The Office of the Auditor General in Ontario.

• Author: Sciarra, Rebecca
• Position: Ontario Audit Act amendments and history

Variations among democratic governments are endless but a common characteristic is the way control of the public purse is exercised. This is particularly true in Westminster style legislatures based on principles of responsible government. Even in democratic states where the confidence convention does not apply governmental disarray abounds when a government is exposed for inappropriately spending funds. Too often, when trying to 'measure' the health of a democracy we look for indicators such as gross national product levels, mortality rates, and the extent to which individual, collective and human rights are protected. Seldom is the focus upon the sphere of fiscal spending and the level of fiscal accountability contained within a political regime when attempting to posit an evaluative analysis on any given government's 'worth', health, or extent to which it is democratic. This article examines the Office of the Provincial Auditor in Ontario and its role in examining the spending of public funds. It also reviews the evolution of legislative auditing in that province and recent changes to the office's legislation.

**********

The first session of the sixth parliament in Ontario marked the official birth of Ontario's first officer of the legislature, with the introduction of the Audit Act, 1886. Edward Blake's warnings and predictions regarding the potential for fiscal mismanagement among the executive and within the public service materialized when a discrepancy of $14,680 was highlighted in the Treasury Department's financial books in 1885. The then Auditor, Charles Hood Sproule had noted the discrepancy and had reported it to the Treasurer of the time but had made no statement to the legislature, as he had no authority to do so. Additionally, the investigation of the fiscal discrepancy revealed that fraudulent activity had occurred. (1)

The introduction of the Audit Act in 1886 envisioned a Provincial Auditor as part watchdog; part in-house expert on 'good' financial management. The 'watchdog' function was indicated by removal from executive control. The Provincial Auditor (2) and all his or her staff would be appointed by the Lieutenant Governor. Further, the Provincial Auditor was vested with the authority to examine any person on oath in connection with any account audited and to report all public accounts and expenditures to the Legislative Assembly.

Refining the Audit Act 1949-2004

The mandate and organizational structure of legislative auditing in Ontario, which we know today is quite different from the provisions outlined in the original Audit Act of 1886. The Office of the Provincial Auditor's mission is "to report to the legislative assembly objective information and recommendations resulting from independent audits of the government's program, its Crown agencies, and corporations." (3) According to the legislation, the Auditor shall be appointed as an officer of the Assembly by the Lieutenant Governor, after consultation with the chair of the all-party standing Public Accounts Committee of the Assembly (PAC). However, since 1992 an open competition has taken place when the Auditor's position has been vacant, in which all three parties represented on the Committee participate in interviewing worthy candidates and then recommending to the government the preferred candidate for the position of Auditor. The Auditor and all staff are independent of the government and its administration and are authorized to access all relevant information and records necessary to the performance of Auditor's duties. The chief mandate of the office, according to its 2004 Annual Report, is to "assist the Legislative Assembly in holding the government and its administrators accountable for the quality of the administration's stewardship of public funds and for the achievement of value for money in government operations." (4) This function of providing elected representatives with thorough and objective information to use to assess the extent to which the executive has been fiscally responsible has been, up until recently, executed through three types of audits. The Office examines the receipt and disbursement of public money, the financial statements of the province and agencies of the crown, and examines the administration of government programs carried out by ministries and agencies.

There have been three pivotal amendments to the Audit Act. The removal of the Provincial Auditor from the authority of the Treasury Department in the 1950s; a phasing out of the Auditor's office performing pre-audit activities and conducting post-audits of government expenditures in the 1970s, and the entrenchment in the late 1970s of the Provincial Auditor conducting value-for-money audits were significant legislative changes made to the mandate of the office. These changes were the product of a number of forces--such as Provincial Auditors of the day, various Provincial Treasurers, and individual MPPs--working together to alter the function of this legislative institution.

The separation of the Provincial Auditor from the Treasury Department was spurred by the PAC in March 1949. In particular, an opposition member of the PAC, Liberal MPP for Waterloo North, Mr. Brown, clearly criticized the incestuous relationship between the Treasurer and the Provincial Auditor and how this compromised the "explicit duty" of the office. As a result of discussions led by Mr. Brown in the PAC, the committee passed a motion recommending that the Act be amended in order to effect greater fiscal accountability. By March 1950, the bill to amend the Audit Act passed second reading. The amendment to the Audit Act reflected the spirit of the discussions in the PAC, as Mr. Brown commented after the act received royal assent, "The strength of the entire Act is summed up in section 25 of the Act, outlining the annual report of the Auditor, to whom he must report and on what he must report." (5)

The next significant change to the scope of legislative audit in Ontario was realized through a shift from the office performing pre-audits of government expenditures to post-audit expenditures. How this change was enacted varied somewhat from the previous process through which amendments to the Audit Act were made in the 1950s. The pre to post audit amendments took substantially longer to be adopted by government.

As early as the mid 1950s, the real-world application of pre-audit practices became harder as budget sizes and expenditures grew. As the province of Ontario boomed in the 1950s, spheres of provincial responsibility began to supersede those controlled by Ottawa, and the size and scope of government dramatically increased. As a result, conducting pre-audits were identified as practically impossible by the then Provincial Auditor. The Auditor's Annual Report in 1956-57, called attention to the fact that not only were pre-audits logistically unfeasible, they were also ill-suited to sufficiently act as a control and review mechanism on government expenditures. The sheer volume of transactions made by government combined with the monetary size of these transactions made the performance of pre-audit functions a deficient tool of legislative auditing.

Despite acknowledgement by the Provincial Auditor in the 1950s regarding the inevitable paralysis of legislative auditing if it continued to perform only pre-audits, a response by government was not heard until the 1970s. It was only when the Committee on Government Productivity began looking at the Audit Act in 1970 that the warnings effaced in the early 1950s found their way through the legislative process.

In 1971, the first reading of the bill to amend the Audit Act reflected the instrumental role, which the Committee on Government Productivity played in enacting amendments to the Audit Act. New amendments to the Audit Act established that legislative auditing would be performed through performing post-audit activities, rather than through pre-audit activities. The committee reasoned that in addition to pre-audits becoming a virtual impossibility with the sheer size of government spending, the act of the Auditor being involved in a spending control function, in fact compromised his role as a servant of parliament. The committee argued that to maintain a system of legislative auditing, where...