Sharing Best Practices in Managing Public Sector … · Such an honour was also attributed to the...

journaljournal

WINTER 2002 VOLUME 13, NUMBER 2

Public Sector Management Workshop

Highways to the Future26-28 May 2002Fredericton, New Brunswick

Sharing Best Practices in Managing Public Sector Resources

The fmi journal is Canada’s leadingmagazine for public sector profession-als involved in the field of public sec-tor financial management.

Its major articles, columns and newscover a broad range of governmentaccounting, auditing, and financialmanagement topics of concern to pro-fessionals.

fmi journal readers hold influentialpositions in public accounting, andhave responsibilities in a variety ofareas: financial management, infor-mation systems, administration andhuman resource management toname a few.

Its authors are individuals who holdsenior or experienced positions withingovernment and the private sector.These individuals share their experi-ence and expertise in areas of concernto professional public sector account-ants and managers with financialresponsibilities.

Virtually any topic of interest to thefinancially-oriented public sectorexecutive may be found in the fmijournal.

A non-profit organization, the FMIhas opened 11 chapters across Canadain the past 40 years. Today, the fmijournal enjoys a readership of morethan 2,000 professionals.

The organization hosts two annualnational conferences: PD Week basedin Ottawa and held in late November,and the Public Sector ManagementWorkshop which takes place in Mayat a different location each year.

journal Win a Trip to Fredericton!The Alan G. Ross Award for Writing Excellence is awarded annually to the individual(s)who contribute the best article (feature or column) to the fmi journal during the year. Theaward is a plaque and a complimentary trip to the FMI’s annual Public Sector ManagementWorkshop. If your article is printed in the Spring or Fall 2001 or Winter 2002 issue, youwill become an eligible contestant for a trip to Fredericton, New Brunswick in the Springof 2002.

The fmi journal editorial team look after, at a minimum the subject areas following theirnames:

aRKay - fINANClAL mUSlNCS & iNSlGHTSBill Boston - Financial Management - (613) 954-6400Jean-René Drapeau - Federal/Provincial Relations - (819) 994-3081David Jones - Office and Home of the Future - (613) 946-3083Les Kom - Personal Financial Planning - (613) 798-4251Bruce Hirst - Federal Financial Management - (613) 957-7168André Robert - Audit Management - Internal - (613) 952-3141Martin Ruben - Audit Management - External - (613) 995-3708Roger Shears - Costing - (613) 260-7757Michael Van Herk - Electronic Commerce and Information Technology - (613) 277-1950Stacy Van Humbeck - Assistant Managing Editor - (613) 759-6809

These editors welcome timely and relevant articles from you. Feature articles are generally2500 to 4000 words. Other articles or input to a regular column are normally shorter (500to 2500 words). Letters to the editor are also welcome.

Please address your correspondence to any of the team members or to Norma Hubley, Managing Editor: fmi journal

Financial Management InstituteP.O. Box 613, Station BOttawa, Ontario K1P 5P7

If you wish to be considered as an editor of the journal, please write to the Managing Edi-tor, and indicate your area of expertise and the type of articles or column to which you wishto coordinate or to which you would like to contribute on a reasonably continuing basis.

The recommended form of input is a 3.5” diskette in Microsoft Word or WordPerfect formats,accompanied by original laser-quality hard copy. It is preferable that the documents be in bilin-gual format. Graphics must be kept separate (not inserted into the text). Advise what software wasused to produce the graphic. The author’s photo and short biography are also requested.

The FMI can no longer supply quantities of additional copies to readers. Reprints, howev-er, are available at a reasonable price. The minimum order is 50 copies.

Subjects of Interest to Our Readership✔ Accountability ✔ Human Resource Management✔ Asset Management ✔ Humour✔ Audit Practices ✔ Information Management✔ Banking & Cash Management ✔ Planning & Resource Allocation✔ Best Practices ✔ Precis of Recent Government✔ Business Planning ✔ Leaders’ Publications or Speeches✔ Career Advice ✔ Public Service Renewal✔ Community Profiles ✔ Revenue Management✔ Electronic Commerce ✔ Salary Management✔ Expenditure Management ✔ Summary/Highlights of Conferences or Seminars✔ Federal/Provincial/Municipal Reviews ✔ Systems✔ Government Accounting Policy ✔ Technology Trends

WINTER 2001 FMI JOURNAL 1

journalWinter 2001 Volume 13, Number 2

The Financial ManagementInstitute of Canada

Managing EditorNorma Hubley

Assistant Managing EditorStacy Van Humbeck

Editorial BoardaRKay

Bill BostonJean-René Drapeau

David JonesLes Kom

Bruce HirstAndré RobertMartin RubenRoger Shears

Michael Van Herk

Advisory Board ChairpersonRichard Neville

Advisory Board MembersJim McCarter

Germain TremblayMary McDonaldPierre-André Paré

Eva PlunkettSteve McLaughlin (Secretary)

PhotographersGeorge DatesTom Ritchie

Cover PhotoPSMW 2002 Poster

Desktop PublisherIan Culbert

FMI Executive Director

The fmi journal is published three times a year. All rightsreserved. Reproduction in whole, or in part, withoutwritten permission from the publisher is prohibited.Opinions expressed are not necessarily those of theFinancial Management Institute of Canada.

Publications Mail Agreement Number 1686348.

The fmi journal is published by the Financial Management Institute of CanadaP.O. Box 613, Station B, Ottawa, ON, K1P 5P7Telephone: (613) 569-1158 Fax: (613) 569-4532Email: [email protected] English section: www.fmi.ca WWW French section: www.igf.ca

inside fmijDepartments

2 Message from the President3 From the Desk of the Managing Editor4 FMI Board of Directors 2001-20026 fINANCIAL mUSINGS & iNSIGHTS10 Professional Developement Week 200115 Capital Chapter News40 Public Sector Management Workshop 2002

Features8 Risk-based Planning for the Internal Audit Function

Paul Fontaine11 Developments in Assurance Standards

Joy Keenan19 Interview with Mr. Guy Breton, Auditor General of Quebec at

the Completion of his Mandate in December 2001Richard Gagnon and Norbert Chouinard

21 Integrated Risk Management in HRDC: Using ImplementationStandards to Achieve Coherence and Flexibility

Basil Orsini23 From Financial Management to Internal Audit and Risk

Management… A Natural TransitionHuguette Forget

24 FIS Celebration: A People Event!Pamela Booth

27 Fiscal Imbalances and National ProgramsJoe Ruggeri

30 Building Capacity: FORD/IARD Program and CommunityDevelopment Strategies

Brenda Bjarnason32 Cost Drivers in Canada’s Health Care System

Paula Gallagher

Columns35 PSAB Perspectives: Keeping Up to Date

on Public Sector Accounting Standards PSAB Turns 20 Years Old and GAAP for Governments Comesof Age

Martha Jones Denning37 Personal Financial Planning

Getting your Financial Life OrganizedLes Kom

For marketing opportunities, please contact Tom Ritchie at (613) 523-0487 or tomritchie@rogers,com

2 FMI JOURNAL VOLUME 13, NO. 2

Iwould like to start with my best wishes for the new year and a sincere thank you for yoursupport and devotion in making 2001 the success that it was.On April 2, 2001, Lucienne Robillard, President of the Treasury Board of Canada,

announced the successful implementation of the Financial Information Strategy (FIS) in allGovernment of Canada departments and agencies. She referred to FIS as the biggest changein Government accounting and financial reporting since Confederation. On September 20,2001, I had the honour to accept, on behalf of the FMI, an outstanding contribution awardin a special FIS award ceremony. Such an honour was also attributed to the Capital Chap-ter for their contribution to the successful implementation of FIS. Our organization is verymuch needed and appreciated throughout the Public Sector and we should be proud of it.

From May 27th to 29th, 2001, the Regina Chapter of FMI hosted the 14th Annual PublicSector Management Workshop in Regina, Saskatchewan. What a success this event was withmore than 300 participants from across the country. Opening remarks were made by theHon. Eric Cline, Saskatchewan’s Minister of Finance, and by Rod Monette, AssistantDeputy Minister of Government Operational Service, Public Works and Government Ser-vices Canada. Under the leadership of Linda McKay and Bob Cochran, Co-Chairs for theevent, the team of volunteers managed to put together an outstanding program which wasmuch appreciated by all participants.

Like most of the more than 1700 people who attended all or part of PD Week 2001 fromNovember 27th to 30th, I have had some time to reflect on some the key messages thatemerged from this very successful conference. With a theme of “Harnessing Change” theOrganizing Committee, under the leadership of Nicole Campeau and Tony Marcantonio,put together an excellent program that dealt with a whole range of issues and changes relat-ed to: citizen-centered service delivery, Government On-Line, modern comptrollership,improved reporting to Parliament, program integrity, and developing an exemplary work-force.

In 2001, we have witnessed a great deal of progress in the Public Sector’s managementagenda however, events such as those that happened on September 11 remind us that wemust never take things for granted. The management of this great country of ours is impor-tant to all Canadians and we must continue to provide the tools and techniques that willcontribute in providing the best possible results.

The Financial Management Institute of Canada plays a much needed role and every yearcontributes to the betterment of this agenda. That is why we must never stop. At this pointin time, we have another group of dedicated volunteers busy planning for the 15th AnnualPublic Sector Management Workshop (PSMW) that will take place in Fredericton, NewBrunswick from the 26th to the 28th of May 2002. With a theme of “Highways to theFuture”, the calendar of events for this workshop has a lot to offer. Two very dedicated indi-viduals, Peter Wolters and Cheryl Munro, have agreed to take the leading role and they arelooking forward to putting on a program that will boost up your knowledge and under-standing of dominating issues.

Of course, we could never contribute so much without the never ending contributions ofvery dedicated board members and volunteers. To all, I say thank you and assure you that Iam extremely proud of being part of it. Looking forward to meeting some of you in Fred-ericton. ■

MESSAGE FROM THEpresident

Germain TremblayPresident


The year 2001-2002 is quickly com-ing to an end. It has been a veryeventful year on the federal govern-

ment financial front. We are now thinkingabout closing our first complete year of fullFIS compliancy, preparing the first set offinancial statements at the departmentallevel using accrual accounting. This is amilestone that was celebrated on September20, 2001 as reported on by Pam Booth.Pam contributed a FIS column for the fmijournal from Winter 2000 to Winter 2001and I would like to thank her for providingour readers with an ongoing FIS statusreport during this period.

Martha Jones Denning from PSAB hasdevoted her regular column to the comingof age of GAAP for governments with thepreparation of financial statements inaccordance with standards as set out byPSAB.

We have devoted this edition to bringour readers up to date on current topics inthe internal audit discipline. Paul Fontaineof Deloitte and Touche (Ottawa) has writ-ten on changes in the internal audit arearequired to incorporate risk based planning.Joy Keenan from the CICA writes that theemergence of ‘business risk’ methodologies

is one of the biggest auditing developmentsin recent years.

We also have an interview with Mr. GuyBreton, recently retired Auditor General ofQuebec, as provided by the Quebec chap-ter. Mr. Breton has seen many changes dur-ing his ten year tenure and leaves his officeoptimistic for the future.

Basil Orsini of HRDC speaks of RiskManagement as an integral aspect ofHRDC’s strategic and business planningprocess. Huguette Forget has written abouther transition from the Financial Manage-ment field to that of Internal Audit andRisk Management as a natural transition.

The Capital Chapter has initiated a regu-lar column and I always welcome inputfrom any other chapters.

Most of our federal government readersare familiar with the FORD/IARD pro-gram; in fact many of you are graduates ofthis program. Brenda Bjarnason hasinformed us of current initiatives spear-headed by Treasury Board in conjunctionwith departments to handle current recruit-ment and retention issues in the financialcommunity.

As we look ahead to Spring, the FMI willbe hosting the Public Sector ManagementWorkshop (PSMW) in Fredericton, NewBrunswick from May 26-26th. This yearsworkshop is themed ‘Highways to theFuture”. Two of the speakers have con-tributed articles as a preamble to their ses-sions. Dr. Joe Ruggeri, from the Universityof New Bruswick will speak of Fiscal Cana-da: A Federation out of Balance. Ms. PaulaGallagher of Deloitte and Touche (Halifax)will speak to Modern Comptrollership:Cost Drivers in the Health Sector.

We have included the full list of speakersand sessions and the registration form foryour information and use. The FrederictonChapter has been working on this event forover a year and has successfully assembledtopics and speakers that will ensure a suc-cessful workshop. I wish them all the best inthis regard and look forward to attendingPSMW 2002. ■

FROM THE DESK OF THEmanaging editor

Norma HubleyManaging Editor

HEADER


FMI Board of Directors 2001-2002Executive and Management Sub-Committee Phone Fax EmailPresident Germain Tremblay (613) 995-3741 (613) 996-2151 [email protected] Bruce Jamieson (506) 452-3150 (506) 451-6091 [email protected] Jim Quinn (613) 838-4352 [email protected] Mary McDonald (506) 444-4076 (506) 453-2266 [email protected] President Cheryl Munro (613) 946-6298 (613) 952-9613 [email protected] Director (613) 569-1158 (613) 569-4532 [email protected]

ExecutiveMarketing and Development Bruce Meredith (613) 992-7624 (613) 947-4661 [email protected] Editor Norma Hubley (613) 759-6796 (613) 759-6023 [email protected] Liaison Roland Letarte (418) 622-5214 [email protected] Week Chairs Nicole Campeau (613) 947-1801 (613) 947-4661 [email protected]

Tony Marcantonio (613) 947-2407 (613) 943-1097 [email protected] Chairs Peter Wolters (506) 453-8187 (506) 453-7154 [email protected]

Cheryl Munro (613) 946-6298 (613) 952-9613 [email protected]

DirectorsLiaison East Fred Donaldson (902) 426-6124 (902) 426-0507 [email protected] West Wolf Boehm (204) 945-7006 (204) 948-2338 [email protected] Liaison Jean Laporte (819) 994-8004 (819) 997-2239 [email protected] Director André Côté (418) 643-5172 (418) 643-0421 andré.coté@invest-quebec.comCommunications Dennis Watters (613) 992-4936 (613) 992-0528 [email protected] Terry Coyle (613) 995-9377 (613) 947-4661 [email protected]

Chapter PresidentsVictoria Derek Greer (250) 356-5103 (250) 356-7751 [email protected] Arvind Reddy (604) 264-2726 [email protected] Patrick Stewart (780) 435-7354 (780) 435-7359 [email protected] Bob Cochran (306) 780-6750 (306) 780-7555 [email protected] Jeff Hnatiw (204) 983-3871 (204) 983-4208 [email protected]/Hull (Capital) Barbara Thompson (613) 759-6431 (613) 759-6023 [email protected]ébec André Côté (418) 643-5172 (418) 643-0421 [email protected] Murray Lambert (506) 453-6939 (506) 453-2917 [email protected] Kevin Malloy (902) 424-2424 (902) 424-0635 [email protected] Mario B. Roy (450) 646-6764 (450) 646-8297 [email protected]

If you have not received your renewal information, contact yourlocal Chapter. Do not delay! There is an exciting year planned. Tobe eligible for preferred member rates, your membership must becurrent. Remember the benefits FMI membership offers:• Networking opportunities with over 2,000 professionals in the

finance field across Canada;• Professional development conferences, seminars, workshops at

preferred rates;• Eligibility for awards and recognition;• Leadership participation in 10 FMI Chapters across Canada;• fmi journal; • And much, much more!

Contact your local Chapter President for informationregarding mailing addresses and program activities.

Victoria $20.00 Vancouver $25.00Calgary $30.70 Regina $25.00Winnipeg $20.00 Ottawa/Hull (Capital) $26.75Montreal $25.00 Quebec $25.00Fredericton $32.35 Halifax $35.00National $32.10

…or send the completed application and payment to:FMI — P.O. Box 613, Station B

Ottawa, Ontario, K1P 5P7

FMI MembershipHave you renewed your membership?

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SEPT 11 - HELP PLEASE: With the trag-ic events of September 11, with imminentwar in India and Pakistan, with strife andpersecution in Afghanistan, now more thanever fmi needs your AOL CD’s anddiskettes. Tax receipts available for anydonations.

SERIOUS FOR ONCE: You don’t stoplaughing because you grow old; you growold because you stop laughing.

GET UP AND FIGHT: Keep hearing onthe news that Canadian Forces are on theground in Afghanistan.

CHRISTMAS LIST: Wouldn’t it be greatif they made an underarm-deodorantwarmer?

A LONG BORING SERMON: In aCatholic church that’s a weapon of Massdestruction.

THE SWEET SMELL OF SUCCESS: Ifgenius is 1% inspiration and 99% perspira-tion, there are a lot of bright people in theoffice elevator.

SEXISM AT ITS WORST: Saw a few ofthose cheap talk shows - you know the type:“My transsexual step-niece is really myfather!” - and we got a little furious. Theyalways doubt the guy’s word as to paternityand never give the woman a DNA test.

IT’S A PUZZLE: The office gopher wasputting together a puzzle, and was reallystumped. He asked us for help saying thatit was supposed to be a tiger. We suggestedthat he put the Frosted Flakes back in thebox.’

