journal Sharing Best Practices in Managing Public Sector Resources AUTUMN 2006 VOLUME 18, NUMBER 1

journal Sharing Best Practices in Managing Public Sector Resources AUTUMN 2006 VOLUME 18, NUMBER 1

Procurement Beyond Count on BMO epurchasing Solutions E-purchasing is the way B2B procurement will be done. And your success will come from finding a substantial provider with a truly automatic and integrated, end-toend web-based solution. BMO epurchasing Solutions can provide the most effective technological solution for driving excess costs out of your company s procurement process. BMO Procure2Pay is an online, decentralized requisition solution set which takes clients from product searching, pricing, ordering and tracking through to payment and accurate general ledger recording. BMO FlexPort is a powerful new webbased solution that combines electronic purchase order delivery, multi-dimensional file/message mapping, flexible payment capability, and advanced reporting in one integrated solution. BMO details Online is a dynamic webbased application that delivers detailed transaction information and seamless integration into your ERP system. BMO Value Realization Program (VRP) is our partnership approach to provide organizations expertise in cost avoidance, rebate optimization and effective supplier relationship management strategies. Extend your reach. And your control. Shift your focus. Optimize. Make the connections. Go Beyond. BMO epurchasing Solutions, a division of BMO Financial Group, is one of the largest financial services providers in North America and a recognized leader in e-business innovation. Contact us at 1.888.838.4401 Email epurchasing@bmo.com Visit www.bmoeps.com BMO e Purchasing Solutions Registered trade-mark of Bank of Montreal All services are provided by Bank of Montreal

journal Autumn 2006 Volume 18, Number 1 inside fmij The Financial Management Institute of Canada Managing Editor Claire Kennedy Assistant Managing Editor Lyne Gélinas Editorial Board arkay Rocky Dwyer Bruce Hirst Wayne Job David Jones Claude Legault André Robert Martin Ruben Germain Tremblay Stacy Van Humbeck Gilles Vézina Departments 2 Message from the President 6 From the Desk of the Managing Editor 8 Financial Musings and Insights 10 FMI Board of Directors 2006-2007 35 Professional Development Week 2006 37 Chapter News Features 11 Financial Administration: Getting From Here to There Paul J. Gauvin 16 Lean Manufacturing in the Public Sector: One Step too far for New Public Management? Dr. Zoe Radnor 20 The Accounting Officer: What are Canadians Getting? Alan Gilmore 24 Need to Develop an RFP? Read This First! Michelle Schulte 28 Play it again Sam! Strategic Planning The Resurrection Rocky J. Dwyer 33 Whistleblower Protection for Financial Managers Christopher J. Stasuik and Matthew McGuire Desktop Publisher Ian Culbert FMI Administrator Joanne Steadman Columns From Behind the Green Eyeshade 43 Hey Buddy! Wanna buy a $2,000 hammer? Bruce Manion The fmi journal is published three times a year by the Financial Management Institute of Canada. All rights reserved. Reproduction in whole, or in part, without written permission from the publisher is prohibited. Opinions expressed are not necessarily those of the Financial Management Institute of Canada. Publications Mail Agreement Number 40040265. Return undeliverable Canadian addresses to: Circulation Department Financial Management Institute of Canada P.O. Box 613, Station B, Ottawa, ON, K1P 5P7 Telephone: 613-569-1158 Fax: 613-569-4532 Email: national@fmi.ca WWW English section: www.fmi.ca WWW French section: www.igf.ca For marketing opportunities, please contact Bruce Shorkey at (613) 829-9913 or bruceshorkey@rogers.com AUTUMN 2006 FMI JOURNAL 1

president MESSAGE FROM THE The FMI organization is now coast to coast with thirteen chapters spread all across Canada! I would like to congratulate Jean Laporte and the Board of Directors for a very successful 2005-2006 year. Under Jean s guidance and leadership as President, there were a number of very significant accomplishments that will serve as excellent building blocks for the activities of the coming year and for many years to come. It is indeed a privilege to serve as your President for 2006-2007 and I would like to take this opportunity to tell you a little bit about myself. I received my Chartered Accountancy designation in 1993 while employed as a Senior Auditor by the New Brunswick Office of the Auditor General. In 1994, I moved to my current position as Director of Finance and Human Resources at the Legislative Assembly of New Brunswick. I have been a member of the FMI Chapter in Fredericton, New Brunswick for twelve years, including eight years as a member of the Board of Directors, and served as Chapter President for two years from 1997 to 1999. I also served as co-chair with Cheryl Munro, for the very successful PSMW held in Fredericton in May 2002. In March 2005, I accepted the opportunity to serve as Vice-President of the FMI organization for the 2005-2006 year. In that capacity I chaired the National Chapter Working Group, working with FMI representatives across Canada on a number of projects including the Chapter Investment Fund, the Chapter Liaisons roles and responsibilities and updating the FMI website. At this time, I would like to welcome the FMI National Board of Directors, including the Chapter Presidents, who have enthusiastically accepted the challenge of ensuring that our organization continues to add value to the financial community and that it continues to respond to the needs of our membership. I look forward to working with this team of energetic, motivated and dedicated professionals. Growth and improvement of the FMI will be the focus of the Board of Directors for 2006-2007. This focus includes continuing to develop and document the policies and processes, including the Strategic Plan, developing and enhancing the capability of FMI National office in meeting the increasing needs and requirements of the Chapters, and continuing to improve the support provided to chapters, specifically in areas that build the FMI organization as a whole. As my predecessor, Jean Laporte, noted in the last FMI Journal, the Chapters are the lifeblood of the FMI organization, and the diversity of the individual Chapters is a reflection of our country. Our organization benefits from the combined strengths of the Chapters, and specifically the volunteers and Boards of Directors in each of the Chapters. I have enjoyed and benefited from being involved at the local Chapter level and I encourage each of you to get involved, volunteer and join a local board or committee. From working with other professionals, networking opportunities and professional development, the skills and experiences gained cannot be easily obtained from a book or course. I look forward to Peter Wolters President, 2006-2007 meeting many members and volunteers during the next year and I will especially enjoy meeting all those individuals who have served the FMI in the past and helped make it the great organization it is today! PD Week and PSMW have offered significant professional development and networking opportunities for many years and have well-deserved reputation as a forum for sharing best practices in the public sector management. Planning and arrangements are well under way for PD Week 2006 from November 28 December 1, 2006 in Ottawa, Ontario. I encourage each of you to visit the FMI web page to review the outstanding agenda and related speakers and presenters for what promises to be another successful PD Week. In addition, PSMW 2007 will be in Winnipeg, Manitoba from May 27-29, 2007 and plans are already well underway. Our organization is strong and growing stronger every year. On behalf of the Board of Directors, I encourage each of you to come and join us at our local Chapter events, at PD week and/or at PSMW as together we move the FMI organization forward and continue towards our goal of becoming the pre-eminent source in Canada for best practices related to the management of public sector resources!! 2 FMI JOURNAL VOLUME 18, NO. 1

Executives Executives holding a CMA designation CMA executives have a broader range of skills Exclusively for executives with five or more years of senior-level financial and strategic management experience. Reach the next level of strategic and financial management success. Gain the professional recognition essential to success for decision-makers in today s complex marketplace a CMA. Earned part-time over two years. Obtain your Certified Management Accountant designation by combining self-study, ten weekends and three week-long interactive sessions with your peers from across the province. 2007 programs commence in the fall. Dual CMA/CPFA Designation Program Two prestigious international accounting organizations have joined forces to create a unique opportunity for current and aspiring government financial officers. CMA Canada has designed a dual designation program for the Canadian public service sector in conjunction with the Chartered Institute of Public Finance and Accountancy (CIPFA). This unique program, built on the renowned strengths of both designations, yields the dual Certified Management Accounting/Chartered Public Finance Accountant designation (CMA/CPFA). The CMA/CPFA Dual Designation Program consists of four courses offered throughout the year: Governance and Public Policy, Public Finance, Financial and Performance Reporting, Audit and Assurance. To learn more about earning the CMA designation or the CMA/CPFA dual designation call/email Jacques Tremblay, CMA, at 1-888-356-6638 or eastern@cma-ontario.org

