretofore doneby the Receiver General of Canada. The ability todo this effectively will ultimately mean that depart-ments can produce their own financial statements.

Despite the advice received from some to consol-idate comptrollership in a single central agency,the Panel considers that the existence of this cen-tral agency and its responsibilities is not in itselfan impediment to modern comptrollership in thegovernment, nor to its effectiveness.

The Panel recognizes the importance of theReceiver General of Canada as a provider of keyservices. Its accountability should be for the qual-ity and cost of the service that it provides todepartments and the government as a wholemore than for the discipline that it might other-wise inject into the system.

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The responsibilities of the ReceiverGeneral of Canada and the Minister ofPublic Works and Government Servicesare combined under one person. TheDeputy Minister of Public Works andGovernment Services is also the DeputyReceiver General of Canada.

This latter responsibility should more appropri-ately be that of the Treasury Board Secretariat ona government-wide basis, and deputy heads on adepartmental basis.

As departments develop their capacity effectivelyto specify and fulfill their own requirements,there is an opportunity for both the ReceiverGeneral of Canada and Treasury BoardSecretariat to adjust their course to ensure thatthey are strong partners in a regime of moderncomptrollership.

P A R L I A M E N T

Parliament and its committees exercise importantoversight responsibilities.

Parliamentarians not only share an interest in theeffective governance and management of affairs,but they also are in an important position toinfluence the conditions that will allow them toobtain the best value from the products of comp-trollership, and indeed create an environment forits successful attainment.

A number of these conditions have been present-ed above in Creating the comptrollership environ-ment—some key questions. These same considera-

tions have equal merit in Parliamentary oversightprocesses and committees. The incorporation ofthese considerations will help promote an envi-ronment for a sustained and substantive comp-trollership function.

P A R L I A M E N T ’ S

A U D I T O R — T H E

A U D I T O R G E N E R A L

O F C A N A D A

The Auditor General of Canada is responsiblethrough legislation to support Parliament by pro-viding audit assurance on a range of matters thatare directly related to, flow from, or are affectedby comptrollership in the Government of Canada.

One part of the Auditor General’s legislation, forexample, requires an audit opinion on the gov-ernment’s financial statements (the PublicAccounts of Canada). Other parts of the legisla-tion engage Parliament’s auditor in the provisionof assurance about various facets of the govern-ment’s financial and general management sys-tems, including those used for non-financial per-formance reporting, as well as matters having todo with authorized spending.

As Parliament’s auditor, the Auditor General ofCanada is a natural champion of effective comp-trollership throughout the full spectrum of thegovernment’s organization and activities. It isclear that for many decades the Auditor Generalof Canada has had an interest and significantimpact on the government’s comptrollershipregime. The Panel considers the Auditor Generalas one of the key players who will have an impor-tant influence in the modernization of comptrol-lership in the Government of Canada. Duringthe Panel’s consultations with the AuditorGeneral, he confirmed both his strong interest inthis aspect of the government’s administrationand his desire to be an advocate for, and con-tribute to this modernization.

This report, as indicated in the foreword, is basedon the principle of management in good faith.The Panel has fully accepted as serious the inten-

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… decisive steps must be taken to restore theconfidence of Canadians in their House of

Commons. Improvements to the proceduressurrounding the business of supply must be

integral to this effort. … Government has madesignificant changes to its expenditure

management system and the reporting offinancial information to Parliament, paving the

way to a more thorough review of supply.Canadians, for their part, expect Parliament to

make full use of these opportunities.“Completing the circle of control”

Report of the Subcommittee on the

Business of Supply

tions of government executives to advance andmodernize comptrollership. At the same time, itis recognized that, as is the case in any large orga-nization, people and circumstances change overtime. Today’s philosophies, priorities and man-agerial styles may not be tomorrow’s. Yet when itcomes to comptrollership, there is a need toensure consistency over time.

The Auditor General is uniquely positioned tomonitor consistency over time and to report toParliament thereon.

The approach suggested by the Panel will lead tomore robust performance reporting and report-ing about the status of comptrollership itself.The Auditor General can support elected offi-cials’ governance and oversight responsibilities byproviding Parliament with assurance about:



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Part V

M o d e r n i z i n g C o m p t r o l l e r s h i p –

T h e W a y F o r w a r d

This part of the report addresses the Panel’scharge to identify critical success factors,

actions and measures by which to make andgauge progress.

M E A S U R E S O F S U C C E S S

LONG-TERM (ULTIMATE) SUCCESS

The process of modernizing comptrollership isless the achievement of a single, fixed objectivethan it is an undertaking to accept a constantlyevolving discipline and embed it within the cul-ture of government.

In describing comptrollership, the Panel con-nects it to key management responsibilities andgovernance interests, and emphasizes results overprocess in the discussion of responsibilities.Success can be thought of in a similar vein—interms of the impact of successfully modernizingcomptrollership on management and gover-nance.

In these terms, the government will have success-fully modernized comptrollership when:

• Risk management, performance informa-tion and reporting, ethics, control, andasset management and protection are root-ed and thriving in the public service man-agement culture.

• Rigorously prepared, complete and relevantfinancial and non-financial performanceinformation is provided to decision makersand is accepted by them as credible.

• Meaningful problem-solving support isgiven in the context of human, financialand capital resource acquisition and man-agement, planning and accountability.

• There a strong capacity to use the abovetype of information effectively in decision-making.

INTERIM GOALS

In order to determine whether the above havebeen achieved it should be possible to answer thefollowing illustrative questions in the affirmative.

• Has Treasury Board set standards forcomptrollership that are flexible enough tobe met in different ways in different situa-tions, yet firm enough to act as a clearstimulus to action?

• Do recognition and reward systems providesufficient incentive to justify the effortinvolved in modernizing comptrollership?

• Have staff of the Treasury Board providedappropriate centers of excellence to supportand counsel deputies in the introduction ofcomptrollership?

• Do deputy heads respect the excellence ofthe center’s advice?

• Have deputy heads assessed their currentsituation and put in place the people, plansand processes to modernize comptroller-ship in their departments?

• Do deputies and ministers have justifiableconfidence that:

• managers throughout the systemunderstand their comptrollershipresponsibilities and “think like propri-etors and taxpayers”

• the information they—and managersthroughout the system—receive rela-tive to their stewardship responsibili-ties is relevant, reliable and useful

• greater delegated authority is given inrecognition of sound comptrollershipcapacity and performance

• risks are appropriately identified,assessed and responded to

• outputs are costed in ways that facili-tate comparisons and decisions?

• Do deputy heads provide to their ministersand to Treasury Board comprehensive,

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Part VModerniz ing Comptrollership - The Way Forward

fact-based financial and non-financialreports on their departments’ performance?

• Do deputies report to their ministers andto Treasury Board on their achievement ofcomptrollership standards?

• Has audit assurance been provided onmanagement reports?

• Is information so reported used in deci-sion-making and oversight processes?

• Does the President of Treasury Boardreport to Parliament on the state of comp-trollership government-wide?

C O N D I T I O N S F O R

M O D E R N I Z I N G


Achieving the scope and pace of change envis-aged in this report, and embedding moderncomptrollership in the public service culture—inthe way that people relate to, and trust oneanother—will not be achieved quickly or easily,or by adopting purely technical means.

The conditions that are discussed below will haveto be met to modernize comptrollership.

SUPPORT AND LEADERSHIP

People at the highest executive and political lev-els must recognize the need for change, under-stand the resultant benefits, give change their fullsupport, and ensure cohesion of leadership andsponsorship throughout the change period.