CLEAN UP YOUR ACT: One cockroachwas telling another about his recent trip toa lab. “Everything was so clean there, spot-less, gleaming white, and sanitary.” “Please,

not while I’m eating!”

WRITE A LETTER TO 911: If DollyParton married and divorced in succession,Tommy Smothers, Mr. Lucky, MartinShort, and football player kicker Ray Guy,she would be known as “Dolly PartonSmothers Lucky Short Guy.”

TIME WOUNDS ALL: We were verybusy recently, doing research for this col-umn, so we shut the office door. A few min-utes later someone knocked on the doorand asked for the time. We told him andwent back to slee... uh work. This wasrepeated by various individuals over thennext little while. We put a sign on the doorsaying “aRKay does not know the time.” Afew minutes later there was a knocking atthe door and a head popped in and said “Itis 3:15.”

MONDAY, MONDAY: A hell of a way tospend 1/7 of your life.

NO PLEONASTICITY: Excerpt from amemo to all fmij writers from the ManglingEditor: “Never use a big word where adiminutive one will suffice.”

PROGRESS: In the 60’s people took acidto make the world weird. Now the world isweird and people take Prozac to make itnormal.

FREEDOM OF THE PRESS: No-ironclothing.

OLIVE ME: Is gargoyle an olive-flavouredmouthwash?

LIVE TO DIE: Courage: a strong desire tolive, taking the form of readiness to die.

DEARLY DEPARTED: We were askedrecently to give a eulogy for an acquain-tance, a lawyer. It was difficult to come up

with gracious words for him. He died whenan ambulance ran over him - in reverse.

YOU’RE NOT OLD, YOU’RE WORNOUT: Our poor boss, just when he finallygot his head together, his body fell apart.

YOU’RE OLD: Re: the boss: Age doesn’talways bring wisdom. Sometimes age comesalone.

WERE YOU AT THE FMI ANNUALMEETING?: Once again, aRKay donateda lovely autographed portrait of aRKay as aprize at the dinner-dance. The winnerasked if he could exchange it for a slightlylarger one. We complied with the request.He wrote to thank us and said that the newpic was exactly the right size for his budgiecage.

LETTER OF RECOMMENDATION:The Mangling editor is applying for anoth-er job (who wouldn’t?) and asked us to pro-vide a reference. We said that she could notcare less about the number of hours she hadto put in, they would indeed be fortunateto get her to work for them, no personwould be better for the job. Waste no timein making this candidate an offer ofemployment. All in all, we cannot sayenough good things about this candidate orrecommend her too highly. There is noth-

fINANCIAL mUSINGS &

iNSIGHTS

aRKayaRKay, who also refers to himself as “your obedientservant” (yos), was born to a family of wolves, wholater abandoned him. He was then taken in by a bandof nomadic, itinerant, wandering auditors who treat-ed him as one of their own. From these humble begin-nings, he developed a deep and abiding respect for thescience (art?) of financial management, leading to hiswork being published in no less than the fmij!

He would love to receive your comments and sug-gestions.

FINANCIAL MUSINGS AND INSIGHTS


ing you can teach a person like her. Wemost enthusiastically recommend this can-didate with no qualifications whatsoever.

IT’S ALL IN THE GAME: We took anoffice colleague to a football game - his first.Afterwards we asked for comments. He wascurious as to why these 24 men and 5 con-victs were prepared to kill for 25 cents. “Atthe beginning a convict tossed a quarter inthe air and for the rest of the game theykept yelling ‘Get the quarter back!’ “

TERRORISM FACTS: What do you do ifyou take a fax from the machine and thereis white powder on the page?

JUST WALK THIS WAY: Everywhere iswithin walking distance, if you have thetime.

BEACHED BUM: Pokemon: A Caribbeanproctologist

TOMORROW, TOMORROW CREEPS:The world will NOT end today. It’s alreadytomorrow in Australia.

YOU WIN, I LOSE: Our inferiority com-plex is not as good as yours.

THE REAL STUFF: Went to the theatre,saw a GENUINE production of TheHunchback. Instead of a Quasimodo, theyused a REAL Modo.

HOW DO YOU GET THERE: Are thereany interstate highways in Hawaii?

WHAT ME WORRY: fmij hired a newaccountant - they told him that his job wasto take on the worries that the ManglingEditor had. He agreed. When he asked thesalary she quoted him $150,000. He askedhow they could afford it and she said tohim “That is your first worry.”

RATHER NOT: News anchor Dan Ratheractually said this: “And now the sequence ofevents in no particular order.”

SEE YOUR OPTIMIST REGULARLY:Sign in the fmij Headquarters Office Com-plex: “Things are going to get a lot worsebefore they get worse.”

WOULD YOU GO TO A FOOTLESSCOBBLER: She said that she would go toa male gynecologist when he took the car toa mechanic who never drove.

THIS WON’T HURT: Asked the Maitred’ at the fmij Towers Staff Cafeteria (CalledThe Vomitorium) how they preparedchicken. He replied “Oh, we just tell themthat they are going to die.”

MENTAL EXERCISE: Imagine a worldwith no hypothetical situations.

A REAL TERROR: He opened an enve-lope, there was Cipro in it - had to dousehimself in icing sugar.

COMPUTER BUGGY: An office colleaguecalled the software hot-line for help. Theytold him to right-click on the screen. He tooka marker and wrote “click” on the screen.

MAKES YOU FEEL SECURE DON’TIT?: Was asked at the airport if anyone hadput anything into our luggage - without ourknowledge.

SCIENTIFIC DISCOVERY: Goldfish donot bounce.

A WORD TO THE Y’s: Always finishwhat you sta

TERROR-ABLE: According to a newsitem, they think the plane crash was anaccident, caused by birds being pulled intoturbines. WHAT? It certainly is terrorism!These nasty people are trying to smotherpoor innocent birds with their headgear?

HE’S SO DUMB: He uses a lunch boxwith a transparent lid so he knows if it ismorning or afternoon.

HE WHO: Coffee: a person who iscoughed upon.

THE PERFECT MAN: Mr. Potato Head.He is tanned, well-rounded, comes with hisown ornamentation, you always knowwhere he is , and if he annoys you, you caneasily rearrange his face. ■

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Public Works andGovernment ServicesCanada

Travaux publics etServices gouvernementauxCanada

With the introduction of the newPolicy on Internal Audit comesthe need for a modified

approach to plan and deliver effective inter-nal audit services in the federal govern-ment. Internal auditors are being asked toprovide more value added services and toalign their efforts with organizational initia-tives including the Integrated Risk Manage-ment Framework recently issued by theTreasury Board Secretariat (TBS). Torespond to this challenge, internal auditorsmust adopt a different business style, anduse a collaborative approach to identify theareas that will benefit most from audit andconsulting services. The best method toidentify these areas is to use a risk-basedapproach for the development of a multi-year internal audit plan. In this article wewill examine an effective approach to devel-op such a plan, and we will summarize theresults and benefits that internal auditgroups can achieve by implementing suchan approach to plan their service offering.

The Institute of Internal Auditors definesinternal auditing as “an independent, objec-tive, assurance and consulting activitydesigned to add value and improve an orga-nization’s operations. It helps an organiza-tion achieve its objectives by bringing a sys-tematic, disciplined approach to evaluateand improve the effectiveness of risk man-agement, control, and governance process-es.”1 This definition highlights the fact thatinternal auditors can provide audit or con-sulting services, as long as their focus relatesto managing risks, and improving controlsor governance matters. According to theTBS Policy on Internal Audit, “it wouldnot be cost effective to undertake an auditengagement to provide assurance where it isclear at the outset that it is highly unlikelythat the expected conclusion, in relation toappropriate criteria for the engagement, canbe provided. In such cases, a consultingengagement focused specifically on identi-

fying problems and deficiencies that needto be corrected, and making appropriaterecommendations to raise the capacity ofoperations to the appropriate level, wouldbe a better use of internal audit resources.”2

Based on this powerful statement, auditingshould be used to provide assurance thatactivities are operating well, but a consulta-tive approach should be used when it isalready known that activities need improve-ment.

Internal auditors are required to tailortheir services according to the nature of theactivities to be examined and decidewhether an audit is appropriate. Two of themain difficulties are to identify which activ-ities should be examined, and which onesare of greater priority. The traditionalapproach taken is to inventory audit uni-verse components (programs, services,processes, systems, etc.) across the organiza-tion, and then decide which ones should begiven priority based on risks and relativeimportance. Although this approach doeshave merit, it is generally biased to estab-lished components that are confined to spe-cific organizational areas. Quite often thetraditional approach fails to identify depart-ment-wide issues, challenges, or improve-ment opportunities which may be a muchhigher priority for senior management, andwhere consulting services should be provid-ed.

Understanding the concept of riskTaken broadly, risks are defined as any-

thing that can impede the achievement ofobjectives. “Risk refers to the uncertaintythat surrounds future events and outcomes.It is the expression of the likelihood andimpact of an event with the potential toinfluence the achievement of an organiza-tion’s objectives.” 3 For example risksinclude the threats to the immediateachievement of program objectives, but alsoinclude such things as maintaining pro-

gram integrity, managing resources in aprudent and cost-effective manner, main-taining a citizen-focus, and improving over-all performance to achieve better results.

Many departments have a tendency toidentify risks mostly in relation to thethings they do to protect Canadian citizensor Canadian interests. While such a per-spective is within the concept of risk man-agement, it does not fully reflect the intentof the Integrated Risk Management Frame-work. For example, the Framework propos-es that “organizations are faced with manydifferent types of risks (e.g. policy, program,operational, project, financial, humanresources, technological, health, safety,political). Risks that present themselves ona number of fronts.”4 Accordingly, having abroad organizational perspective on the dif-ferent categories of risk is essential for risk-based planning.

Developing a planning approach that worksTo develop a risk-based multi-year inter-

nal audit plan, it is necessary to identify andassess risks across the organization. For thispurpose, internal auditors may partner withmanagement to develop a corporate riskprofile that is consistent with the require-ments of the Integrated Risk ManagementFramework. Such a risk profile is “intendedto examine both threats and opportunitiesin the context of an organization’s mandate,objectives and available resources.”5 To

Paul FontainePaul Fontaine is a Manager in the Enterprise Risk Ser-vices of Deloitte & Touche in Ottawa. Paul is a Char-tered Accountant and an MBA graduate of the Uni-versity of Ottawa. He is also a Certified ManagementConsultant and a Certified Internal Auditor. Prior tojoining Deloitte & Touche in 1996, Paul was an inter-nal auditor with Teleglobe Inc. in Montreal. His areaof focus with Deloitte & Touche includes the assess-ment of risks, the design of management frameworks,the assessment of modern comptrollership capability,and the provision of internal audit services.


Risk-based Planning for the Internal Audit Function

Paul Fontaine

RISK-BASED PLANNING FOR THE INTERNAL AUDIT FUNCTION


identify and define the risks, and to under-stand how they are linked to departmentaloperations, interviews and focus groupsshould be conducted across a wide audienceof departmental representatives and exter-nal stakeholders.

Internal auditors may participate in thedevelopment of the corporate risk profile tohelp facilitate the process of risk identifica-tion and assessment, and provide their ownviews of what they believe to be the mostimportant risks facing the department. Itshould be understood, however, that therisk profile developed under the require-ments of the Integrated Risk ManagementFramework needs to be a management-ledexercise, since it is management’s responsi-bility to identify and manage risks. Internalauditors on the other hand have a responsi-bility to provide assurance on the effective-ness of risk management practices, the firststep of which is the identification andassessment of risks. By being involved inthe risk identification and assessmentprocess, internal auditors can provide aconsulting service within the process itself,and can also provide some assurance thatthe risk identification process is being car-ried out effectively.

Once the various risks have been identi-fied and defined, work sessions can beorganized for the assessment of likelihoodof occurrence and potential impact of therisks should they materialize. Anotherapproach is to directly assess the overalllevel of exposure to each risk. The purposeof these assessments is primarily to deter-mine which risks are perceived as moreimportant than others. The importance ofrisks will directly influence the types of con-trols that management will want to have inplace to monitor and manage (mitigate)these risks. The results will also provideinternal auditors with a clear view of thesignificant areas and where it would be ben-eficial to spend more effort.

Looking at the results and benefitsInternal auditors may be surprised to

learn that the most important risks identi-

fied relate to department-wide horizontalissues, challenges or improvement opportu-nities. This will be consistent with the Inte-grated Risk Management Frameworkwhich stipulates that “the current operatingenvironment is demanding a more integrat-ed risk management approach. It is nolonger sufficient to manage risk at the indi-vidual activity level or in functional silos.Organizations around the world are bene-fiting from a more comprehensive approachto dealing with all their risks.”6 This state-ment is also consistent with the experienceof many federal government departmentsand agencies who have identified some oftheir most important risks as relating to thefollowing:• Strategic planning, prioritization, fund-

ing, and resource allocation;• Management framework organization

and governance structures;• Information needed for making decisions

and managing performance;• Human resource planning, recruiting,

development, and retention; and• System development, and management

and support of technologies.To help management address these types

of challenges or improvement opportuni-ties, and to provide a meaningful contribu-tion to the overall success of the depart-ment, internal auditors need to define proj-ects in relation to the types of risks identi-fied and to the most important issues facingtheir department. One effective approach isto involve subject matter experts within oroutside the department to help define andscope potential audit or consulting projects.Where applicable, linkages should be madebetween the risks identified, and the variousprograms, services, processes and systems.Some risks will require the creation of a dis-tinct audit or consulting project that doesnot directly involve an existing program,service, process or system. The end resultwill be a risk-based internal audit planwhich includes audit and consulting proj-ects that are directly aligned with the mostimportant departmental risks and priori-ties, as perceived by managers and staff, and

as perceived by external stakeholders. Thebenefits will be audit and consulting servic-es provided in the areas most critical todepartmental success, based on risks anddirections received from audit clients inter-nal and external to the department.

ConclusionThe development of a risk-based multi-

year internal audit plan is essential for inter-nal audit groups to provide services thatwill be of greatest benefit to their depart-ment. The plan should be driven from acareful identification and analysis of risks,to identify the most important areas whereaudit and consulting services should be pro-vided. Such an approach is consistent withthe requirements of the TBS Policy onInternal Audit which states that “auditengagements should be structured to thespecific needs of the organization, as deter-mined through risk assessment analysis andconsultation with senior management.”7

The development of a risk-based multi-year internal audit plan is a high profile ini-tiative that is considered a best practice inthe field of internal auditing. When suchplanning efforts are directly aligned withdepartmental initiatives relating to the Inte-grated Risk Management Framework, thebenefits are even greater since both man-agement and internal auditors combinetheir efforts to identify and assess risks, andto implement more effective risk manage-ment strategies and practices. ■

References

1. Institute of Internal Auditors, Website, January2002

2. TBS Policy on Internal Audit, February 2001, page5

3. TBS Integrated Risk Management Framework,April 2001, page 8




7. TBS Policy on Internal Audit, February 2001, page5


Professional Developement Week 2001

PD Week 2001 CommitteeThanks to a dedicated team of Volunteers!

Cheryl Driscoll, Tony Marcantonio (co-chair) Nicole Campeau (co-chair) Anne Gagné,Ann Collinge, Ann Biron, Gerry Leus, Lucie Leclerc-Cowell, Mark Huard, Kiersten Leus,Gerry matthews, Dominique Ledain, manon Demers, ann Townsend, Dena Palamedes,Christine Lorenz, Elaine Taylor, Louise Villeneuve, David Willey, Dennis Doucette, BruceMeredith and Him Quinn.

Absent: Dave Holland, Terry Coyle, Tom Ritchie, Catherine Caule, Linda coperman,Robert Berniquez, Bill Reid, Stephen Aykward, Brent Dobson, Sue Kennedy, Susan Jellett,Sue Stimpson, Gisèle Dallaire, Fran Correa, Ron Harvey aned Les Plumadore.

Honourable Lucienne Robillard started theweek and set the tone for sharing best prac-tices and learning strategies.

Jeffrey Simpson explored the challengesand issues following September 11 tragedy.

FMI President ReceptionMr. Germain Tremblay expressing his thanks to our exhibitors,sponsors and partners for their support during PD Week 2001

FMI members promoting PSMW 2002 and recruitment ofmembers at PD WeekFrom left to right: Peter Laflamme (Capital Chapter), BruceJameison (Vice-President, FMI and Fredericton chapter), TonyMarcantonio (PD Week, Co-chair)


Developments in AssuranceStandards

Joy Keenan

Since 1999, the CICA’s AssuranceStandards Board (ASB) has beenresponsible for setting assurance and

auditing standards for practitioners in boththe public and private sectors in Canada.This article outlines two of the key devel-opments in assurance standards that willhave the greatest impact on practitioners inthe coming years.