journal The fmi journal is Canada s leading magazine for public sector professionals involved in the field of public sector financial management. Its major articles, columns and news cover a broad range of government accounting, auditing, and financial management topics of concern to professionals. fmi journal readers hold influential positions in public accounting, and have responsibilities in a variety of areas: financial management, information systems, administration and human resource management to name a few. Its authors are individuals who hold senior or experienced positions within government and the private sector. These individuals share their experience and expertise in areas of concern to professional public sector accountants and managers with financial responsibilities. Virtually any topic of interest to the financially-oriented public sector executive may be found in the fmi journal. A non-profit organization, the FMI has opened 13 chapters across Canada in the past 40 years. Today, the fmi journal enjoys a readership of more than 2,000 professionals. The organization hosts two annual national conferences: PD Week based in Ottawa and held in late November, and the Public Sector Management Workshop which takes place in May at a different location each year. Win a Trip to Winnipeg! The Alan G. Ross Award for Writing Excellence is awarded annually to the individual(s) who contribute the best article (feature or column) to the fmi journal during the year. The award is a plaque and a complimentary trip to the FMI s annual Public Sector Management Workshop. If your article is printed in the Winter, Spring or Fall 2006 issue, you will become an eligible contestant for a trip to Winnipeg in the Spring of 2007. The fmi journal editorial team members look after, at a minimum, the subject areas following their names: arkay - financlal muslngs & inslghts Rocky Dwyer - Liaison with Academic Institutions - (613) 996-4534 Bruce Hirst - Federal Financial Management - (613) 943-8763 Wayne Job Electronic Commerce and Information Technology (613) 952-9476 David Jones - Office and Home of the Future - (613) 946-3083 André Robert - Audit Management - Internal - (613) 952-3141 Martin Ruben - Audit Management - External - (613) 995-3708 Germain Tremblay - Provincial Financial Management - (613) 996-8269 Stacy Van Humbeck - Human Resources ZManagement - (613) 941-7166 Gilles Vézina - Management Issues - (613) 952-1414 These editors welcome timely and relevant articles from you. Feature articles are generally 2500 to 4000 words. Other articles or input to a regular column are normally shorter (500 to 2500 words). Letters to the editor are also welcome. Please address your correspondence to any of the team members or to Claire Kennedy, Managing Editor: fmi journal Financial Management Institute P.O. Box 613, Station B Ottawa, Ontario K1P 5P7 If you wish to be considered as an editor of the journal, please write to the Managing Editor, and indicate your area of expertise and the type of articles or column to which you wish to coordinate or to which you would like to contribute on a reasonably continuing basis. The recommended form of input is in Microsoft Word or WordPerfect formats. It is preferable that the documents be in bilingual format. Graphics must be kept separate (not inserted into the text). Advise what software was used to produce the graphic. The author s photo and short biography are also requested. The FMI can no longer supply quantities of additional copies to readers. Reprints, however, are available at a reasonable price. The minimum order is 50 copies. Subjects of Interest to Our Readership Accountability Human Resource Management Asset Management Humour Audit Practices Information Management Banking & Cash Management Planning & Resource Allocation Best Practices Precis of Recent Government Business Planning Leaders Publications or Speeches Career Advice Public Service Renewal Community Profiles Revenue Management Electronic Commerce Salary Management Expenditure Management Summary/Highlights of Conferences or Seminars Federal/Provincial/Municipal Reviews Systems Government Accounting Policy Technology Trends

The CMA/CPFA Dual Designation Your key to expanding career opportunities in government and beyond. Federal government employees can now receive comprehensive public sector financial management and strategic leadership training through a new dual designation program that is being offered by Certified Management Accountants of Canada (CMA Canada) and the U.K.-based Chartered Institute of Public Finance and Accountancy (CIPFA). The program is offered in English and French. Candidates who successfully complete the program will receive a dual professional accounting designation as a Certified Management Accountant (CMA) and Chartered Public Finance Accountant (CPFA). An executive program is available to seniorlevel financial management professionals to earn the dual designation at an accelerated rate, recognizing the skills and experience of qualified candidates. Developed through extensive consultation with the Comptroller General of Canada and his senior staff, the CMA/CPFA dual designation program equips candidates with the best level of knowledge and competencies for existing government financial officers, or for those who aspire to be government financial officers. The dual CMA/CPFA designation will create opportunities for career advancement in the Canadian federal government, as well as provide a portable qualification that will open doors to public finance management around the world. For more information about the CMA/CPFA dual designation program, please contact: Jacques Tremblay, Regional Director of Marketing (Eastern Ontario), CMA Ontario, Tel. 1-888-356-6638, e-mail: jtremblay@cmaontario.org Roch Gilbert, Co-ordinator, Admission and Quality, CMA Québec, Tel. 1-800-263-5390, e-mail: r.gilbert@cma-quebec.org To learn more, attend our CMA Canada seminar on the CMA/CPFA dual-designation program at FMI Professional Development Week 2006, Ottawa Congress Centre, Thursday, November 30th, from 10:45 a.m. to 12:00 noon. www.cma-canada.org

managing editor FROM THE DESK OF THE The lazy days of summer are behind us, the back-to-school ordeal was survived and we are ready to tackle the challenges awaiting us at the office. The FMI Chapters have been very creative this past summer in preparing program events and training activities for the upcoming year that will significantly contribute in informing you of key issues and broaden your skill sets to address them. The fall is also synonymous with the yearly FMI Professional Development Week held in Ottawa for several years. The theme this year for the PD Week is Spotlight on Accountability. Its relevance and interpretation still generate controversy in both the private and public sectors and will continue to dominate in years to come. Canadians are demanding that increased accountability be placed not only on government at all levels but also on individual managers. A number of measures have been announced in response to that demand such as the Federal Accountability Act and the increased personal liability of managers in their organizations. However, we still need to understand their application in our functional role and the society at large. This edition of the Journal is very proud to present several articles from leading professionals who will share with you their knowledge and thought provoking views in their areas of expertise. Mr. Paul Gauvin, well known leader in promoting sound financial management practices in the public sector and the recipient of the prestigious Fellow of the Society of Management Accountants designation, offers highlights on successful strategies to further excellence in public administration. His article, Financial Administration: Getting from Here to There, is particularly relevant given the priority being placed by the Government of Canada on accountability, stewardship, financial integrity and transparency. Therein, Mr. Gauvin points out critical areas where gaps must be filled to achieve our goals. These include professionalism and competency in the financial and audit community; modernization of the classifications standards; adequate financial resources; departmental delegation; ethics and values; and, integrated corporate information systems. An article co-authored by Christopher Stasuik and Matthew McGuire examines Canada s newest whistle-blowing protection initiatives for financial managers. Their article will also inform you of the expended Public Sector Integrity Commissioner s powers under the proposed new legislation. You will also become familiar with the impact of the proposed amendments for both contractors performing government work and crown corporations. Professor Radnor s article examines why the public sector productivity growth does not appear to have followed the same trajectory as that of the manufacturing industry. Her article points out the cultural and organizational factors influencing the success in achieving improved efficiency level in the different sectors. Once again, Alan Gilmore shares his wisdom with us on demystifying how Canadians will benefit from the Federal Accountability Act. Alan also provides us with a useful comparison of responsibilities between Claire Kennedy Canadian an U.K. Accounting officers. A common attribute among leading organizations is both the ability to develop and execute business plans in a savvy, flawless manner. Is it an art more than a science? Rocky Dwyer s article examines the major elements key to a successful planning model and the major steps to implementation. Another article provided by Michelle Schulte offers sound advice to managers struggling with the complexity of the procurement process more specifically, the preparation of Request for Proposals. As usual, Bruce Manion has managed to tackle the topic at hand with an original twist! He manages to nail accountability on the head with his tale of a $2,000 hammer! Once again, we are very pleased to recognize the contribution of the FMI sponsors, exhibitors and advertisers who supported our activities during 2005-06. I would like to wish the warmest welcome to Lyne Gélinas, the new FMI Journal assistant editor. Lyne has been actively involved with the FMI for several years and her experience will greatly benefit the Journal team. The upcoming PD Week has topics dealing with a wide range of issues and I hope you can make the time to take advantage of it! 6 FMI JOURNAL VOLUME 18, NO. 1

RFPs that deliver results! RFP SOLUTIONS Procurement Strategies for Government, is an Ottawa-based firm of procurement, legal, accounting and engineering professionals. RFP SOLUTIONS works exclusively for government agencies, to help public sector managers reduce the risks, delays and complexities associated with the RFP process. RFP SOLUTIONS has contributed to numerous government RFPs in areas such as IM/IT professional services, communications, training, audit and evaluation, and consulting services. RFP SOLUTIONS clients include Canada Revenue Agency, Indian and Northern Affairs, RCMP, Auditor General, Health Canada, Foreign Affairs, Justice, Industry Canada, Canada Post Corporation and numerous other public sector organizations. If you wish to contact us, please call (613) 728-1335 and ask for David Swift, Managing Director. David can also be reached at: dave@rfpsolutions.ca To learn more about RFP SOLUTIONS, please visit our website at: www.rfpsolutions.ca

financial musings & insights PLANETHOOD FOR PLUTO! YOU CAN TELL A MARKETER (1): Got one of those calls recently. Told the caller we were very busy and very interested. Could we get the phone number and call back? Negative. We kept pleading, also asking what time the caller ate supper. NOW THAT S SICK!: Do Viruses ever get sick? DOUBLE DOUBLE (NOT LATTE): Do witches run spell checkers? HARD SOFTWARE: Bought a piece of software, read the manual. How come programmers find it so easy to master the special languages that run computers, yet they cannot write instructions for us in decipherable English (or French, or Latvian, or... ) YAOL: Is AOL so expensive because someone has to pay for those free disks? SPY vs SPY: In Russia, a KGB keyboard has no escape key. SOFT HARDWARE? Why do they call it a hard disk if its damaged with the slightest impact? YOU CAN TELL A MARKETER (2): Want to stop them dead in their tracks? Ask What are you wearing? TIE A YELLOW RIBBON: Seen those ribbons, various colours, twisted into a loop and worn on lapels, bumpers, etc? Saw a plaid one and asked what it supported. answer was Ribbon manufacturers. FROM DUST TO DUST: Saw a clod of dust along the highway - difficult to see what was causing it. Got closer - it was a dust control sweeper. UNITS - 1 LITE YEAR: 365.25 days of drinking low-calorie beer because it s less filling: TEED OFF: Primitive natives beat the ground with clubs and yelled, it was called witchcraft; today, we call it golf. IN THE MIDDLE: Golf is a game in which the slowest people in the world are those in front of you, and the fastest are those behind. GOLF PROSE: Use golf cart, not a caddy: The cart cannot count, criticize or laugh. LOST OUR GRIP: We used to have a handle on life, but it broke. PSST: Co-worker is jealous because the voices only talk to me. UNITS - 3 A straight line: Shortest distance between two jokes. DOWN TO EARTH: It seems that Earth is the insane asylum for the universe. WORK IN PROGRESS: The boss is not a complete idiot; some parts are missing. He took an IQ test and the results were negative. GENESIS ENCORE: God must love stupid people; He made so many of them. EVERYONE OUT OF THE POOL: Some people s gene pool could use a little chlorine. UNITS - 4 Microfiche: 1 very tiny fish. SLEEP IT OFF: To him consciousness is that annoying time between naps. PROCRASTINATE... NOW: Will fill this one in later KERMIT SAYS: Time is fun when you re having flies. HECK: Where people who don t believe in Gosh go. WATER COOLER CHAT: We divorced over religious differences. He thought he was God, I didn t! DOG THINK: When we get to heaven, can we sit on your couch? EVER WONDER?: Why a dog suddenly stands straight up when he s under the coffee table. ANSWER PLEASE: If people point to their wrist when asking for the time, where do they point to when they ask where the bathroom is? CAN T CATCH ME: Watched the Roadrunner. If Wiley E. Coyote has enough money to buy all that ACME crap, why didn t he just buy dinner? ORIGIN OF THE SPECIES: If electricity comes from electrons, does morality come from morons? IMPOSSIBLE: It s physically impossible for you to lick your elbow. CAN T WIN: For every action, there is an equal and opposite criticism. THE HURRIEDER I GO.. : The sooner you fall behind, the more time you ll have to catch up. RIP: Once in heaven, do you get stuck wearing the clothes you were buried in for eternity? STRAIGHT: Granny is over 80 and still doesn t need glasses. Drinks right out of the bottle. CAF-FIEND: A day without coffee is like night...you sleep through it. FORGET ASPIRIN: Doc said Take two cups and call me in the middle of the night. HE S INSPIRED: While working under the sink, he get this insatiable urge to paint a church ceiling. EVER WONDER?: When in grade school, we were told that in case of fire we had to line up quietly in a single file line from smallest to tallest. What is the logic in that? Do tall people burn slower? I DO? Bigamy is having one wife/husband too many. So is monogamy. GIMME A SECOND LINE FOR THIS POEM (1): T was the end of the month. 8 FMI JOURNAL VOLUME 18, NO. 1

