Review of Crown Corporation Governance
February 10, 2004
Ottawa, Ontario
The Report of the Auditor General tabled today identifies a number of issues involving the application of the Financial Administration Act (FAA) to all Crown Corporations.
Key issues identified by the Auditor General include:
- Inappropriate financial transactions between Crown Corporations and government departments; and
- Failure to detect through internal audit procedures the inappropriate movement of public funds.
As part of its broader efforts to strengthen oversight and accountability, the government has directed the President of Treasury Board to undertake a comprehensive review of the accountability framework for Crown Corporations. This review will seek to strengthen Crown Corporation oversight and accountability, identify ways to detect problems earlier and enhance its ability to take corrective and/or disciplinary action in cases of wrongdoing.
The review will assess:
- The adequacy of the accountability framework with respect to the proper balance between the independence of Crown Corporations and government oversight;
- Ways to make information on Crown Corporations’ operations and performance more readily available to parliamentarians and Canadians, while protecting the confidentiality of commercially sensitive information;
- Whether improvements can be made to strengthen management, transparency and accountability, including the possibility of extending the Access to Information Act to Crown Corporations; and
- Lessons learned from other jurisdictions and the private sector where recent transformations in practices and business processes have increased management performance and the efficiency of Corporations.
The Treasury Board Secretariat is to report on recommendations that require legislative change no later than September 30, 2004. In carrying out its review, the government will seek the views of parliamentarians, the Auditor General, unions, and other interested parties.
Given the government's explicit direction to strengthen parliamentary oversight and accountability across the public sector, the Treasury Board Secretariat is also exploring additional measures that could be pursued immediately to strengthen the transparency, accountability and sound management of Crown Corporations through regulatory options that do not require legislative change.
As one of those measures, the government will direct Crown Corporations that fall under existing FAA authorities to enact bylaws that:
- Require the creation of a full-fledged code of conduct for all employees, management and boards of directors, that goes beyond the current directives on conflict of interest;
- Will define the composition, mandate and autonomy of the corporation’s audit committee; and
- Will mandate the corporation's audit committee to explicitly review: policies and processes undertaken by management to establish and to communicate expected standards of behaviour; the adequacy of the corporation’s legal and ethical compliance programs; and the regular examination of officers’ expenses and benefits, including the use of corporate assets.
The review will assess the appropriateness of extending certain provisions of the FAA to all Crown Corporations that are not currently regulated by the Act.
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