The Panel’s consultations convince it that there iswidespread acceptance at the senior levels of gov-ernment of the need for change and a desire forthe resultant benefits.

Accordingly, the Panel recommends a number ofmechanisms for providing consistent and cohe-sive leadership from the center.

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With the government’s purpose in mind, tocreate a management culture that is fact-based, results oriented, open and accountable,the effectiveness of comptrollership asexercised by central agencies might be judgedby how effectively they:

• communicate multi-year fiscal constraints• communicate changes in priorities• seek out and remedy inconsistencies in

objectives and results• take action to remedy inconsistencies between

budget allocation, objectives and priorities• manage cross-impact and government-

wide initiatives• enrich the government’s management

system to provide opportunities for higherlevels of individual and collectiveperformance

• evaluate and report, comprehensively, onthe effectiveness of policies and practicesrelated to [comptrollership]

• manage a government-wide continuousimprovement program with benchmarking.

The effectiveness of departmentalcomptrollership may be judged by the samecriteria . . . while recognizing the relevantcontext. A more obvious preoccupation withthe “client perspective” is a significant matterfor departmental managers.

Society of Management Accountants of

Canada

The development of these [comptrollership] capabilities largelyrepresents the development and application of techniques. It is“doable”, albeit with varying degrees of effort, if there is sufficientwill. However, without sufficient support from the top, bothpolitical and bureaucratic, only marginal technical improvementwill be achieved in either financial management or programresults measurement. We have defined the issues in terms of a setof capabilities. However, if these capabilities are not set in thecontext of a management culture that demands them and supportsthem, the level of capability developed will be uneven andunsatisfactory.

Auditor General of Canada

C e n t r a l s u p p o r t

There are two aspects of central sup-port that are important to consider.One has to do with the way in whichthe Treasury Board Secretariat staffgo about their work. The otherrelates to the areas in which they willsupport departments.

As Treasury Board has shifted itsemphasis from individual transac-

tions to overall direction, results and accountabil-ity, it has created a recognized need for differentskills in its secretariat and for those skills to beused in different ways. The weight of evidenceprovided to the Panel suggests that this need isreflected in day-to-day practices, albeit moreslowly than might be desired.

A key implementation issue, therefore, is the waythat staff of the Treasury Board carry through itsresponsibilities as standard setter, supporter andmonitor of comptrollership across the govern-ment. Equally important is the example it sets asthe integrator and prime comptroller for the gov-ernment as a whole.

Creating a cohesive framework for comptroller-ship responsibilities as discussed above requires acombination of restraint not to intrude on theresponsibility of deputies to find the best approachfor their departments, and discipline to maintaincohesiveness and meet reasonable expectations forproper conduct. The Treasury Board Secretariatneeds to develop the right kind of standards, thecapacity to support deputies when asked, and thetools and capacity to make the standards stick.

As regards the areas in which Treasury BoardSecretariat help is needed, input from deputyministers and their staffs suggests that they wouldwelcome—and expect—expert advice in the fol-lowing areas:

• risk management techniques• bench marking and performance measure-

ment• financial accounting and the appropriate

application of accounting principles

• maintaining accountability through contracts• applying performance measurement and eval-

uation techniques in smaller organizations• cost and management accounting• information systems architecture.

Departmental officials stressed that this should beprovided on an advisory and request basis, not as apolite way of telling them what to do withoutaccepting responsibility. They also acknowledgedthe temptation to attempt to delegate departmentalresponsibilities upward, while ostensibly only seek-ing advice. They stressed that they would expectadvice from recognized and seasoned experts.

E f f e c t i v e n e t w o r k i n g a n d

s h a r i n g o f b e s t p r a c t i c e s .

Managers and professionals with whom the Panelhad contact stressed the important role that thecenter plays when it brings them together to dis-cuss philosophy, common concerns, successes andlessons learned. Such informal and face-to-facecommunication plays a crucial role in passing onlearning, opening up alternatives, and speedingimplementation.

A variety of networking and sharing opportuni-ties should be provided and encouraged.

P o l i t i c a l s u p p o r t a n d

s p o n s o r s h i p

Deputy heads of individual departments, and theComptroller General will require the sponsor-ship and support of their ministers, and particu-larly Treasury Board ministers, to create and sus-tain an appropriate environment for change.

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Treasury Board should take the lead in relation tocomptrollership across the government and provideoff-site training and awareness-raising. It shouldorganize developmental opportunities. It used to befairly homogenous, but now its changed, and thereneeds to be opportunities for exchange.

quoted from an interview with a deputy minister

One part of this successfactor has thus been

satisfied although, as onedeputy head observed, the

devil is in the detail.



As reflected in many of the captions in thisreport, appointed officials respond to the politicalsystem in which they operate—a system some-times overwhelmingly characterized by partisanor constituency imperatives. For this reason, thePanel recommends a series of actions designed tocreate an environment more conducive to mod-ern comptrollership.

If there is to be real demand for, and constructiveuse of, comptrollership information, politicalleadership will be needed to establish groundrules for dealing constructively with interactionsbetween elected and appointed officials.

MANAGERIAL AND PROFESSIONAL

CAPACITY

The capacity of people in the system who areassociated with comptrollership should beassessed, and there must be a willingness to makethe necessary investments.

Modernizing comptrollership calls for attentionto the skills and capacity of both line managersand functional specialists. All levels of manage-ment, both elected and appointed, and functionalspecialists must move ahead with shared under-standing, vision and commitment. Otherwise,

change will be marginal and the desired “modern-ization” will fail or at least fall considerably shortof the advances that are possible and required.

This is because, as the Clerk of the Privy Councilpoints out, people perform, not systems. In orderto work in different ways they will require appro-priate skills development, both formally and,most importantly, through on-the-job trainingand experience. Most learning comes throughon-the-job experience and interactions.

Current capacity—both managerial and profes-sional—varies greatly among departments. Eventhose departments that have made the mostprogress acknowledged that they have a long wayto go and a major challenge to address.Professional groups and functional specialistsconsulted also acknowledge the need to improvetechniques and tools and develop improved inter-personal and organizational skills to relate betterwith operational managers.

Central agency staff consulted also acknowledgedthe need to do business differently and the conse-quent need to develop new skills, approaches andwork patterns.

The Panel has emphasized the need to developcapacity in departments. While there is some latentcapacity within the system to achieve more byexpecting more, both senior managers and func-tional specialists acknowledged that this opportuni-ty is limited. The nearby box provides an illustra-tion of the capacity issue as it applies to the finan-cial community.

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Every day at two o’ clock, governing andmanaging come together.

quoted from an interview with a deputy minister

Changes now taking place … will intensifycontacts between public servants and committees.

… [T]here must be some guidance provided formembers and public servants alike when the

latter appear before committees … [to] pave theway to a constructive relationship.

“Completing the circle of control” Report

of the House Subcommittee on the Business

of Supply

An assessment of what comptrollership employees should know,based on competencies and where they are now positioned, mayrequire a substantial investment in learning opportunities. If aculture of continuous improvement is to prevail, an investment inthe development of people, changed structures, roles and processessuch as performance measurement, rewards and penalties,recruitment and selection, will be required to make it happen.

Association of Public Service Financial Administrators

The f inancial community in government

The case of financial officers in government serves to illustrate the human capacity challenge facing allcomptrollership professionals. Financial officers have been long and closely—even exclusively—associatedwith comptrollership in government.