FINANCIAL MUSINGS & INSIGHTS EVER WONDER?: Which came first the intestine or the tapeworm? AIN T IT TRUE: From a worldly point of view, there is no mistake so great as that of being always right. GIMME A SECOND LINE FOR THIS POEM (2): O fair and tasty orange. OVERHEARD IN THE OFFICE: My husband says I never listen to him (at least I think that s what he said). SIX FORCES OF NATURE: Magnetism, Gravity, Duct Tape, Whining, Remote Control, and The Force That Pulls Dogs Toward The Groins Of Strangers. EERIE HUH? Just had an out-of-money experience. GET EVEN WITH HIM: Buy a lot of orange traffic cones and reroute traffic into his driveway. GIMME A SECOND LINE FOR THIS POEM (3): Your hair has turned to silver. OD ID: When you get your drivers license renewed, get drunk before they take your picture. That way, when a cop pulls you over and looks at the picture on your license he ll say, Yeah, you look fine, and let you go. TOO POOPED?: Train your dog to poop right on the shovel. It makes clean up a lot easier. PEDESTRIAN HUMOUR: There are two kinds of pedestrians: the quick and the dead. Rx: Whenever you feel blue, start breathing again. WEATHER OR NOT: Take a lesson from the weather. It pays no attention to criticism. IMPOSSIBLE: Almost everyone who reads this email will try to lick their elbow. YOUR CAR IS OLD WHEN...:Your gas gauge measures in cubits. GIMME A SECOND LINE FOR THIS POEM (4): She was lovely all decked out in purple. TELESENSE: They say DON T REPAY LOANS send for help. Why don t they borrow lots and not repay instead. WORSE AND WORSER: It s bad to forget to zip up your fly. It s worse to forget to unzip your fly. OUR ACCOUNTANT IS SO LIFELESS: He is alive, but only in the sense that he can t be legally buried. HE S SO OLD THAT: When he was a boy, the Dead Sea was only sick. DOWN UNDER: Do people in Australia call the rest of the world up over? IMPOSSIBLE: You tried to lick your elbow, didn t you? EVER WONDER? Does killing time damage eternity? EVER WONDER?: Why it is that when you re driving and looking for an address, you turn down the volume on the radio? 1-2 - 3-4: Are part-time bandleaders semi-conductors? EVER WONDER? Can you buy an entire chess set in a pawnshop? EVER WONDER?: Do pilots take crashcourses? PHILOSOPHY 101: Have you ever imagined a world with no hypothetical situations? EVER WONDER?: If space is a vacuum, who changes the bags? SLIM AND SLIMMER: They say swimming is good for the figure. Oh Yeah? Look at a whale! EVER WONDER?: Why we sing, Take me out to the ball game, when we are already there? CARPERPETUATION (kar pur pet u a shun): The act, when vacuuming, of running over a string or a piece of lint at least a dozen times, reaching over and picking it up, examining it, then putting it back down to give the vacuum one more chance. NOTE RE: 2 nd LINE: Can t be done huh? WE RE A GOOD FIT! National Bank of Canada is proud to contribute to the development of the public sector in Canada by way of partnerships with the various levels of government and related organizations and companies. A team of professionals is available to offer you specialized services and develop made-to-measure solutions for your needs. You can reach our dedicated team at (514) 394-4378 or via e-mail at governmentbusiness@nbc.ca AUTUMN 2006 FMI JOURNAL 9

HEADER FMI Board of Directors 2006-2007 Executive Committee Phone Fax Email President Peter Wolters (506) 453-8187 (506) 453-7154 peter.wolters@gnb.ca Vice President Mark Huard (613) 954-6226 (613) 952-5810 mark.huard@cra-arc.gc.ca Secretary/Treasurer Duane Wilson (613) 990-2683 (613) 954-0016 duane.wilson@psepc.gc.ca Past President Jean Laporte (819) 994-8004 (819) 997-2239 jean.laporte@tsb.gc.ca Marketing & Communications Anik Lapointe (819) 997-1164 (819) 994-6174 anik_lapointe@acdi-cida.gc.ca Partnerships Bryn Weadon (613) 992-6907 (613) 992-9693 weadon.bm@forces.gc.ca Administrator Joanne Steadman (613) 569-1158 (613) 569-4532 national@fmi.ca Directors Managing Editor, fmi journal Claire Kennedy (613) 992-6169 (613) 947-3571 kennec@parl.gc.ca Assistant Managing Editor, fmi journal Lyne Gélinas (819) 956-0485 (819) 956-4515 lyne.gelinas@pwgsc.gc.ca PD Week 2006 Chair Marcel Boulianne (613) 715-5227 (613) 759-7479 bouliannem@agr.gc.ca PD Week 2006 Vice-Chair Monique Arnold (613) 830-0383 monique_arnold@fmi.ca PSMW 2007 Winnipeg Local Chair Ronald Smith (204) 269-5873 ronaldssmith@hotmail.com PSMW 2007 Winnipeg National Chair Germain Tremblay (613) 996-8269 (613) 996-0458 germain.tremblay@nserc.ca Liaison East Derwin Banks (902) 432-5139 (902) 432-5586 derwin.banks@cra-arc.gc.ca Liaison Central Hugo Pagé (613) 992-1644 (613) 995-2116 hugo.page@pwgsc.gc.ca Liaison West Ron Stoesz (204) 983-2277 (204) 984-4253 ron.stoesz@rcmp-grc.gc.ca Special Director, Strategic Plan Implementation Kim Elliott (819) 956-6775 (819) 956-1926 kim.elliott@tpsgc.gc.ca Chapter Presidents Alberta Suzanne Kyle (780) 499-4998 suzmark@hotmail.com Capital (Ottawa) Philip Mostert (613) 212-2892 (613) 212-2896 pjmostert@kpmg.ca Fredericton Christine Robichaud(506) 457-6886 (506) 457-4933 christine.robichaud@gnb.ca Halifax Kathryn Burlton (902) 464-2000, x 2843 (902) 464-2120 kburlton@hrsb.ns.ca Manitoba Cheryle Boutilier (204) 983-6276 (204) 984-4253 cheryle.boutilier@rcmp-grc.gc.ca Montreal Mario B. Roy (450) 645-0978 (450) 645-0960 mario.roy@del.longueuil.ca Ontario Richard Slee (416) 212-3006 (416) 325-8051 richard.slee@fin.gov.on.ca Prince Edward Island Andrew Burt (902) 368-4076 (902) 368-5380 adburt@gov.pe.ca Québec Bertrand Carrier (418) 691-5921 (418) 646-0991 bertrand.carrier@vgq.gouv.qc.ca Regina Mike Pestill (306) 787-9219 (306) 787-5830 mpestill@justice.gov.sk.ca St. John s John Martin (709) 729-2341 (709) 729-2098 jmartin@gov.nl.ca Vancouver Sundeep Cheema (604) 264-2734 (604) 264-2225 sundeep.cheema@rcmp-grc.gc.ca Victoria Gordon Gunn (250) 480-3563 (250) 480-3539 ggunn@kpmg.ca Marketing Coordinator Bruce Shorkey (613) 829-9913 bruce.shorkey@rogers.com FMI Membership Have you renewed your membership? If you have not received your renewal information, contact your local Chapter. Do not delay! There is an exciting year planned. To be eligible for preferred member rates, your membership must be current. Remember the benefits FMI membership offers: Networking opportunities with over 2,000 professionals in the finance field across Canada; Professional development conferences, seminars, workshops at preferred rates; Eligibility for awards and recognition; Leadership participation in 13 FMI Chapters across Canada; fmi journal; And much, much more! Contact your local Chapter President for information regarding mailing addresses and program activities. Alberta $30.70 Quebec $25.00 Fredericton $32.25 Prince Edward Island $25.00 Halifax $50.00 Regina $25.00 Manitoba $25.00 St. John s $30.00 Montreal $30.00 Vancouver $30.00 Ontario $40.00 Victoria $25.00 Ottawa/Gatineau (Capital)$37.45 or send the completed application and payment to: FMI P.O. Box 613, Station B Ottawa, Ontario, K1P 5P7 10 FMI JOURNAL VOLUME 18, NO. 1

