Auditor General keeps the heat on GN

Sheila Fraser, the Auditor General of Canada, kept the heat on the Government of Nunavut this week, defending a recent report that says decentralization is a major reason for the GN’s “myriad financial management problems.”

In response, GN officials are handling the decentralization issue as if it were radioactive plutonium.

They’ve hired a consultant to report on “recentralizing” the GN’s widely scattered financial employees, but they’re making no commitments yet on basic structural change.

Fraser, who appeared before the legislative assembly’s standing committee this past Tuesday, said in her latest report that the GN’s money management systems are still too weak, exposing the government to fraud, theft, error and other dangerous risks.

“The current system isn’t working,” Fraser said, pointing out that the GN has failed to meet commitments aimed at creating a strong financial system by 2005.

In her report, Fraser said this is happening for two reasons:

* the GN still uses inferior systems unsuitable for its billion-dollar-a-year operations;
* the GN’s financial workers are scattered all over Nunavut, and there aren’t enough professional accountants to train them and help them solve problems.

And she says the GN’s well-intentioned efforts to fix the mess haven’t worked.

For example, an approach aimed at fine-tuning the system through small, step-by-step changes “has not worked so far and there is no reason to believe that it will work in the future.”

She also says another option — hiring more accounting professionals — isn’t viable either. She says that’s because the GN has no choice but to hire these people from outside of Nunavut, an expensive task that would increase competition for staff housing.

That leaves a third choice: “recentralizing” financial jobs so that more people work together under one roof, making it easier for senior staff to support less-experienced trainees.

“This is needed to make the most of the relatively small number of professional accountants in the territory, at least until problems are fixed and staff are adequately trained,” Fraser told MLAs on the operations committee.

Fraser also said she respects the Nunavut government’s right to set its own policies, such as the decentralization of jobs among communities.

She said recentralization might take jobs out of communities, but that those jobs could be replaced by others, and that such a move might save money that could be spent on services for people.

“Recentralizing the accounting operations would not affect services to Nunavummiut. On the contrary, it might produce savings that could be reinvested in the communities,” Fraser said.

Keith Peterson, the MLA for Cambridge Bay, pointed out that in Nunavut, this may be easier said than done.

“In small communities, these are not just jobs. There are people attached to those jobs,” Peterson said.

But MLAs are also aware that the GN’s weak, decentralized financial management system is forcing the government to break its own rules and to break the law.

Fraser said, for example, that this is why the GN’s consolidated financial statements are always late, delivered many months after they’re supposed to be given to MLAs and the public.

It also explains why the government sometimes spends more money than the legislative assembly has allowed them to spend, forcing MLAs to vote for supplementary appropriations after the money has been spent, Fraser said.

Tagak Curley, the MLA for Rankin Inlet North, asked Fraser if this situation creates a “confidence” issue for the assembly. (A confidence issue is one that justifies a vote to remove a cabinet minister, or the entire government.)

Fraser replied that, in her experience, this would depend on why the issue came to light in the first place. For example, if the health department overshoots its budget because it’s forced to spend more than expected on patient care, then the overspending may be forgiveable, she said.

Keith Peterson, who along with other MLAs has been calling for a law to protect whistle-blowers in Nunavut, asked Fraser what she thought about the idea of whistle-blowing legislation.

(Whistle-blowing legislation would protect government workers from being fired if they speak out about government wrong-doing.)

Fraser said her office has no position on that issue. But, speaking personally, she said she’s against the idea, because to pass such a law is a tacit admission that government is not working.

“It means that all systems have failed,” Fraser said.

Hunter Tootoo, chair of the committee, then provoked gales of laughter with a barbed comment aimed at the GN, which is notorious for punishing workers who speak publicly on virtually any topic.

“If we had whistle blowing legislation up here, we would hear more whistles than we had in the hockey game last night,” Tootoo joked.

As for the GN’s response to Fraser’s report, Bob Vardy, the deputy minister of finance, set out a 10-point action plan aimed at reviewing the finance department’s systems, filling vacant jobs, and supporting existing staff.
But they’re handling the toxic issue of “recentralization” separately, by commissioning a consultant’s report that was given to cabinet on Thursday of last week.