The most recent information available (1992 data) shows that the financial community in government con-sists of approximately 3,000 men and women across all government departments. Almost half of them holda professional accounting designation. Demographic analysis shows that the average age in all but the mostjunior levels is over 45.

The government will have a significant need for the training and expertise of financial professionals in mod-ernizing comptrollership.

The introduction of the government’s Financial Information Strategy will pose significant challenges. Itwill, for example, introduce accrual accounting that requires far more judgments about allocations, estima-tion and valuations than has heretofore been called for. Similarly, the introduction of user fees demandsmuch greater use of and expertise in costing and billing systems. Consistent application and clear communi-cation of professional judgments will be essential to maintaining discipline and integrity in the system.While such judgments form the core of professional accounting training, and designations, the emphasis ofgovernment on cash accounting provides little exercise for these skills. It is not clear to what extent theyhave atrophied and to what extent they are still available, but in latent form.

Further, truly embedding comptrollership responsibilities into the jobs of managers changes fundamentallythe nature of financial officers’ activities. Accounting has to become more widely recognized as somethingdone for rather than to managers. Supporting systems and information have to be made user friendly forgeneral managers as well as for accountants. Authority, accountability and control systems will have to starttreating people differently, according to how well they perform comptrollership responsibilities. Financialprofessionals should come closer to the management team, rather than act as scorekeepers.

The impact of the new view of comptrollership on the financial specialists is profound, and they recognizeit to be so. Financial specialists will need different skills—and even higher professionalism and integrity—tobalance their support for managers with their concern for the integrity of the system in an environmentwith significantly more room for judgment.

Consultations with financial officers, and with their union, revealed both acceptance of the need for changeand willingness to undertake it. Their support was tinged by a degree of apprehension about:

• the availability of the right kind of training, particularly in respect of the human and communicationskills necessary to work effectively with managers

• the level of support for, and recognition of, the value of professional advice and objective analysis.

Contributing to and underlying both these apprehensions is a concern that financial officer career pathstend to provide them with limited exposure to the world of operations, and to label them as specialists.Perceptions of narrow specialization’s combined with partial understanding of the business, handicappedthem in applying judgment, communicating effectively with or truly supporting line managers as profes-sionals. This is perceived as limiting their upward mobility.

Steps are underway to assess requirements for providing and building specific skills and competencies in thefinancial community. More difficult, however, is what to do about building and maintaining knowledge ofthe business and sustaining an appropriate level of professionalism in the financial community.

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C o m p e n s a t i o n

Any discussion of building capacity, and especial-ly of responding appropriately to comptrollershipperformance, entails consideration of compensa-tion levels and structures.

The Government of Canada competes for spe-cialist staff with other governments and with theprivate sector. Pay scales do not approach thosefor top echelon managers or professionals in theprivate sector. The structure of pay scales tend toreward those with larger staffs, rather than thosewho achieve more with the same or fewerresources or those who contribute effectively toorganizational objectives through teamwork.

The whole subject of compensation levels andstructures is already under review as part of the“La Relève” initiative. The Panel underlines theimportance of this work to modernizing comp-trollership. It is an essential element of maintain-ing the capacity of the public service to serve thepublic interest. These considerations are alsoreflected in the Panel’s suggestions regarding theacquisition and deployment of specialist skills.

INCENTIVES

There should be appropriate incentives for excel-lence in comptrollership. There are few mone-tary incentives available to reward improvedcomptrollership. There are, however, a numberof non-monetary incentives that the Panel sug-gests should be deployed to promote changeincluding:

• clear linkages to career progression • linkages to compensation• latitude to operate with less oversight and

intervention from the center• support from the center when the occa-

sional thing goes wrong in an otherwisewell-functioning organization

• audit and oversight approaches that recog-nize excellence.

Deputy heads should also be entitled to theearned benefits of trust flowing from excellencethat they achieve in comptrollership in theirdepartments particularly in areas of financial andnon-financial performance reporting and budget-ing. Equally, where performance in comptroller-ship falls below minimum acceptable standards,sanctions should be brought to bear.

Similarly, appropriate entitlements and incentivesshould be provided for the Secretary of TreasuryBoard/Comptroller General. This official shouldbe entitled to:

• expect support from ministers in respect of his important comptrollership responsi-bilities

• access to a meaningful forum to deal with,and resolve, differences of view among col-leagues

• have clarity in respect of accountability forthe quality of comptrollership.

A C Q U I S I T I O N O F

S P E C I A L I S T

S U P P O R T

Hiring possibilities—especially for seniorspecialists—are limited or constrained bypay-scale disparities. Further, the pace ofchange discussed in this report will call fordeployment of expertise faster than long-term development will likely allow.

An approach that has been used here and inother jurisdictions, and one that the Panelcommends for selective applications to coversituations while internal capacity is beingdeveloped, is to use contractual and inter-change arrangements with the private sector.

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C H A N G E M A N A G E M E N T

CREDIBILITY OF THE CHANGE

INITIATIVE

Insiders and, almost or as important, the key pro-fessional and other external communities shouldview the modernization process as being credibleand necessary. The effort will be credible only ifit permeates government at every level.

In large measure credibility is the result of theleadership discussed above and establishment bythe government of clear priorities and targets forachieving modern comptrollership.

Modernization will incur costs that have to bemet. These include scarce management time toprovide leadership and resources to develop man-agerial and professional capacity.

MECHANISMS FOR CHANGE

What the Panel is proposing is change and mod-ernization that will stand the test of time. Theoverall goal will have to be clear, and the direc-tion of change should be constant.

Many initiatives—in the private and public sec-tors—either run out of steam or become too quick-ly frozen into rigid structures. For this reason, theapproach set out in this report seeks to providecontinuity through people, communications andvisibility, rather than through legislative change.

COMMUNICATIONS

Communications will play a crucial role in mod-ernizing comptrollership.

Simply communicating responsibilities once willnot be sufficient. What will be called for areimplementation steps that reinforce and explainthe message consistently over time. Among thesuggestions received by the Panel for communi-cating comptrollership responsibilities through-out the system were:

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The problem has been that most managers thinkthat comptrollership is someone else’s job.

quoted from an interview with a deputy

minister

A performance requirement of managers in thepublic service should be to specifically address theeconomical use of resources.

Society of Management Accountants of Canada

M E C H A N I S M S —T H E U S E O F

L E G I S L A T I O N

Many respondents advocated legislationas the appropriate mechanism for makingclear the comptrollership responsibilitiesof key players in the system. They pointto the use of legislation in other jurisdic-tions and reason that only legislation:

• could provide a sufficiently clear andsustained signal of the need to change

• fixes responsibilities clearly and vis-ibly enough to avoid undue varia-tions in approaches to comptroller-ship with changes in personnel

• sufficiently supports those whomight find their comptrollershipresponsibilities in tension withother priorities or imperatives.

Modernizing comptrollership need notand should not be predicated on legisla-tion. Given the level of recognition dis-cussed above, and given the consistency ofwhat is recommended with the generaldirection of management change andrenewal in the government, the Panelaccepts the advice of senior executives onthis subject. That is, administrative means,particularly those dealing with selection,training, recognition and reward of peopleand those dealing with the reporting, vali-dating and use of information, will providesufficient impetus and focus.

• inclusion in codes of conduct, acknowl-edged on an annual basis

• inclusion in training sessions, on appoint-ment to post or as a condition of delegation.

