The committee met at 9:04 a.m.

[M. Bernier in the chair.]

M. Bernier (Chair): I’m looking forward to hearing from Michael today and his team regarding the audit coverage plan.

Michael, I think I will just turn it over to you right away and look forward to the discussion.

Office of the Auditor General

FINANCIAL STATEMENT AUDIT
COVERAGE PLAN

M. Pickup: Perfect. Thank you so much. I will just proceed, assuming there are no technical difficulties, unless someone tells me otherwise.

I come to you today from the lands of the Lək̓ʷəŋin̓əŋ-​speaking peoples of the Esquimalt and Songhees Nations as a Mi’kmaw member of the Miawpukek First Nation. I have been a visitor here in British Columbia on these lands for seven months. Daily I like to connect with nature in some way, whether it’s the water or the forests and trees. That is important to me.

[9:05 a.m.]

Moving on now, we are providing presentations today on our three-year financial statement audit coverage plan for the fiscal years ending ’22, ’23 and ’24.

Joining me today are Russ Jones, the Deputy Auditor General; Molly Pearce, a principal in the financial audit and related services portfolio, who will walk through the financial statement audit coverage plan in the presentation that we have today; and also Stuart Newton, who is the assistant Auditor General in the financial audit and related servinices portfolio.

As you know, we, the Auditor General, are required to table a three-year financial statement audit coverage plan for your consideration and approval. The financial statement plan identifies which government entities will be audited by our office and which ones will be audited by private sector firms, for example. This plan is prepared in accordance with the requirements of the Auditor General Act.

One of the goals of this plan is, of course, to ensure that we have the right depth and breadth of knowledge about the business of government so that we can focus our efforts on the areas of greatest risk. It is also designed to meet Canadian generally accepted auditing standards — which you may hear referred to as Canadian auditing standards, for example — in order to allow me to form my audit opinion on the government summary financial statement.

The coverage levels — just some context; I know most of the members are new on the Public Accounts Committee — don’t vary greatly from year to year. So very often we focus our discussion on the changes.

The other thing I would add is that each jurisdiction is unique in Canada. So this process is, actually, new for me as well. Obviously, as the Auditor General in Nova Scotia for six years…. We were the Auditor of the public accounts of Nova Scotia — similar to British Columbia, a similar set of financial statements — but we didn’t have this as part of the process, where we went to the Public Accounts Committee to discuss our work. That’s neither good nor bad. It just is different, and every jurisdiction is different.

Likewise, at one time, I had responsibility for the public accounts of Canada, the largest set of financial statements in the country. We didn’t do a process like this either. It just wasn’t part of the act.

Actually, it gives us a great opportunity to engage with you, the Public Accounts Committee, on the financial statement audits because it is so different. It is unique to British Columbia. I very much look forward to us having this opportunity, particularly with so many of the members being new.

Frankly, as an auditor, if it seems a bit complicated at times, it is. As I get up to speed here, it has been a bit of a learning process for me, and I’ve been auditing public accounts for 30 years. So there you go.

I’m going to turn it over to Molly Pearce, our principal who’s really very much running the financial statement audit, to walk through the coverage plan.

I’m really pleased to tell you, without embarrassing Molly, that she recently was promoted into this position. I look forward to the next eight years of working together. We had the opportunity to promote her in the last couple of months, with the retirement of Peter Bourne, who was in the position and who had been in the office since the 1990s.

I’m quite comfortable that you’re going to get to know Molly well. I certainly look forward to working with her over the next eight years.

I didn’t want to embarrass you by that, Molly.

It wasn’t in her notes, just so you know.

Now, having said that, I’m going to turn it over to Molly to walk through the presentation slides as well.

M. Pearce: Thank you, Michael. Very kind words. I look forward to working with you for the next eight years as well.

Good morning, Members. Today we are seeking your approval for three things: first, for our audit plan and appendix A of our report beginning on page 22; second, for the Auditor General to continue as direct auditor for six entities where our term exceeds five years — this is on page 19 of our report; and, three, for the Auditor General to continue as direct auditor for one entity outside the government reporting entity. This is on page 21 of our report.

[9:10 a.m.]

The annual audit of the summary financial statements is the largest audit performed in British Columbia and provides assurance on whether the financial statements present fairly the financial position and operating results of the province. The opinion on the summary financial statements is the Auditor General’s alone, but in British Columbia, the audit of the government reporting entity is accomplished by the combined work of the Office of the Auditor General and private sector auditors. The Auditor General audits central government, which includes, among other things, all government ministries.

This plan meets professional requirements for audit coverage under generally accepted auditing standards and will allow the Auditor General to sign the audit opinion on the government summary financial statements. These standards require us to be involved in the audit of all significant entities included in the summary financial statements.