Business risk approach to financialstatement audits

One of the biggest auditing develop-ments in recent years is the emergence of“business risk” methodologies the largerinternational accounting firms developedfor financial statement audits. The firmsdeveloped these methodologies for a varietyof reasons, including:• the complexity and pace of change of

business require a broader understandingof the business and its risks;

• audit efficiency and effectiveness areimproved by taking into account allforms of evidence, rather than just stan-dardized procedures;

• an increase in the use of technology byaudit firms’ clients, results in more reli-able records, and a potential for relianceon higher level controls;

• a greater emphasis on corporate gover-nance by regulators, stock exchanges andothers is aided by enhanced auditorknowledge of the client’s business and abroader understanding of the businessand its risks; and

• an enhanced knowledge of the client’sbusiness and its risks also provides theauditor with the ability to provide betterclient service by providing useful insightsand information to the client about itsbusiness that might assist in the long-term continuity of the business as well aspromoting the integrity and reliability ofthe financial statements.For both the traditional and business risk

methodologies, the objective of the audit isthe same—to provide an opinion as towhether the financial statements are free ofmaterial misstatement. And, both method-ologies are risk based (i.e., the basis for pro-viding the opinion is that risk of a materialmisstatement in the financial statements isreduced to an acceptably low level). Thetraditional focus of risk assessment in afinancial statement audit is on accountingsystems, processes and controls. The busi-ness risk methodology starts with a broaderconsideration of the entity’s business riskthat relies more explicitly on concepts ofbusiness analysis and assessment of overallbusiness risk, and then makes a linkbetween business risks and those that mightaffect the financial statements.

These new business risk methodologiesare consistent with generally acceptedauditing standards (GAAS) as described inthe CICA Handbook – Assurance. A jointproject is currently being undertaken by theInternational Auditing Practices Commit-tee (IAPC) and the US AICPA to expandand clarify existing standards to deal withthe more complex environment. The impe-tus for this project was a report1 issued inMay 2000 by a Joint Working Group(JWG) set up to conduct research on themethodologies. The research initiative ofthe JWG was supported by the CanadianInstitute of Chartered Accountants, theAmerican Institute of Chartered Accoun-tants and the UK Auditing Practices Board.

Because the project to revise the stan-dards is still in progress, the underlyingprinciples and the changes to existing stan-dards are not yet fully defined; however, theJWG’s report identified a number of areaswhere the focus of audit work might changefrom the existing audit risk approach underthe business risk approach:

1. Knowledge of the businessThe business risk approach generally

results in an increased breadth and depth ofknowledge of the entity’s business, becauseof a broader focus on critical business risksand related controls. The process of obtain-ing knowledge has become a larger part ofthe audit, with a greater amount of timedevoted to it. In addition, software toolsand databases may be used to gather indus-trial, economic and competitor data toassist in planning the audit.

2. Internal controlExisting standards define audit risk as the

product of inherent, control and detectionrisk. In some firms using a business riskmethodology, inherent risk and control riskmight be covered implicitly in the consider-ation of business risk, resulting in a muchdifferent structure for collecting and evalu-ating information from that of the tradi-tional audit risk model.

For example, the auditor would generallyconsider high-level “pervasive” controls thataddress business risks (e.g., aspects of thecontrol environment and corporate gover-nance and monitoring controls over busi-ness processes). The auditor’s considerationof these high level pervasive controls direct-ly influences the nature, extent and timingof additional procedures. Such a “top-down” approach to controls testing (i.e.,first looking for and testing high level con-trols rather than detailed controls) meansgreater attention is paid to managementcontrols that deal with business risks.Reliance on high-level controls can justify

Joy KeenanJoy Keenan has been with the CICA for 13 years. Forthe first 10, she worked in Public Sector Accounting,where she developed auditing standards and account-ing standards for the public sector. She transferred toAssurance Standards when it assumed responsibilityfor setting assurance standards for the public sector.Joy is responsible for the Assurance Standards Board’sAudit Risk project.


DEVELOPMENTS IN ASSURANCE STANDARDS

the reduced need for testing controls at anoperating or processing level.

A rigorous analysis of business risks,together with review and testing of the highlevel controls can comprise a significantportion of audit evidence under businessrisk methodologies. Inherent and controlrisk might be assessed together and empha-sis is placed on the “remaining risk” offinancial statement misstatement after theoperation of controls, and subsequently onthe audit procedures necessary to ensurethat remaining risk is reduced to an accept-able level.

3. EvidenceThe scope of possible evidence sources is

broadened under the business risk method-ology. In particular, properly supported andpersuasive analytical procedures mayreceive increased emphasis as a source ofaudit evidence under the business riskapproach because the auditor’s understand-ing of the business is enhanced. For exam-ple, regression analysis is much easier toapply and interpret with a better under-standing of the business. In addition, keyperformance indicators might be used aspart of the risk assessment and analysis ofthe business.

The combined effect of the change inassessing and testing controls and the use ofanalytical procedures might justify a reduc-tion in substantive tests undertaken onmost audit engagements. While firms gen-erally require the performance of some sub-stantive procedures, the substantive testingthat is done under a business risk method-ology tends to be more “focused”. Whererisk is high, a commensurate level of evi-dence would be collected. In low risk situa-tions, detection risk may be addressed pri-marily via analytical procedures performedin connection with assessing business risk.

4. Fraud/Misstatements/Going ConcernThere is a view that use of the business

risk approach assists the auditor in detect-ing management fraud. Because theapproach is based on the testing of high-level controls, it may detect managementfraud more readily than the traditionalapproach based on testing of detailed con-trols, which might be ineffective in pre-venting or detecting management override.

Technology advances have resulted in

systems inherently less prone to routineerror. As a result, risk now rests more inestimates and areas of management judg-ment that are less capable of verificationthrough traditional procedures. Well-designed analytical procedures might be themost powerful means of detecting manage-ment fraud, misstatements (especially withrespect to accounting estimates) and goingconcern issues, given a broader understand-ing of business risk and high-level controls.

5. Audit team compositionGiven the need to identify business risks,

the reliance on high-level controls and theuse of analytical procedures to a greaterextent, the audit team needs to have appro-priate skills and experience to perform anaudit using a business risk approach effec-tively.

The risk assessment process is the under-pinning of a financial statement audit. As aresult, it is logical that there is a joint glob-al effort to develop a consistent worldwidestandard. Over the past year and a half, theIAPC and the United States AICPA haveworked on separate projects related to theaudit risk model. In June 2000, the IAPCapproved a project to incorporate the busi-ness risk approach into the InternationalStandards on Auditing (ISA). The AICPAwas starting work on related projects stem-ming from recommendations in the August2000 report of the Public Oversight Board’sPanel on Audit Effectiveness.2 Recently, ajoint IAPC/US task force was set up and iscurrently developing a fully harmonizedstandard. The Canadian IAPC member isa member of this joint task force.

The joint task force is aiming to publishan Exposure Draft (ED) proposing to revisestandards later this year. The ASB is work-ing towards publication of a Canadian EDon audit risk at roughly the same time asthe joint International/US documents.

Harmonization and convergence“There is a compelling need for a sin-gle set of global auditing standards thatwill be accepted worldwide. As securi-ties markets have become global andthe cross-border issuance and tradingof securities has expanded, the needhas also increased for internationalstandardization of accounting, audit-ing and reporting standards.”

– Aki Fujinuma, President, Internation-al Federation of Accountants (IFAC)

Over the past decade, the need for audit-ing standards and practice to continuallyevolve and develop to keep pace with thechanges occurring in other areas of businessand economic activity has become animportant focus of standard setters as wellas the major international accountingfirms.

The CICA’s Task Force on Standard Set-ting (TFOSS) identified harmonization asan important force that will shape thedevelopment of standards in the 21st centu-ry. The ASB supports the development ofquality global auditing and assurance stan-dards. Its strategic plan recognizes eventualconvergence with international auditingstandards as a key strategic direction.

There is a subtle but important distinc-tion between what is meant by “harmoniza-tion” and “convergence”. The followingworking definitions are proposed:

Harmonization means adopting whatothers have developed, with an eye tounique Canadian circumstances that mightrequire a different answer, i.e., a substantivedifference. For example, under a harmo-nization strategy, standards contained inthe CICA Handbook – Assurance would beamended by the ASB as necessary to beconsistent with standards developed byother standard setters. Convergence meansworking with others to develop the stan-dard. Under this strategy the standards con-tained in the CICA Handbook – Assurancewould be those developed jointly withother standard-setting bodies, with addi-tional guidance provided as necessary toaddress unique Canadian circumstances.The format of the Handbook might lookquite different from how it looks today. TheASB has not yet concluded on an eventualending point with respect to harmoniza-tion/convergence.

The ASB also intends to maintain itsleadership position in terms of standard set-ting. It believes the important ED on auditrisk, now under development, as well as therecently released ISA 240, The Auditor’sResponsibility to Consider Fraud and Error inan Audit of Financial Statements, provide anexcellent opportunity to do so. To that end,the ASB recently approved a standard onfraud and error, consistent with ISA 240,


DEVELOPMENTS IN ASSURANCE STANDARDS

and it has set up an advisory group toreport to the Board on the implications ofthe audit risk project. The ASB also devotesa portion of its agenda at each meeting todiscussing IAPC projects, including pro-posed new projects, so that it is able to pro-vide input to the IAPC, via the CanadianIAPC member, on a timely basis.

The ASB is also developing a frameworkto address short and long term issues andgoals for convergence, including:• how Canada can maintain its standard-

setting capacity and continue to play asignificant role in establishing interna-tional assurance standards;

• retaining the authority to set uniqueCanadian assurance standards where cir-cumstances warrant; and

• identifying an appropriate due processthat allows Canadian stakeholders theopportunity to provide input to IAPCprojects that will be the basis for stan-dards or guidelines in the CICA Hand-book– Assurance.This framework will help ensure the ASB

fulfills its mandate of providing qualityassurance standards that meet the needs ofCanadian stakeholders including practi-tioners, users of financial statements andaudit reports, legislators, regulators and thepublic.

The Board believes its strategy to eventu-ally converge with international standardshas been given added relevance by the for-mation of the joint IAPC/US task force forthe audit risk project. In addition, its con-vergence initiative will be enhanced by theimplementation of the recommendations of

the IAPC Review Task Force to strengthenthe standard-setting processes and structureof the IAPC. These recommendations weredeveloped with the input of member bodiesof IFAC, including the CICA, standard-set-ting bodies, regional accounting organiza-tions, international regulators, andaccounting firms, all of which providedcomments on a draft report.

In the words of the Task Force Chair,Manual Sanchez Y Madrid,

“Harmonization of auditing standardscan only be achieved if we demonstratethat IAPC operates using due processand transparency and has the capabili-ty and resources to develop high quali-ty standards for the foreseeable future.”The recommendations of the Task Force

are intended to meet those objectives. Thekey recommendations include:• A revision of the IAPC’s objectives to

more clearly reflect its goals—to developauditing standards of high quality and tooperate and be seen as operating in thepublic interest;

• Expanded membership from 14 to 18members to include 10 representativesfrom IFAC member bodies, five repre-sentatives from international audit firmsthat would be nominated by the Transna-tional Auditors Committee of the Forumof Firms,3 and three non-auditor repre-sentatives;

• Making committee meetings open andagendas and minutes available to thepublic;

• A mandate for the expanded committeeto work closely with national auditing

standard setters on matters important toits goals, including undertaking jointcoordinated projects, thus promotingeventual convergence of auditing stan-dards for global acceptance; and

• Increasing the committee’s technicalresources.The final report may be viewed on the

IFAC web site, www.ifac.org.

Some final thoughtsIt’s too soon to say what changes will be

made to Canadian GAAS as a result of theaudit risk project in the short term and con-vergence in the longer term. The ASB’s dueprocess provides for open communicationswith its stakeholders to ensure that thoseaffected are informed of all proposedchanges, and to seek their input on anongoing basis. Part of this communicationseffort will also include consultations withstakeholders, as the ASB updates its strate-gic plan in 2002. The ASB’s web site atwww.cica.ca, also contains current informa-tion about the audit risk project and con-vergence, as well as other projects relevantto Canadian practitioners. ■

References

1. W. Morley Lemon, Kay W. Tatum, W. Stuart Tur-ley, Developments in the Audit Methodologies of LargeAccounting Firms. Stephen Austin & Sons, Ltd.Caxton Hill, Hertford, Great Britain, 2000.

2. More information can be obtained on the PublicOversight Board’s web site:www.pobauditpanel.org.

3. More information on the Transnational AuditorsCommittee and the Forum of Firms can beobtained on the IFAC web site: www.ifac.org.

Bank of Montreal Colour Advertisement

Section de la Capitale

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Financial Statement preparation under FIS

October 25, 2001

Grants and ContributionsNovember 7, 2001

Expenditure Management System

January 24, 2002

Government OnlineFebruary 13, 2002

Year-End ProceduresFebruary 27, 2002

Modern Comptrollership and Financial Policy Update

March 21, 2002

Multiple IssuesApril 25, 2002

Annual General Meeting

May 9, 2002

Préparation des états financiers dans le cadre de la SIF

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Système de gestion des dépenses

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Fonction de contrôleur moderne et mise à jour sur la politique financière

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Journée multi-sujetsle 25 avril 2002

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le 9 mai 2002

Sharing the Knowledge

Partager le savoir

Capital Chapter

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The Capital Chapter of the FinancialManagement Institute has about800 members with representation

from many federal government depart-ments and agencies. Our theme this year is“Sharing the Knowledge”, which expressesthe Chapter’s role in organizing eventsthroughout the year that enable representa-tives from all levels of government and pri-vate enterprise to share their knowledge andexperience with our membership.

The Chapter sponsors a broad range ofhalf and full day seminars. These events areespecially geared to provide an opportunityto discuss and share ideas on current gov-ernment financial and related issues, tolearn about the most up-to-date practicesand technologies applicable to governmentfinancial administration, and to developtechnical and managerial skills.

The nine events scheduled for 2001-2002 cover a wide spectrum of topics ofinterest to public sector financial managersfrom all levels of government and privatesector. Events include an impressive list:Financial Statement Preparation under FIS,Grants and Contributions: ExpenditureManagement System, Government Online,Year-End Procedures, Modern Comptrol-lership and Financial Policy and a final ses-sion on Multiple Issues with emphasis onHuman Resource topics.

Our first four events of this year playedto sold-out audiences. Our first event of theyear was the Kick Off Breakfast, in Septem-ber, which drew a record crowd with over500 participants. Mr. Richard Neville,Deputy Comptroller General, TreasuryBoard Secretariat, Government of Canada,introduced this year’s suite of seminars witha speech focused on key government initia-tives. The event concluded with an awardsceremony, jointly sponsored by TreasuryBoard Secretariat, which celebrated the suc-cessful implementation of the FinancialInformation Strategy (FIS) in the FederalGovernment.

The second event on “Financial State-ment Preparation under FIS” had over 200participants, the third event “Grants andContributions” had over 150 participantsand the “Expenditure Management Sys-tem” had over 200 participants. We appre-ciate the continued strong support of theCapital Chapter membership and all theother participants. Participant feedbackshowed a high level of satisfaction and con-firms that the FMI Capital Chapter Pro-gram Committee members have a goodunderstanding of the needs of the member-ship and did a great job in attracting expertsin the subject matter.

The Capital Chapter has a reputation ofproviding informative seminars at a low

“not-for-profit” cost. This and the fact thatthe program committee takes special care toinclude current subjects of interest to thefinancial management community is thereason for the considerable success achievedto date. The FMI Program Committee ismade up of volunteers who dedicate theirtime to helping the participants at ourevents have an opportunity to learn aboutcurrent initiatives in financial management,to sharing community knowledge and toensuring that participants have an opportu-nity to network. There are five more semi-nars to come, with such exciting topics asGovernment Online and Modern Comp-trollership. The Capital Chapter would liketo thank Chapter members for their sup-port and encourage others to visit our website at http://www.fmi-cc.ca for moredetailed information on upcoming events.

Program committee members for theFMI Capital Chapter are as follows:

Monique Arnold, Luc Belanger, Eliza-beth Bow, Cheryl Driscoll, Ann Collinge,Pierre Laflamme, Marie-Claude Lebel,Daniel Maloley, Cherilyn Montiny, PhilipeMostert, Huy Q. Nguyen, René Paré, PaulPower, Jenille Prince, Glenn Richardson,Lucia Stachurski, Tidian Touré, Cathy deVroome. Ann Biron and Barbara Vander-Noot are Co-Chairs of the Program Com-mittee. ■

Capital Chapter

Sharing the Knowledge!Ann Biron and Barbara VanderNoot


FMI Capital ChapterBoard of Directors for 2001/2002

Role Name Org. Tel. # Fax # Email

Executive CommitteePresident Barbara Thompson AAFC 759-6431 759-6023 [email protected]

Past-President Charles MacKinnon DND 997-8229 997-2883 [email protected]

Vice-President Marc Desjardins SC 951-1436 951-5102 [email protected]

Treasurer Emer Mullan AAFC 759-6586 759-1204 [email protected]

Secretary Pierre Laflamme TBS 952-3363 952-7979 [email protected]

Committee Chairs & MembersProgram Chairs Ann Biron PWGSC 956-5286 956-5407 [email protected]

Barbara VanderNoot TBS 946-9340 - [email protected]

Program Members

Luc Belanger CIDA 997-4198 994-0253 [email protected]

Elizabeth Bow PWGSC 956-2839 956-8400 [email protected]

Ann Collinge TBS 957-7233 952-9613 [email protected]

Cheryl Driscoll TBS 957-9687 952-9613 [email protected]

Marie-Claude Lebel PWGSC 956-2238 956-8400 [email protected]

Cherilyn Montminy FIN 943-2956 995-1325 [email protected]

René Paré PWGSC 956-1258 956-1926 [email protected]

Paul Power PSTG 277-8037 688-2333 [email protected]

Lucia Stachurski FIN 943-7941 995-1325 [email protected] Touré HRDC 994-5838 994-5114 [email protected]

Communications / Liaison / Marketing Chair

Huguette Forget HRDC 762-8739 953-3289 [email protected]@NHQ

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Interview with Mr. Guy Breton,Auditor General of Quebec whosemandate ended December 2001

Richard Gagnon and Norbert ChouinardQuébec Chapter

Gagnon & Chouinard: For ten years yourreports reveal deficiencies in public admin-istration. Are you leaving your office withno hope of ever seeing the public adminis-tration remedy its shortcomings?

