STANDING COMMITTEE ON PUBLIC ACCOUNTS THIRD REPORT June 2002 3rd SESSION of the 24th LEGISLATURE LEGISLATIVE ASSEMBLY OF SASKATCHEWAN

TABLE OF CONTENTS I. Introduction II. Selection of Audit Committee III. Review of the Business and Financial Plan of the Office of the Provincial Auditor IV. 22 nd Annual Conference of Canadian Council of Public Accounts Committees V. An Overview of Infrastructure Risks VI. An Overview of Privacy VII. Board of Internal Economy VIII. Chief Electoral Officer IX. Department of Agriculture and Food X. Department of Education XI. Department of Energy and Mines XII. Department of Environment and Resource Management XIII. Department of Executive Council XIV. Department of Finance XV. Department of Health XVI.

Department of Justice XVII. Department of Municipal Affairs, Culture and Housing XVIII. Department of Post-Secondary Education and Skills Training XIX. Department of Social Services XX. Government E-mail System XXI. Information Technology Security XXII. Improving Accountability for Results XXIII. Improving Public Sector Planning and Reporting XXIV. Pensions XXV. Planning for Year 2000 and Learning from Year 2000 XXVI. Rate Regulation in the Public Sector XXVII. Saskatchewan Crop Insurance Corporation XXVIII. Standing Committee on Public Accounts XXIX. Towards a Better Accountability System XXX.

Understanding the Finances of Government XXXI. Workers’ Compensation Board XXXII. Working Together to Gather Information for Public Reports Appendix 1 List of Witnesses

Mr. Krawetz, Chair of the Standing Committee on Public Accounts, presents the Committee’s Third Report of the Twenty-fourth Legislature. I. INTRODUCTION Business Conducted This report reflects the work of the committee during the First, Second and Third Sessions of the 24th Legislature. The observations, conclusions and recommendations contained in this report are based upon the committee’s examination of testimony heard until the end of its meeting on June 20, 2002.

During these meetings, your committee concluded examinations on the following reports of the Provincial Auditor: • • • • • • • • • • 1999 Fall Report of the Provincial Auditor (Volume 1) 2000 Spring Report of the Provincial Auditor 2000 Fall Report of the Provincial Auditor (Volume 1) 2000 Fall Report of the Provincial Auditor (Volume 3) Your committee substantially completed the consideration of seven additional reports but was unable to conclude its review.

These reports include the following: 1999 Spring Report of the Provincial Auditor 1999 Fall Report of the Provincial Auditor (Volume 2) 2000 Fall Report of the Provincial Auditor (Volume 2) 2001 Spring Report of the Provincial Auditor 2001 Fall Report of the Provincial Auditor (Volume 1) 2001 Fall Report of the Provincial Auditor (Volume 2) In several instances, your committee has deferred its decision pending the receipt of further information. In another instance, your committee has chosen to postpone its consideration of certain chapters until an RCMP investigation has been completed.

It is your committee’s request that the Government of Saskatchewan respond to this report within 120 days. Membership The work of your committee would not have been possible without the service of its members. Your committee expresses its gratitude to Ms. Pat Lorjé and Mr. Kim Trew who stepped down from the committee on March 29, 2001. Mr. Ron Harper and Ms. Judy Junor joined the committee on the same day. Mr. Harper was later elected Vice-chair on April 25, 2001 to replace Ms. Lorjé. Your committee also wishes to thank Ms. Deb Higgins, Ms. Carolyn Jones and Mr.

Mark Wartman who were members of the committee until April 24, 2002. They were replaced by Ms. Pat Atkinson, Mr. Keith Goulet and Mr. Warren McCall. Five members, Mr. Rod Gantefoer, Mr. Carl Kwiatkowski, Mr. Lyle Stewart, Mr. Milton Wakefield and the Chair, Mr. Ken Krawetz have served on the committee throughout the period covered by this report. Since the adoption of a rule change in April 2000 permitting the temporary substitution of members on the Standing Committee on Public Accounts, many other Members of the Legislative

Third Report of the Standing Committee on Public Accounts Twenty-fourth Legislature Assembly have participated in the proceedings. The committee wishes to thank them for their contribution. Acknowledgments The committee expresses its appreciation to the Office of the Clerk for the administrative support and procedural advice provided, to the Provincial Auditor and his staff, to the Provincial Comptroller and his staff, to Hansard, and to the many witnesses who appeared before the committee. A list of witnesses is attached to this report as an Appendix. II.

SELECTION OF AUDIT COMMITTEE Among the amendments made in 2001 to The Provincial Auditor Act was the establishment of an independent Audit Committee. This new Audit Committee was designed to strengthen the Standing Committee on Public Accounts by providing it with an independent source of advice on auditing and accounting issues.

Your committee may call upon the Audit Committee to provide advice on the selection of a Provincial Auditor, to assist in the review of the reports, estimates and business and financial plan of the Provincial Auditor, and to advise on any other matters as may be determined by your committee. It should also be noted that the Audit Committee is available to assist the Provincial Auditor, the Minister of Finance, the Minister responsible for The Crown Corporations Act, 1993 and the Standing Committee on Crown Corporations on any matters that each may request.

The amendments to The Provincial Auditor Act set out a role for your committee in the selection and appointment of individuals to serve on the Audit Committee.