We define our audit involvement with the 140 government entities and three trust funds as being either direct, oversight or limited. For direct audits, our office conducts the audit with our own staff or a contracted firm. In 2022, this is 11 organizations. For oversight, audits are conducted by private sector auditors, and our office conducts oversight procedures on those organizations. In 2022, that’s 19 organizations. Finally, for limited involvement, audits are conducted by private sector auditors, with no field work done by our office. We do communicate with the auditor and may direct audit work as required. In 2022, this is 113 organizations.

In deciding our level of involvement, we look at the risks involved at both the entity and the sector level, as well as the capacity of our office. We also look at new organizations when there are new entities, because we are entitled, under our act, to be the auditor of new entities for the first three years. There are no new entities in this plan. If there were, we would have to decide whether our office or a private sector audit firm would be the auditor.

In the plan, we have to balance the benefits achieved through our auditor rotation with professional standards that require us to maintain appropriate knowledge and experience in order to fulfil our mandate. For audits that exceed five years, including ministry audits, we employ senior staff rotation and other safeguards, as required by assurance standards, to ensure that our objectivity is maintained.

In the preparation of this plan, we reviewed each ap­pointment exceeding five years and considered if rotation to a private sector audit firm would be necessary. In this year’s plan, as noted, we are requesting approval to continue as auditor for six entities. Of those, one is a shell corporation that takes less than ten hours to audit, and one is already being audited under contract with a private sector audit firm. Rationale for these appointments is on page 19 of our Financial Statement Audit Coverage Plan.

Turning now to the detailed plan, on the screen is the table from page 16 of the report. This table summarizes our planned coverage, for the next three fiscal years, for the existing 143 entities for financial statement fiscal years ending in 2022 through 2024. This is a roll-up of the detailed plan as shown in appendix A of the plan.

The first column shows the type of entity, and the second column shows the expected number of entities of each type for the fiscal year ending in 2021. The remainder of the table shows our planned coverage by entity fiscal year and level of involvement. For example, in 2022, for universities, colleges and institutes, we plan to have limited involvement in 20 of the 25 entities, to have oversight involvement in four and to directly audit one. As you can see from the totals, our levels of involvement do not change significantly between years.

[9:15 a.m.]

Looking at the trends by organization type, for school districts, in the past, we have directly audited up to five of the 60 school districts at any one time for five years each. At the moment, however, our plan is to audit one school district directly, and by the end of this plan, we will be performing oversight procedures in three school districts. We will rotate our oversight involvement throughout the school districts.

For the post-secondary sector, in the 2020 fiscal year, we took on the audit of the University of British Columbia, which is one of our larger audits. We will be the auditor for the duration of the plan. We also plan to have an oversight role in four to six universities, colleges or institutes in each year of the plan.

For health authorities and hospital societies, we will continue to directly audit the Interior Health Authority for the remainder of our five-year term, until 2022, at which point we plan to rotate on to the Provincial Health Services Authority in 2023. We also plan to have an oversight role in five authorities and one hospital society each year of the plan.

For Crown corporations, in the 2020 fiscal year, we took on the audit of B.C. Hydro, which is the largest of our Crown audits. We will be the auditor of B.C. Hydro for the duration of the plan.

There is only minor rotation of Crown involvement of our office for the three years of the plan. We plan to have an oversight role in eight or nine Crown corporations across various sectors during the three-year plan. For other organizations within the consolidated revenue fund, as noted in the report, on the bottom of page 13, one of the changes to last year’s plan is that we will no longer audit the financial statements of the Office of the Representative for Children and Youth, starting this 2021 fiscal year.

For organizations outside the government reporting entity, as noted on page 21 of the report, we plan to continue with one engagement: the provincial employees community services fund.

Also of note, appendix B, starting on page 30 of the report, shows that there are over 100 subsidiaries, partnerships and joint ventures that are consolidated into the government entities in the plan. We have noted where these additional entities may be audited by our office, versus a private sector audit firm. In some cases, the subsidiaries are not audited.

To give you an idea of how our plan results in our overall involvement with government expenses, this chart shows that the Auditor General had either oversight or direct involvement with 84 percent of government entity expenses in the 2020 fiscal year. Our plan provides for a similar level of involvement in future years. Please note that these figures exclude the consolidated revenue fund.

Consultation with organizations is required by section 10(7) of the Auditor General Act. Each year, we consult with organizations impacted by the plan, where we will be changing or taking on oversight or direct audit coverage. At this time, we have met with or contacted by telephone all the affected organizations. We will follow up with a formal communication once the committee has reached a decision on the plan.

Our plan this year is to produce a report on the financial statement audit for release next October. The report will highlight selected financial control issues found through the course of our audit work. These will include issues noted in ministries as well as individual Crown entities, whether we audit them directly or not. We will also discuss issues requiring significant audit work or professional judgment to complete our audit. We will be conducting a survey of all the entities included in the government reporting entity on fraud risk management and will be presenting our results in our October report.