Guy Breton: Absolutely not! I havealready stated publicly and maintain thatQuébec is among the best public adminis-trations in the world. Moreover, this publicadministration is always endeavoring to dobetter, to adapt to the changes sweepingthrough our society.

As with any other infrastructure, thehighway infrastructure for instance, thepublic administration must be inspectedregularly to identify, anticipate and correctits weaknesses. The Auditor General con-tributes to this task. It should be no surprisethat each year he draws up a list of“repairs” that need to be made to preservethe quality of this infrastructure. Justbecause there is no such list, does not meanthat there are no problems; rather, it meansthat the weaknesses are kept hidden or arenot known. In short, the report of the Audi-tor General must be seen as evidence of theadministration’s transparency towards Par-liament, which is a prerequisite for the prop-er operation of our democratic system.

Gagnon & Chouinard: In your opinion,what are the main challenges that tomor-row’s public service will have to take up tooffer high-quality services that meet theneeds of citizens?

Guy Breton: The reports that I tabled inthe National Assembly in 2001 commenton some of these major challenges.

First, it is necessary to apply the PublicAdministration Act and the underlying “man-agement by results” approach. The Act seeksto systematize government management sothat all decision-makers, including the ulti-

mate decision-makers namely the ministersof the government and the National Assem-bly, have the necessary information to evalu-ate whether or not government services meetneeds and whether or not they attain thelevel of quality sought. While this principlehas held a place in management theory fordecades, strategic planning, the declarationof services for the public, performance indi-cators and the management report are allindispensable management tools that requirefurther development and need to be appliedsystematically.

A second challenge consists of gettingready to cope with the ageing of Québec’spopulation, a phenomenon that will takeplace must faster than in Canada or the Unit-ed States. The ratio of the population sup-porting most social costs, namely personsaged 20 to 64, in relation to seniors will gofrom 5 to 1 to 2 to 1 by 2050. As forQuébec’s population as a whole, it is expect-ed to begin its decline in 2026. This phe-nomenon highlights the risks in the publicfinance field: maintaining a balanced budgetcould become increasingly difficult over thelong term. Moreover, the availability of man-power to offer public services, in particular inthe health sector, could also be problematic.

Thirdly, the ever more intensive use ofinformation technologies and communica-tions, in particular to offer on-line servicesto citizens, as for example the issue of cer-tificates or to register in a program, willrequire the reorganization of several posi-tions and will pose major challenges fromthe standpoint of confidentiality and thesecurity of information.

Gagnon & Chouinard: During your termof office, you published numerous reportson a host of subjects. Although these sub-jects are all important, what three subjects

marked you most and why?Guy Breton: The case that marked me

most is that of the Curateur public (PublicCurator) (1998). After several years of fruit-less attempts, we were finally able, with theagreement of its authorities and the supportof a parliamentary committee, to proceed avalue-for-money audit of this agency. Wediscovered a situation that was so dismal thatI deemed it useful to submit to the NationalAssembly the only special report of my entireterm of office. The scandal was all the moreappalling in that the shortcomings identifiedaffected the rights and assets of a highly vul-nerable clientele: persons ruled incapable ofcaring for themselves and their belongings.The government was quick to take action torectify the situation, an operation that hadnot yet been completed a few months ago.The outcome of this case confirms that weare right to insist on carrying out our auditmandate when an agency objects thereto.That is why we have no intention of “throw-ing in the towel” in the case of the Caisse dedépôt et placement du Québec whichobjects to having us examine how it managesthe collective nest egg of Quebecers.

The second case is that of the financialassistance offered to farm producers (1996).We had discovered that the ministère de l’A-griculture was awarding grants which, insome cases, were contributing to the exces-sive spreading of chemical fertilizers or thatwere being used to build hog houses produc-ing a volume of manure that far exceeded the

Guy BretonMr. Breton completed his mandate as Auditor Gener-al of Quebec in December 2001. He assumed thisposition in 1991. Mr. Breton received his CharteredAccountant designation in 1964. He has a vast expe-rience in the field of auditing both in the public andprivate sectors. Mr. Breton is President of the Quebecchapter of the FMI. Mr. Richard Gagnon and Mr.Norbert Chouniard, directors in the Quebec chapterof the FMI met with Mr. Breton just prior to the com-pletion of Mr. Bretons mandate.


INTERVIEW WITH GUY BRETON

absorption capacity of farmlands. Theseexcess amounts were ending up pollutingour rivers and streams. For its part, the min-istère des Affaires municipales had spent bil-lions of dollars to clean the wastewaters oftowns and cities and to restore the purity ofriver water. It was clear that one governmentorganization totally ignored the actions ofanother government organization.

Finally, the third case is very recent(2001). It is that of the management ofrisks associated with demographic changes.Already, forecasts from various sourcesshow that the ageing of the population willexert major pressure on the costs of publicprograms. The demographic factor alonecould result in an increase in the proportionof the gross domestic product (GDP) dedi-cated to health and social services from the7 percent that it was in 1998 to 15 percentin 2050. In contrast, other sectors such asthat of education could find themselves inthe opposite situation. There is a risk thatthe resources freed up by those sectors whoactivities are on the decline will not beredistributed to those whose activities areon the rise, and that the result will be anincrease in public expenditures. However,the studies carried out to date have notbeen adequately coordinated. Consequent-ly, it is difficult for the government toobtain a long-term global vision and todetermine its leeway. At a time when we arestepping up our efforts to anticipate risks inorder to reduce the costs associated with alack of foresight, our society cannot bury itshead in the sand on this question. We canlikely attenuate the effects of the ageing ofthe population on public finances and serv-ices by devising well-coordinated strategiesright away. This is a question of responsi-bility towards those who will follow us.

Gagnon & Chouinard: In your report ofDecember 2000 to the National Assembly,you informed us of your reflections on theAuditor General Act. What are the mainirritants and what improvements wouldyou like to see made to the Act?

Guy Breton: The first recommendationthat I made consists of subjecting all gov-ernment corporations to value-for-moneyaudits. At the present time, the Act doesnot provide for this type of audit geared tomanagement and performance in govern-ment corporations whose financial state-

ments are audited by private sector audi-tors. This is the case for example of Hydro-Québec, the Société des alcools or theSociété générale de financement.

Moreover, in government corporationswhose financial statements are audited bythe Auditor General, the obligation ofentering into a prior agreement with theboard of directors is a serious obstacle tocarrying out such audits, according to theinterpretation of some. For example, theCaisse de dépôt et placement, which man-ages over $100 billion, still refuses to enterinto such an agreement. On this subject, Ihave asked the National Assembly toremove this obstacle or to relieve the Audi-tor General of this obligation.

Secondly, I suggested that only the Audi-tor General should assume responsibilityfor value-for-money audits in all govern-ment agencies and corporations, even whenthe financial audit is entrusted to a privateauditor. The latter would be invited to par-ticipate actively in such value-for-moneyaudit, but the Auditor General wouldreport himself to the National Assembly.

Thirdly, I recommended that the AuditorGeneral Act be amended to take intoaccount all forms of government supportwhich, in substance, are comparable togrants. This support takes all kinds offorms, for example income tax credits, withrespect to which it is advisable to clarify themandate of the Auditor General.

In December 2001, the Commission del’administration publique invited the AuditorGeneral to table a bill proposal, somethingthat will likely be done by my successor.

Gagnon & Chouinard: What are theachievements that characterize your termof office as Auditor General of Québec?

Guy Breton: Within the organization, Irelied on the experience of my personnelwhen modifying the value-for-moneyauditing method in order to detect majorshortcomings more rapidly, which hasallowed us to conduct more audits. Thegreater number of audit reports has made itpossible to publish two volumes of myreport to the National Assembly, one inJune and the other in December.

In the public arena, I believe that I havehelped to make the Auditor General’sremarks more interesting for citizens andparliamentarians with the end result that

they have devoted more time to examiningmy reports and have informed the managersof the activities in question that the short-comings identified need to be corrected.

Gagnon & Chouinard: Over the last fewyears you have worked as a member of theFMI Board of Governors, Québec section,and we would like to thank you for yourcontribution. What topics should be ofparticular concern to FMI members overthe next few years?

Guy Breton: The FMI could take aninterest in the government’s financial indi-cators based on the model developed by theCanadian Institute of Chartered Accoun-tants. This model suggests using some tenindicators to assess the evolution of a gov-ernment’s financial position over severalyears’ time.

The Institute could also begin reflectingon the means that will allow us as a societyto reduce the effects of the rapid ageing ofthe population on public finances.

Finally, it would be interesting to assessthe cost of tax expenditures, income taxcredits, in relation to the economic spin-offs they generate.

Gagnon & Chouinard: What are yourplans in the upcoming months? Do youintend to play a role within the govern-ment administration?

Guy Breton: The Auditor General is nota member of the public service. Conse-quently, at the end of my term of office, Iam not transferred to another positionwithin the government administration.Over the short term, I plan to go on sab-batical for a few months. Over the mediumterm, I would like to remain active bybecoming involved in a project that willallow me to make the most of my profes-sional experience.

As the position I held imposes a certainreserve, I do not find it appropriate to playa highly visible role in Québec’s govern-ment administration. I have a special inter-est in teaching and university research, aswell as in international cooperation in thefield of strengthening institutions similar tothe Auditor General in developing coun-tries. The next few months will give me theopportunity to explore these variousavenues. ■

Integrated risk management is a key partof the Government’s Results for Cana-dians - A Management Framework for

the Government of Canada. HumanResource and Development Canada(HRDC) has incorporated this govern-ment-wide initiative into it’s efforts tomodernize its management practices and tostrengthen managers’ capabilities. Thedepartment is operationalizing TreasuryBoard’s framework for integrated risk man-agement, where risk is a measure of uncer-tainty that can prevent or facilitate theachievement of organizational objectives.

Treasury Board defines integrated riskmanagement as “a continuous, proactiveand systematic process to understand, man-age and communicate risk from an organi-zation-wide perspective. It is about makingstrategic decisions that contribute to theachievement of an organization’s overallcorporate objectives.” The objectives ofintegrated risk management in HRDC, aselsewhere in the federal government, are toenhance business planning and decision-making to:• support citizen-focused delivery of pro-

grams and services; and• improve program results through more

informed decision-making to strengthenaccountability to Parliament and Canadi-ans.Risk Management has become an impor-

tant aspect of our strategic and businessplanning, and increasingly, of how we man-age our programs and services.

The practice of risk management is notnew to the Federal organizations, includingHDRC. Its objective is to broaden andintegrate our approach to managing gov-ernment programs and services in the faceof significant uncertainties by includingstrategic and operational risks, and positive

as well as negative possibilities. We are inte-grating improved risk management into ourstrategic processes and have developedguidelines for our key business processes.

The implementation of integrated riskmanagement in HRDC:• Supports the goal of improved manage-

ment and ensuring a sustainable organi-zation;

• Ensures transparency, accountability anddocumented “due diligence”;

• Puts in place a common, and flexible,approach to managing risks by:• building risk assessment practices into

major business operations• developing the capacity of managers

and key partners to manage risks;• placing specialists in roles that support

managers and employees;• establishing processes to share risk

management information and lessonslearned, across the department; and

• ensuring that results are acted uponand monitored, within the frameworkof departmental business plans.

We are making progress in achievingthese objectives, thanks to our collabora-tive, team effort! Internal Audit and RiskManagement Services is actively supportingthe work of branches and regions under theleadership of our Director General and thedepartment’s chief risk officer, the AssistantDeputy Minister of Finance and Adminis-trative Services.

We have developed standards to providecoherence and guidance for full implemen-tation of improved integrated risk manage-ment. These standards will be used tobenchmark progress and learn from ourexperience. We have used the seven ele-ments of the National Quality Institute(NQI) to ensure more rigor and conver-gence to the standards that were developed

by a small group that I led involving ourFinance and Administrative ServicesBranch. These seventeen guidelines weresubsequently refined through widespreadconsultation and then accepted by HRDC’ssenior management.

The elements and standards, highlightedbelow, may be of practical interest to otherorganizations at this time.

Leadership• Senior managers explicitly include risk

management as a key aspect of businessplanning and ongoing control processes

• Performance agreements of senior man-agers address high risk areas

Planning• Planning processes include risk manage-

ment:• scanning the environment (threats and

opportunities);• assessing strategic and operational risk;• considering risk tolerances and capaci-

ty needs• Risk assessments are included in project

planning• Roles, responsibilities and accountabili-

ties include risk management

Citizen/Client Focus• Consultations with external and internal

clients include appropriate communica-tions on important risks and how theyare being addressed


Integrated Risk Management inHRDC: Using Implementation

Standards to Achieve Coherence andFlexibility

Basil Orsini

Basil OrsiniBasil Orsini is Internal Audit Director, CorporateRisks, in Internal Audit and Risk Management Ser-vices of Human Resources Development Canada. Hemade presentations on risk management at this year’snational FMI conference as well as the FMI Profes-sional Development Week. He leads department-wideaudits and risk initiatives. He is a Certified InternalAuditor, Certified Government Audit Practitionerand has Certification in Control Self-Assessment.


INTEGRATED RISK MANAGEMENT IN HRDC

People Focus• Training includes risk management principles

where appropriate• Group and individual learning plans address risk

management, where necessary• Technical support and tools for risk identifica-

tion and assessment are available

Supplier/Partner Focus• The procurement process includes risk manage-

ment considerations• Risk management principles are used in design-

ing monitoring systems

Process Management• Business risk profiles are developed and main-

tained• Generic HRDC risk management process is tai-

lored to specific needs of the business• Risk identification, assessment and mitigation

are considered in the management of major proj-ects

Organizational Performance• Progress in implementing risk management in

the work environment is monitored and assessed• Lessons learned and best practices in risk man-

agement techniques and strategies are shared• High risk areas in major business units are dis-

cussed and evaluated corporately

These guidelines are designed to help managersto align this improvement initiative within theirown plans and priorities.

We have accomplished much over the past sever-al years and we are aware that much remains to bedone. These guidelines are designed to provideboth coherence and flexibility. We achieve coher-ence through agreement on seventeen standardsdesigned within a service quality framework. Also,we achieve flexibility by allowing branches andregions to flesh out these guidelines using theirexisting business processes in alignment with exist-ing operational plans rather than creating andenforcing arbitrary processes and schedules.

We will continue to learn from best practiceselsewhere and to share our own experiences andprogress. It is particularly important that we active-ly share information across the department on bestpractices, successes and challenges, as improvedrisk management is built into key programs andoperations.

We hope that you will find these implementationguidelines useful in our common journey forimproved modern comptrollership within the publicservice. ■


Why a move, after 15 years, fromfinancial management to Inter-nal audit and Risk Management

Services? It is a natural transition!The financial management activity is

evolving to focus their services from purefinancial analysis to include non-financialinformation. As expressed by the Comp-trollership Panel, “comptrollership is anintegrating function that includes manage-ment’s diverse responsibilities such as finan-cial and non-financial performance infor-mation, budgeting, resource allocation,control and risk management”. This inte-gration is not an easy task. It involves sig-nificant behavioral and organizationaldimensions, which take time to implement.The importance of reaching this integrationis key in our role as financial advisors andunderstanding the impact the financialadvice has on operational activities whenmaking appropriate funding allocation rec-ommendations. With limited resources andsometimes resource deficiencies, depart-ments face important operational chal-lenges that need to generate operationalsavings and efficiencies to meet programresults. These challenges need an appropri-ate balance between due diligence and pro-

gram results. Making appropriate linkagesbetween costs and program results andunderstanding the impact it may have onoperational activities and compliance ofexisting policies and guidelines is funda-mental in evaluating risks associated withcosting scenarios. This is one of the reasonswhy I moved from financial managementto an Internal Audit and Risk Managementdirectorate.