Financial Administration: Getting From Here to There Paul J. Gauvin Financial administration in the Federal Government has advanced significantly over the years and we have much to be proud of in terms of our accomplishments. However, many challenges and opportunities still exist to bring financial administration even further along the road of excellence. This article highlights some of the priority issues which, if successfully addressed, will help us to effectively get from here to there. Defining From Here to There Here is the generally sound state of financial administration today which reflects important progress in many areas notwithstanding a constantly changing working environment such as: the implementation of Modern Comptrollership, and the culture of accountability that this has encouraged; the implementation of the Financial Information Strategy and its positive impact on Government accounting practices; the vastly improved financial and other reporting to Parliament and Canadians through the evolution and refinement of the Departmental Performance Report, the Report on Plans and Priorities and the annual Management Accountability Framework Progress Report; the re-establishment of the Office of the Comptroller General (OCG) in 2003, and the leadership and functional direction provided by the OCG since that time; this has been instrumental to strengthening functional direction to departments, and to advancing a range of financial management improvement initiatives; and, Treasury Board Secretariat (TBS) leadership in areas such as policy suite renewal across finance, asset management, audit, evaluation and other disciplines which articulate, among other things, specific accountabilities for e.g. the Deputy Head, Chief Financial Officer, and Chief Audit Executive, as well as expressing clear expectations of departments for compliance and the consequences of non-compliance. Certainly this approach has been most welcomed. There is the desired future state for financial administration as I see it. This means, for example, that: finance and audit capacity gaps have been filled across all departments and that professionalism and competencies have been further strengthened at all levels; there is recognition and acceptance that the financial community needs proper resourcing i.e. both dollars and classifications (in the same way this has already been recognized for the audit and evaluation communities) to enable financial functions to capably take on the more complex roles and responsibilities demanded today; integrated corporate information systems provide timely, accurate financial and non-financial information, they minimize cost, duplication and overlap and they maximize interoperability and information sharing; there is a need to further streamline and simplify an already overburdened system by giving consideration to increased departmental delegation, particularly for low risk/more routine activities; and, there is a continued emphasis on accountability, and on the highest possible ethics and values in the workplace. Perhaps most importantly, there also includes continued important leadership by the Centre e.g. particularly Treasury Board Secretariat and the Office of the Comptroller General. This leadership is critical to actively driving the implementation of plans and initiatives (in collaboration with departments and agencies) to further strengthen Paul J. Gauvin In November 1999, Paul J. Gauvin was appointed as Deputy Commissioner, Corporate Management and Comptrollership at the Royal Canadian Mounted Police in Ottawa. A native of Moncton, New Brunswick, Mr. Gauvin began his career as an accountant with Blue Cross/Blue Shield. Since that time, Mr. Gauvin has dedicated over 30 years to public service, in increasingly senior financial and program management positions, including in the Atlantic Canada Opportunities Agency where he served as Senior Vice President, Policy, Planning and Programs as well as in some of the largest, most complex federal government departments, including Employment and Immigration Canada and Transport Canada, where he served as Senior Financial Officer and Senior Assistant Deputy Minister, Finance and Administration. Among his career accomplishments are his leadership of the successful development and implementation of the Government s first major integrated finance and materiel management system and his role as Chief Negotiator for the Government s commercialization of the Air Navigation Service, a $1.5 billion sale to the private sector and the single largest Government commercialization activity. The sale was a cornerstone of the Government s deficit reduction, streamlining and divestiture agenda and it continues to serve as a model for other privatization initiatives. In addition to providing critical, strategic financial management leadership within the RCMP, Mr. Gauvin also led the RCMP s successful collaboration with PWGSC which resulted in Government approval to relocate several thousand Headquarters employees to a much-needed, more modern, operational policing facility in Ottawa. Mr. Gauvin is a former Past President of the Financial Management Institute and a champion of the excellence and professionalism of the finance community. He is the recipient of numerous honours and awards, including the National Transportation Week Award of Achievement and the Public Service Award of Excellence, and a frequent speaker on the challenges of government financial administration, implementation of major financial systems, and divestiture. In October 2003, Mr. Gauvin was awarded the Fellow of the Society of Management Accountants Designation (FCMA) by CMA Canada, a prestigious, national honourary designation recognizing his achievements and for bringing distinction to the CMA profession. Mr. Gauvin is married to Anne and has two adult children, Monique and Mark. financial management and internal audit and evaluation across Government. A Changing Environment Public servants are fortunate to work in AUTUMN 2006 FMI JOURNAL 11

FINANCIAL ADMINISTRATION an extremely interesting and diverse work environment, with many different opportunities for career fulfillment. However, today s public sector environment also has many challenges. It is strongly rules-driven and characterized by intense public scrutiny. There is a priority on accountability, transparency, values and ethics and there is also zero tolerance (and stringent consequences) for error or misjudgment. Both the public and Parliament expect that departments will demonstrate rigorous stewardship of resources as well as economy, efficiency and effectiveness. And, as hard working, responsible, good corporate citizens, the vast majority of public servants effectively meet these expectations every day. In fact, we often do ourselves a disservice by continuing to focus on the very few isolated exceptions to this. It is also true that today, some traditional roles are changing. For example, under the Federal Accountability Act (FAA), it is intended to strengthen auditing and accountability in departments through a number of measures including designating Deputy Heads as Accounting Officers. According to the FAA, Deputy Heads would be accountable before the appropriate committee of Parliament to answer questions related to e.g. their responsibility to ensure that there are effective systems of internal control; and to sign departmental accounts. Entrenching the responsibilities of Deputy Heads in legislation creates a significantly different level of accountability. Therefore, efforts must be made in the very near term to ensure all Deputy Heads have a consistent understanding of what this new level of accountability truly means. In addition, the requirement for Deputy Heads (and Senior Financial Officers) to certify on Financial Statements that an effective system of internal controls is in place in order to minimize risk, requires a different level of review, advice and assurance such as that provided by internal audit, in order to contribute to the integrity of the process. This would include the identification of potential or actual gaps in internal controls that need to be addressed or the identification of opportunities to optimize the effectiveness of existing internal control systems. So, internal audit s involvement in this process should be encouraged across all departments. Professionalism and Competency in the Financial Community While there are many talented, capable financial officers already in the Public Service, there is still a significant shortage of experienced, competent and professionallyaccredited Senior Financial Officers/Senior Full Time Financial Officers (as well as Financial Officers at other levels) to meet departmental needs. This gap has serious implications particularly given the current environment s priority on sound and rigorous stewardship of public resources. While a number of initiatives are being taken to strengthen the quality and capacity of financial management e.g. through recruitment and development activities, there is still a significant difference in capacity among departments. There is also intense competition for the scarce, qualified professionals already in the system. The opportunity presented by external recruitment is certainly an important option but we need to be realistic in our expectations. External recruitment can involve a significant time lag while the individual becomes familiar with the Federal Government s complex legislative, policy, and management/decision-making frameworks as well as Government priorities which drive departmental agendas. It is true that some private sector individuals may have already had the opportunity to be exposed to the Federal Government but these situations are far less common. Whether internal or external recruitment, this is a major human resource issue for the financial community. Internal and external recruitment frequently take an inordinate amount of time due to the intricacies of the competitive staffing process and the need to ensure fairness. We therefore need to ensure that our partners in the staffing community understand the urgency of our requirement and that collectively, we identify options to streamline the efficiency of the staffing process to maximize results. Modernizing Classification Standards There is also an urgency to addressing the classification needs of the financial community. As with many other Public Service occupational groups, existing classification standards need to be modernized to reflect the realities and demands of a 21 st century Public Service. For the financial community this means significantly expanded roles. For example, it is expected that, more than ever before, financial officers will serve as catalysts and contributors to improving program management; and that integrated financial and non-financial information will be critical to the integrity of management decision-making and optimally, to enable managers to leverage scarce resources in the delivery of departmental mandates. In addition to more appropriately recognizing increased functional accountabilities, however, the modernization of financial classification standards would contribute to the implementation of practical management structures within financial organizations; and, it would also contribute to a further professionalization of the work environment for development and career pathing/progression purposes. It may be that the current compression within the FI category to four levels is no longer appropriate in today s environment, although I am not prejudging the outcome of any classification review. Ultimately, the goal should be to ensure that qualified individuals move through the system to take on more senior responsibilities in proportion to the depth and breadth of their experience and expertise. This would go a long way towards ensuring that departments have the caliber of financial professionals they require to meet their needs. Again, however, we need to ensure that our partners in the classification community understand the nature and urgency of our requirement and the need for results. The review of classification standards should not be laborious, lengthy and unnecessarily complicated. Ideally, it should build on existing standards as opposed to completely reinventing them. And, while there should be the appropriate level of consultation and input across the financial community, in the end, the goal of any consultation should be to facilitate as opposed to delay moving this forward as a priority. Financial Resources The financial community needs adequate resource levels to allow it to take on the additional, complex and resource-intensive roles and responsibilities demanded today. 12 FMI JOURNAL VOLUME 18, NO. 1