Finally, our report will include commentary on the controls in place related to key COVID expenditure programs. We are also considering adding a section to our audit opinion around key audit matters. This would include a paragraph on audit issues that require significant work or professional judgment. We will be looking to meet with a few members of the committee to discuss your views on the value added of the additional content in the opinion. We believe that both these changes will enhance the Legislature’s insight into the summary financial statements.

[9:20 a.m.]

To conclude, as mentioned, we are seeking your approval of the three-year audit coverage plan, approval to continue as direct auditor for six entities past five years and approval to continue to be the direct auditor of one entity outside of the government reporting entity.

Thank you, Members. I will now turn it back to the Auditor General.

M. Pickup: Thank you, Molly, for that very clear and complete presentation. I think we all appreciate it. I was just going to focus again on one thing you mentioned there at the end, something new that we’ll be doing this year in October of 2021. We finished the big financial statement audits in July, and in October, we will be coming to the Legislature with this report on all of the things that Molly outlined — things like fraud risk management surveys, some work we did on COVID expenditures, significant audit issues, financial control concerns. So we’re really excited about that as some additional information for people in the Legislature to understand related to this work.

Perhaps I will pause now and turn it over to you, Chair, for us to take questions. Stuart and Russ are on the line with us as well, so it’ll be a team effort with all the experience sitting around this table.

M. Bernier (Chair): Well, thank you very much to you and your team, then, for putting that forward. I’m just looking around, first of all, on the screen, now that I can see the whole screen, if there were any members of the committee…. Jackie, I see your hand up first.

J. Tegart: Thank you very much for the overview. I’m curious about what key COVID-19 expenditures entail. We’ve had significant dollars spent on COVID-related expenditures, and I would be very interested to know what we’re going to receive in the key COVID expenditure focus that you’re talking about.

M. Pickup: Thank you for that question. I will let Molly outline…. I call them buckets of expenditures that we are going to look at. Just one opening comment I would make on that. This will be incremental or in addition to any performance audit–related work that we’re going to be doing.

Very soon we will be releasing a performance audit coverage plan. When we look at programs, for example…. If we’re looking at things like dam safety but perhaps related to the pandemic…. Perhaps it will be substance use, or perhaps it will be rural Internet or…. Any of those pandemic-type-related expenditures that are performance audits — that’s not what we’re talking about here. We’re specifically talking about control work. So if seems a bit limited to you, it’s only because we’re not talking about all the performance work.

Molly, why don’t you outline, please, the bucket of expenditures?

Chair, can I refer to Molly?

M. Bernier (Chair): Of course.

S. Newton: Michael, I can take that question.

M. Pickup: Okay, or Stuart. There you go.

S. Newton: Absolutely. The three programs we’re looking at are the B.C. emergency benefit for workers, the one-time payment for individuals and families and the recovery grants for small and medium-sized businesses. Given that the audit planning and the materiality for the audited programs are of a significant size, we would, through the course of our regular audit work, assess the program, the controls in place, to determine any impacts on financial statement reporting due to a financial statement misstatement.

It’s not an audit of the effectiveness of the program against objectives. It truly is: how is it run? How does it compile to get into the financial statements? We will also be able to get a better sense of broader control issues as we do the work, so those may come out in the report as well.

M. Bernier (Chair): Thank you, Stuart. Thanks, Jackie.

Any other questions from the committee?

Well, I’ll jump in right now, because I’m not letting you get off this easily, you and your team.

[9:25 a.m.]

For the Auditor General, in your opening comments…. I’m wondering if you could explain to me. About halfway down in your opening comments in your report, it talks about “focus our efforts on risk areas.” Can you let me know and the committee know what you mean by “risk areas”? What determines a risk area?

M. Pickup: Sure. I will let the team sort of jump in as well and supplement this, because my comments may be a little bit more general to a financial statement audit.

When we look at risk areas that we may focus on, in terms of organizations that we may audit, risk will include things like, for example, organizations that may have more complex transactions. We would use the term “inherently more risky.” So a lot more complexity in the journal entries that may be happening versus just necessarily flowing things in and out.

Unusual transactions may increase risk. Increased expenditures in an area — so new programs, for example. Things with pressure to get things out the door more can impact risk as well. So some of those things we would call “inherent risk.” Then if there are areas where controls may not have had the time to develop controls over something, then the control risk may be higher as well.

If you look at it globally from a government perspective in terms of things that we may chose to audit from a risk perspective, it may be part of our perspective in terms of, if we haven’t been in an organization for some period of time, we may want to be there doing some audit work so we have a more direct sense. Significance to the overall opinion — so dollars matter. Right? If something is inherently high dollar value, if something makes up 10 to 15 percent, for example, of total government expenditures, that in and of itself can make it an area that goes up in terms of the risks we’re looking at.

Perhaps I would let Stuart or Molly or Russ supplement that response, Chair, if that is okay with you.

S. Newton: I’ll just add that there are also areas within the financial statements that require a lot of judgement to assess the dollar value. Personal income tax is one as well that requires a high degree of estimation, a lot of calculation. So inherently something like that would be more risky. It requires more judgement on the preparer’s part, but it also requires more judgement on our part to be able to assess whether it’s reflecting appropriately. Those create an added risk as well.