SHORT AND LONG-TERM PROGRESS

There should be subsequent fast-paced imple-mentation with the support of, and partnershipwith, outside communities and professionals

In any change initiative, there is a clear need topace change: fast enough to sustain momentumand focus and to challenge participants; deliber-ate enough to allow due care and to set expecta-tions capable of being met. Particularly in a long-term project such as modernizing comptroller-ship, expectations should be reflected in clear,concrete and challenging mileposts which makevisible and sustain the progress.

The government should aim—within threeyears—to make substantial and substantiveprogress toward the ultimate goals describedabove. The achievement of the interim resultshaving to do with reporting represent a results-oriented test of progress. If these comptrollershipresults can be met, then the other interim mea-sures described above will have been successfullyimplemented.

C H A M P I O N S F O R

C H A N G E — A M O D E R N I -Z A T I O N T A S K F O R C E

The report has stressed throughout the impor-tance of cohesive, continuing leadership in orderto modernize comptrollership. Signaling person-al and institutional commitment to those ends,and building and maintaining momentum, arekey steps toward modern comptrollership.

To these ends, the Panel recommends that theTreasury Board mandate a Modernization TaskForce. The main purposes of the task force are toprovide leadership, impetus and momentum forchange. The task force would monitor progressand if necessary suggest changes in direction,pace and priority. It would report to the TreasuryBoard through it’s President.

This task force should comprise a very smallnumber of deputy ministers including the currentTreasury Board Secretary. To achieve the conti-nuity that is needed these individuals, onceappointed, should serve for a period of timeregardless of subsequent changes in their posi-tions within the government. The participationof the Auditor General of Canada and one or twopeople from outside government is, in the Panel’sview, also desirable.

M A K I N G P R O G R E S S —A N A G E N D A F O R

A C T I O N

To embed modern comptrollership in the Govern-ment of Canada, the Panel recommends that:


• endorse and adopt a modern view of comp-trollership

• endorse the proposed allocation anddescription of responsibilities

• provide leadership for the modernization ofcomptrollership and report to Parliamenton the state of comptrollership.

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Given the need to expand the role of thecomptrollership function in government, it is

imperative that steps occur to enhance the imageand awareness of the critical support role

employees of the comptrollership function canprovide. The non-financial manager needs a

greater level of understanding of this role andshould be provided with educational or

orientation opportunities.

Association of Public Service Financial

Administrators


• maintain a consistent and strong emphasison comptrollership capability and inclina-tion in deputy ministerial and aspirantdeputy ministerial selection, mandating andassessment processes.

SECRETARY OF TREASURY BOARD/COMPTROLLER GENERAL OF CANADA

• develop and implement a plan for progress,including provision for the establishmentof a group of lead departments to spear-head the modernization effort

• establish and staff centers of excellence tosupport the capacity development and advi-sory needs of departments

• develop, in consultation with lead depart-ments, appropriate standards for comptrol-lership and for financial and non-financialbudgeting and reporting

• establish an implementation task force, astandards advisory board, and a comptrol-lership council .

DEPUTY HEADS

• embrace their responsibilities for moderncomptrollership

• assess their current comptrollership envi-ronment, structures, processes and peopleagainst the vision set out in this report,their strategic priorities, and other depart-ments

• develop department-specific priorities formodernization

• secure commitment of their senior man-agement groups to action plans and timeta-bles for modernization

• communicate their priorities and plans formodernizing comptrollership to TreasuryBoard, the Auditor General, and to the rel-evant Parliamentary standing committee

• drive the modernization process and reporton progress.

THE SPECIAL ROLE OF THE AUDITOR

GENERAL

Responsibility for managing and reporting andfor modernizing comptrollership rests with theadministration. Nevertheless, the Panel regardsthe Auditor General as a natural champion ofmodern comptrollership. As a servant ofParliament, with an interest in financial manage-ment and accountability, the Auditor General cansupport elected officials’ governance and over-sight responsibilities by providing Parliamentwith assurance about:



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79

A p p e n d i c e s

Part 4 of the report characterizes how certain facets of the responsibilities proposed for various play-ers should be dealt with.

This appendix is a synopsis of matters that are dealt with in the responsibilities framework and isintended to serve as a checklist and a basis for dialogue among those who will assume comptrollershipresponsibilities.

1/ SET THE TONE FROM THE TOP

“Look through the window at the top. Look through the window at the top—through it, you can glimpse notonly the heart of the company, but also its very soul.” Donald Fullerton, then Chairman and CEO of theCanadian Imperial Bank of Commerce (from a speech given at a CCAF conference in 1991)

Setting the tone from the top starts with the leaders’ reactions and behavior as perceived by col-leagues and ultimately all levels of employees—from Parliamentarians and ministers on through allranks of management.

Is this matter appropriately dealt with by Parliament, ministers and executives?

2/ PLAN FOR EFFECTIVE COMPTROLLERSHIP

Comptrollership does not happen by itself. It is recognized that a department’s staff do not remainstatic, nor does its operating environment, nor even necessarily its businesses. What may work wellwhen a particular management team is in place may be less effective if the team changes.

Does the department have a plan, and is it kept current?

3/ ASSIGN AND DEVELOP PEOPLE

Excellence in comptrollership, while influenced by certain facets of support such as technology,depends on people. Assigning the right people to comptrollership functions and developing strongmanagerial and specialist capacity is a key issue for individual departments and for the center.

Do executives and managers have suitable knowledge of the specialist disciplines that support them in theircomptrollership responsibilities? Do specialists and professionals have a sound knowledge of the programs andservices their departments are involved with and do they have suitable levels of managerial acumen?

4/ INTEGRATE FINANCIAL AND NON-FINANCIAL PERFORMANCE INFORMATION

Performance information will be most valuable when it brings together both financial and non-financial and historical and prospective information and establishes the links between them. Theinformation’s usefulness is enhanced when it is presented in the context of the department’s vision,mission, objectives, and direction of its programs and activities.

Does performance reporting promote understanding without oversimplifying and interpret linked financial,non-financial and cost information?

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Appendix 1Guidance on the nature ofcomptrollership respons ib il it ies

Does it relate this information to:

• the available alternative means of fulfilling the department’s mission

• the expectations for performance and results that have been established in business and strategic plans orin other planning instruments

• a forward-looking perspective that can contribute to future policy or strategic planning decisions andilluminate the organization’s ongoing capacity to sustain desired performance levels

• external as well as internal information to facilitate (where possible) comparisons to other organizationsengaged in comparable programs, activities or service delivery mechanisms?

5/ ESTABLISH A PERFORMANCE REPORTING FRAMEWORK

Excellence in performance reporting is an essential ingredient to modern comptrollership.Achieving this excellence requires agreement as to what constitutes a meaningful framework andset of standards. This framework must be set at a level that allows for its adaptation to the diversebusinesses of government, without imposing a straight jacket that leads to the triumph of processover results.

Does the performance reporting framework used by the government and its departments and agencies incor-porate the principles suggested in this report?

6/ REPORT ON COMPTROLLERSHIP

The approach to comptrollership that is proposed is based on the notion that deputy head needs toknow the extent to which government and departmental standards are being met in their owndepartment or agency, and that the center needs to know the extent to which government-widestandards are being fulfilled across the system.

Are there a series of interlocking reports on comptrollership—by senior financial officers to deputies, bydeputies to their ministers and the center, by the Deputy Comptroller General to the Secretary of the TreasuryBoard, by the Secretary of the Treasury Board to the Treasury Board, and by the President of the TreasuryBoard to Parliament?

7/ CONSOLIDATE REPORTING

A characteristic of modern comptrollership is that it directs as much of time of executives, man-agers and professionals as possible to conducting the businesses of their departments. Unnecessaryor overlapping reporting requirements are avoided.