FINANCIAL ADMINISTRATION For example, there is the expectation that: financial officers will provide a significantly enhanced challenge function and add strategic (in addition to functional) value to the development and refinement of business plans, business cases, Treasury Board Submissions, and Memoranda to Cabinet; financial officers will be valuable, contributing partners with their business and service line clients, providing financial strategies and advice to enhance program development and delivery and to enable managers to demonstrate sound stewardship of resources; and internal (financial) control will extend beyond accounting and financial systems to e.g. crucial measures that provide reasonable assurance that financial records are complete and accurate, and that financial and non-financial information used for monitoring and reporting purposes is appropriately integrated, relevant, reliable and timely. Moreover, although Program Review occurred several years ago, in some quarters the finance function has still not fully recovered from the serious depletion it experienced (as did many other valuable support functions) in spite of ongoing rebuilding efforts. We fully understand that departmental priorities will and must focus on meeting the program and service delivery needs of Canadians. But we can t have it both ways. On the one hand, the Government is placing a priority on accountability, stewardship, financial integrity and transparency and it is correctly looking to the financial community to provide leadership. On the other hand, there does not appear to be a recognition that the financial community is not currently adequately resourced to meet new challenges. There needs to be a better resource balance. The needs of the finance community must be recognized in the same way as they have been recognized for other professional communities such as internal audit and evaluation. An adequately resourced finance function is a critical element of the financial integrity of departments and agencies. Increased Departmental Delegation In spite of important efforts and progress by the Centre over the years to increase departmental delegations, there are still many irritants in the system which requires all departments to spend scarce resources fulfilling routine externally-imposed requirements. It appears that regardless of capacity, maturity and size, all departments are generally treated the same e.g. small departments with significantly less program or financial risk versus large departments with more complex budgets, programs, etc. For example, on the issue of delegation of capital authority, there is little difference between a department having $3M authority and having $5M authority. Both levels of authority require the same rigor and discipline i.e. strong project and financial management, monitoring and control. The goal should be to let departments manage responsibly, and to hold departments accountable for results. It is understood that of the several hundred Treasury Board Submissions handled by TBS analysts and the Board each year, less than 10% are considered high risk. The remainder is of a low risk/more routine nature. Additional opportunities must be seriously examined to further streamline and simplify an already overburdened system, consistent with the TBS s stated objectives to be more strategic, to be less transactional, and to reinforce departmental accountability. Professionalism and Competency in the Internal Audit and Evaluation Community Similar to the finance community, there are many talented, capable individuals already within the audit and evaluation community. However, we are still experiencing shortages in the number of qualified functional specialists in spite of the additional resources that have been allocated to shore up audit and evaluation expertise. There is also intense competition among departments and agencies to attract and retain the limited number of qualified individuals already in the system as well as to recruit from the outside. The same challenges to external recruitment as exist for the finance community also exist for audit and evaluation i.e. external recruitment can involve a significant time lag while the individual becomes familiar with the Federal Government s complex legislative, policy, and management/decision-making frameworks as well as Government priorities which drive departmental agendas. Whether internal or external recruitment, this is also a major human resource issue due to the intricacies of the competitive staffing process and the need to ensure fairness. Again, our partners in the staffing community must help to streamline the efficiency of the process. A Changing Audit Environment The audit environment is changing. For example, there is a new emphasis on increased independence for the Chief Audit Executive, and the audit function in general, and the Government is committed to having departments implement departmental audit committees comprised primarily of members from outside the Federal Government. On the issue of increased independence for the Chief Audit Executive, a balance must still be achieved between independence and the role the CAE plays as a senior member of a department s senior executive committee. The CAE is not an observer at these meetings but rather a participant, contributing, as do other senior executives, to the shaping of strategic agendas, and to providing perspective and input to planning and decision making. The CAE and the internal audit function also play an important role in providing useful, high quality functional support to departmental management at all levels. Such support includes ensuring that audit reports (whether internal or external) provide fair and balanced findings and consistently reflect a professional tone. It also includes having an audit specialist provide his/her expertise to assist program managers to understand the basis for any audit findings, and (since managers are not audit specialists) assisting them to understand the process of responding to, or challenging, such findings particularly where the department s integrity is being unfairly undermined. This support is entirely consistent with what departments need. As for the requirement that departments establish audit committees comprised of members from outside the Federal Government, this represents a fundamental change in the way we will do business. At the present time, many departments are proceeding along their own paths in the implementation of this requirement. However, greater AUTUMN 2006 FMI JOURNAL 13

FINANCIAL ADMINISTRATION consistency across departments would not only increase the likelihood of success, but it would also facilitate the sharing of lessons learned. Ultimately, it would enable a more consistent evaluation of the benefits of this new approach to determine if they are as originally envisioned. In addition, the Centre could provide invaluable assistance to departments by helping to assemble a list of possible candidates with the appropriate qualifications (based on established criteria) from which departments could select. There will be a learning curve for any such individuals and so, it would also be helpful if there were some standard type of orientation to the Federal Government that any such outside individuals should receive. Departments would be responsible for their own departmental orientation of individuals. Greater consistency would benefit not only departments, but also those serving on departmental audit committees and the Government as a whole. Integrated Corporate Information Systems Sound financial systems, together with human resource and operational data modules, are central to everything we are trying to accomplish to improve financial management. For example, well-functioning systems provide the important financial data used to support operational decision-making, reporting in such areas as budgetary management, the development of wellfounded business cases, and the production of accurate and timely Public Accounts and Financial Statements, etc. In addition, transaction analysis provides information for both internal and external auditors, internal control systems and for the various accounting operations functions. Under optimum circumstances, there should be one system for all of the Federal Government, but particularly for the five or six very large entities, and supported by standards and mandatory information requirements provided by the Centre. Departments would then be accountable for meeting such standards and for accurately providing the required information. For medium to very small agencies, systems should be specified through cluster groups or Shared Services. We need to recognize the reality that there is a significant difference among the capacity and expertise of small and large departments. While the Government has invested substantially in large and sophisticated systems, e.g. SAP, Oracle, PeopleSoft, etc. there are also many other systems that are being developed for specific applications such as Shared Travel Services, Electronic Supply Chain, EMIS, etc. that do not appear to take into account what already exists. This results in: complicated, costly labor-intensive interface issues; ineffective, duplicate data capture and unproductive work; system changes and upgrades (which are a regular occurrence) which must be tracked and addressed to ensure interfaces are still functioning or to identify what new interfaces, remedial measures or work-arounds are required; new and ongoing training and refresher training for users, system support personnel as well as system technical experts; diverse system documentation including technical and user manuals; costly and diverse maintenance programs; and, an inability to usefully share lessons learned in any meaningful way which might normally benefit departments in an environment of similar systems and applications. We must become smarter and as a result, more efficient and effective, by maximizing the potential of our large powerful systems in the same way as they do in the private sector where the bottom line is one of the key, if not the key, indicator. One large system without the need for multiple, complex and costly interfaces should be regarded as the preferred approach. Ethics and Values The importance of ethics and values in the workplace cannot be overstated. These qualities are at the heart of sound management and decision making and they are critical to reinforcing public trust in Government institutions and Government employees at management and other levels. I have already commented that the vast majority of public servants are responsible, hard working good corporate citizens who understand the importance of values and ethics in the workplace. Having said that, we still need to take a more integrated approach to reinforcing this issue across departments. It is unrealistic to expect that providing a 2-day course on Values and Ethics will be sufficient. In addition to reinforcing the Public Service Values and Ethics Code, we need culture change in the work environment, ongoing reaffirmation, constant vigilance, zero tolerance with measurable and uniformly applied consequences, and other initiatives to reinforce ethics and values. And we have already made some important steps towards doing so. For example, the October 2005 TBS review of the Financial Administration Act entitled The Financial Administration Act - Responding to Non Compliance - Meeting the Expectations of Canadians took a comprehensive look at the complex issues surrounding compliance and sanctions under the FAA and related policies; the current renewal process for the TB policy suite has embedded consequences for non-compliance in many policies; and most recently, the provisions within the Federal Accountability Act Action Plan have important implications for further strengthening departmental administration. But collectively, we still need to do more. At the same time, it is also important to recognize that we operate in an environment of risks and that these will never be totally eliminated. Therefore, we must do our utmost to minimize significant errors within the resources we have available. It is unreasonable to expect that departments will be resourced to check 100% of transactions nor will we always have 100% of the required information needed for fail-safe decision making. For most departments, this means concentrating on the areas which are most vulnerable and known to represent the highest risk. The recent remarks by Sheila Fraser, the Auditor General of Canada in an interview in the Spring/Summer edition of the FMI Journal (Volume 17, No. 3) were very interesting and very timely. Two extracts from this interview are particularly appropriate to a discussion of the issue of values and ethics. She said: What has impressed me most is the quality of the people who work in government. I think Canadians really underestimate the competence, the loyalty, and the professionalism of the Public Service of Canada. 14 FMI JOURNAL VOLUME 18, NO. 1