We also, across government, periodically get risk assessment information on government’s key risks and operational risks. Operational risks, although inherently you wouldn’t think there’d be a financial aspect to it, in that they’re focused on achieving a program…. But in some cases, the speed with which something has to be put in place, or a relatively new program, as Michael alluded to, would also flag us as an area of potential risk.

As we go through our planning, we would then get a better sense of whether the risks are being realized to then know how to focus our work going forward.

M. Bernier (Chair): Good. Well, thank you, Stuart.

A couple of technical questions. First of all, on the approval for over five years to go into a sixth year…. I’m not sure if this is to you, Michael, or maybe even to Jennifer. Just trying to understand.

Obviously, there are the legislative requirements built into the act that I was reading through. But is this just an annual ask of the committee? Is this that every year we have to approve to go over five years? I’m assuming that that’s just a rotated formality that we need to do, but just wanting to get clarity on that.

M. Pickup: I will jump in. I always enjoy being corrected. The folks that work with me know. Correct me quick; correct me often — including Jennifer as well.

Every year we would come back to you to say what those audits are that are extending beyond the five years. So next year, presumably, if we are into year five this year on a different audit and we decide that we want to continue with it, we would be back next year with that rotating list of what might be up now for greater than five years.

Did I get that right, folks?

M. Bernier (Chair): I see nodding.

M. Pickup: I see nodding. That’s a good sign.

S. Newton: Yes, you did, Michael.

M. Bernier (Chair): One other question, as I’m giving some time for any other committee members to think if they have any. What is the process, then, for you and your team…? I’m sorry if it’s in the report itself and I missed it when I was going through looking for it.

[9:30 a.m.]

How do you determine who to have involvement with, high or moderate? I’m looking at when you talked about, in the report, school districts. You’re choosing one. You’ve got a couple there that you’re looking at. You’re talking about UBC now. Does this go with a specific ask from an organization asking for help, or is there a process that your office goes through, Michael, to determine which organizations you want to have that direct involvement with?

M. Pickup: Thank you for that question. I think rather than give you a general answer as to how we would approach that from an audit perspective, I’ll look to a specific answer here and ask Stuart, Russ or Molly to jump in and give the specifics here for this year as to how we address that.

S. Newton: Certainly. I can start, and Molly can correct me, having a lot more experience with public accounts through a variety of levels within the group.

We actually have a five-year rolling plan, of which we only publish three at a time. We are looking at large entities, significant entities with high dollar values. UBC is an example. Hydro is an example, major Crowns.

As you can tell, health authorities are a significant ex­penditure, and we are either auditing one directly or doing oversight on all of those because those were seen as specifically significant entities to monitor.

If you look in the university sector, we rotate between UBC, Simon Fraser University and UVic, as the three biggest, to do direct audit work. Then we have some rotation of oversight through some of the smaller post-secondary institutions as well.

With school boards specifically, we have audited more per year over a period of time. They’re relatively small in dollar value as an impact on government’s financial statements. But we do know, through working with school boards, that they appreciate that we have come by to help out, because not only do we do the year-end financial statement work, but a lot of times, we are also providing commentary on where we’re seeing things done well in other places to provide support to boards and organizations.

One of the reasons why we are lower in the school boards is we were looking at, potentially, another way to be able to focus our control work not specifically on one entity but broader, on a topic. That could be then published, to be able to provide information and support more broadly across the government reporting entity.

M. Bernier (Chair): If I can ask, then…. I’m just looking at the report. You’re moving, in 2022, to do direct oversight with Saanich, for instance, and you’re finishing off with Okanagan-Similkameen, board 53. Just for people who are listening….

First of all, as a former Minister of Education…. I know we have critics on here as well. I know school boards — and universities, for that matter, in speaking with them — really do appreciate the oversight, the direct involvement and the help, especially, as you mentioned, Stuart, with best practices, almost, in other areas that can come forward. That’s good.

Can a specific organization ask to be added to the list for direct involvement? Again, how does that process of determination of who’s involved happen? I know some school districts would like that.

S. Newton: We do try to rotate through all of the school boards. Some are larger and more complex than others. From that perspective, they would tend to be more likely to be directly audited by us because they are more significant and more complex. There’s a weighting to that. The other part is accessibility and ability to get across the province over the course of 60 school districts over a longer period of time.

Certainly, if a school district has a particular concern or has a desire to potentially have us come audit them, it’s worth letting us know and connecting with us. They may have additional information that would change our risk profile of that organization to then say: “Okay, well maybe that is something that we need to look at more directly.” That is always a possibility.

We still have to balance it out with resourcing and how many people are out in various geographic areas within the province. But it would add to the mix of how we would assess risk.

Did that help?

[9:35 a.m.]