Has there been a substantial consolidation of required reporting vehicles?

Do deputy ministers prepare an annual report meeting the conditions described in this report?

8/ LINK PERFORMANCE REPORTING TO BUSINESS CYCLES

Both financial and non-financial information respond to what are often unique business cycles thatcan range from hours and days to months and individual and multiple-year periods.

Do government-wide and annual reports of departments recognize the cycles of various programs and ini-tiatives, recognizing that not everything should be reported on every year?

Has a planned approach to reporting been adopted?

81

9/ RECOGNIZE THE DEPUTY HEAD’S ROLE IN REPORTING

Deputy heads (and their top management team), because of their experience and position at theconfluence of all key aspects of their departments’ operations, are best able to interpret perfor-mance information and to communicate it. This is especially important in ensuring that appropri-ate judgment is brought to bear on the selection of performance measures and indicators, their lim-itations, and their implications.

Does the deputy head exercise a direct role in preparing annual financial and non-financial performancereports?

10/ VALIDATE REPORTS

The important reports referred to above should not only be prepared with rigor but they shouldalso be demonstrable as such. Audit should be applied periodically either once every several years,at the discretion of deputy heads, or when judged appropriate by the center

Is the test of audit applied periodically?

11/ SET STANDARDS THAT ARE ADAPTABLE TO THE NEEDS OF DEPARTMENTS.

Standards must be capable of being implemented in ways that respond to diverse businesses and cir-cumstances, that focus appropriately on the results expected and that make clear prohibitionsagainst certain acts or behaviors, or requirements to do things a particular way. Standards shouldset reasonable expectations that help executives, managers, and all personnel to attain their organi-zation’s goals—to succeed. Generally speaking, standards should not create roadblocks to takingreasonable action or accepting reasonable risks.

Have needed standards been developed and implemented in a way that promotes strength without rigidity?

12/ PROVIDE BENEFITS EARNED BY EXCELLENCE IN COMPTROLLERSHIP

Empowerment and the devolution of authority should be accompanied not only by the exercise ofrigorous judgment on the part of those who receive authority, but also by an understanding of whatconstitutes acceptable risks and an ability to assess proposed courses of action in relation to these—in short an excellence in comptrollership.

Do those who achieve excellence in comptrollership receive the benefits that flow from the trust they haveearned?

Consider: career progression; compensation; the amount of latitude executives are given to operate with; theamount and kind of oversight that is applied; the nature, extent and timing of audit coverage?

13/ ACHIEVE CONSENSUS AND COORDINATION AT THE CENTER

Several central agencies will play a vital role in providing leadership and direction both to mod-ernize and to sustain excellence in comptrollership. Not all these agencies will necessarily agree allthe time, nor is it expected that they should. Differences of opinion will from time to time arise onimportant issues related to elements of comptrollership. The Treasury Board is well-positioned tointegrate and to help resolve disputes.

Does the Treasury Board assume this important role?

82

14/ PRESENT “ONE FACE” TO DEPARTMENTS AND AGENCIES

Many of the Treasury Board staff and virtually all of the government executives consulted charac-terized a modern comptrollership regime as being one in which Treasury Board presents one faceto the operating departments and agencies.

Does the Treasury Board Secretariat appropriately integrate its dealings with departments?

15/ CREATE FOCAL POINTS FOR EXCELLENCE

Appropriate vehicles need to be in place through which managers and professionals can developand maintain a capacity to achieve excellence in aspects of comptrollership that are key to individ-ual departments and to the government. In this regard, centers of excellence—at which staff cangain developmental experience, and from which they can obtain advice and expertise—are impor-tant vehicles.

Have such centers and focal points been created?

16/ PROVIDE COUNSEL

Deputy heads are entitled to be able to ask for and receive effective counsel and advice to help themmeet standards, achieve their goals and fulfill their departments’ missions. Departmental officialsstressed that this should be provided on an advisory and request basis. They also acknowledged thetemptation to delegate departmental responsibilities upward , under the guise of seeking advice.They stressed that they would expect top-flight advice from recognized and seasoned experts.

Does the center have this capacity?

17/ MINIMIZE UNNECESSARY CONSTRAINTS

There will inevitably be certain areas in which the government chooses to restrict its employees’latitude to act. It is to be hoped that there need not be many such areas. Modern comptrollershipshould be understood to recognize this potential and the reasons that sometimes make it necessaryto adopt constraint-oriented direction.

Are necessary prohibitions clear and clearly enforced by the center?

18/ PERFORM A PERIODIC STAND-BACK REVIEW

The comptrollership regime for the Government of Canada provides considerable flexibility toadapt to evolving needs. This stems from the assignment of specific responsibilities and the speci-fication of prerequisite competencies of individuals such as the Comptroller General throughadministrative means rather than legislation.

Periodic stand back reviews help to ensure adaptation to evolving needs, and to maintain appro-priate emphasis on comptrollership matters.

Does the Treasury Board, under the leadership of its President, undertake periodic reviews of the adequacy ofcurrent organizational arrangements that support comptrollership in the Government of Canada and reportthese findings to Parliament?

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The following is a consolidation of the major recommendations that appear in Panel’s report.

COMPTROLLERSHIP

Comptrollership should be understood to be about ensuring that:

• management decision making has the benefit of rigorous, complete and integrated financial andnon-financial, historical and prospective performance information as well appropriate advice,analysis and interpretation of this information

• the oversight, accountability and public reporting responsibilities of elected officials are sup-ported by rigorous, complete and integrated financial and non-financial performance informa-tion

• a mature risk management environment is created and sustained • control systems are appropriate to management needs and risks• ethics, ethical practices and values permeate the organization.

Comptrollership must be viewed as:

• a management function that is a part of every manager’s job; it cannot be delegated entirely tospecialists

• an integrating function—one that brings together relevant information from within and withoutthe organization

• analyzing and interpreting information, understanding its limitations, and using that informa-tion to challenge plans and practices.

A willingness to act on the basis of information, and on the basis of the logical outcome of challenge,should be seen as an essential characteristic of comptrollership.

COMPTROLLERSHIP IN THE GOVERNMENT OF CANADA

There should be a strong capability for comptrollership both in the operating departments and agen-cies, and at the center.

The center should have the capacity to:

• make recommendations to Cabinet for resource allocation• establish government-wide administrative standards and policies• establish and monitor a control and accountability framework• advise on the machinery of government

The prime responsibility for performing comptrollership on a day-to-day basis should rest with theoperating departments and agencies.

Departments, and particularly their deputy heads, should have the flexibility and capacity to decide howbest to meet their key comptrollership responsibilities.

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Appendix 2Agenda for act ion—Summary of Recommendations

People with comptrollership responsibilities should be rewarded or sanctioned based on their performance.

Incentives should be provided to encourage the modernization of comptrollership in the government.

DEPUTY HEADS

These officers should:

• accept their prime responsibility for comptrollership within their organizations and create a cul-ture and environment within which comptrollership can make its contribution to strategic andbusiness planning, risk management, control, and performance reporting

• establish, and be held accountable for, the comptrollership regime that best suits their assess-ment of their organization’s circumstances and needs while meeting government-wide standards

• develop short and longer-term plans for comptrollership suitable for their departments • produce annually, for their ministers and the center, a consolidated and integrated report, capa-

ble of standing the test of audit (which should be applied at least once every several years), ontheir organization’s financial and non-financial performance

• work with the center to determine a reporting cycle for the performance of different aspects ofthe organization’s businesses

• report annually to their ministers and the center on the extent to which they meet the govern-ment-wide standards for comptrollership

• ensure appropriate rotation of financial staff through operational posts and provide managerswith the opportunity to become familiar with the tools of comptrollership specialists

• have the final say in the selection and appointment of the key players who will have particularcomptrollership-related responsibilities.



