Photos: Dick Hemingway Editorial Photographs
When Ontarians elect a government, they provide it with the authority to spend, tax, borrow, and administer the province's resources. The government is accountable to the Legislature — made up of both government and opposition members of provincial parliament (MPPs) — for the allocation and use of these resources. The Legislature, in turn, is accountable to the citizens of the province.
In assessing whether the government is doing a good job managing the public purse, members of Ontario's Legislature must have objective, appropriate, and timely information. In addition, they must be able to critique and question the government. But how can members of the Legislature make this assessment? The Legislature, rather than undertaking an in-depth examination of the government's finances itself, delegates part of that responsibility to its own Standing Committee on Public Accounts (also known as the Public Accounts Committee, or "PAC") and to the Auditor General.
A good analogy is to compare the Legislature and PAC to the Board of Directors and Audit Committee of a large public company. Just as members of the Board are elected by, and represent, the interests of the company's shareholders, members of the Legislature are elected by, and represent, the people of Ontario. The Audit Committee of a Board of Directors is a small group of Board members who assist the Board in overseeing the financial affairs of the company. Similarly, PAC comprises eight members of the Legislature who have a mandate to review and report to the Legislature their observations, opinions, and recommendations on the Report of the Auditor General and the Public Accounts.
Much of the detailed scrutiny of the use of government resources is carried out on behalf of the Legislature by the Auditor General. Each year, the Auditor General tables an annual report which provides legislators with information that allows them to judge how well public resources are being used. Essentially, the Auditor General watches over the administration of Ontario's finances and in doing so, helps elected representatives in the Legislature hold the government accountable for the way it administers the resources provided to it by the Legislature.
The Auditor General Act gives the Auditor the mandate to examine the government's financial accounts and transactions and to report his findings to the Legislature. He is to report on instances of misuse or mismanagement of public funds, overexpenditures, and other irregularities. The Auditor General is also charged with assessing whether public resources are well administered, whether government and broader public-sector activities are managed with due regard to economy and efficiency, and whether procedures to measure and report on the effectiveness of programs and organizations have been established and are operating satisfactorily. This is often referred to as the "value-for-money mandate" of the Auditor General. For more detailed information on the Auditor General's role and responsibilities, visit our Reports page and consult Chapter 6 of our most recent Annual Report.
The Auditor General is appointed as an officer of the Legislative Assembly under the Auditor General Act, which enables the Office to carry out its mandate independently of the government and its administration. Independence is a vital safeguard for the Office in fulfilling its responsibilities objectively and fairly.
The Auditor General's responsibilities include the examination of the province's Public Accounts, the accounts and financial transactions of a number of agencies of the Crown, and value-for-money-oriented audits of selected government activities and programs and broader public-sector organizations that receive government grants. The Office also assesses compliance with relevant legislation and government directives. The Auditor General's main responsibilities are described below.
The government is required to report annually on its financial performance to the Legislature and to the people of Ontario. One of its primary means of accomplishing this is by submitting to the Legislature its audited financial statements every year. These statements outline all spending, borrowing, and revenues for the previous fiscal year (the province's fiscal year runs from April 1 to March 31). The document that the government submits is called the Public Accounts.
The Public Accounts are a record of financial transactions that have occurred, unlike the province's Budget and Estimates, which outline planned financial activities.
The Auditor General audits the province's financial statements annually in accordance with generally accepted auditing standards. This type of financial audit is known as an attest audit. After his audit, the Auditor General expresses an opinion on the financial statements of the province. An auditor's opinion is, by definition, the auditor's report on whether a set of financial statements are fairly presented and comply with appropriate accounting principles.
The Auditor General's opinion is reproduced in both the Public Accounts of the province and in the Auditor General's own Annual Report.
In addition to auditing the province's financial statements, the Auditor General also examines the accounts and financial transactions of numerous provincial Crown agencies such as the Liquor Control Board of Ontario, Ontario Place Corporation, TVOntario, the Ontario Securities Commission, and the Toronto Area Transit Operating Authority.
Such audits include the expression of an opinion, which is usually supplied to the agency's board and the Minister(s) responsible. In addition, copies of the audit opinion and of related financial statements are forwarded to the Deputy Minister of the relevant Ministry and to the Secretary of the Management Board of Cabinet.
As well, the Auditor General directs the audits of several other Crown agencies whose audits are performed by public accounting firms, and he has audit access rights with respect to audits of Crown-controlled corporations, whose audits are also performed by public accounting firms.
Generally, each agency and Crown-controlled corporation reproduces its audited financial statements in its own Annual Report, which is publicly available.