M. Bernier (Chair): Yeah, that was perfect. I appreciate that answer.

Anyone else on the committee have any questions regarding the report or the presentation?

M. Pickup: Chair, in the meantime, could I make two more quick comments?

M. Bernier (Chair): Of course. Please.

M. Pickup: At the risk of sounding repetitive or a broken record, I want folks to leave here today realizing the value of what they’re going to be getting from our team here in October in terms of this report and what a monumental effort it is for the team here to take on this work.

This is new for us to do this here in B.C. It’s something that, frankly, I’ve brought in from Nova Scotia. I think it’s part of why I’m sitting in this chair today. You know, it’s something out of the concept that I brought in and then the ability of the team here to take this on, to be open to the change, to be cooperative and to see the value in this for people in the Public Accounts Committee, people in the Legislature and, I think, people across the province.

I’ll give you an example. We’re going to be out there asking organizations that we may not be auditing: “Do you have fraud risk policies? Are you assessing the risk of fraud?” Then we’re going to be able to report back, through this report, in October of this year, keeping in mind we only finished the financial audit in July. People will then take a little bit of vacation, and they’ll be back and get this report to you in October. That will tie, probably, Nova Scotia for the quickest in Canada to report back to a legislature.

I just want to acknowledge the people here in the office for their openness for taking this on so the members here on the committee, as well, appreciate what a big change this is to what we do and the value that it’s going to bring, particularly, I think, during COVID expenditure time, when you see all these increased expenditures. This is going to be a really, really good product.

The other thing I wanted to mention quickly and to acknowledge publicly is that — and we’ll have a time for it later, I think, as it gets scheduled — the team here, not necessarily limited to those on the call today but the folks here in the office, were able to produce that September COVID information report. Essentially, we started that in May or June and got that to the Legislature in September. We were the first audit office in Canada to produce a COVID-related spending report.

I know the folks on the call and the others in the office are very humble people. I get that, and that’s a good approach. We’ll have time for it another day, but I want to publicly acknowledge it again. I think we’re off to a great start here, even during a pandemic — and to be able to adapt. I did want to mention those two things. Thank you for giving me that opportunity.

M. Bernier (Chair): Of course. I’ll just pass on my thanks on behalf of the committee too. I know yourself, bringing in different ideas and views this last year — especially, as you said, with COVID, to put a bit of a focus on that….

I’m glad to see that in the report because I think it’s also about making sure that not only the committee and the Legislature but the general public feels confident that money is being accounted for properly. It’s being spent. It’s being audited. All of that work that you and your organization do helps give that certainty to the public, as well, that as a legislature, we’re doing everything we can. So thank you for that, and to your team.

Rick, is there anything from you, by chance?

R. Glumac (Deputy Chair): I’ll ask just a quick question. Many of the entities that are not being audited right now — how long have some of them not been audited? Is there criteria, like: “Oh, this hasn’t been audited for eight years. We have to audit this one.”

M. Pickup: Perhaps, again, rather than giving a general answer, I will turn to my colleagues here. Do we have a specific answer beyond a general sort of guideline or approach we would take from a risk perspective?

S. Newton: It is truly from a risk perspective. We are aware of how frequently we are getting to certain entities. We were balancing that sort of rotational frequency with existing known risks that are prevalent at the time, as well as the size of audits that we take on. So when we take on a larger audit, it limits the number of audits we can do that might be of a smaller nature.

[9:40 a.m.]

The thing to remember is that all of the entities that we don’t audit directly are still audited. They’re audited by a public accounting firm. The information, the audit opinions, all are available and roll into the creation of the summary financial statements. We do rely on those auditors to be able to provide key information to us in instruction letters that we do provide annually. Especially on things like deferred capital contributions, there are very specific information requirements that we request as well. So just because we’re not auditing them, they are still subject to a rigorous, robust audit process from an external auditor.

The risk will change year after year. If there is a specific entity, we can go back and see, specifically, how long it has been since we’ve audited that entity, if you have a particular question on that entity. To Michael’s point, it is risk-based, and it will be a reassessment year over year.

R. Glumac (Deputy Chair): Basically, there’s no maximum time. But as more time goes by, I’m assuming, the risk goes up.

S. Newton: It would depend on the nature of the entity. If we use school districts as an example, the size of the school district — if it’s fairly significant, over time, there is a risk.

We also monitor what’s occurring within the sector. When it comes to auditing the K-to-12 school boards, there is a summary document created of all that information that we also then audit. As we get experience and information that relates to some specific entities, that will potentially increase the risk. Time would be one factor, but that’s not necessarily the biggest factor. It really depends on what’s happening at school boards, the dollar value related to the school board and any other issues that we’re noting through our other audit work.

Just as an added piece, we also meet with the firms monthly, on a monthly conference call, to discuss audit issues. These are public accounting firms. They do audit in the public sector. We’re usually talking to their practice leads about issues across the sector. As we are finding issues or they are finding issues in post-secondary, health authorities, school boards, then we get to sort of triangulate the information that we’re getting. That will also feed into our risk assessment as we go forward.