• maintain a consistent and strong emphasis on comptrollership in the selection and mandatingprocesses for the government’s most senior executives

• assess and reward, or if necessary sanction, performance in this area.

SECRETARY OF THE TREASURY BOARD/COMPTROLLER GENERAL


• establish appropriate standards (and key frameworks) for financial and non-financial informationreporting and budgeting for the government as a whole

• receive annual consolidated and integrated reports from departments on their performance andensure that such reports are subjected to periodic audit

• establish appropriate high-level, government-wide standards for comptrollership that can beadapted to the circumstances of individual departments

• receive reports from departments on the extent to which they have met these standards• from those reports and from observation, know the extent to which the above standards are met

government-wide• act to preserve the above standards government-wide when there is evidence of deterioration• give effective counsel to departments to help them achieve the standards and their department’s

mission in the most effective way possible• supply Treasury Board, other central agencies, and Parliament with government-wide financial

and non-financial performance information appropriate to their responsibilities

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• report annually to the President of the Treasury Board on the state of comptrollership in thegovernment

• establish and staff centers of excellence to support the capacity development and advisory needsof departments

• establish a specifically focused Comptrollership Council of senior officials to foster comptroller-ship throughout the government

• identify a number of departments to lead in the modernization of comptrollership, and chair aModernization Task Force comprised primarily of deputies from those departments.

TREASURY BOARD OF CANADA

This committee of Cabinet should:

• endorse and adopt the view of modern comptrollership proposed in this report• endorse the proposed allocation and description of responsibilities, and authorize the establish-

ment of the proposed mechanisms• approve government-wide standards for performance reporting, comptrollership and budgeting• provide leadership for and support efforts to modernize comptrollership in the government• ensure that appropriate resources are available to achieve modernization of comptrollership• report to Parliament on the state of comptrollership in the government.

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The Independent Review Panel on the Modernization of Comptrollership in the Government ofCanada (the Panel) was created to facilitate renewal and change of the comptrollership function

for the future. Key questions comprising its principal terms of reference included the following:

• What does the face of comptrollership in the Government of Canada (both at central agencylevel and in departments) look like now? Why does it look that way? What assumptions is itpredicated on? How might we characterize current comptrollership?

• Has/is anything changing in the way in which the Government goes about the conduct of itsbusiness(es) that suggests traditional assumptions need to be challenged or changed to ensurethat comptrollership meets the needs of, and provides value and the support to, managementand the governing body that it ought to? Is the public sector operating in a higher risk environ-ment than previously?

• What comptrollership needs are suggested by the above? What role does/should comptroller-ship have in relation to these issues in order to ensure that it is relevant, robust and responsiveto changing conditions and risks?

• How might we want to characterize comptrollership in the year 2000 and beyond?—how willwe know when we ought to be satisfied?

• What critical success factors need to be identified to achieve successful comptrollership ‘mod-ernization’?

• What approaches to change should be considered? What practical steps can be taken by theGovernment to achieve the desired scope and quality of comptrollership? What agenda foraction should be adopted?

The review was directed to take into account the function at both the central agency level of the govern-ment and in respect of operating departments but not Crown corporations or other arms-length agencies.

The central focus of the review was directed to the substantive nature of the comptrollership func-tion not the organizational means that are currently in place or may become needed.

M E M B E R S H I P O F T H E P A N E L

The members of the Panel were:

JEAN-PIERRE BOISCLAIR, FCA, CMC—ChairPresident, CCAF-FCVI Inc.

Jean-Pierre Boisclair is the President of CCAF–FCVI (formerly the Canadian ComprehensiveAuditing Foundation), a national, non-profit, research and education organization dedicated tobuilding knowledge for meaningful accountability, effective governance, management and audit.Mr. Boisclair has led the Foundation’s work since it was created in 1980. He is a past partner in anational firm of Chartered Accountants and has worked with the federal government, theGovernment of British Columbia and other public sector institutions in the areas of financialmanagement, governance information and performance reporting. In the private sector, heserved as a chief executive officer of a corporation in the aerospace industry.

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Appendix 3Terms of Reference & approach

J. DOUGLAS BARRINGTON, FCAGroup Managing Partner, National Services, Deloitte & Touche, Chartered Accountants

Mr. Barrington is a past Chairman of the Board of Deloitte & Touche and currently ViceChairman of CCAF-FCVI. He was Chairman of the Inter-Institute Vision Task Force of theCanadian Institute of Chartered Accountants (CICA) and currently chairs the CICA VisionLeadership Group. He obtained his MBA designation at Harvard University in 1966.

WILLIAM R. C. BLUNDELL, O.C., B.A. SC.-ENGINEERING PHYSICS

Chairman, Manulife Financial

Mr. Blundell is past President and CEO of General Electric Canada and past Vice-President Financeof GE Canada. He is Director of Alcan Aluminum Limited, Amoco Canada Petroleum and ViceChairman of Export Development Corporation. He is also Chairman of the Wellesley Hospital, amember of the National Forum on Health and a Governor of the University of Toronto.

WILLIAM A. DIMMA, O.C., P. ENG., D.B.A.Chairman, Monsanto Canada Inc. Mr. Dimma is also Chair of Canadian Business Media Ltd. and the HomeCapital Group Inc. He is a director of the Greater Toronto Airports Authority, Fleet Aerospace Corporation,Sears Canada and London Life.

Mr. Dimma is a past Director of Canron Inc., Interlink Freight Systems, Polysar Chemical, HomeOil, Toronto Star Newspapers, Trizec Corporation Ltd., Union Carbide Canada Inc., Canadian Club,Economic Council of Canada, Toronto Hospital for Sick Children, C.D. Howe Institute, TorontoSymphony, etc. He is past President and CEO of Royal Lepage Limited and of Torstar Corporation.He is a past Professor and Dean of the Faculty of Administrative Studies, York University.

RAYMOND PROTTI

President and Chief Executive Officer, Canadian Bankers Association

Prior to joining the Canadian Bankers Association, Mr. Protti was a senior executive in the publicsector. He is a past Director of the Canadian Security Intelligence Service (CSIS); formerDeputy Minister—Agriculture and Agri-food Canada; and Labour Canada. Mr. Protti has alsoheld positions with the Bank of Canada, the Department of Finance and the Privy Council. Heobtained his MA in Economics from the University of Alberta and attended the London Schoolof Economics and Political Science.

KARN SANDY, CMA, FCMAChief Operating Officer, Workers’ Compensation Board of Manitoba

Ms. Sandy is past Executive Director, Corporate Services of the Workers’ Compensation Boardof Manitoba. She is a member of the Executive of the Financial Executives Institute—WinnipegChapter and a past Chair of the Board of the Society of Management Accountants of Canada.She is currently a member of the Financial Management Institute and Institute of PublicAdministration of Canada and a CCAF Governor.

EDWARD J. WAITZER, LL.B., LL.MPartner, Stikeman, Elliott

Mr. Waitzer served as Chairman of the Ontario Securities Commission 1993-1996 and theTechnical Committee of the International Organization of Securities Commissions (IOSCO),

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1994-1996. He served as an Adjunct Professor at Osgoode Hall Law School and as VicePresident, Listings and Distributions of the Toronto Stock Exchange. He is a partner withStikeman, Elliott and has served as a director of numerous private and public sector organizations.He currently chairs The Strategy Working Party of The International Accounting StandardsCommittee and is a member of The Task Force on Standard Setting of the CICA.