Based on the new Treasury Board Inter-nal Audit policy, departmental InternalAudit directorates are focusing both onassurance and consulting services. The newfocus on consultative services brings aninteresting aspect that motivated my inter-est to Internal Audit. The notion of provid-ing added value and not be limited to after-the-fact interventions will, with no doubt,be a service that managers will increasinglyseek in the future. For Internal Audit direc-torates which have taken the mandate tosupport the implementation of the Inte-grated Risk Management policy issued byTreasury Board in April 2001, it representsa complementary function as risk and con-trol assessment is an integral part of audit-ing. By definition, risk management alsorequires that internal auditors have a moreproactive focus in their new consultative

role. Similar to the financial managementcommunity, internal auditors will need tobecome more knowledgeable of client’sbusiness, process, policies, business plan,performance measures and other things.This is another reason why my move fromfinancial management to an Internal Auditand Risk Management directorate was anatural transition.

Finally, had my initial experience been inan Internal Audit directorate, a move fromInternal Audit to a Financial Managementdirectorate would also been a natural transi-tion as both activities are an integral part ofthe Modern Comptrollership function. ■

Huguette ForgetWith over 18 year of experience in the financial man-agement community, Huguette Forget has managedmajor projects and participated on major initiativessuch as the Labour Market Development Agreement,The Atlantic Groundfish Strategy and GovernmentOn-line.

Within the diverse and evolving environment ofHuman Resources Department Canada, HuguetteForget played a leadership role in the financial man-agement area in dealing with the challenging issues inthe realm of national standard costing and horizontalorganizational factors.

Currently seeking a Master’s degree in Environ-mental Management, it is indicative of her thirst forknowledge.

From Financial Management to InternalAudit and Risk Management…

A Natural Transition

Huguette Forget


As part of his 1995 Federal Budget,the Minister of Finance providedthe very necessary political support

and resources needed to implement theGovernment of Canada’s Financial Infor-mation Strategy (FIS). With the extraordi-nary team and individual efforts of hun-dreds of people government-wide, thou-sands functional specialists were trainedand ready to work with 35,000 ‘Managersof All Kinds’ - the ultimate users of the newinformation that FIS provides - in 94departments and agencies. This incrediblefeat was accomplished on April 1, 2001.

The key change introduced by FIS wasaccrual accounting. Financial reporting isnow decentralized to departments andagencies. Departments and agencies pre-pare their own financial statements.

From a systems perspective, FIS requiredmajor changes to the central suite of sys-tems at Public Works and Government Ser-vices Canada (PWGSC), including chequeissue, banking and cash management, payand the central financial management andreporting system. Individual departmentsimplemented or upgraded complex finan-cial and materiel systems. Major new inter-faces were built between the departmentaland the central systems.

Implementing FIS also involved institut-ing new financial practices and accountingpolicies. And it meant getting people readyfor the changes that FIS brought, includingdeveloping communications, change man-agement, training and learning programs.

A Reason to CelebrateIt was indeed an enormous undertaking

and a momentous achievement by the func-tional communities (finance, materiel/assetand real property) in departments andagencies. In partnership with the Treasury

Board of Canada Secretariat (TBS) andPWGSC, they got the job done on timeand within budget, something rarely seenwith large systems projects.

It’s the kind of accomplishment thatmust be, and was, celebrated. TBS co-host-ed the FMI Capital Chapter Season Open-er Breakfast Kick-off with a special FIS Cel-ebration Event on September 20, 2001. Mr.Richard Neville, Deputy Comptroller Gen-eral of Canada, TBS, Mr. Rod Monette,Assistant Deputy Minister of GovernmentOperational Services, PWGSC, and Mr.Jim Libbey, Executive Director of theFIS/Shared Systems Directorate, TBS par-ticipated in awarding trophies to 21 indi-viduals and 17 team representatives. In all,there were 445 finalists.

The main purpose of the ‘FIS Implemen-tation Recognition Program’ was to recog-nize the ‘outstanding contributions’ of indi-viduals or teams who demonstrated leader-ship, initiative and collaboration govern-ment-wide in the implementation of FIS.Letters, along with a nomination form, cri-teria and eligibility guidelines, were sent toall Senior Full-time Financial Officers, FISProject Team Leaders, Chairs of the FISForum Working Groups and the Chairs ofthe Cluster Groups, inviting nominationsfor:• Outstanding work done by individuals in

their own departments and agencies,thereby ensuring the successful imple-mentation of FIS in their department oragency; and

• Outstanding work done by individuals orteams, who either produced a product orcontributed innovative and creative ideasthat were recognized as being usable byother departments and agencies, therebydemonstrating leadership and savingtime and effort in the implementation of

FIS government-wide. This included thework of the Cluster Groups, the FISForum and the Forum’s WorkingGroups.Representatives from departments and

central agencies formed a NominationsCommittee whose task it was to determineaward recipients. It is worthy to note thatall recipients were unanimous selections bythe Nominations Committee - their contri-butions were self-evident.

FMI Capital Chapter Keynote Address onChange

In his presentation to more than 500attendees, Rick Neville spoke of change.FIS is a necessary part of the process tomodernize management practices in theGovernment of Canada. As such, it directlysupports Results for Canadians: A Manage-ment Framework for the Government ofCanada.

Change is the only constant. It is not easybut it is necessary to survive in today’sworld. By working together, forming part-nerships and establishing good workingrelationships, our efforts will achieveresults.

The success and lessons learned with FISare proof of this.

The FIS Celebration EventJim Libbey noted that the Celebration

Event was a very special day in the FISOdyssey started in November 1996. Thecommunity demonstrated that much can

Pamela BoothPamela Booth is Team Leader, Communications andChange Management, FIS/Shared Systems Direc-torate in the Treasury Board of Canada Secretariat.Pam advises departments and agencies on the ‘People’side of FIS. Pam can be contacted by e-mail [email protected] or by telephone at (613)957-3120.

FIS Celebration: A People Event!Pamela Booth

On April 2, 2001, Lucienne Robillard, President of the Treasury Board of Canada,announced the successful implementation of the Financial Information Strategy in allGovernment of Canada departments and agencies. She referred to FIS as the biggest

change in Government accounting and financial reporting since Confederation.


FIS CELEBRATION: A PEOPLE EVENT!

be accomplished when people come togeth-er and focus their attention and effort onthe same cause.

The nominations received for the FISOutstanding Contribution Award trulyindicate the level of pride that the commu-nity has in this achievement. The nomina-tors chose many words of praise to describethe hard work over the last several years.Either in departments and agencies, inCluster Groups or in the FIS Forum and itsWorking Groups, everyone worked togeth-er to share information, products and expe-riences in the implementation of FIS.

Rick Neville then spoke on ‘Pride in OurSuccess’. He was very happy and certainlyvery proud to be at the event to present atoken of thanks for exceptional contribu-tions to FIS. Although the focus of theevent was to recognize the work of thesepeople, all FIS Implementation Teams wereto be saluted for their successful implemen-tation of FIS. Indeed, several departmentsand agencies have already organized theirown celebrations.

The valuable lessons learned from theimplementation of FIS will be carried for-ward to future initiatives as work proceedson Shared Systems and Government On-line (GOL), Modern Comptrollership andso on, all towards achieving Results forCanadians.

Rod Monette then spoke and said thatthe functional communities had imple-mented an historic change in Federal Gov-ernment accounting - a change that makesthese communities a worldwide leader inpublic accounting standards.

Rod mentioned that in an article pub-lished in the FMI Winter 2001 Journal,Frank Claydon, Secretary of TBS andComptroller General of Canada wrote “FISis a key component of Modern Comptrol-lership and an important step towardsachieving the objectives of Results forCanadians. FIS will help us ensure that wemanage the resources entrusted to us by thepeople of Canada wisely.”

Rod commended the leadership of theFIS ADM Steering Committee for the rolethey played in this success but noted thatprofessionals in every department andagency shared their vision.

The tools are in place for more informeddecision-making. The community is nowworking with Manager of All Kinds as they

learn how to use the new types of informa-tion that will be available to them. This willensure that we harvest the benefits of FIS.

The CeremonyRick and Rod then presented an

engraved and personalized ‘OutstandingContribution Award’ trophy to the follow-ing individuals and teams.

Individual Recipients• Lucie Blanchet, Public Works and Gov-

ernment Services Canada• Michael Blaschuk, Public Works and

Government Services Canada• Annette Butikofer, Canada Customs and

Revenue Agency• Cynthia Cantlie, Department of Fish-

eries and Oceans• Daniel Chartrand, National Research

Council• Micheline D’Aoust, Privy Council Office• Len Jodoin, Royal Canadian Mounted

Police• Raymond Jordan, Canadian Heritage• Barry Ladd, Public Works and Govern-

ment Services Canada• Jean Laporte, Transportation Safety

Board• Micheline Lavoie, Privy Council Office.• Carole Leblanc, Agriculture and Agri-

Food Canada• André Léger, Industry Canada• Phyllis Rice, Indian and Northern Affairs

Canada• Fred Serafin, Public Works and Govern-

ment Services Canada• Larry Smith, Public Works and Govern-

ment Services Canada• Rachelle Therrien, National Parole Board• Gord White, Canadian Food Inspection

Agency• David Willey, Auditor General of Cana-

da• Sarah Wong, Canadian International

Development Agency• Patricia Younger, Agriculture and Agri-

Food Canada

Team Awards(Representatives who accepted the award

on behalf of their teams are in parenthesis)• Agriculture and Agri-Food Canada Sat-

urn Division (Greg Archibald)• Canadian Heritage/Parks Canada Asset

Accounting Team (Bill Tobin)• Citizenship and Immigration Canada

Financial Policy Unit (Paul Hurtubiseand Daniel Simard)

• FIS Forum Change Management Work-ing Group (Dianne Tomkins)

• FIS Forum Communications WorkingGroup (Micheline Lavoie)

• FIS Forum Engaging Managers WorkingGroup (Len Jodoin)

• FIS Forum FAQ/Fact Sheets WorkingGroup (Rose-Ann McIlhinney andAndré Léger)

Rod Montelle, Ann Biron and Rick Neville


FIS CELEBRATION: A PEOPLE EVENT!

• FIS Forum Learning Advisory WorkingGroup (Bernard Ouellet)

• FIS Forum Presentations WorkingGroup (Cynthia Cantlie)

• FreeBalance Cluster FIS Project Team(Micheline D’Aoust & Jean-PierreLabelle)

• G/X Cluster FIS Project Team (CraigHetherington)

• Integrated Financial and Materiel SystemCluster (SAP) Cluster FIS Project Team(Wayne Job)

• National Research Council FIS Imple-mentation Team (Allan Loney)

• Oracle Financials Cluster FIS Sub-com-mittee (Deloranda Walton)

• Privy Council Office FIS Implementa-tion Team (Rick Robinson)

• PWGSC Appraisals, Accrual AccountingTeam (Gil Mick)

• PWGSC FIS Central Systems Imple-mentation Team (Ann Biron)

The award to the PWGSC FIS CentralSystems Implementation Team was of spe-cial significance as it represented the suc-cessful partnership between PWGSC, theCluster Groups, and TBS. Working togeth-er, they met the functional and technicalchallenge of creating interfaces for the vari-ous technical platforms with the six Receiv-er General systems. In short, within 3 years,they got the job done and as a result, metsuccess on April 1st, 2001. Ann Bironaccepted the award on behalf of her 175-member team.

Special AwardsJim Libbey announced two special

awards to recognize the partnership that theFederal Government has enjoyed and bene-fited from with the FMI of Canada and itsCapital Chapter.

The first special award was accepted byGermain Tremblay, President, on behalf of

his FMI Canada Board of Directors. TheFMI contributed to the promotion andmandate of FIS by publishing articles and aregular column in the fmi journal andthrough information sharing at its twoannual national conferences - ProfessionalDevelopment (PD) Week in Ottawa andthe Public Sector Management Workshopin the regional Chapters.

The second special award was acceptedby Barbara Thompson, President, on behalfof her FMI Capital Chapter Board ofDirectors. We have come to rely on ourpartnership with the Capital Chapter andthe Celebration Event was just one exampleof this.

A ‘FIS Wall of Fame’ was the final high-light in the FIS Celebration. A large graph-ic poster with the photographs of all awardrecipients was displayed at the TBS Comp-trollership Branch Kiosk at FMI PD Weekin November 2001.

Other CelebrationsThe Distinction Awards Program, which

is a highlight of Technology in GovernmentWeek, recognizes and celebrates excellenceand leadership in the management of infor-mation and information technologies in thepublic sector. At the 9th Annual Celebrationof Excellence in Managing Information andInformation Technology, the FIS ProjectOffice in TBS and the PWGSC ReceiverGeneral Team were finalists in 3 categories.A gold medal was awarded to the PWGSCReceiver General Team in Group 1, FederalAwards, Serving Canadians Better throughIM/IT Innovations – Implementing Medi-um to Large IT Projects.

Indeed, the award represents the accom-plishments of the community in the imple-mentation of FIS. Congratulations to oneand all for your efforts to successfullyimplement FIS on April 1st, 2001. ■

Jim Libbey, Executive Director, FIS Shared Systems Directorate


The Canadian federation containstwo major sets of imbalances: eco-nomic imbalances and fiscal imbal-

ances. Economic imbalances are character-ized by the persistence of regional dispari-ties as seven of the ten Canadian provincescontinue to have below-average economicperformance. Fiscal imbalances have twodimensions: vertical and horizontal. Verti-cal fiscal imbalances (VFI) refer to a situa-tion where the federal government has thefaster growing revenue sources while theprovinces have the faster growing spendingresponsibilities. Horizontal imbalancesreflect the different revenue-raising capacityof different provincial governments.

Consistent with section 36 of the Consti-tution, three policy instruments have beenused in Canada to deal with the above threeimbalances, as in Table I.

This paper is confined to a brief analysisof vertical fiscal imbalances. It discusses theconcept and dimension of VFI, identifiessome of the policy distortions they maygenerate and makes some suggestions forcorrections that, in my view, wouldstrengthen the Canadian federation.

Vertical fiscal imbalances are a measure ofthe mismatch between revenue potentialand spending responsibilities of the federalgovernment relative to the provinces andterritories as a group. In the current Cana-dian context, they provide an explanationof why the federal government has built afiscal structure that tends to generateincreasing surpluses over time while the

provinces and territories as a group have fis-cal structures that barely produce budgetbalances. Vertical fiscal imbalances are cal-culated by projecting, for each order of gov-ernment separately, the revenues andexpenditures that will be generated by theexisting fiscal structures under certainassumptions about the future time-path ofthe major economic indicators and in theabsence of discretionary policies. The esti-mation of VFIs, therefore, does not involvefiscal forecasts. Rather, it projects whatwould happen automatically if the demo-graphic and economic variables such aspopulation, Gross Domestic Product(GDP), employment, labour productivityand inflation grew at a certain rate. My esti-mates of VFI identified the root causes ofvertical fiscal imbalances in Canada shownin Table II.

Inspection of Table II leads to the follow-ing observations.1. VFI originate largely on the spending

side. The provinces and territories areresponsible for the high-growth spendingprograms such as health care while thefederal government has mainly slow-growing spending programs.

2. On the revenue side, more moderateimbalances originate from two sources:(a) the federal dominance of the fast-growing personal income tax, and (b)slow-growing federal transfers to provin-cial-territorial governments which holdback their revenue growth.Two recent studies have looked at vertical

fiscal imbalances in Canada. One study wasco-authored by C. Matier, L. Wu and H.Jackson; I prepared the other study for theprovincial-territorial Ministers of Finance.Despite some methodological differences inthe estimation of projected trends in gov-ernment revenues and expenditures, thesetwo studies are in complete agreement onthe federal fiscal position. Both studiescome to the conclusion that, in the absenceof discretionary policy measures, the feder-al fiscal structure will generate surplusesthat will increase in magnitude over time.For the fiscal position of provincial-territo-rial governments, the two studies derivesimilar results in scenarios that incorporatesimilar assumptions. For example, if costpressures in health care spending are mod-erate and CHST cash payments grow atclose to the growth of nominal GDP, the

Fiscal Imbalances and NationalPrograms

Joe Ruggeri

TABLE I

Imbalance Policy ToolRegional Disparities Regional Development PoliciesVertical Fiscal Imbalances Transfer of Tax Points

Federal Cash Transfers, such as those under theCanada Health and Social Transfer (CHST)

Horizontal Fiscal Imbalances Equalization

TABLE IIAverage Annual Percentage Changes in Revenues and Expenditures, 2000-2020

Federal Provincial-Territorial DifferenceExpenditures 2.2 3.5 -1.2Own-Source Revenues 4.2 3.8 0.4Total Revenues 4.1 3.6 0.5

Joe RuggeriDr. Ruggeri holds a B.A., an M.A. and Ph.D. in Eco-nomics. Currently Dr. Ruggeri is the Vaughn Chair inRegional Economics and Director of the Policy Stud-ies Centre at the University of New Brunswick. Dr.Ruggeri has held previous positions with the federalgovernment and the governments of Alberta and NewBrunswick. Dr. Ruggeri has published three booksand numerous articles in refereed journals.


