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Ottawa's quiet removal of internal auditors draws fire

A stop sign is seen near Peace Tower on Parliament Hill in Ottawa December 30, 2009.


The federal government has quietly removed internal auditors from four regional development agencies, placing the work in the hands of a central department that is itself faced with a shrinking budget.

It's a risky decision to take away financial oversight at the department level and one that makes losing – rather than saving – taxpayers' money more likely, says the Public Service Alliance of Canada, the union that represents the auditors.

The regional development agencies, where about 20 audit jobs will be affected in total, include the Atlantic Canada Opportunities Agency (ACOA), which has been questioned on its spending in the past. The offices of the ministers in charge of the four agencies say the elimination as of April 1 will save a total of $2.5-million each year.

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The agencies – ACOA, Canada Economic Development for Quebec Regions, Western Economic Diversification Canada and Federal Economic Development Agency for Southern Ontario – help businesses stimulate the economy in their regions. Their internal auditing will now be looked after by the Office of the Comptroller General, the department within the Treasury Board of Canada Secretariat that oversees auditing across government.

PSAC vice-president of national employees Eddie Kennedy said he hasn't been told how the Comptroller General's office will keep up with the work and whether it will cut staff because of budget cuts. He said it won't compare to local auditing.

"The whole purpose of what our members do in those roles is to make sure that the taxpayers' dollar is being spent for the purpose that it was intended," he said. "There's no way we're not opening up the door for potentially discrepancies."

The secretariat's budget was slashed by $7.6-million this year, and spokesman Pierre-Alain Bujold said it's still being determined how many positions are needed to keep up with the influx of work. He said it's too early in the fiscal year to give a comparison of staffing levels this year compared to last.

ACOA, which was created in 1987 and had internal auditors until this month, was questioned in 2000 when the auditor-general found that the agency paid $200,000 more than market value for office space in Sydney. The agency had asked for space in a building owned by a golfing partner of then prime minister Jean Chrétien in 1994. The space was never used as intended and only two employees worked there.

"The ability to monitor on the ground, in those locations, is going to be minimized by the fact that it's being centralized," Mr. Kennedy said. "On top of that, it's less people looking at how the money's being spent."

However, a spokeswoman for the minister of state for the Southern Ontario agency, Gary Goodyear, said that the change improves "the cost effectiveness of audits as well as the consistency and accountability of this function across Canada."

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The Canadian Northern Economic Development Agency never had internal auditors. A spokeswoman said that, since its creation in 2009, it has used the Comptroller General. An audit of the agency was leaked to a television network last year that showed CanNor had violated almost every financial management rule since it was created, including on travel and contracts.

It might not just be regional agencies getting rid of internal auditors. Typically, departments classified as "small" are the ones throughout government that rely on the Office of the Comptroller General.

The government changed its policy on April 1 to redefine "small." The old definition included a "reference level" of less than $300-million and fewer than 500 full-time employees. As of this month, there's no limit on the number of employees, newly classifying nine more departments as small and eliminating the requirement to have internal audit teams.

Those departments, which include the Privy Council Office and Public Service Commission, "are in the process of assessing how to deliver their auditing requirements," Mr. Bujold said in an e-mail.

He said that could be through keeping their own internal audit group or by using the Comptroller General's office, which already provided auditing for 47 departments and agencies before this year's additions. It also oversees the internal auditing of large departments that have their own teams.

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