Your committee addressed this task during the past months and chose to recommend to the Speaker that five individuals should be appointed, all of whom must be resident in Saskatchewan, and who must include one of each of the following: One person who is a member in good standing of the Institute of Chartered Accountants of Saskatchewan; • • • • • • • One person who is a member in good standing of the Society of Management Accountants of Saskatchewan; One person with an accounting background chosen from the faculty of a post-secondary educational institution; One person who is a member in good standing of the Law Society of Saskatchewan and whose preferred area of practice involves financial dealings; and One person who has experience in operating a business in the private sector.

Your committee consulted with the professional associations, the two provincial universities and the Chamber of Commerce to seek the names of qualified individuals. The names unanimously recommended by your committee were then reviewed by the members of the Standing Committee on Crown Corporations, as required by the Act, prior to being forwarded to the Speaker. Your Committee is pleased to report that the Speaker of the Assembly formally appointed the following five individuals to the Audit Committee on January 31, 2002: Mr.

Rob Jaspar, Vice-President, Internal Audit, Potash Corp. of Saskatchewan, Saskatoon Institute of Chartered Accountants of Saskatchewan Mr. Raymond Hueser, Controller, UFR Urban Forest Recyclers, Inc., Swift Current Society of Management Accountants of Saskatchewan 2

Third Report of the Standing Committee on Public Accounts Twenty-fourth Legislature • • • Dr. Morina Rennie, Ass ociate Profes sor of Acco unting, Faculty of Adm inistration, University of Regina Faculty of a post-secondary institution Mr. Ralph Ottenbreit, Q.C., Barrister and Solicitor, Robertson Stromberg, Regina Law Society of Saskatchewan Mr. Terry Alm, Realtor, Realty Executives, Saskatoon Private sector businessperson Subsequently, on February 28, 2002, the Speaker appointed Dr. Rennie as the Chair of the Audit Committee, pursuant to the unanimous recommendation of this committee.

The Legislative Assembly Office is providing administrative support to the Audit Committee. III. REVIEW OF THE BUSINESS AND FINANCIAL PLAN OF THE OFFICE OF THE PROVINCIAL AUDITOR During the 2001 Spring legislative session, amendments were adopted to The Provincial Auditor Act that enhanced the independence of the Provincial Auditor and the Government’s accountability to this Assembly. One new measure was the formalizing in legislation of the current practice of the Provincial Auditor to table in the Assembly a business and financial plan and an annual report on his office’s operations.

A second new measure was the transferring of responsibility for reviewing these documents to the Standing Committee on Public Accounts. In the past, this review had been within the mandate of the Board of Internal Economy. In December of 2001, the Public Accounts Committee carried out this task for the first time. Your committee began its review by receiving an overview of the business and financial plan by the Acting Provincial Auditor and his staff.

Your committee then considered and adopted two resolutions, which were as follows: RESOLUTION #1 That the 2002-2003 Estimates of the Office of the Provincial Auditor (Vote 28, sub vote PA01 – Provincial Auditor) be approved, as submitted, in the amount of $5,379,000, and that such Estimates be forwarded to the Minister of Finance by the Chair. RESOLUTION #2 That the 2002-2003 Estimates of the Office of the Provincial Auditor (Vote 28, sub vote PA02 – Contingency) be approved, as submitted, in the amount of $348,000, and that such Estimates be forwarded to the Minister of Finance by the Chair.

These resolutions were forwarded to the Speaker of the Assembly, in his capacity as Chair of the Board of Internal Economy, on December 19, 2001 for inclusion in the estimates of the Legislative Branch of Government. Your committee wishes to thank the Acting Provincial Auditor and his staff for the preparation of their business and financial plan and their willingness to answer the questions posed by members of the committee.

Your committee was pleased with the manner in which the Provincial Auditor’s budget was reviewed and believes that the adoption of these new procedures will strengthen the independence and accountability of the Provincial Auditor to this Assembly 3

Third Report of the Standing Committee on Public Accounts Twenty-fourth Legislature IV. 22 ND ANNUAL CONFERENCE OF CANADIAN COUNCIL OF PUBLIC ACCOUNTS COMMITTEES In September 2001, it was the turn of the Saskatchewan Public Accounts Committee to host their national colleagues at the 22nd Annual Conference of Canadian Council of Public Accounts Committees. Arrangements were completed to hold the conference in Regina from September 16th to 18th, 2001 in conjunction with the 29th Annual Conference of the Canadian Council of Legislative Auditors.

Unfortunately, the terrorist actions in the United States on September 11th and the ensuing disruption to air travel in Canada intervened and on September 15th, 2001, your committee was forced to cancel the conference. V. AN OVERVIEW OF INFRASTRUCTURE RISKS

Chapter 4 – 2000 Fall Report of the Provincial Auditor (Volume 3) Your committee reports that this

chapter was received and reviewed for informational purposes and that there were no recommendations to report on. VI. AN OVERVIEW OF PRIVACY

Chapter 12 – 2000 Spring Report of the Provincial Auditor Your committee reports that this

chapter was received and reviewed for informational purposes and that there were no recommendations to report on. VII. BOARD OF INTERNAL ECONOMY

Chapter 13 – 1999 Fall Report of the Provincial Auditor (Volume 2) Your committee chose to defer considering this

chapter pending a report by the clerk on the Standing Committee on Public Accounts’ practice regarding the review of Provincial Auditor’s reports on the Board of Internal Economy. A report has been received from the Deputy Clerk. VIII. CHI EF ELECTORAL OFFICER

Chapter 16 – 2000 Fall Report of the Provincial Auditor (Vol