FISCAL IMBALANCES AND NATIONAL PROGRAMS

provinces and territories as a group wouldexperience potential surpluses in the future,but much smaller than federal surpluses.The aging population may generate costpressures that will lead to faster growth ofhealth care spending than GDP growth.Under a scenario of strong cost pressures, ahigher growth of federal transfers is neededto prevent budget deficits for provincial-territorial governments.

Despite the agreement on the facts, thereis a major difference of opinion between thefederal government and the provinces onthe state of government finances in Canada.The premiers see growing federal surpluses,which provide the federal government withample policy flexibility, while most of themmust perform juggling acts just to keeptheir budgets in balance. The federal gov-ernment view - as expressed, for example,by the Minister of IntergovernmentalAffairs - is that there are no fiscal imbal-ances as long as the provinces have suffi-cient funds to finance their expenditures,regardless of the size of the federal surplus.

The federal interpretation would be con-sistent with a federation composed of fiscal-ly independent jurisdictions in the sensethat each jurisdiction finances its spendingentirely through own-source revenues. Inthis case, the relative fiscal position of eachorder of government has no implicationsfor intergovernmental fiscal relations andthere are no legitimate claims on the feder-al surplus by other jurisdictions. This is notthe Canadian situation. In Canada, overhalf of provincial spending is for what maybe called national programs such as healthcare and post-secondary education. Theseare programs delivered by provinces underconstitutional responsibility, but are partlyfinanced by the federal government. Underfiscal interdependence, federal surplusescannot be treated as independent of provin-cial spending needs, especially when thespending pressures originate from nationalprograms. One may argue that the jointfinancing of national programs legitimizes aclaim by provincial governments on a por-tion of federal surpluses. In this framework,a federal fiscal structure that generates sur-pluses represents a vertical fiscal imbalanceeven when provincial governments are ableto keep their budgets in balance because itprovides the federal government with dif-ferential power over the financing of

national programs. This power may be usedto distort provincial decisions and nationalpriorities. For example, Canadians haverepeatedly made it clear that their first pri-ority is health care. Yet, in the most recentbudget the federal government foundmoney for all kinds of programs it deliversdirectly, but no money for health care deliv-ered by provincial and territorial govern-ments.

The different views about vertical fiscalimbalances held by the federal governmentand by by the provincial-territorial govern-ments is really fuss about the fundamentalstructure of the Canadian federation. It isan expression of the relative decision-mak-ing power of federal and provincial govern-ments as it is affected by their relative long-term fiscal positions. Three scenarios fordealing with this issue can be envisaged.The first is the continuation of acrimoniousrelationships between federal and provincialgovernments, periodic fights over thefinancing of national programs and unilat-eral federal initiatives close to election time.The second is a move towards independentfiscal systems, which can be achieved byreplacing CHST cash payments with equal-ized tax points. The third is greater inter-governmental co-operation and joint prior-ity setting with respect to the financing ofnational programs. The Hon. StephaneDion seems to lean towards the thirdoption by acknowledging “ the need to talkabout the collective responsibility of ourgovernments.” In practice, however, thefederal government seems to be moving ina different direction. It takes unilateralaction with respect to policies that affectregional economies or the finances ofprovincial-territorial governments, it isincreasingly encroaching in areas constitu-tionally assigned to the provinces, and isdistorting provincial priorities through theintroduction of programs that requirematching fund from provincial-local gov-ernments.

I argue that the strengthening the Cana-dian federation requires at the same time aclear separation of responsibilities by feder-al and provincial-territorial governmentsand a higher degree of co-operation amongall governments. For the purpose of restruc-turing fiscal federalism it is useful to identi-fy three separate groups of programs. Thefirst group involves programs delivered

directly by the federal for the benefit of allCanadians and is called federal programs.The second group involves programs deliv-ered by provincial-territorial governmentslargely or exclusively for the benefits oftheir residents and are called provincial-ter-ritorial programs. The third group involvesprograms delivered by provincial-territorialgovernments but benefiting all Canadians,directly or indirectly. These are callednational programs and include the major“social programs” of education and healthcare. The federal government is involved inthese national programs through transferpayments to all provinces and territories (the cash component of the Canada Healthand Social Transfer) and transfers to the lessaffluent provinces and territories (equaliza-tion). The first two groups of programsrequire appropriate tax room for each orderof government. The financing of nationalprograms involves both orders of govern-ment and is the main cause of vertical fiscalimbalances on the spending side. A largeportion of provincial-territorial expendi-tures on national programs is for health carewhich is the fastest growing component ofpublic spending. However, the largest shareof the fastest growing revenue source, thepersonal income tax, is controlled by thefederal government. Ensuring adequate andstable financing of national programsrequires the elimination of vertical fiscalimbalances by providing a better matchbetween spending responsibilities and rev-enue-raising capacity.

If all provinces had the same economicpotential and fiscal capacity, and had resi-dents with the same preferences, the opti-mal solution to vertical fiscal imbalanceswould be to transfer the appropriateamount of personal income tax points fromthe federal to provincial-territorial govern-ments. Given the inter-provincial differ-ences in economic conditions and fiscalpotential and likely differences in prefer-ences, an alternative approach is needed.My preference is for an arrangement that Icall the notional transfer of PIT points.Under this proposal, the federal govern-ment would earmark a portion of its PITrevenue to a national programs fund. Theamount of earmarked revenue would equalthe current CHST cash payments plus anadditional amount to make up part of thereduction implements during federal fiscal


FISCAL IMBALANCES AND NATIONAL PROGRAMS

restraint. The revenue placed in this specialfund would effectively be provincial-territo-rial revenue collected and administered bythe federal government. It would not besubject to federal budgetary decisions. Therevenue from this fund would be allocatedamong provinces and territories on a percapita basis with adjustments for differen-tial cost pressures among regions arisingfrom different patterns of population aging.

I argue that strengthening the commit-

ment of all governments to the financing ofnational programs is essential for the suc-cess of the Canadian federation in the newmillennium. To an outside observer, theidentifying features of Canada are its largeland mass, the severity of its winters, thepristine beauty of its nature and the moder-ation in the attitudes of its people. To aninsider, the defining feature is the commit-ment by all governments, in response toshared values, to equality of opportunities

for all Canadians regardless of their place ofresidence. So strong are those shared valuesthat the government commitment wasenshrined in the constitution. That com-mitment can be fully honoured only if fed-eral and provincial-territorial governmentswork co-operatively to ensure that thefinancing of national programs is placed onsolid and sustainable grounds in allprovinces. ■

No other bank is better positioned to offer integrated financial solutions for government and public sector organizations.

You can reach our dedicated team at (514) 394-4378 or via e-mail at [email protected]


From 1995 to 1999, over 900 financialofficers left the federal Public Service.During this same time period the

internal audit community was deeplyaffected by the Program Review exercise.This is not inconsequential as many moreknowledgeable and experienced employeeswill be eligible to retire over the next fouryears.

Given this information, plus the intro-duction of state-of-the-art systems, accrualaccounting, GAAP-based departmentalfinancial statements, modern comptroller-ship, new internal policies and priorities, itbecomes obvious that the financial manage-ment and internal audit communities areincreasingly challenged to develop strategiesaimed at attracting and retaining newemployees.

One such strategy, the Financial Officerand Internal Auditor Recruitment andDevelopment (FORD/IARD) Program hascontinued to provide positive resultstowards this end. In fact, as recently asDecember 6, 2001, approximately 350members of the financial management andinternal audit communities gathered at theOttawa Congress Center to honour 132new graduates of this program.

These graduates, recruited from universi-ties across Canada, work in 23 departmentsand agencies from coast to coast and havejust recently completed a rigorous 12-month on-the-job training program. In thewings are another 160 recent recruits cur-rently working in departments and com-pleting their training and development pro-gram.

Recruitment and development of highlyqualified employees continues to be criticalto the public service objectives of renewaland rejuvenation. Towards this end, thefinance and internal audit communitieshave relied heavily on the FORD/IARDprogram, which recruits recent university

graduates for entry-level positions. Theimpact of the program has been particular-ly important in recent years, when you con-sider that from 1997 to 2000 over 400 newfinancial officers and internal auditors wererecruited.

This year, over 1200 university graduates

Building Capacity: FORD/IARDProgram and CommunityDevelopment Strategies

Brenda Bjarnason

Brenda Bjarnason Brenda Bjarnason is a Program Officer with theFinancial Management Community DevelopmentDivision, Treasury Board Secretariat of Canada. Bren-da is responsible for coordinating the Financial Offi-cer and Internal Auditor Recruitment and Develop-ment Program.


FORD/IARD PROGRAM AND COMMUNITY DEVELOPMENT STRATEGIES

or soon- to-be graduates applied to theFORD/IARD program. It appears, there-fore, that a federal public service career infinancial management and internal audit isan appealing career choice of many youngprofessionals.

Successful FORD/IARD candidates aremotivated individuals who are as comfort-able with people as they are with technolo-gy. Coming from a variety of backgroundsand representative of the Canadian popula-tion, they share a commitment to excel-lence and an appreciation for the uniqueadvantages of employment with the Gov-ernment of Canada. In today’s Public Ser-vice, these include diverse avenues forcareer development and excellent opportu-nities for growth.

In addition to entry-level recruitment, anew pilot initiative was launched this sum-mer to address a growing people deficit atthe FI3 and 4 levels. A competency-basedpool of candidates for departments andagencies was established and as a result, 85pre-qualified candidates were made avail-able to departments and agencies forstaffing purposes. The financial manage-ment and internal audit communitiesappear to be on the right track in address-ing the challenges presented by an ageingdemographic profile, and the need to buildcapacity.

Today’s financial officer and internalauditor are increasingly expected to have ordevelop more comprehensive and sophisti-cated competencies to support the steward-ship of resources, risk management, per-

formance, accountability and appropriatecontrol. As well as being technically profi-cient, they must also have skills in the fol-lowing areas: management, leadership,interpersonal relationships, consulting, andbusiness.

But skills such as these take time to devel-op. In addition to recruitment initiatives,more is required in the areas of mobility,orientation and learning, and networking.As a result, the Financial ManagementCommunity Development Division iscompleting the development of an Orienta-tion Program for new FI’s at senior levels(FI3-4) as well as a Professional Develop-ment Framework for all FI’s. These initia-tives are being completed in co-operationwith various departments and agencies and

are critical factors in ensuring that employ-ees are well equipped to meet the respectiveneeds of their organizations.

Finally, the recent launch of a newComptrollership Community Websiteshould provide further support to the com-munities by offering various products andservices in relation to professional develop-ment, recruitment and mobility. This web-site is available to managers and employeesacross Canada.

To obtain more details, federal public ser-vants may visit our website @http://extranet3.psc-cfp.gc.ca/tbr. Informa-tion on FORD/IARD recruitment may isavailable at @ www.jobs.gc.ca. ■


Total Canadian health expenditures today are5 times those of the late 1970s.

Basic health care cost drivers in Canada areexpected to increase overall costs by 5% a year.

Canadians 65 years of age and older make uponly 12.5% of the population. They consume45% of all health expenditures.

Canada has a world-class health caresystem – but it is a system undertremendous pressure. There is pres-

sure from politicians to reduce costs. Thereis pressure from the public to provide themost advanced medical services. There ispressure from health care professionals toprovide competitive compensation.

These pressures – and others – underliethe evolution of health care in this country.To ensure that the health care system is sus-tainable over the long term, we need to lookclosely at the factors that are most impact-ing the evolution of our health care systemand consider how these factors can be effec-tively managed. One of these critical (andleast understood) factors is health carecosts.

Total health care costs are made up oftwo basic components: the demand forhealthcare services and the cost of deliver-ing health care services. We use a very sim-ple formula to illustrate this equation:

Demand for health care service x Costof delivering health care services =Total health care costsThe demand for health care services is

made up of two elements: volume and levelof acuity. Volume refers to the number ofpeople who require health care services atany point in time, or the number of testsordered by a physician, or the number ofmeals required to feed patients in hospitalbeds. Level of acuity refers to the severity ofthe illness and the level of service required;for instance, a wart on your finger would

have a much lower level of acuity than brainsurgery.

The cost of delivering health care servic-es is also made up of two primary elements:the cost of the people and supplies neces-sary to deliver the service and the efficiencyof service delivery.

Therefore, our formula looks like this:

(Volume x acuity) x (service deliverycost x efficiency) = Total health carecosts

Contrary to popular belief, most of theelements making up this formula and, con-sequently, the total cost of our health caresystem are within our control. We are not atthe mercy of spiraling health care costs. Wecan manage total costs by effectively man-aging the demand for service and the cost ofdelivering that service. Further, we canmanage demand and costs by effectivelymanaging volume and acuity and efficient-ly managing delivery costs.

However, to do this effectively and effi-ciently, we need to take a closer look atsome of the other factors that are affectingour health care system, particularly whenthese factors drive demand and costs. Thereare two very different types of cost ‘drivers’,basic drivers and accelerators.

For instance, looking at the demand sideof the equation, basic drivers include popu-lation growth and an aging population.These factors are well understood andmeasurable. They can be tracked and reli-able forecasts made. We know, for instance,that by the year 2031, approximately 20 percent of Canada’s population – a full one infive people – will be seniors.

Looking at the cost side of the equation,basic drivers would include inflation andrising expenditures for programs currentlyup and running. Again, these basic costdrivers tend to be understood, measurableand predictable.

When we look at the basic drivers in ourhealth care system we can predict that totalhealth care costs will increase about five

Cost Drivers in Canada’s HealthCare System

Paula Gallagher

Paula GallagherPaula Gallagher is a Partner with Deloitte & Touche –Solutions in Halifax. She is responsible for the PublicSector Solutions consulting practice in Canada. Dur-ing her 17-year consulting career, Paula has workedwith hundreds of organizations in both the public andprivate sectors in Canada, the US, New Zealand andEurope. In recent years, she has focused her efforts onthe health care sector. Much of her work has beenwith hospital corporations and provincial govern-ments to address the issue of containing costs in a timeof increasing demand and funding shortages. If youwould like more information, please contact Paula at902-496-1807 or at [email protected].

=Total

HealthcareCost

Demand for

Service

Cost ofDelivering

Service∑ X

• Volume• Acuity

To manage healthcare costs, you must…• Manage demand for service• Manage the cost of delivering service

• Service Delivery Model• Efficiency• Pricing

Healthcare Costs… A Simple Formula


COST DRIVERS IN CANADA’S HEALTH CARE SYSTEM

percent per year, year over year. This trans-lates into a significant price tag, as noted byCanada’s provincial and territorial ministersof health in their report UnderstandingCanada’s Health Care Costs. In that report,issued last year, total health care costs forCanada, now estimated to be approximate-ly $56 billion, are expected to grow to $67billion within five years and hit nearly $85billion within the next decade.

This may be only the tip of the iceberg.Accelerators – factors that could rapidlyand unpredictably escalate health care costs– must also be seriously considered andassessed. New diseases, wars, etc. can dra-matically escalate our demand for services.On the cost side of the equation, accelera-tors include the cost of new and emergingtechnologies, labour shortages, and newdrugs and treatments. Together, the impactof these accelerators will be significant –but just how significant we cannot predict.

That’s one reason why it is imperativethat we manage the factors that make uphealth care costs and the drivers that influ-ence these costs. We all have a role to playhere. This management process is not thesole responsibility of those in the healthcare system. We are all affected, and we areall responsible.

There are four primary ways to managedemand for health care services. They are:• Invest in public infrastructure proven to

increase the health of the population, i.e.education, public health initiatives, etc.;

• Invest in health promotion and preven-tion; and

• Manage chronic diseases and medicationuse through education and coordination

• Change practice patterns.Obviously, if we can prevent a disease or

illness from occurring, we save the systemthe cost of having to treat the person withthat condition. The Centers for DiseaseControl and Prevention in Atlanta lookedat a number of health care issues andassessed the fiscal effect of prevention. Inthe case of Pap smears, for example, theyfound that performing Pap tests every threeyears reduced the incidence of invasive cer-vical cancer by 91.2 per cent. The costs ofdiagnosis, treatment, and follow-up associ-ated with early stages of cervical cancerwere $4,359US, whereas the same costs forlate, invasive cervical cancer were morethan triple that amount, or $13,359US.

Prevention, however, takes foresight andcommitment in a time when governmentmoney belts are tightly clinched. Recentlyin Nova Scotia, for example, almost half ofthe funds in a $1 million anti-smoking pro-gram remain unspent because the govern-ment does not know if it will be able tocontinue funding the smoking cessationprogram. Nova Scotia has the highestsmoking rate in Canada. Ironically, weknow that the payback from smoking cessa-tion programs is significant. A study pub-lished in the journal Pediatrics found thatreducing smoking prevalence by just oneper cent would prevent 1,300 low birth-weight live births and save $21 million USin direct medical costs in the first yearalone. Over seven years, it would prevent57,200 low birth-weight infants and save$572 million US in direct medical costs.

The demand for health care services canalso be managed by educating patients,

health care professionals and others abouthow best to deal with chronic illnesses andhow to best use available medications.Optimal disease management means active-ly involving patients, the community andresource groups – to explore effective andless costly alternatives to emergency roomtreatment and acute care hospital stays.