FINANCIAL ADMINISTRATION While the Auditor General is speaking here of public servants generally, in my view, her remarks apply particularly to the recognized competence, loyalty and professionalism of the financial officer community. Later in the article, Ms. Fraser went on to say: I don t think the private sector is as wonderful as people think. There is some truth to the fact that the public sector is more cumbersome. However, large corporations in the private sector can also be bureaucratic. Unfortunately, recent events in the private sector indicate that there are some serious issues around transparency and ethics. In my view, the public sector is more transparent.... I can assure you that if the audit reports of some of the large private companies were published in the front page of the newspapers, they wouldn t all be glowing testimonies to good management. This, too, is relevant because operating in the private sector sometimes may appear less complex perhaps because it is not governed by the same legislative and policy frameworks as the public sector. But, regardless of the working environment, strong ethics and values are a common denominator and a common indicator of sound management. Some Closing Comments To summarize, I want to recognize the positive progress that is being made in many different areas to strengthen financial administration, led by the Centre. But while much has been done, much remains to be done and there is already an ambitious agenda with many different priorities. The risk of proceeding along too many different parallel paths is that we may lose focus. We need an integrated plan that brings together core issues of immediate importance, and leaders that will drive their implementation to get us from here to there. As highlighted in this article, from my perspective, these core issues are: enabling Deputy Heads to fully understand their new role as Accounting Officers, as well as the role that SFOs must play in this process; strengthening the professionalism and competency of the financial community as well as ensuring proper resourcing and modernizing classification standards; further shoring up internal audit and evaluation expertise, the provision of solid guidance and assistance to departmental managers notwithstanding the issue of independence, and greater consistency among departments as they move to implement a new approach to departmental audit committees; giving further consideration to our approach to the selection and implementation of integrated corporate information systems and to allowing departments greater latitude; encouraging the involvement of internal audit as another level of review, advice and assurance in the Deputy Heads and SFOs certification on the system of internal controls within departmental financial statements; Printing Costs giving further consideration to increased departmental delegation of authority; and, continuing to place a priority on reinforcing ethics and values in the workplace. We have good reason to be optimistic about the future of financial administration. We already have some of the best and brightest functional experts, strategic and functional leadership from the Centre, and a reputation for professionalism. This, combined with our commitment to working hard to meet the many challenges and priorities in today s environment, will bring financial administration even further along the road to excellence. Printing costs are a significant portion of office operating budgets. We have provided cost saving solutions to our customers for over 30 years. Let us do the same for you. Largest Inventory in National Capital Region Just In Time Delivery Online Ordering Hewlett-Packard & Lexmark Business Partners NMSO # E60PS-040069/005/PS 100% Canadian Not Just Pennies 1-888-289-1202 Ottawa Toronto Montreal www.thecomputermediagroup.com AUTUMN 2006 FMI JOURNAL 15

Lean Manufacturing in the Public Sector: One Step too far for New Public Management? Dr. Zoe Radnor Senior Lecturer/Associate Professor in Operations Management, Warwick Business School, University of Warwick, Coventry, UK, CV4 2AL Dr. Zoe Radnor As many of us are aware public sector productivity growth does not appear to have followed the same trajectory as that of manufacturing industry. In the UK NHS, for example, real terms spending has increased by 30% since 1996 whilst, the recorded increase in output is only 2% higher. This increase in spending has caused much greater pressure on public services to focus on productivity and waste reduction. The pivotal publication of the Gershon report, in July 2004, stated that the public sector should find ways to achieve substantial cost savings ( 20 billion) both cash and non-cash savings by 2008 (Gershon, 2004). This pressure, to improve the productivity and performance of public services has lead to many calls from industrialists, management consultants and policy officers for the transfer of industrial practices into the public sector. In particular, Lean Thinking has been proposed as one way to achieve substantial cost savings and quality improvement. Many management consultancies have entered the arena claiming to have a Lean solution and methodology. At the Local Government Association (LGA) Improvement conference in February 2006 at least 6 of the stalls present were selling the virtues of Lean. However, when questioned only 1 or 2 had any real experience of Lean application in the public sector. Within the UK some management consultants who have and are implementing Lean include Vanguard, Simpler and Ross International. But is their model of Lean appropriate to public services and is there evidence that Lean actually achieves the outputs and outcomes promised regarding efficiency savings? Most people recognise the roots of Lean thinking in the Toyota production system, (Monden, 1983) but there has been considerable development of the concept over time. The Toyota Production System, which was developed in the 1950s after World War 2, was introduced as an alternative to mass production techniques in the Toyota factory and led to raise productivity and quality levels by allowing the flexibility of skilled production with the volume efficiencies of mass manufacturing. The term Lean was first adopted in the 1980s by Womack and Jones (1990) as it was claimed that the implementation of Lean practices in manufacturing resulted in using less of everything (e.g. raw materials, labour, time, etc) compared to mass production. There has been evidence of the transfer of Lean manufacturing concepts to the service sector with supermarkets adopting Lean techniques for improving the flow of customers for many years (Swank, 2003). The term itself has gone on to be used within many contexts including some writings focusing on the organisation (as in Lean Manufacturing or Lean Service), the supplier (Lean Supply) or customer end (Lean Consumption). Arguably all notions of Lean are rooted in the work and principles of Womack and Jones (1996) who developed five core principles to represent Lean or Lean Thinking which are: Specify the value desired by the customer Identify the value stream for each product providing that value and challenge all of the wasted steps Make the product flow continuously Introduce pull between all steps where continuous flow is impossible Manage toward perfection so that the number of steps and the amount of time and information needed to serve the customer continually falls. In the UK, there are examples of organisations who, have developed and introduced the principles and practices of Lean thinking in the public sector. A study by Kollberg and Dahlgaard in 2005 assessed the suitability of Lean Thinking in the UK health service by looking at how a performance measurement system called the flow model was designed to identify key performance indicators that measure changes towards Lean Thinking. Lean has been used to generate a process-based perspective within the NHS Emergency Services, where a collaborative programme produced substantial improvements to patient waiting times. Another recent study commissioned by ODPM (2005) on the use of Lean Thinking to improve Social Housing revealed 80% reductions in the time taken to process repairs, a 40% reduction in the time taken to collect first rental payments, a 50% reduction in the number of steps needed to re-house and a 50% reduction in void time. This was all achieved with both significant cost reduction and improvement to the customer experience. However, others (for example, (Hines et al., 2004) highlight a number of the key criticisms associated with the holistic lean philosophy especially in service settings including lack of contingency, human aspects, coping with variability and lack of strategic perspective. It is also widely agreed that there has been relatively little evidence of Lean being applied in the public sector so it has not be possible to state how and what aspects of Lean can work in the public sector. In 2005, the Scottish Executive decided to address the question of whether it should formally promote the adoption of the Lean within both centralised and local services in Scotland. As no records of the practice of Lean in either Scottish or the rest of the UK public services existed a detailed study was commissioned. The study (Radnor et al, 2006) included the generation and analysis of results from: A review of evidence on the use of lean in the public sector. Eight case studies of public sector organisations using Lean. 16 FMI JOURNAL VOLUME 18, NO. 1

LEAN MANUFACTURING IN THE PUBLIC SECTOR TABLE 1 Examples of Lean Programmes and Outcomes in Public Service Organisations Type of Organisation Programme Description Outcomes/Achievements Health Agency Large, high profile adoption of Lean Thinking with a 48% reduction in throughput time and necessary contact long-term (10 year) plan. time per patient. Rapid Improvement Events (RIE) involving 80% reduction in the number of steps in a process. staff delivering service were used to Death rate fell by 30% for single process. implement Lean practices. Patient hand-offs reduced from 23 to 13 as a consequence of the value-stream mapping exercise. Government Agency Consultants were engaged to conduct an RIE involving The outcome for the project was simply to be able to cope staff, focusing on topics such as: with the additional workload within existing resource increase in workload constraints. The Department achieved their on-going target of waste of staff time on admin tasks never failing to complete their part of the process within the seven day limit. Local Authority Consultants engaged for initially 6 months to launch The time taken for registration of a planning application was programme of Rapid Improvement Event (RIE) for reduced from an average of 5 days across the six areas to an process improvement. Ambitious programme with average of two. 12 processes dealt with in first year. Local Authority Business Change Process rooted in Lean thinking but The removal of abandoned vehicles service has moved from: focussed on changing culture rather than using a An average of 28 days to remove vehicle reduced to 3 days Lean toolkit. Average 1000 enquiries per annum increased to 2500 enquiries Average 250 cars removed per annum increased to 800 RAF Base A Lean programme - mainly tactically deployed, but Two Value Stream Analysis (VSA) events generated a 105 with aspirations to strategic Policy Deployment - using person reduction in manpower and 31m budget saving. three main techniques, Value stream analysis, A more recent estimate of the total savings for the production process preparation and RIE. programme to date was over 60m. A survey of public sector organisations using Lean. The findings from this study have begun to generate a model of what a Lean model within the public sector could consist of as well as generate evidence of the effect of Lean within various public service organisations (see Table 1). The study illustrated that as in manufacturing, Lean has been used in the public sector to reduce waste, improve flow, place more focus on the needs of customers and take a process view. However, many of the Lean tools often found in manufacturing were applied differently in the public sector. In manufacturing, a large set of improvement tools and techniques is used to standardise processes, whereas public services use a narrower range, including process and value stream mapping. How is Lean being implemented in the public sector? Two different approaches to the implementation of Lean were described within the study: full implementation of the philosophy and, rapid improvement event (RIE) or Kaizen Blitz. The full implementation model involved the embedding of Lean principles, broad use of Lean tools and alignment of improvement to strategy taking a whole systems perspective. However, the majority of case studies favoured the RIE approach, which used rapid improvement workshops to identify a range of improvement actions ranging from small, incremental quick wins to longer term policy or strategy changes. An RIE or Kaizen Blitz typically has three phases: a 2-3 week preparation period; a 5-day event to identify changes required; and a 3-4 week follow up implementation period. Public sector managers reported that the RIE appealed because its style of delivery could overcome slow responses by staff to change initiatives through providing some return for effort relatively quickly, prevalence making it more visible and, staff feeling engaged in the process. However, a disadvantage of the RIE is that quick wins may be difficult to sustain because they are not easily integrated into the overall strategic objectives of the organisation. A fuller implementation, taking a more longitudinal, developmental approach allows the establishment of a sustainable Lean capability. This is achievable through a programme that can include multiple RIEs, though it requires alignment with organisational strategy. What factors make organisations suitable for Lean? The study highlighted several organisational and cultural factors that influence the extent of adoption of Lean across the public sector. Organisations that integrated the idea as part of their improvement or capacity building strategy and had strong management buy-in, were more ready to embrace Lean improvements. Similarly, organisations with a history of managing change, that had previously tackled process change and that were able to build effective, multi-disciplinary teams across traditional organisational barriers had the greatest capacity for Lean improvement. It is also easiest to apply in high volume, repeatable processes, but this should not discourage other applications. In contrast, several factors inhibited change. These included; lack of resources to implement changes, resistance to change from staff and management, post RIE lack of ownership of the activity, lack of commitment to the change process and, the slow pace of change in the public sector. Many management consultants and policy officers are heralding Lean as a means to address the efficiency agenda, but is the notion of Lean as defined originally appropriate for the public sector? Lean can successfully focus attention on waste reduction through analysis of the AUTUMN 2006 FMI JOURNAL 17