W O R K O F T H E P A N E L

The Panel approached its task on an iterative basis using a number of methods to obtain the informa-tion upon which it based its judgments.

Initially efforts focused on obtaining information about the current status and role of comptrollershipin the Government of Canada, how and why the function evolved to where it is today and its currenttrend line. Staff of the Treasury Board Secretariat prepared a series of background papers for the Paneldealing with such matters as:

• The Past And Current Scope Of Comptrollership In The Government Of Canada• The Basis In Law For The Comptrollership Function In The Government Of Canada• Research On Comptrollership• A Current Inventory Of Initiatives In The Comptrollership Area• Existing Vision For Future Directions

A second phase of input sought out information and considered opinion to support and facilitate theformulation of the Panel’s judgments. The Panel invited written submissions from organizations andindividuals (who were thought to be well positioned to provide advice on the topic) to provide theiradvice regarding the key questions with which it was concerned. Governments in other jurisdictionswere also approached for comparative and trend information, and a trip to Washington DC providedfurther comparative information.

A third phase of input was intended to provide an opportunity for less formal input and advice througha program of individual interviews and focus group discussions. Through these, the members of thePanel not only obtained additional input and personal views, but also refined the Panel’s thinking andhelped it to arrive at its final conclusions. At least one member of the Panel attended all key interviewsand focus group sessions.

The Panel engaged the Deloitte & Touche Consulting Group to provide an independent check of thepracticality of its recommendations. Paul Robinson, of their Ottawa office, conducted a change chal-lenge assessment, applying criteria drawn from their change management practice to the Panel’sapproach and to a draft of its report.

Between its first meeting, in March 1997 and the completion of its report in October 1997, the Panelmet formally six times. At three of the meetings, its members received oral presentations to supple-ment written submissions or to provide original input. The Deputy Comptroller General attended thePanel meetings to ensure a transparent process and to promote an effective and expeditious hand-overof the final report.

The Panel has appreciated deeply the time and effort expended by all those who contributed—orallyor in writing—to its work. Their advice and wise counsel helped shape the Panel’s views and conclu-sions. The report of the Panel, however, remains first and last that of its members, regardless of theconsultations and advice obtained.

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WRITTEN SUBMISSIONS AND INFORMATION WERE RECEIVED FROM

The Association of Public Service Financial AdministratorsThe Auditor General of CanadaThe Canadian Institute of Chartered AccountantsCGA CanadaThe Fraser InstitutePaul Gauvin, Former Senior Assistant Deputy Minister, Transport CanadaThe Society of Management Accountants of CanadaThe Comptroller and Auditor General of AustraliaThe Comptroller and Auditor General of the United Kingdom

ORAL PRESENTATIONS TO THE FULL PANEL WERE RECEIVED FROM

V. P. Harder, C. Davis, R. Neville, and A. Winberg Treasury Board Secretariat

L. D. Desautels, R. M. Dubois, M. Barrados, R.C. Thompon, and D. TimminsOffice of the Auditor General of Canada

P. W. CurrieRoyal Bank of Canada

W. P. Solski and B.R. WilsonDofasco Inc

L. D. DesautelsAuditor General of Canada

INDIVIDUAL OR SMALL-GROUP INTERVIEWS WERE HELD WITH

J. Bourgon, Clerk of the Privy CouncilC. Bowsher, former Comptroller General, USAM. Cappe, Deputy Minister, Human Resources Development CanadaM. Catterall, MPS. Clark, Deputy Minister of FinanceI.D. Clark, former Secretary of Treasury Board/Comptroller General of CanadaW. Crandall, Associate Deputy Minister, Revenue CanadaL. D. Desautels, Auditor General of CanadaG. E. DeSeve, Comptroller, Office of Management and Budget, USAD. Dodge, Former Deputy Minister of FinanceR. Emond, Assistant Deputy Minister, National DefenceL. Fréchette, Deputy Minister, National DefenceF. Gingell, Member of the Legislative Assembly of B.C.D. Good, Assistant Deputy Minister, Human Resources Development Canada

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Appendix 4Organizat ions and ind iv iduals whocontributed to the work of the Panel

P. Homulos, Assistant Deputy Minister, Heritage CanadaS. Horn, Congressman, Member of Congress, USAR. Hubbard, President, Public Service CommissionO. Ingstrup, Commissioner, Correctional Service CanadaH. Labelle, President, CIDAG. Leclerc, former Deputy Comptroller General of CanadaJ. Libbey, Deputy Project Leader, Financial Information StrategyK. Lynch, Deputy Minister, Industry CanadaHon. M. Massé, President of Treasury BoardD. Miller, Assistant Secretary of Expenditure Management Sector, Treasury BoardG. Osbaldeston, former Clerk of the Privy Council and Secretary of Treasury BoardR. Quail, Deputy Minister, Public Works and Government Services CanadaM.H. Rayner, President & Chief Operational Officer, Canadian Institute of Chartered Accountants of

Canada (former Comptroller General of Canada)S. Serson, Deputy Minister, Indian and Northern DevelopmentJ. Smith, Principal, Canadian Center for Management DevelopmentJ. Stobbe, Assistant Deputy Minister, Government Operational Service, Public Works and

Government Services Canada

FOCUS GROUP AND INPUT SESSIONS WERE HELD WITH

Government officials in the fields of Corporate Services, Finance, Internal Audit andEvaluation, and Legislative Audit

Participants: A. Armit, Public Service Commission; W, Austin, Indian Affairs and NorthernDevelopment; M. Barrados, Office of the Auditor General of Canada; G. Bédard, Office of theAuditor General of Quebec; D. Bickerton, Natural resources Canada; J. Callon, Canada LabourRelations Board; R. Cameron, Treasury Board Secretariat; R. Campbell, Treasury BoardSecretariat; C. Carter, Office of the Auditor General of Nova Scotia; J. Davidson, RevenueCanada; C. Davis, Treasury Board Secretariat; R. M. Dubois, Office of the Auditor General ofCanada; L. Edwards, Foreign Affairs and International Trade; R. M. Emond, Department ofNational Defence; R. B. Fadden, Natural Resources Canada; Y. Fortin, Statistics Canada; A. Gareau, Commissioner for Federal Judicial Affairs; M. Gibeault, Human ResourcesDevelopment Canada; D. Good, Human Resources Development Canada; B. Gorman, TreasuryBoard Secretariat; A. Graham, Department of Agriculture and Food; J. Greenberg, Office of theAuditor General of Canada; P. Gregory, Office of the Auditor General of British Columbia; E. Grout-Brown, Office of the Auditor General of Canada; J. Henrichon, Office of the AuditorGeneral of Quebec; B. Hirst, Treasury Board Secretariat; J. Hitchinson, Office of the AuditorGeneral of Canada; J. Hodgins, Office of the Auditor General of Canada; F. Jaakson, Consultingand Audit Canada; D. Kam, Department of Agriculture and Agri-Food; D. Kingsley, CanadianInternational Development Agency; R. Lafleur, Health Canada; G. Lain, Office of the AuditorGeneral of Alberta; L. Lalonde, Office of the Auditor General of Canada; K. Leishman, Office ofthe Provincial Auditor of Ontario; A. Lennox, Office of the Auditor General of Canada; J. Libbey, Treasury Board Secretariat; W. Lye, Treasury Board Secretariat; J. Lynes, TransportCanada; E. MacPherson, Canadian Artists and Producers Tribunal; S. Mathieson, Office of theComptroller General of British Columbia; E. McAllister, Canadian International DevelopmentAgency; S. McIntosh, Solicitor General; M. McLaughlin, Office of the Auditor General of