We also need to look closely at patternsof practice and how they can be changed tobe more cost-effective and achieve optimaloutcomes. To illustrate, we need to ensurethat only necessary tests are ordered, thatpatients are not kept in costly hospital bedsfor unnecessary days.

Then there is the cost of delivering serv-ices. There are four primary ways to effec-tively manage costs:• Provide service in the most appropriate

setting;• Reduce service duplication;• Change practice patterns; and• Ensure the most appropriate individual

provides the service.Where service is provided directly affects

the cost of that service. The cost of treatingsomeone in hospital, for example, is signif-icantly greater than treating them in theirown home.

Duplication of service can occur at manydifferent points in the health care system.There is significant duplication in the col-lection of information. To illustrate, insome provinces, if a hospital patient hasbeen identified as needing nursing homecare, the hospital charges the patient a dailyrate for services until the move occurs. Thisrequires collecting financial informationfrom the patient. The long-term care divi-sion of the provincial health departmentcollects basically the same information todetermine how much to charge the patientonce they are in the nursing home. If thereis a spouse at home who receives home careservices, this financial information is col-lected a third time.

As with the demand for services, we mustinvestigate practice patterns to see howcosts could be better managed. Thisinvolves standardizing the products used bycare providers, to ensure we get volume dis-counts from suppliers. It also means order-ing the most cost effective set of tests toachieve the desired outcome for the patient.

Finally, we need to realistically assess whois the best person to provide service. If a

Cost DriversDemand for

Service

• Population growth• Aging

• Emerging and newtechnologies

• Increased incidence ofnew diseases

• Changing expectations• Unexpected crises

Cost of Delivering Service

• Inflation• Rising costs for current

programs

• Labour shortages• New pharmaceuticals• Information systems

Impact

• 5% annual increase

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COST DRIVERS IN CANADA’S HEALTH CARE SYSTEM

neurosurgeon is required, a neurosurgeonshould be available. However, if the servicecould be delivered safely and effectively bya family physician or an extended role nurseor a nursing assistant – all less expensiveoptions – then these individuals should beused to deliver the service.

What will it take?Managing any system – not just one as

complex and essential as health care –requires the right strategy followed by rig-orous and ongoing evaluation. It alsorequires time and commitment.

But what will it take to manage ourhealth care system, to manage the factorsthat make up health care costs and the driv-ers that influence these costs? We have iden-tified six key initiatives. In order of impor-tance, they are:

Effective Governance and Real LeadershipAlthough most provinces have made

structural changes that give a single,‘regional’ board greater control over a widerrange of health care services, these boardsstill do not have the freedom and authoritythey require to effectively meet the needs ofthe populations they serve. We must con-tinue to make changes that reduce theinfluence of politics and special-interestgroups on health care decision-making.

Focus on Activities with Long-Term PayoffAll too often we opt for solutions that

yield short-term gain but cause long-termpain. We need to determine what activitiestaken now will have the greatest impactfive, 10, 20 years down the road. Here iswhere disease prevention, for example,becomes an important consideration. TheCenters for Disease Control, for example,found that the use of some childhood vac-

cines saved up to $29 in direct medicalcosts for each dollar spent. The outcomewas not just a healthier budget, but alsohealthier children.

Build Alternative Levels of CareThe doctor and the hospital are no

longer the apex of the Canadian health caresystem – because they are not always themost appropriate avenues for treatment.The level of care is an area that needs to beclosely examined. The question is not whocan provide quality care, the question iswho can most effectively provide qualitycare. The first study conducted under theCanadian government’s National Evalua-tion of the Cost-Effectiveness of HomeCare program found that governments cancut treatment costs for elderly patients by asmuch as half by providing care in the com-munity instead of in institutions. The num-bers are striking: each patient cared for inthe community rather than in a facilitysaves the system an average of $8,000 ayear.

Commit to the Development of EffectivePatient Information Systems

Modern technology can advance diagno-sis, treatment and recovery. It can alsoenhance efficiency and effectiveness. Thereare, of course, up-front costs associatedwith the use of advanced information tech-nologies. What we need to recognize – andact on – is the fact that there are also long-term savings.

Make the Tough DecisionsThere are no easy answers. We need to

look critically at what ails our health caresystem and address the cause of these ail-ments – not merely the symptoms. In anaddress to the provincial legislature, Tony

Clement, Ontario’s Minister of Health andLong-Term Care, noted that health carespending has increased at a dramatic pacein Ontario: 27 per cent in five years; 19 percent in a two-year period alone. However,he stressed, double-digit increases in healthspending are no longer sustainable. “Toincrease spending without improving qual-ity is unwise. To increase spending well inexcess of economic growth is unsustainable.At the current rate of increase, within fiveyears health spending would consume 60per cent of the Ontario government’s oper-ating budget - up from 44 per cent todayand 38 per cent since our government wasfirst elected. Responsible choices and toughdecisions are needed, not merely to sustain,but quite literally to save Canada’s healthcare.”

Engage the Health Care Sector and theCommunity in Finding Answers

Managing the health care system inCanada is not the responsibility of one per-son, one department or one level of govern-ment. We all have a role to play – becausewe are all affected. In particular, those withexpertise in health care, finance, and tech-nology must be engaged in discussion,planning and identifying solutions.

Canada has a world-class health care sys-tem – but it is a system under tremendouspressure. We can not only withstand thosepressures we can manage them effectively. ■

Bibliography

Provincial and Territorial Health Ministers. “Under-standing Canada’s Health Care Costs: FinalReport.” August 2000. .http://www.gov.on.ca/health/english/pub/ministry/ptcd/ptcd_doc_e.pdf

Hollander, M. “Substudy 1; Comparative Cost Analy-sis of Home Care and Residential Care Services:Preliminary Findings.” Victoria, British Columbia:Report for the Health Transition Fund, HealthCanada, (November 1999).


2001 marked a special year for theCICA’s Public Sector AccountingBoard (PSAB) – its 20th year in the

business of developing accounting stan-dards for the public sector. And, at the endof those two decades it can be said thatGAAP for governments has also come ofage. By achieving this milestone, Canadiangovernments, and PSAB and its volunteersand associates, have made an outstandingcontribution to the quality of public sectorfinancial reporting in Canada.

In the late 1970’s government accountingand reporting practices were in disarray.Similar events and transactions were beingreported in different ways. Financial state-ments were fragmented, incomplete andwere not comparable between jurisdictions.A 1980 CICA research study, “FinancialReporting by Governments”, stated in itsconclusions:

“The financial statements of Canadiangovernments are now so complex and variedin presentation and terminology that evenpersons familiar with government accountinghave difficulty appreciating the significance ofinformation conveyed.”

The situation caused such a degree ofconcern that legislative auditors urged theCICA to do something about it. The cre-ation of PSAB in 1981 was the CICA’sanswer. The establishment of standards inthe public interest is a primary goal ofCanada’s chartered accountants and PSABhas played a major role in helping achievethat goal.

Since 1981, PSAB has accomplished theformidable task of persuading the federal,provincial and territorial governments tocome to agreement on a significant body ofcommon accounting standards – a set ofgenerally accepted accounting principles, or“GAAP”, for governments. Even moreremarkable is the fact that the governments

have adopted these standards voluntarily –private sector standards are enforceable bylaw, but Canada’s senior governments,being sovereign, set their own rules.

In 1988, PSAB turned its attentiontowards standardizing municipal account-ing, which is dictated by legislation or reg-ulation in each province and territory. Sincethat time, with the help of many local gov-ernment treasurers, auditors and organiza-tions, as well as provincial municipal affairsdepartments, the efforts to bring local gov-ernments on board have also met withresounding success. Today, more than 140of the 214 municipalities in Canada with apopulation of over 25,000 are required toapply PSAB standards in preparing theirfinancial statements. In 1995, Alberta ledthe way in adopting PSAB’s standards forits municipalities. Manitoba followed, pass-ing similar legislation for its rural munici-palities. Since January 2001, all municipal-ities in BC and Ontario are required toapply PSAB standards in preparing theirfinancial statements. Saskatchewan passedlegislation with similar requirements inJune 2001, effective for the 2002 fiscal year.

PSAB’s success in just two short decadesin leading a reform of government account-ing and reporting in Canada, and theembrace of PSAB standards as fundamentalto sound government reporting, rests onthree pillars: the quality of the standardsdeveloped; the open, consultative dueprocess employed in their creation; and thededication of the volunteers and associatesof PSAB.

The impact that PSAB’s accounting andauditing standards1 for government havehad on the quality of the information thatgovernment officials use for decision-mak-ing on a daily basis has been immeasurable.When governments make better decisionsbecause they are acting on high quality

information, all citizens in Canada benefit.

GAAP for governmentsTwo decades have passed since the cre-

ation of PSAB and government GAAP isnow a reality. When a “critical mass” ofRecommendations is issued that has beendeveloped through an extensive due processthat includes ongoing consultation and thebuilding of consensus with the governmentcommunity, the Recommendations consti-tute generally accepted accounting princi-ples for government in the true sense of“general acceptance”. The standards in thePSA Handbook are now sufficiently robustto comprise this “critical mass” of account-ing and reporting principles.

The following highlights the benefits forgovernments in applying the standards ofthe PSA Handbook:• Following independently set standards

that have achieved general acceptance inthe government community results incredible, unbiased financial statements;

• Comparability between years for a gov-ernment and between jurisdictions isprovided when all governments followthe same standards in preparing theirfinancial statements. Such comparabilityallows for inter-jurisdictional and intra-jurisdictional comparisons that can beused for benchmarking and other per-formance assessments;

• The standards are set in the public inter-est with the needs of users of governmentfinancial information in mind. This user-orientation also adds to the credibility offinancial statements prepared using the

Keeping Up to Date on Public Sector Accounting Standards

PSAB Turns 20 Years Old and GAAP for

Governments Comes of AgeMartha Jones Denning

Martha Jones DenningMartha Jones Denning is a Principal with the PublicSector Accounting Board of the Canadian Institute ofChartered Accountants (CICA). She is a CharteredAccountant and has been with the CICA since March1991. Prior to joining the CICA, she was an auditmanager with KPMG, Toronto. The public sector webpage of The Canadian Institute of Chartered Accoun-tants is at www.cica.ca/PublicSector.

PSAB PERSPECTIVES


PSAB PERSPECTIVES

PSA Handbook standards;• The standards are set by drawing on the

expertise of a cross section of governmentfinance officials and academics fromacross Canada. PSAB members are vol-unteers chosen for their knowledge,experience and judgment. They serve asindividuals without remuneration. Theyvoice and vote their personal convictionsand judgments independent of the poli-cies of the governments or organizationswith which they are associated; and

• The due process crucible used to set thestandards of the PSA Handbook isrigourous and consultative. The processis designed to ensure that alternativepoints of view are heard and considered,and that recommendations are appropri-ate, technically sound, grounded inaccounting theory, logical and under-standable. Some argue that the processtakes too long, but the consultativenature of this process is fundamental toits success.To date, the PSA Handbook provides

standards that address only the financialposition and financial performance of agovernment. But, governments need tomeasure more than financial performancein order to measure their success in deliver-ing government services, because govern-ments are being held accountable for morethan financial performance.

Performance ReportingPerformance needs to be measured

against objectives and must be measured interms of achievements, not just the level ofactivity, units produced, or dollars spent.Assessing performance should focus onevaluating outcomes such as safe communi-ties, healthy citizens, cleaner air and an edu-cated workforce, rather than inputs such asdollars or labour, or outputs such as grants,numbers of medical treatments performed,or miles of road repaired. Assessing out-comes means evaluating the efficiency andeffectiveness of government programs inproducing the desired benefits or results.

Identifying the desired benefits andresults of government programs is the first

step. These objectives signal what a govern-ment’s priorities are and what it will be heldaccountable for. Performance measurementis fundamental to a successful governmentplanning process because it can give gov-ernment information to facilitate andenhance program delivery and managementand to make better spending decisions.Communicating a government’s perform-ance against well-defined objectives willdemonstrate its accountability to its juris-diction.

PSAB started a new initiative in perform-ance reporting by approving the first in aseries of planned performance projects in1999. That first project is called “FinancialStatement Discussion and Analysis”(FSD&A). The task force for the projecthas been recruited and research is under-way, with task force meetings planned tostart in early 2002.

Performance reporting envisions a gov-ernment accountability report that isbroader than the financial statements. Sucha report would include the financial state-ments as a cornerstone of the report, butwould also include:• information about trends and financial

statement relationships (which will beaddressed in PSAB’s FSD&A project); aswell as

• indicators of government financial con-dition that puts the financial positionand results of government in an econom-ic context (this topic was addressed in a1997 CICA research report2 that will beconsidered in stage two of the perform-ance reporting initiative); and

• other financial and non-financial per-formance information (stage three of theinitiative).The performance reportinginitiative will start with evaluating andrecommending the reporting of trendsand relationships within the financialstatements to build on the financial state-ment standards already issued by PSABand applied by governments.

ConclusionToday, Canadian governments produce

audited, whole of government financial

statements that, in their completeness, reli-ability and overall quality are the envy ofthe world. To put this achievement in per-spective, auditors of the financial state-ments of the US government are stillunable to express an opinion on the USwhole of government financial statements.High quality US standards are in place, andsignificant progress has been made in mov-ing towards a clean opinion on the USstatements, but financial systems weakness-es, record-keeping problems, incompletedocumentation and weak internal controlsstill call into question the reliability of thegovernment’s financial report.

Since governments in Canada spendalmost half of the gross domestic productand affect the lives of all Canadians, theyneed standards that result in useful, reliable,complete financial information. Develop-ing these standards and getting governmentto adopt them is what PSAB is all about.

PSAB is a catalyst for constructive changeand a medium for all interested parties tocontribute their thoughts and opinions. Itbuilds consensus, free from bureaucratic orpartisan constraints. It is also, therefore, theappropriate forum for developing standardson government performance reporting.

PSAB’s strengths — dedicated people, anopen process and a quality product — haveproduced positive changes in the past twodecades and will continue to do so in thenext 20 years too. With these strengths as afoundation, PSAB can be confident in itsability to meet the challenges ahead, and tocontinue to lead the way to better govern-ment financial and performance informa-tion – information needed for better deci-sion-making and essential for accountabili-ty. ■

References

1 Effective October 1, 1998, responsibility for settingstandards for assurance and related services for pub-lic sector entities was transferred to the CICA’sAssurance Standards Board from the Public SectorAccounting and Auditing Board.

2 Indicators of Government Financial Condition,CICA research report, 1997.


Dear Reader, Hands up – or double-click your mouse

— if you believe• The world is a simpler place than it used

to be;• We all have less paper to keep tabs on;• The Tooth Fairy not only exists, but is

FIS-compliant and uses accrual-basedbudgeting for distributing loonies to gap-toothed Canadian kids.Not seeing many hands, nor hearing

many mice being clicked, I sense you are arealistic bunch.

So, as battle-hardened realists aware oflife’s complexities and adept at handlinglots and lots of paper, why is it that so fewof you have an up-to-date financial plan foryour future?

Did you get high?You may remember one of last summer’s

mega-hit songs, a cheerful ditty by Afro-man (“Because I got High”), whichexplained how the singer had the best ofintentions to clean his room, study forexams and so on, but got distracted and didnot follow through.

True, doing a financial plan is dull work.Channel-surfing, walking the dog, car-pooling the kids, and writing ERP submis-sions are infinitely more fun.

But when it’s your financial future that’son the table, why not muster some gustofor a thorough review of where you are attoday; where you want to get to in thefuture; and whether you’re on the right roadto arrive there?

Your road mapThe first step is to charitably agree with

me that money is not an end in itself, butrather a means to an end - something thathelps you do the things you enjoy. You thenlook in the mirror and answer the obviousnext question as only you can: what do youenjoy most in life?

If you’re like many Canadians, for whomretirement planning is the number onefinancial issue today, you can re-work thisquestion as follows: what do I look forwardto doing in retirement? Travel, gardening,family time, golf, sailing, running the homebusiness of your dreams, and other suchpastimes would be healthy, typical answers.But if you’ve chosen reviewing financialstatements, upgrading financial systems, orwatching stock tickers, it may be time for aholiday.

My clients consistently find that gettingtheir financial lives organized – including apersonal financial plan built around theanswer to that key question – gives themboth peace of mind and more time to dowhat they enjoy most.

We’ve got issuesSome of the issues to organize in your

financial life just might be:• Savings: You’ll want to have some of

these. Very handy for short-term needsand emergencies, as well as for longer-term projects. Rule of thumb: try to save10% of your gross or take-home pay. Hottip: set up a separate bank account foryour savings, so they don’t mysteriouslyvanish in the daily bustle of paying billsand taking out cash to buy more stuff.

• Investments: You might have financialinvestments like stocks and bonds, in oroutside your RSP. You might have otherinvestments such as a business, real estate(like your home), art, or antiques. Welike our investments when they grow, anddisavow them when they drop in value,but over time they usually can help usincrease our wealth. And that’s a goodthing.