The other piece we also then do is that if there is an area of a particular risk, a specific school board, we can also determine when their auditor rotates off, to know the best time for us to pick that up.

M. Bernier (Chair): I think the Deputy Auditor General wanted to jump in there.

R. Jones: I was just going to mention a couple of the entities that we haven’t taken on, like ICBC and Lottery Corp. The reason: we do oversight for both of those, and we have for years and years. ICBC requires some very specific talents that the firms have and that we don’t have in-house. That’s why we haven’t taken those ones on in the past. You need some actuarial help in ICBC, obviously. In Lottery Corp., the firm that currently does that audit actually reapplies each one of the draws because they have an in-house place where they can do that, to make sure that the draws were accurate. We don’t have that ability.

In some of those cases, as Stuart is overseeing Lottery Corp., I oversee ICBC. We have a pretty good relationship with the firms, and as Stuart mentioned, we talk to the firms monthly. We talk about issues across the sectors and try and come up with consistent accounting and auditing issues that everybody can look at on a monthly basis.

The firms have actually come to us on a number of occasions to ask what’s going on in the public sector so that they can actually apply it to their clients as well. I think we cover everything fairly well. We’d love to do more, but we don’t have enough staff to do more. That’s where the risk comes into play.

[9:45 a.m.]

Up until about ten years ago, I don’t think we were even auditing a health authority. We’ve started going through all the health authorities now. PHSA is one that I think is very unique in the province, and it’s one we’re looking forward to taking over in a couple of years.

M. Pickup: Chair, may I make a comment?

M. Bernier (Chair): Of course, Michael.

M. Pickup: Thanks to my colleagues for those answers.

If we go back to who’s signing that Auditor’s report or the opinion on the summary financial statements of the government, at the end of the day, I’m on the hook. I’m signing that opinion, so we’ve got to do enough work across these organizations that we’re comfortable. That was the comment.

Perhaps — and here I go throwing suggestions out without talking to the team, which I generally try to avoid doing — next year we can add a column on these summary tables that indicates the last time we audited those organizations, if ever. Then that would perhaps facilitate that type of discussion as well. I think we could simply add another column, Chair, if that would be helpful, and I think I see the Deputy Chair nodding.

M. Bernier (Chair): I’m nodding as well. Thank you, Michael.

Mike Starchuk has a question.

M. Starchuk: Michael, your enthusiasm is not lost on anybody. Your one comment that you made…. I just wanted to touch bases with it a little. You said that you had brought big change from Nova Scotia to this position that’s here. What were you seeing, prior to coming here, as something that you felt needed change?

M. Pickup: I say “change” as a positive thing. I don’t think it’s a reflection of something that was wrong. I think it is a reflection of opportunities. I don’t think, for ex­ample, we were fully taking advantage of our opportunity to inform members of the Legislature and the public of the value of financial audits. What you will see in the October report is where we are really drawing out what we’re doing on financial audits. We’re bringing to members’ attention some of the issues that are coming up in financial audits. It’s not a criticism of the way things were done.

It is, I think, a missed opportunity, and in my perspective, the need to focus on whom we’re working for and then providing folks in the Legislature with more tools to hold government accountable, and in the process, I believe, improve how things are done — for example, add­ing on the fraud risk management survey.

We’re going to do that in a very cost-efficient way. We’re not going to do a full performance audit that could take us two years and spend 5,000 or 6,000 hours. We’re going to push it through our financial audit work that we’re doing. I think it is really about taking advantage of what a financial audit gives you the opportunity to do and then reporting that to the Legislature.

The other thing that we’re working really hard to do is to move this to an October report, rather than a report that could be months later, to bring it closer to the date of the completion of the financial statements. Government releases the financial statements at the end of July. We finish the audit end of July. People take a little bit of time off. Before you know it, September is here. People are back, and we’ve got a report coming out in October. It really is about us focusing, I believe, on the people we’re working for and taking advantage in the financial audits.

That will be a discussion we also engage in on key audit matters, so that Public Accounts Committee members, and members of the Legislature, can see: “Okay. You do these financial statement audits. You have these audited opinions that may be clean, have very little in them — they might be two pages — after you have spent thousands and thousands of hours. What did you deal with on the financial audit?”

It’s an opportunity for us to engage with people — to say: “Here were the issues that we dealt with.” An example: in Nova Scotia, we had a financial statement audit issue on environment that we dealt with on the financial audit. It all turned out fine, from a financial audit perspective. The financial statements were fair. But when we talked about it in our reporting, we engaged in a discussion with committee members and with legislators, and we decided to do a performance audit on that topic because of some of the things that came out on the financial audit.