An extremely important part of the Auditor General's mandate is the value-for-money component. Value-for-money audits are assessments of whether or not money was spent with due regard for economy and efficiency and whether appropriate procedures were in place to measure and report on the effectiveness of government programs. Under the Auditor General Act, the Office is required to report to the Legislature significant instances where it is observed that the government is not fulfilling its responsibilities in these areas.
To fulfill its value-for-money mandate, the Office annually conducts audits of selected ministry or agency programs and activities. Major programs and activities are generally audited every five years or so. Every year, senior management of the Office consider a number of risk factors when selecting which programs to audit in the coming audit period. These factors include: the results of previous audits, the total revenues or expenditures at risk, the impact of the program or activity on the public, the inherent risk due to the complexity and diversity of operations, the significance of possible issues that may be identified by an audit, and the costs of performing the audit in relation to the perceived benefits.
The results of value-for-money audits are reported on in the Auditor General's Annual Report and constitute a large portion of that document. As well, of all the observations that the Auditor General reports on, value-for-money findings tend to attract the largest proportion of media coverage and interest from the public and from the Standing Committee on Public Accounts.
When the Auditor General Act became law on November 30, 2004, it expanded the Auditor’s value-for-money mandate to include organizations in the broader public sector that receive government grants, such as hospitals, colleges, universities, school boards, and other organizations meeting the definition of grant recipient. This is a significant change to our mandate insofar as over 50% of provincial expenditures go to such organizations. While the expanded mandate does not apply to grants to municipalities, it does allow the Auditor to determine whether a municipality spent a conditional grant for the purposes intended.
The expanded mandate also allows the Auditor to conduct value-for-money audits of Crown-controlled corporations, such as the new hydro corporations that began operating in 1999 after the restructuring of Ontario Hydro.
Under the Auditor General Act, the Auditor General may also be asked to undertake special assignments to perform value-for-money audits as requested by the Legislature, the Standing Committee on Public Accounts, or a Minister of the Crown. Such assignments, however, shall not take precedence over the ongoing work of the Office, and the Auditor may decline an assignment by a minister if it conflicts with the Auditor's other duties.
Generally, results of a special assignment are compiled in a report and submitted to the party that requested it. It is usually up to the requesting party to decide whether the Auditor General's special report will be made public.
Every year, the Auditor General reports on the results of his examination of government resources and administration. The Auditor General's report is tabled by the Speaker of the Legislative Assembly in the Assembly, usually in the fall, at which time it becomes available to the public.
The main body of the Annual Report consists of matters arising from individual value-for-money audits of ministries and agencies. It includes the audits' significant findings, observations, and recommendations, as well as ministry and agency responses to the recommendations. It also includes a chapter of follow-up reviews of all the value-for-money audits from the Annual Report published two years previously. Furthermore, the Annual Report includes observations resulting from the attest audits of the Public Accounts, certain information required by statute, and reports on the Office's operations and on the activities of the Standing Committee on Public Accounts.
After the Annual Report is tabled, it is referred to the Public Accounts Committee for review.
The Public Accounts Committee is an all-party legislative standing committee that, based on the Auditor General's reports, examines, assesses, and reports to the Legislature on a number of issues, including the economy and efficiency of government operations; the effectiveness of programs in achieving their objectives; controls over assets, expenditures, and the assessment and collection of revenues; and the reliability and appropriateness of information in the Public Accounts.
The Committee helps ensure that the Auditor General's Annual Report is given a public hearing. It selects parts of the Auditor General's report and holds public meetings on selected topics raised by the Auditor General. The responsible Deputy Minister or agency chief executive officer, along with senior staff, normally attend these hearings to answer questions. Following these hearings, the Committee prepares and submits to the Legislature a report containing comments and recommendations based on the Auditor General's report. It is then up to the government to respond to the Committee's recommendations. The Committee's reports can be accessed by clicking here.
The Auditor General attends all Committee meetings and provides assistance to the Committee on the preparation of its agenda, its reports, and other areas as required.
The distinction between government advertising and partisan advertising can sometimes be unclear. In an effort to bring a greater measure of accountability to this subject, in 2004, the Auditor General was given the added responsibility of reviewing proposed government advertisements funded by the taxpayer. The Auditor is to review these advertisements before they are published or broadcast to verify that they meet certain standards and are not tainted by partisan political interest. This review is conducted primarily to determine that:
Under the Government Advertising Act, 2004, a government office cannot publish, display, broadcast, or distribute a reviewable item:
It should be noted that the decision resulting from the Auditor General's review is final.
The Act applies to all ministries, Cabinet Office, the Office of the Premier, and other such entities as may be designated by regulation, and it covers the following types of advertisements:
The Act also applies to any of the above types of advertising where:
For contact information on government advertising review, please visit www.auditor.on.ca/adreview.