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Canada; H. McRoberts, Office of the Auditor General of Canada; D. Miller, Treasury BoardSecretariat; P. Morse, Office of the Auditor General of Canada; K. Mosher, Treasury BoardSecretariat; E. Murphy-Walsh, Environment Canada; R. J. Neville, Treasury Board Secretariat;B. Orsini, Revenue Canada; M. Pawlowski, National Research Council; E. Peters, HealthCanada; R. Prosser, City of Saskatoon; D. W. T. Rattray, Office of the Auditor General ofCanada; C. Robertson, Treasury Board Secretariat; J. Robins, Citizenship and Immigration; D. Rogers, Treasury Board Secretariat; B. Ruta, Office of the Auditor General of Canada; P. Simeoni, Office of the Auditor General of Canada; B. Sloan, Office of the Auditor General ofCanada; J. Stobbe, Public Works and Government Services Canada; C. Swan, Treasury BoardSecretariat; L. Talbot Allan, Environment Canada; R. C. Thompson, Office of the AuditorGeneral of Canada; D. Timmins, Office of the Auditor General of Canada; G. Tremblay, HumanResources and Development Canada; S. Turner, Public Works and Government ServicesCanada; M. Ulrich, Treasury Board Secretariat; J. Van Adel, National Defence; G. Westcott,Department of Justice; A. Whitla, Treasury Board Secretariat; A. Winberg, Treasury BoardSecretariat; C. Young, Bank of Canada; M. Zamparo. Industry Canada;

Facilitators: S. Fraser, Caron Belanger Ernst & Young; Y. Gauthier, Groupe-Conseil KPMG; M. Gosselin, Deloitte & Touche, T. Gow, Thompson Gow & Associates; R. Harris, KPMG; E. Kmiecik, Public Policy Forum; P. D. Lafferty, Coopers & Lybrand; D. Moynagh, CCAF-FCVI Inc.; G. Post.

Provincial Legislative Auditors

G. Breton - Quebec; E. Marshall - Newfoundland; G. Morfitt - British Columbia; W. Murphy -Prince Edward Island; E. Peters - Ontario; R. Salmon - Nova Scotia; J. Singleton - Manitoba; P. Valentine - Alberta.

Senior Full-time Financial Officers, in conjunction with a meeting organized by Treasury Board

Participants (as advised by Treasury Board Secretariat): S. Aghajanian, The Senate of Canada; R. Asselin, Justice Canada; M. Andrecheck, Canadian Security Intelligence Service; N. Bainbridge, Industry Canada; G. Bergeron, Public Works and Government Services Canada;D. Bickerton, Department of Natural Resources; D. Boire, Royal Canadian MountedPolice;W.D. Boston, Revenue Canada; M. Boutin, Library of Parliament; E. Boyd, Privy CouncilOffice; E. Burke, Federal Court of Canada; M. Conway, Foreign Affairs and International Trade;A. Corriveau, National Archives and National Library of Canada; G. D’Aloisio, MedicalResearch Council of Canada; L. Desroches, Environment Canada; D. Dickson, Fisheries andOceans Canada; M. Dupéré, Atomic Energy Control Board; R. Fauvelle, Statistics Canada;S.Guertin-Paré, Treasury Board Secretariat; J. Gregoire, Canadian International Trade Tribunal;K. Ginsberg, ; P. Guitard, National Round Table on the Environment and the Economy; G.E. Jarvis, National Defence Canada; D. Kam, Agriculture & Agri-Food Canada; D. Kingsley,Canadian International Development Agency; A. Latourelle, Heritage Canada; J. Letang,National Farm Products Council; J. Lynes, Department of Transport; B. Manion, Office of theSuperintendent of Financial Institutions; O. Marquardt, Health Canada; J. McCarthy, Indian andNorthern Affairs Canada; J. J. McCrea, House of Commons; C. Ménard, Competition Tribunal;S. Merrill, Atlantic Canada Opportunities Agency; G. Métayer, Status of Women Canada; E. Miller, National Parole Board; I. O’Connor, Supreme Court of Canada; L. Paquette, FinanceCanada and Treasury Board secretariat; D. Pelchat, Canadian Human Rights Commission:

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C. Pelletier, Public Service Staff Relations Board; L. Ricard, Public Service Commission; R. Richer, Canadian Intergovernmental Conference Secretariat; J. Robbins, Citizenship andImmigration; G. Roberts, Correctional Service Canada; P. Sauvé-McCuan, Natural Sciences andEngineering Research Council, and Social Sciences and Humanities Research Council; A. Séguin,Immigration and Refugee Board ; J-P. Thibault, Civil Aviation Tribunal; J-G. Séguin, NationalResearch Council; S. Siu, Human Resources Development Canada; L. Tremblay, EmergencyPreparedness Canada; J. Vézina, Elections Canada

Legislative Audit Officials, in conjunction with the annual meeting of the Legislative AuditNetwork, organized by CCAF-FCVI Inc.

W. Bordne, Ontario; J. Ferguson, Saskatchewan; I. Garvie, Manitoba; P. Gregory, BritishColumbia; J. Henrichon, Québec; E. Hopper, New Brunswick; C. Janes, Newfounland; G. Lain,Alberta; L. McAdams, British Columbia; E. Morash, Nova Scotia; G. Peall, Ontario; E. Price,British Columbia; N. Ricard, Manitoba; M. Saher, Alberta; P. Simeoni, Canada; W. Strelioff,Provincial Auditor of Saskatchewan.

Academics in the fields of Politicial Science, Public Administration, Business, and Economics

T. Atkinson, University of Waterloo; L. Brooks, University of Toronto; C.E.S. Franks, Queen’s University; J.E. Hodgetts, Queen’s University; E. Lindquist, University of Toronto; A. Nakamura, University of Alberta; D. Poel, Dalhousie University

Senior Administrative Officers of Smaller Agencies, organized in cooperation with the smallagencies network

J. Baptiste, Canadian Human Rights Commission; J. Callon, Canada Labour Relations Board; M. Glynn, Human Rights Tribunal Panel; K. Johnston, Transportation Safety Board of Canada;E. Miller, National Parole Board; M. Montpetit, Tax Court of Canada; D. Pelchat, CanadianHuman Rights Commission; C. Riopel, Royal Canadian Mounted Police Public ComplaintsCommission; P. Simard, Canadian Dairy Commission.

Former officials of the Office of the Comptroller General

J. Q. McCrindell, R Salmon, D. Wood

Treasury Board Senior Advisory Committee

G. Anderson, Deputy Minister, Intergovernmental Affairs; M. Cappe, Deputy Minister, Human Resource Development Canada; L. Fréchette, Deputy Minister of National Defence; S. Hurtubois, Deputy Minister, Heritage Canada; D. Holdsworth, Privy Council Office; H. Labelle, President, Canadian International Development Agency; S. Serson, Deputy Minister,Indian & Northern Development; J. Smith, Principal, Canadian Centre for ManagementDevelopment; R. G. Wright, Deputy Minister, International Trade; V. P. Harder (Chair)

The Panel apologizes for any inadvertent omissions from this list of individuals who contributed tothe work of the Panel. Briefings were held where attendance was not recorded.

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