It’s a chance to engage in all of these things. In no way am I being critical. It’s more that I want us to seize on the valuable work that we’re doing and on the opportunities that we have, to demonstrate the value-add to the people in the Legislature and to everybody in British Columbia, and to make positive change so that something comes out. I’m already hearing anecdotally, by us asking these questions on fraud risk management, for example: “Do you have a fraud risk policy? Have you done fraud risk assessments? What is your communication and education strategy?”

[9:50 a.m.]

Asking those questions alone can make positive change before you even report the results, because people who may not have been doing this type of stuff will say: “Oh, okay, you’re asking me those questions. Maybe the answer is no. Oh, maybe we should be doing something here. Let’s have a discussion.”

I know it’s a long answer. Now I’m hoping I answered your question, because I kind of went down that road. Did I answer your question?

M. Starchuk: Mr. Chair, if you would allow me to just expand a little bit.

Yes, you did, in a very, very, very good way. I like the fact that when somebody takes over a portfolio, they’re not there to criticize; they’re there to build upon it and take the positive aspects and move those things forward.

I think what I’m hearing…. I just want to ask this last question with regards to the other committee I sit on. You talk about the performance audits and doing smaller, bite-sized, more relevant and more current. The problem sometimes with audits is that they take so long that by the time you generate the information at the end of it, it may be redundant at that point. It may be well after the fact.

Is that part of what you’re trying to do, Michael? Do things in these quicker, bite-sized pieces so you can report out on them when they’re really more tangible to the public?

M. Pickup: Absolutely. I think the team is already showing the ability to deliver on that. I started having contact with folks here after my appointment. I didn’t officially get here till July, but we started, for example, discussing that COVID information report and spending.

We got that done in three or four months — as I said, the first audit office in Canada to produce a COVID report to the Legislature, by September. That wasn’t me. That was me working with folks here and everybody delivering on that.

From a time perspective, to be able to get this report to the Legislature in October is a huge effort. It will be a huge effort. It will be a major achievement, because we are adding on to the work that is being done, and we are advancing the delivery of the product by months.

When I went to Nova Scotia, my first year we did a report something like that that was done in February of the year after public accounts. By the next year, we got it down to October of the year before. We cut off four or five months so that we could get relevant information and, I would suggest, even better information. It is focusing that.

One of the things that delights me, coming into this job after 31 years or so working in other audit offices, is just the sheer open-mindedness and willingness to change and to discuss new ideas by people here in the office. It’s been absolutely refreshing and wonderful to work with the group here, even though it’s only been six months already. We all start kind of with what is possible, not with no, which I really appreciate. It’s a credit to the people working in this office.

N. Sharma: I just wanted to start by saying thank you for the clarity in your report. I really appreciate it. I thought it was laid out really well and was really crisp in terms of the content. Just as a new member, I wanted to express my appreciation.

One thing that I was wondering, on top of the questions already asked, is: how does your office engage with the general public directly? I see the process for the GREs that you’re actually engaged with. But besides maybe putting stuff publicly on the website, is there another way that we do that to show the work you’re doing?

M. Pickup: I’ll try to keep my answer shorter for you and invite my colleagues to supplement or correct as well.

On the financial statement audits, one of the things we’re going to be doing is this more detailed report in October to the Legislature, which will be publicly available, that essentially will be the first time we’re doing such a detailed report like that, with all of these extra things that we’re doing, all of which will be publicly available. With that, things that we’re doing on the performance audits, we’re going to take the exact same approach.

We will have the at-a-glance, where everything is summarized on a page or two. We will have a three-minute video where I walk through the summary of what we found on the financial statement audits. The key points, I will summarize in a three-minute video, just like I’m doing for the performance audits as well. We will do a news conference, we will do media interviews, and we will have a communication strategy for the financial statement audit work that is the same as the performance audit work.

[9:55 a.m.]

That is one of my goals and objectives here — that everybody in the Legislature and in the province realizes the full value of what they’re getting from these financial statement audits, similar to what they realize on the performance audit portfolio. Does that help?

M. Bernier (Chair): I see nodding, Michael, so I’m as­suming yes.

Any other questions, then, from the committee?

M. Pickup: Can I put one last sort of advertisement/marketing in for tomorrow? Tomorrow we have our report, a performance audit report, coming out on medical devices’ cybersecurity. I think there are some 36,000 medical devices across the province. We finished a performance audit on it, and I’m going to table that to the Legislature tomorrow. I wanted to advertise that while I’m with you folks.

M. Bernier (Chair): I appreciate that. It kinds of goes to Niki’s point, then, of how we get information out there. So thank you for that.

Seeing no other questions, I’m just going to ask technically: Jennifer, should we move to the comptroller general, or do we vote on the report from the committee first for acceptance?

J. Arril (Clerk of Committees): I just wanted to let you know, Chair, that I did get a note from Carl, and he doesn’t have any further comments on this piece. I can move on to the technical, procedural piece if you’d like, Chair.

M. Bernier (Chair): Last chance for any questions, I guess. I don’t see any from the committee, so yes, let’s move to that. I know you have to put up the motion on the screen, I think, and I’ll be looking for a committee member to move that.