A few tips: match your investments toyour needs (income or growth, forinstance); be tax-savvy (more on thisbelow); and set up a monthly investmentprogram so that a fixed amount of your

savings automatically goes into high-quality mutual funds each month andsteadily builds a nest egg over time.

• Taxes: Canadian tax rates thankfully aredropping, but still are hefty. Focus not onwhat you make, but on what you keep,after taxes. Make your investments as tax-efficient as possible: you are fully taxedon interest income (like that from bankaccounts, GICs or bonds) but enjoy taxbreaks on other types of income (likeCanadian dividends or capital gains).Take advantage of the few remaining taxshelters where they make sense for you(such as RRSPs) and practise income-splitting with your main squeeze. If youown a business, know your tax options.Get friendly with your tax accountant

• Insurance: This stuff protects you andyours from the unforeseen; as well asfrom things that you can expect will hap-pen (like your income declining in retire-ment, or your estate being reduced bytaxes). Talk to a specialist you trust andcover the bases, including your insurancecoverage after you retire.

• Children’s education: The new govern-ment grant has greatly increased theattractiveness of RESPs, so have a chatwith your advisor if you don’t alreadyhave one of these on the go. Then have achat with your kids, before they starttheir summer jobs, to let them knowabout the new house rules: management

Getting your Financial LifeOrganized

Les Kom

Les KomLes Kom, FMA is an Investment Advisor with BMONesbitt Burns in Ottawa, specializing in helping indi-viduals and organizations meet their financial goalsusing conservative strategies. Questions, comments,or suggestions for future topics can be addressed to theauthor at [email protected], or you can contactLes at (613) 798-4251. Opinions are those of theauthor and may not reflect those of BMO NesbittBurns. The information and opinions contained here-in have been compiled from sources believed reliablebut no representation or warranty, express or implied,is made as to their accuracy or completeness. BMONesbitt Burns is a member of the Canadian InvestorProtection Fund.

PERSONAL FINANCIAL PLANNING


PERSONAL FINANCIAL PLANNING

requires them to put away half of theirsummer earnings into a special accountthey set up for their post-secondary edu-cation.

• Changing careers: If you are re-careeringyourself, you may face once-in-a-lifetimedecisions relating to a severance package;your pension account; health benefits;and so on. With so much to do as part ofyour transition, be sure you take the timeto understand your financial options sothat you make informed, sensible deci-sions. Options such as a special RSProllover from your severance package, ormanaging your own pension by takingthe commuted value of your pension, aretwo very important examples. This iswhen you are glad you have a great advi-sor, or wish you did.

• Retirement planning: This is the road mapthat most Canadians want these days.The best retirement plan is the one thatclearly reflects your circumstances andhas gone through the reality check offamily discussion, sometimes heated.

The plan covers rather useful questionslike: in how many years do you want toretire; what income will you need at thattime; what assets do you already have togenerate that income (including yourpension); what additional assets mightyou need to build to cover any shortfall;what rate of return on your assets willmeet your needs; what the pre-tax valueof your estate would be at differentpoints in time; and so on.

Again, your advisor is the person thatshould be able to help you put this plantogether and explain the various issues onwhich you need to reflect.

• Estate planning: This is the point atwhich you rush out to walk the dog or, ifyou don’t own one, to walk your neigh-bour’s mongrel, the one you normallyglare at. But a few moments of your valu-able time for estate planning are usuallywell spent and need not be so uncom-fortable.

Simply put, there are two parts to thistopic. There’s the legal stuff, meaning,the unquestionable importance of havingreasonably up-to-date wills and powers ofattorney. Then there’s the financial stuff,namely, making sure a surviving spousewill be all right financially; and decidingwhether you want to preserve your estate

for your heirs, when the second spousemoves on and a potentially large tax billhits. So if your advisor has not alreadyspent a few quality minutes with you onthis, give her/him a call.

A little planning goes a long wayTake a look at your financial life and the

individual issues discussed above. Is yourfinancial picture reasonably well-organized?Or does your plan need some work?

If some action is needed, you have threebasic choices. You could:• Do it yourself, drawing on your own

experience and time as well as variousresources available through books andthe Internet;

• Use a series of individual advisors (invest-

ment advisors, insurance people,accountants, or lawyers), recruiting eachone separately, as needed, and serving asyour own coordinator, planner and gen-eral contractor; or

• Use one financial advisor to coordinateyour plan - someone who works togetherwith you on the overall picture; is expertin helping you manage key pieces of thepicture; and helps you link with otherprofessionals for specific elements thatneed extra expertise.Whichever course you follow, I am con-

fident you will find that a little planningcan go a long way in giving you greaterpeace of mind and more time for the thingsyou enjoy most in life. ■

G&C leadership for over 10 years

GX-Programse

Government Program and G&CSystems in an e-world

Ottawa Victoria613.230.3833 250.995.3071

Accelerated pathfor CAs and CGAs

Given a second chance,would your employer

hire the manager you are today?

Invest in your skills.Choose one of our professional programs

for working managers.

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FEB 1993SEPT 2002

Find out about our information sessions in Hull,Montreal and Ste-Foy (no registration required) :

www.cma-quebec.org1 800 650-ECMA

Best before

CMA Executive Program Université du Québec à Hull (in English and French)

Concordia University (in English)

CMA-MBA Executive ProgramUniversité du Québec à Montréal (in French)

Université Laval (in French)

The 2002 CMA and

CMA-MBA executive

programs are up

and running!

The year 2002 will be one of consolidation and innovation for theCMA and CMA-MBA executive programs of the Ordre descomptables en management accrédités du Québec (CMA). Lastyear, the programs underwent a substantial transformation and anew university partner (UQAH) joined the Order. This opened thedoor to a major repositioning of the product in the executivetraining market. The CMA Executive Programs combinemanagement and accounting education, something no othermanagement training program offers.

The CMA Executive Program will be offered at Université duQuébec à Hull (UQAH), in both languages, and at ConcordiaUniversity, in English, while the CMA-MBA program will continueto be offered at Université Laval and l’Université du Québec àMontréal (UQAM).

What’s new? Université Laval last year launched a brand newformula for the CMA-MBA Executive Program. Thanks to theperfect coordination of the content of the CMA program andspecialized MBA courses, this path offers a two-for-one solution intwo and a half years, the same length as the CMA ExecutiveProgram. UQAM is also shortening its program to two and a halfyears while maintaining the built-in MBA component. Thisinnovation will no doubt give the program even greater visibilityamong competing products.

Information sessions will be held regularly from February to June.In Quebec City and Hull, the Order’s representatives are scheduledto meet potential candidates every two weeks, while weekly sessionsare planned for Montreal.

Find out about this programs at the Order’s Web Site at www.cma-quebec.org or at 1 800 650-EMCA.


T H E F R E D E R I C T O N C H A P T E R I S P R O U D T O H O S T P S M W 2 0 0 2

“Highways to the Future”26-28 May 2002 ■ Fredericton, New Brunswick

The Fredericton Chapter will this year host the annualPSMW. The 2002 workshop will be held at the SheratonInn located on the beautiful Saint John River, May 26th

through the 28th. Our two honorary co-chairs are, Paul Gauvin,Deputy Commissioner Corporate Management and Comptroller-ship, RCMP and the Honorable Norm Betts, FCA, Minister ofBusiness New Brunswick and Responsible for Service NewBrunswick. They will headline what promises to be an intensive andinformative two day conference covering a broad range of topics ofconcern for managers, supervisors and professionals.

Do not miss this chance to gain fresh, innovative, solutions shar-ing best practice among people who share your same challenges. Come join us as this annual workshop explores the following fourthemes: Modernizing Government; Audit; Modern Comptroller-ship; and Fiscal Canada.

The following are but a sample of the lineup with whom you asa participant will be able to converse; Daryl Wilson, Auditor Gener-al, Province of New Brunswick, “The Process of Making Decisions inGovernment - A Best Practice”; Sheila Fraser, Auditor General ofCanada, “ Financial Management in Government”; “Federal Provin-cial Relations-Fiscal Arrangements”; Giuseppe Ruggeri, VaughanChair in Regional Economics, Professor, University of New Brunswick,

“A Federation out of Balance”; Rod Quiney, Deputy Assistant Com-missioner, Canada Customs and Revenue Agency, Office of the AssistantCommissioner, “Moving Beyond Hyphenated Government - A FederalGovernment Example”; and Paula Gallagher, CMC, Partner withDeloitte and Touche, “Cost Drivers in the Health Sector”.

Management of public resources is being modernized and a greatdeal of changes will occur over the next few years. We, as public sec-tor managers, must be ready to deal with changes and learn newmethods that will help facilitate and enhance the decision makingprocess. You can count on our conference for an update on infor-mation critical to your role of preparing and implementing thechanges that lie ahead for public services.

If you:• need solid direction and creative ideas to address specific chal-

lenges;• are looking for an opportunity to step back and reflect on where

your organization is going and how it is getting there; or• would like to hear some good ideas and practical ways to improve

your organization .Then, “Highways to the Future” is the workshop for you.Come, listen and participate, as we share best practices in man-

aging public sector resources. You will not be disappointed! ■

SUNDAY 26 MAY 2002

9 am Pre-Conference Tour

5 – 9 pm Registration

6 – 10 pm Reception and Official Welcome at Old Government HouseHon. Marilyn Trenholme Counsell, Lieutenant Governor ofNew Brunswick

MONDAY 27 MAY 2002 {TENTATIVE AGENDA)

7:30 am Registration and Sponsors Area OpenContinental Breakfast

8:15 am WelcomeGermain Tremblay, FMI National President

Opening RemarksSpeaker to be announced

8:30 am Keynote AddressHonorary PSMW 2002 Co-Chair, Paul Gauvin, Deputy Com-missioner Corporate Management and Comptrollership, RCMP

9:30 am CONCURRENT SESSIONS

A. Modernizing Government: Modernizing the Way HumanResources is Managed in the Federal Public SectorStephen Baker, Executive Director, Human Resources Modern-ization, Strategic Palnning and Analysis Division, TreasuryBoard Secretariat

B. Audit: The Process of Making Decisions in Government -A Best PracticeDaryl Wilson, Auditor General, Province of New Brunswick

C. Modern Comptrollership: AccrualAccounting and Budgeting IssuesKevin Malloy, Controller, Province of Nova Scotia

10:30 am Refreshments in Sponsors’ Area

10:50 am CONCURRENT SESSIONS

A. Modernizing Government: PNB Public Service RenewalRecruitment and Retention StrategiesKaren Stafford, Senior Director of Personnel Services, NB Power

B. Audit: Financial Management in GovernmentSheila Fraser, Auditor General of Canada

C. Modern Comptrollership: The Changing OrganizationalStructure; Accountability Relationships in the Public SectorMichael Ferguson, Comptroller, Province of New Brunswick

11:50 am Speech/Promotion by Sponsor

12:10 pm Lunch and Sponsor Speaker

1:30 pm CONCURRENT SESSIONS

A. Modernizing Government: One Stop Government ServicesBob Gamble, President, Service New Brunswick

B. Audit: Performance Measurement in an Information Tech-nology EnvironmentSpeaker to be announced

C. Modern Comptrollership: Cost Drivers in the Health SectorPaula Gallagher, CMC, Partner with Deloitte and Touche

2:30 pm Refreshments in Sponsors Area

3:00 pm Keynote AddressHon. Andy Scott, Member of Parliament for New Brunswick(Fredericton)

4:15 pm FMI Annual General Meeting

6:00 pm Reception

7:00 pm Dinner and Entertainment“Lucien”, New Brunswick’s Blue Collar Philosopher

Followed by Music and Dancing…continues/

F M I F R E D E R I C T O N I S P R O U D T O P R E S E N T

Highways to the FutureA Public Sector

Management Workshop26-28 May 2002

Addressing a Variety of Topics• Modernizing Government • Audit •

• Modern Comptrollership • Fiscal Canada •

TUESDAY 28 MAY 2002 {TENTATIVE AGENDA)

8:15 am WelcomeGermain Tremblay, FMI National President& Bruce Jamieson, FMI National Vice President

Opening RemarksPeter Wolters and Cheryl Munro, PSMW 2002 Co-Chairs

8:30 am Keynote AddressHonorary PSMW 2002 Co-Chair, Hon. Norm Betts, FCA,Minister of Business New Brunswick and Responsible for ServiceNew Brunswick

9:30 am CONCURRENT SESSIONSA. Fiscal Canada: Federal Provincial Relations - Fiscal Arrange-

mentsFrançois Delorme, Director of Federal Provincial Relations Divi-sion, Department of Finance Canada

B Modernizing Government: PNB Perspective; Power to thePeople-The Real Government Online StoryJudy Ross, Director of Architure and Planning Department ofSupply Services, government of New Brunswick

C. Modern Comptrollership: Challenging Public Sector Valuesand Ethics in a World of Rapid Change (Tentative topic)Speaker to be announced

10:30 am Refreshments in Sponsors’ Area

10:50 am CONCURRENT SESSIONSA. Fiscal Canada: A Federation out of Balance

Giuseppe Ruggeri, Vaughan Chair in Regional Economics, Pro-fessor , University of New Brunswick

B. Modernizing Government: Federal Perspective: Power tothe People-The Real Government Online Story (Tentativetopic)Peter Oberle, Service Transformation Government

C. Modern Comptrollership: Economic Factors-Impact onCanadian Federal and Provincial Budgets (Tentative topic)Speaker to be announced

11:50 pm Speech/Promotion by Sponsor

12:10 pm Lunch and Sponsor Speaker

1:30 pm CONCURRENT SESSIONSA. Fiscal Canada: The Canadian Economy - A Prospectus

Dale Orr, Managing Director, Canadian Macro ServicesB. Modernizing Government: Moving Beyond Hyphenated

Government - A Federal Government ExampleRod Quiney, Deputy Assistant Commissioner, Canada Customsand Revenue Agency, Office of the Assistant Commissioner

C. Modern Comptrollership: Risk Management Principles andPractice (Tentative topic)Speaker to be announced

2:30 pm Refreshments in Sponsors’ Area

3:00 pm Power Presentation - Brent FinnamoreProducing Extraordinary Results in Work and in Life - AFresh Approach to Developing an Empowering Mind-Set

4:15 pm Conference Wrap-Up

REGISTRATION INFORMATION

Your receipt or bill will confirm your registration

Registration DatesPrior to April 10, 2002Early bird prices in effect

After April 30, 2002Please fax your registration and pay your fees by mail or credit card

May 15 , 2002Registration deadline by mail or faxAfter this date, registration will only be accepted at the Workshop

Substitutions / CancellationsThe registrant may be substituted with another individual from yourorganization

No Refund after April 30, 2002

Hotel InformationLimited rooms have been reserved at the Sheraton Inn on the Riverat the Government and Conference Rate of $104 + HST per night

Please confirm reservation byMay 15, 2002:

Sheraton Fredericton Hotel1-800-325-3535 or (506) 457-7000

Public Sector Management Workshop

Highways to the FutureFredericton, New Brunswick 26-28 May 2002

REGISTRATION FORM

NAME TITLE

ORGANIZATION

ADDRESS

CITY PROVINCE POSTAL CODE

TELEPHONE FAX E-MAIL FMI MEMBERSHIP #

❏ Invoice required ❏ Receipt required ❏ Payment enclosed ❏ Payment to follow by mail

Credit card: ❏ VISA ❏ MasterCard ❏ American Express

ACCOUNT NUMBER EXPIRY DATE SIGNATURE

Member Non-MemberEarly Bird After Early Bird After

10 April 2002 10 April 2002

Full Registration Fee $425.00 $475.00 $475.00 $525.00 $ _____________

Daily Registration Fee $250.00 $275.00 $275.00 $300.00 $ _____________

Additionnal dinner tickets _______ x $50.00 each = $ _____________

Pre-Conference Tour _______ x $20.00 each = $ _____________

15% HST $ _____________

TOTAL PAYMENT $ _____________

CONCURRENT WORKSHOPS STREAMSChoice of Stream Monday Tuesday

9:30 am ❏ A ❏ B ❏ C ❏ A ❏ B ❏ C10:50 am ❏ A ❏ B ❏ C ❏ A ❏ B ❏ C1:30 pm ❏ A ❏ B ❏ C ❏ A ❏ B ❏ C

PRE-CONFERENCE TOURSunday, May 26 9:00 am Depart the Sheraton for scenic St. Andrews-by-the-sea, where you may participate in a variety of

activities:• World Class Algonquin Golf Course• Whale watching tour on beautiful Bay of Fundy• Shops and Boutiques of St. Andrews• Kingsbrae Gardens• Huntsman Marine Science Centre Aquarium and Museum• Ministers Island

Transportation Cost $20. For further Pre-Conference Tour details and fees visit our National OfficeWebsite at: www.fmi.ca

PROGRAM DETAILSFor Program details, visit our National Office Website at www.fmi.ca

To register by fax or for additional information Mail registration to;Telephone: 613-569-1158 Fax: 613-569-4532 FMI, P.O. Box 613 Station B

E-mail: [email protected] Ottawa, Ontario K1P 5P7

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