Treasury Board President Tony Clement, along with a number of his colleagues, attempted to explain this difference but their explanations were far from convincing. Their handling of the issue, in fact, came straight out of the Keystone Cops.
Given the sensitivity of this issue and the size of the sum missing, it’s surprising that Treasury Board did not undertake a detailed analysis of what happened to this $3.1 billion before the release of the auditor general’s report; they had time to do so and it might have saved the government considerable embarrassment. Instead, they’ve suffered a major blow to their credibility as sound managers of the public purse.
The auditor general identified three possible explanations for the money’s apparent disappearance:
The funding may have lapsed without being spent;
It may have been spent on PSAT initiatives but reported as part of ongoing program spending;
It may have been carried forward and spent on programs related to the initiative.
To these, we add a fourth possible explanation: sampling error in explaining the $3.1 billion.
Usually with a large program in place over a long period of time, such as PSAT, there is a high probability that some earmarked funds will not be needed — and so, they “lapse”. Estimates were made in 2001 to cover initiatives advanced by departments covering the period 2003 to 2009. It could be that the cost for some of the proposed initiatives was overstated and/or the proposed initiative was never implemented.
The Public Accounts presents information on what was authorized to be spent and what was actually spent. An analysis of the Public Accounts data for the period under review would have revealed how much of the $3.1 billion lapsed. There was plenty of time during the course of the audit to undertake such an analysis. It is surprising that Treasury Board did not undertake such an analysis, given the sensitivity around “missing” cash.
It’s also possible that certain components of PSAT were misclassified — human error. Departments would need to look into whether their classification of PSAT was correct. For this exercise, a number of the departments receiving the bulk of the funding could be reviewed. Again, this begs the question: Why wasn’t this done?
Departments can also request that certain funds appropriated to be spent in one fiscal year be carried forward to a future fiscal year. However, this would require the approval of the Treasury Board and Parliament. Records of such transactions are maintained by the Treasury Board and the applicable department. This information also should be relatively easy to obtain. Again, why wasn’t it?
Part of the explanation for the “missing” $3.1 billion could be statistical sampling. The sum is not a “hard” number based on an analysis of what the departments/agencies received and what they actually spent. As such, it is subject to sampling error. No ranges were given by the auditor general. The number could be somewhat higher or lower — probably not by any significant amount. The bottom line is that the government does not know the exact amount.
The auditor general states that there was no misappropriation of funds. However, unless there is a full explanation for the missing $3.1 billion, this claim will continue to come under attack. It also puts into question the government’s commitment to sound management of the public purse.
Once again the ability of Parliament to oversee government spending has been eroded. Parliament should ask the Parliamentary Budget Officer (PBO) to undertake a review of the missing $3.1 billion. It simply cannot be shrugged off as “lacking clarity” or as a “bureaucratic error”; the government can’t simply vow that better controls will be put in place so that it won’t happen again.
In this report, the auditor general followed up on recommendations made in earlier reports on the management of PSAT funds, to which Treasury Board had agreed. It found that Treasury Board did not fully comply with all of the recommendations. In the spring report, the government agreed with nearly all of the recommendations the auditor general put forward in the eleven chapters. But past experience has demonstrated that not all of the agreed-upon recommendations are actually implemented.
This raises the question of how serious the government is in accepting the auditor general’s recommendations. Only time will tell — and only if the auditor general does a follow-up audit.
Finally, with all of the restraint measures introduced starting with the 2012 budget, how capable are departments and agencies in responding to the auditor general’s recommendations? If trade-offs are required, what priority is allocated to such implementing the recommendations?
Original Article
Source: iPolitics
Author: Scott Clark and Peter DeVries
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