J. Arril (Clerk of Committees): Sure, if I may. As members are aware, the committee is required by statute to approve the financial statement audit coverage plan. In terms of approvals, on page 7 of the Financial Statement Audit Coverage Plan, three approvals have been requested. Generally, this is rolled into one motion for the committee to consider. By practice, there is also a second motion, which I can walk through now, Chair. Or if members would prefer to consider the first motion, with respect to the approvals themselves, I can certainly screen-share that motion for a member to move.

M. Bernier (Chair): This being one of our first official meetings with a lot of people, let’s go through No. 1 first, and then we’ll go on to the second.

J. Arril (Clerk of Committees): Absolutely. If a member is prepared to move the first motion, I will screen-share it now. Bruce, if you could just read it through once I put it on the screen, that would be great. I’m hoping it’s showing.

B. Banman: I move that the Select Standing Committee on Public Accounts, pursuant to sections 10 and 14 of the Auditor General Act, endorse the three recommendations listed on page 7 of the Financial Statement Audit Coverage Plan for Financial Statement Fiscal Years Ending 2022, 2023 and 2024, as presented on February 8, 2021.

M. Bernier (Chair): That’s good. I appreciate that. Thank you, Bruce.

With that, then, I look to the committee.

R. Glumac (Deputy Chair): Do we need a seconder on that?

M. Bernier (Chair): No, not on these. I don’t think we do.

J. Arril (Clerk of Committees): No seconder is re­quired.

Motion approved.

J. Arril (Clerk of Committees): All right. I’ll just explain the second one. The committee has, by practice, passed a second motion. As members may be aware, the Select Standing Committee on Finance and Government Services is responsible for reviewing and approving the budgets of the statutory offices, and the committee is currently undertaking that process right now.

Basically, should the Select Standing Committee on Finance and Government Services fail to approve the Office of the Auditor General’s budget and should that require a change to the Financial Statement Audit Coverage Plan, this motion would ask that the Office of the Auditor General return to this committee if any updates are required.

M. Bernier (Chair): Thanks, Jennifer. Maybe before we go to the motion, are there any questions on that? I think Jennifer explained that quite well.

Okay, it looks like everybody understood that. That’s good, Jennifer. Thank you.

[10:00 a.m.]

J. Arril (Clerk of Committees): If a member is prepared to move the motion, then I will screen-share it.

M. Bernier (Chair): Do we have a member that can do that? There you go. Jackie threw her hand up.

J. Arril: Jackie, thank you. I will screen-share this motion.

J. Tegart: I move that should the fiscal year 2021-22 budgetary estimates proposed by the Office of the Auditor General fail to be approved by the Select Standing Committee on Finance and Government Services, the Office of the Auditor General return to the Select Standing Committee on Public Accounts with any amendments to the financial statement audit coverage plan for financial statement fiscal years ending in 2022, 2023 and 2024 which may be required.

M. Bernier (Chair): Any questions on it? No?

Motion approved.

M. Bernier (Chair): Thank you, everyone.

Jennifer, I just wanted to ask you quickly. I know we have Carl on the phone. Did Carl have information that he wanted to do specifically to his office as the comptroller general?

Not to put you on the spot, Carl, but I was just curious if there was any additional information separate than that of the report.

C. Fischer: I don’t have any additional comments. I think everything you’ve heard today reflects the risk discussions that we’ve had with OAG over the past year. I think the only other thing that I always like to remind people is that regardless of plans, throughout the year staff at OCG here and OAG work together on an almost daily basis to identify questions and issues and resolve them in the best way possible.

Molly is a strong practitioner. She’ll be taking on a role that bears a lot of weight this year. It will be a challenging year. We look forward to continuing the work that we’ve done in the past.

M. Bernier (Chair): Thanks, Carl. I love to see the fact that there’s so much camaraderie and trust amongst everybody, and supports.

Molly, you’ve got a big team around you, supporting you with a lot of work that has to be done. To Michael’s point, we’re viewing, through the agenda, the workload that you have in front of you. I know, as you said, there is a lot of work. I appreciate, as well, I guess I would say the condensed timelines, in some respects, that you’ve put forward, which is a benefit to the Legislature and the public too. I know that’s extra work, but I also appreciate the fact that that’s valuable work as well, so thanks to the team.

Jennifer, is there anything else that I’m missing before we can adjourn the meeting, then?

J. Arril: No, Chair. I just thought to remind members and everyone at the table that the next meeting is on March 8, and currently scheduled for review is the COVID-19 information report that’s been referenced a few times here today.

Chair, to your question with respect to next steps for this committee meeting, if members are satisfied, then you could seek a motion to adjourn.

M. Bernier (Chair): Yeah, thanks. I’ll just ask again if there are any questions or input from anybody before we adjourn.

Okay, seeing none, a motion to adjourn the meeting then. Jackie is moving.

Motion approved.

The committee adjourned at 10:04 a.m.