LEAN MANUFACTURING IN THE PUBLIC SECTOR Flow: Kaizen: Kanban: Lead time: Pull: Standard work: Takt time: Throughout time: Value/ Valuable: Value stream: Value stream mapping: Waste: Glossary of Key Lean Terms The progressive completion of tasks along the value stream so that a product or service proceeds from design to launch, order to delivery, and raw materials into the hands of the customer with no stoppages, scrap or backflows. Continuous, incremental improvement of an activity to create more value with less waste. A signal, often a card attached to supplies or equipment that regulates pull by signalling upstream operation and delivery. The total time a customer must wait to receive a product or service after requesting the product or service. In service sectors, it is the time from the beginning of the process to the end (e.g. from when a patient arrives until he or she leaves the hospital). A system of cascading production and delivery instructions from downstream to upstream activities in which nothing is produced by the upstream supplier until the downstream customer signals a need; the opposite of push. A precise description of each work activity specifying cycle time, takt time, the work sequence of specific tasks for each team member, and the minimum inventory of parts on hand needed to conduct the activity. The available operations time divided by the rate of customer demand. Takt time sets the pace of the operations (or process) to match the rate of customer demand and becomes the heartbeat of any lean system. The time required for a product or service to proceed from concept to launch, order to delivery, or raw materials into hands of the customer. This includes both processing and queue time. A capability provided to the customer at the right time at an appropriate price, as defined in each case by the customer. The specific activities required to design, order, and provide a specific product (or service) from concept launch to order to delivery into the hands of the customer. The identification of all the specific activities occurring along a value stream for a product or product family (or service). Anything that does not add value to the final product or service, in the eyes of the customer; an activity the customer wouldn t want to pay for if they knew it was happening. The 7 manufacturing wastes are: The 7 service wastes are: Transport, Inventory, Motion, Waiting, Overproduction, Over-processing and Defects. Delay, Duplication, Unnecessary Movement, Unclear Communication, Incorrect Inventory, Opportunity Lost and Errors. A further waste that can be added to both manufacturing and service is not using the minds of the employees. process. At the same time, the methodology asks questions about what customers consider to be value-adding activities, increasing the understanding of customers needs. Organisations split into isolated departments are encouraged to think about joining up processes. Lean gives frontline staff an opportunity to tackle problems that give them hassle, which increases morale and motivation. Lean can also contribute to a culture of change. However, the evidence also suggests that Lean should be used as a means to achieve greater output, faster with higher quality with the same resource rather than a method of rapid unit cost reduction to release cash or to reduce headcount. The fourth example in table 1 illustrates the last point well. Here, a council were able to more than triple their levels of activity, to a higher service standard, without increasing costs. The case examples found by the study show there is little doubt that Lean can work in the public sector. In some cases, achievements were dramatic and, in all cases, critical in developing an improvement culture. This would indicate that the majority of public sector organisations can benefit from the concept. However, the public sector must not blindly adopt the model of Lean from manufacturing; they must adapt the approach to suit their needs. There are risks of failure if Lean is simply seen as a tactical toolkit developed from manufacturing. Lean has the potential to generate some outstanding savings and changes in mindsets within public services and the rapid adoption of the term reflects this potential. One quote from the study described the opportunity of process based improvement in the public sector as not low-hanging fruit but apples on the floor, suggesting that methodologies such as Lean could be readily used to identify efficiency gains. If government departments, management consultants and policy officers continue to use the term Lean and herald its impact as much as they are now by which to achieve efficiency savings then it is important that they and public service organisations consider the following criteria: The need to adapt, not adopt, Lean Thinking concepts. The need to consider Lean not as a quick fix but as a philosophy. The need to develop (or have) a mindset within the organisation of process and customer view. The need to ensure that there is strong leadership, commitment and some link with strategy in order to ensure longevity Therefore, if Lean is implemented cor- 18 FMI JOURNAL VOLUME 18, NO. 1

LEAN MANUFACTURING IN THE PUBLIC SECTOR rectly, it can become more than just the next management fad. However, public sector managers must not attempt Lean naively. Lean Thinking should involve whole system change that must be implemented carefully and not rushed into, with realistic expectations about its impact and ease of adaptation. References 1. Gershon, P. (2004) Releasing Resources to the Front Line: Independent Review of Public Sector Efficiency. in TREASURY, H. (Ed.) London, HM Stationary Office. 2. Hines, P., Holweg, M. & Rich, N. (2004) Learning to evolve: A review of contemporary lean thinking. International Journal of Operations and Production Management, 24, 10, 994-1011. 3. Kollberg, B. and Dahlgaard, J.J. (2005) Measuring Lean Thinking Initiatives in Health Care Services, International Journal of Productivity and Performance Management (Forthcoming). 4. Monden, Y. (1983) The Toyota Production System, Portland, Productivity Press. 5. ODPM, (2005). A Systematic Approach to Service Improvement, September, Ref: 05HO03367, ODPM Publications, Wetherby. 6. Radnor, Z., Walley, P., Stephens, A. and Bucci, G. (2006) Evaluation of the lean approach to business management and Its use in the public sector, Scottish Executive Social research, Edinburgh 7. Swank, C.K. (2003). The Lean Service Machine. Harvard Business Review, October 2003. 8. Womack, J. P., D. T. Jones, et al. (1990). The Machine that Changed the World. New York, Macmillian. 9. Womack, J. & Jones, D. (1996) Lean Thinking: Banish the Waste and Create wealth in your organisation, New York, Simon and Schuster. AUTUMN 2006 FMI JOURNAL 19

The Accounting Officer: What are Canadians Getting? Alan Gilmore Since 1866, the British have regarded the permanent secretaries (the equivalent of deputy ministers) of UK government agencies as Accounting Officers. British government documents state that Accounting Officers have personal responsibility for the overall organization, management, and staffing of the department and for department-wide procedures. They must ensure that standards of financial management are high, and they have a particular responsibility to see that appropriate advice is tendered to ministers on all matters of financial propriety and regularity and more broadly as to all considerations of prudent and economical administration, efficiency and effectiveness and value for money. Accounting Officers answer personally to the Committee of Public Accounts on these matters, within the framework of Ministerial accountability to Parliament for the policies, actions and conduct of their departments. After a long confusing debate Canadians are on the verge of having their own accounting officers. If passed, the Federal Accountability Act will designate deputy ministers and heads of government departments and agencies as accounting officers. But what are Canadians really getting? While the title is the same, just how similar is the Canadian accounting officer to his or her British namesake? To draw any conclusions it s necessary to review the history of the debate in Canada and to critically examine the Canadian version of the accounting officer. The British Accounting Officer was born after a long battle for Parliamentary control over the public purse in the United Kingdom. The first major steps towards establishing government financial accountability to Parliament were taken in the 1860s. William Gladstone, Chancellor of the Exchequer from 1859-1866, led the reform movement. His 1866 Exchequer and Audit Departments Act established a circle of financial control for public funds: the House of Commons would authorize expenditure, accounts would be produced by departments and audited by the UK Comptroller and Auditor General and the results of the audits would be reviewed by a dedicated Parliamentary committee, the Committee of Public Accounts (PAC), which Gladstone also established in 1861. From the 1870s, senior officials, usually permanent departmental secretaries, testified at PAC meetings. In 1920, the Treasury Department recommended and the PAC adopted the procedure of designating permanent secretaries as Accounting Officers. Alan Gilmore Alan Gilmore, Ph.D. is a former senior principal in the Office of the Auditor General of Canada. He has extensive experience reviewing values and ethics initiatives, and governance and regulatory frameworks. He was responsible for the Auditor General s recent reports to Parliament on the Costs of Implementing the Canadian Firearms Program and Accountability and Ethics in Government. He is professor in Public Affairs Ethics in the Faculty of Philosophy at Saint Paul University, Ottawa, and he is an Associate with the strategic policy and management consulting firm Sussex Circle. Why didn t this evolution occur in Canada? The Revenue and Audit Act of 1878 was one of the earliest Canadian attempts to control the public purse. The Act required deputy heads and others charged with the expenditure of public money to accurately audit the accounts. In practice, each department developed its own bookkeeping system, many of which were unreliable. This led to increasing calls for reform. Not surprisingly, one recommendation was to adopt the British accounting officer concept, which placed greater responsibility and accountability on the shoulders of deputy ministers and vested review authority with the Public Accounts Committee. Instead, the Government chose, through the 1931 Consolidated Revenue and Audit Act, to centralize responsibility in a Comptroller of the Treasury, responsible to the Minister of Finance. In his classic work, The Public Purse, Professor Norman Ward concluded that this occurred because the Canadian Public Accounts Committee was inactive and maintained a total silence during the debate. The steep rise in spending during and after World War II led to calls for a new framework for financial control. The government s response was the 1951 Financial Administration Act (FAA). It replaced the 1931 Consolidated Revenue and Audit Act but continued the centralized approach to accounting and auditing. In 1962, the Report of the Royal Commission on Government Organization (Glassco Commission) said it was time to let the managers, manage. Seven years later, in 1969, the Government amended the FAA, creating a decentralized system of accounting and auditing similar to the system created in 1878. The position of Comptroller of the Treasury was abolished, and deputy ministers were given some of the administrative responsibilities of the UK Accounting Officer. However, they remained accountable to ministers without the protections afforded to permanent heads in the UK should they disagree with Ministers. Eight years later, in 1975, the issue was raised again as a result of the Auditor General s Report. The report concluded that Parliament and indeed the Government had lost, or was close to losing, effective control of the public purse. In part, this was the result of deputy heads neglecting their financial control statutory responsibilities given to them in 1969. To address this issue the report proposed adopting the British accounting officer concept. The importance of the issues raised by the 20 FMI JOURNAL VOLUME 18, NO. 1

