Departmental Audit Committees and Governance: Making Management and Accountability the Priority from the Top Down
Shepherd, Robert, Canadian Public Administration
"I don't think any institution can go through the scrutiny, the scrubbing we've gone through and come out squeaky clean."
(Kofi Annan 2001)
A fundamental shift is occurring in Canada's federal public management--quietly, discreetly and well below the radar of scholarly discussion. A directive issued by the Treasury Board and administered by the Office of the Comptroller General requires (as of I April 2006) departments and agencies to institute "department and agency audit committees" (DAACs). According to the DAAC policy, the role of these committees is to "ensure that the deputy head has independent, objective advice, guidance, and assurance on the adequacy of the department's control and accountability processes. In order to give this support to the deputy head, the audit committee should exercise active oversight of core areas of departmental control and accountability in an integrated and systematic way" (Canada, Treasury Board Secretariat 2006b: Section 4.1.1). These committees support deputy heads in their role as accounting officers, yet few have connected the fact that the help often plays a pivotal role in household management.
Members of these committees are typically former senior public servants, academics or, as is becoming the norm, former or current high-ranking officers from private-sector firms. That these committees should have singular and regular access to deputy heads and detailed and confidential information about the management within departments is unprecedented. That they have some limited authority and resources to compel departmental officials, through the deputy head, to follow their advice is also a fundamental shift in federal organizational culture.
In some quarters, this shift is the ultimate triumph of the "new public management" (NPM). Not only is the public sector a net importer of private-sector ideas and tools, it now has an institutional voice and a means for acting on its preferences for public-sector action at least at the level of management. According to one official, "It's finally happened--we've corporatized our public services to such an extent that there is no differentiating between us and IBM, GE or Bell, save for the ensign on our letterhead." In other quarters, incorporating audit committees is a positive step towards improving the management of departments and the internal audit function. They are a valuable resource, providing independent advice on matters of risk. According to one deputy head, "My committee is a sounding board on my internal management decisions, my eyes and ears in the department, and my interpreter of audit findings--it is my resource, and these individuals are highly distinguished and experienced in their own right."
The institution of DAACs is a response to the "audit explosion" (Power 2005) occurring in most western democracies. Public sectors are obsessed with accountability, responding to the deteriorating confidence of their citizens in all things public management. Failing grades posted by auditors general, internal overseers, polls and media reports, and investigations or inquiries examining scandals and corporate failures have generated demands by citizens that governments "clean up" the messes left in the wake of what may be perceived as poor public management. Public sectors also want greater assurance that public institutions are working as expected and that information is made publicly available. The institution of audit committees is regarded as the latest in a number of measures--including the "expenditure management system," "Management Accountability Framework" and "strategic reviews"--taken by the Treasury Board and central agencies in Canada to repair broken, or at least poorly performing, systems and processes and to focus the attention of senior officials on matters of financial and systems management (see Sutherland and Doern 1985: 15-56).
This article examines the rationale for audit committees and considers some preliminary observations on their implementation and the effect these may have on Canada's public management, including their claims for improving accountability. …