THE ACCOUNTING OFFICER Chart 1 Comparison of the Responsibility and Accountability of the UK and Canadian Accounting Officer UK Accounting Officer Canadian Accounting Officer Responsibilities As principal accounting officers, permanent secretaries in The Act designates the deputy minister or head of an agency the United Kingdom have personal responsibility for the as its accounting officer [who] is accountable before the overall organization, management, and staffing of the appropriate committees of the Senate and the House of department and for department-wide procedures. They must Commons for ensure that standards of financial management are high, that a) the measures taken to organize the resources of the financial systems promote the efficient and economical department to deliver departmental programs in conduct of business and safeguard financial propriety and compliance with government policies and procedures; regularity, and that decisions on policy proposals fully take b) the measures taken to maintain effective systems of into account financial considerations internal control in the department; c) the signing of the accounts that are required to be kept They have a particular responsibility to see that appropriate for the preparation of the Public Accounts pursuant to advice is tendered to Ministers on all matters of financial section 64 [of the Financial Administration Act]; and propriety and regularity and more broadly as to all d) the performance of other specific duties assigned to him considerations of prudent and economical administration, or her by or under this or any other Act in relation to efficiency and effectiveness and value for money. the administration of the department. Relation to Minister If a minister contemplates a course of action that would Where the minister and the accounting officer for a infringe on the [above] matters, the accounting officer is department or agency are unable to agree on the required to object in writing and indicate that it is his or her interpretation or application of a policy, directive or standard duty to notify the Treasury and the Comptroller and Auditor issued by the Treasury Board, the accounting officer shall General without undue delay should the advice be overruled. seek guidance in writing on the matter from the Secretary of the Treasury Board. If ministers do proceed, accounting officers must obtain a written instruction to take the action and then inform the And, where guidance is provided and the matter remains Treasury and the Comptroller and Auditor General. unresolved, the appropriate minister shall refer the matter to the Treasury Board for a decision. The Board is required to A similar course of action is expected when the issues relate put its decision in writing and provide the Auditor General of to the accounting officer s wider responsibilities for Canada with a copy. administrative economy, efficiency, and effectiveness. Accounting officer personal If the above procedure has been followed, the Public [Not addressed] responsibility Accounts Committee holds that the accounting officer bears no personal responsibility. Relation to Public Accounts Accounting Officers answer personally to the Committee of Accounting officers are obliged to appear before the Committee Public Accounts on these matters, within the framework of appropriate committee of the Senate or the House of Ministerial accountability to Parliament for the policies, Commons and answer questions related to carrying out of actions and conduct of their departments the responsibilities and the performance of the duties described above. Accounting officers are required to disclose to the Public Accounts Committee instances involving propriety and [Not addressed] regularity where they have been overruled by ministers. The Comptroller and Auditor General must report cases where ministers have overridden the accounting officers advice on administrative efficiency, economy and effectiveness. Source: United Kingdom. HM Treasury. The Responsibilities of an Accounting Officer. London: HMSO, 1991. Annex # 4.1. (s.5) p 2; The UK Code of Conduct and Guidance on Procedures for Ministers; Federal Accountability Act (Committee Stage) Auditor General led to yet another Royal Commission - - the Royal Commission on Financial Management and Accountability (Lambert Commission.) Its 1979 report recommended that the deputy ministers be held accountable for departmental management before the Public Accounts Committee. But the Government pre-empted the Lambert Commission report in 1978 and re-created the position of Comptroller General within the Treasury Board. The Comptroller General was to act as Chief Financial Officer. While the title sounded similar to those of the past, the authority was very different. The office focused on developing financial and management policies; it had no control over expenditures. (In 1993, the office was combined with the position of Secretary to the Treasury Board. It has recently been re-established as a separate entity for the third time.) The Privy Council Office Position Since at least 1977, the Privy Council Office (PCO), with the support of most deputy ministers, has successfully argued against adopting the accounting officer concept. Its 1977 submission - - Responsibility in the Constitution - - to the Lambert Commission argued that adopting the accounting officer concept would undermine Canada s classical style of Westminster democracy. However, the PCO has never clearly explained how a practice followed in the UK since 1866 was not part of classical Westminster democracy and why it would undermine Canada s parliamentary system which the 1867 British North America Act states was established with a Constitution similar in Principle to that of the United Kingdom. The PCO did recognize that the function enabled the UK Parliament to scrutinize and to some extent to control the exercise of administrative authority and to hold officials rather than ministers accountable for administration, but it concluded that this was only made possible by the non-partisan practices of the UK Public Accounts Committee. The PCO appeared to have mistakenly concluded that UK Accounting Officers were accountable to the Public Accounts Committee. While Accounting Officers appear before the Committee of Public AUTUMN 2006 FMI JOURNAL 21

THE ACCOUNTING OFFICER Accounts on matters of administration, they do so within the framework of Ministerial accountability to Parliament. The Committee has no authority to punish Accounting Officers. Thus, when questions infringed on policy and politics, Accounting Officers refer them to ministers. This error has lead to much confusion and concern in Canada about dividing deputy minister and ministerial responsibility. Thus, the PCO argued that direct accountability of officials to Parliament for administrative matters would divide the responsibility of ministers and politicize deputy ministers; result in unsound management and artificial distinctions between questions ministers and officials would answer; and, offend Parliament s preference for holding ministers accountable. Recognizing the contradiction between its position and parliamentary practice, the PCO conceded that as matter of observation officials were in a sense accountable before Parliament for matters of administration. However, it argued that this situation because if questions were related to policy or politics, officials could refer the questions to ministers which as indicated had been the practice in the UK for over a century. Still concerned, the PCO sought to ensure that there would be no question of deputy ministers being held accountable by Parliament and introduced into the already obtuse debate the distinction between accountability and answerability. Accountability was defined as accounting to Parliament for how ministerial responsibilities have been carried out and problems corrected and, accepting personal consequences for the problems caused. In contrast, the duty of deputy ministers was only answerability to inform and provide explanations to Parliament. Continuing Concern But the idea of accounting officer concept refused to go away. In 1985, it was raised again by the Special Committee on Reform of the House of Commons (McGrath Committee.) As part of its package of reforms to strengthen the role of the House of Commons, the Committee proposed that deputy ministers be called before committees using an approach similar to the accounting officer concept. While the government accepted this proposal it did not clarify the responsibility and accountability of officials vis a vis ministers. This left officials in an increasingly awkward position before committees which at times held them accountable for major problems. Alternatively, it created a situation of mutual plausible deniability of accountability between ministers and deputy ministers. Things became more complicated in 1989, when the Canadian Council of Public Accounts Committees developed Guidelines for Public Accounts Committees in Canada that called for PACs to hold public servants accountable for their performance of the administrative duties and implementation activities which have been delegated to them; and that it was unacceptable for them to be able to use the principle of ministerial responsibility when they are asked to account for their decisions and actions. In 1991 the Council reported that the federal PAC had implemented its recommendation. The issue of ministerial accountability continued to surface, in part because of the expanding practice of the PAC and other parliamentary committees to call senior officials to testify. The confusion caused by the half-way adoption of the UK practice, led the 1996 report of the deputy minister Task Force on Public Service Values and Ethics (Tait Report) to observe that many public servants find the concept of ministerial responsibility unclear, outdated, just unreal, or meaningless. The report concluded that because of the evolving nature of parliamentary government and the continuing confusion, it would be useful to develop a clear statement of ministerial responsibility for ministers, public servants and the public. The 2000 Auditor General report on Values and Ethics in the Public Sector found the government had made little progress in addressing the recommendations of the Tait report; and it endorsed the call for clarifying the accountability of ministers and officials as a prerequisite for maintaining sound values and ethics in government. Two years later, in 2002, in response to the controversy over the management of grants and contributions in Human Resource Development Canada, the government announced an eight-point plan of action on government ethics. The plan included strengthening public service management and accountability for public funds and mechanisms for more explicit accounting of departmental affairs by deputy ministers using the UK accounting officer as a possible model. In response to objections, the government rejected the idea and maintained the status quo in its 2002 Guide for Ministers and Secretaries of State. However, its June 2003 Guidance for Deputy Ministers appeared to take some hesitant steps toward adopting the accounting officer concept by stating that deputy ministers when requested should personally appear before parliamentary committees to give an account of their stewardship of the department. Six months later, the December 2003 publication, Governing Responsibly: Guide for Ministers and Ministers of State, withdrew this possible concession and restated the PCO s 1977 position that deputies only provided information to parliamentary committees. The contradictions and gaps in the government s position were detailed in the November 2003 Auditor General Report on Accountability and Ethics in Government. Sponsorship Inquiry This is where the matter may have rested if not for the sponsorship program and the subsequent reports of the PAC to the House of Commons and the Commission of Inquiry into the Sponsorship Program and Advertising Activities (Gomery Commission). In its 2005 report the PAC expressed frustration with a situation where those with responsibility are able to avoid accountability. It recommended that to clarify responsibility and accountability Deputy Ministers be held to account for the performance of their duties and for the exercise of their statutory authorities before the House of Commons Standing Committee on Public Accounts. The House of Commons agreed with the PAC report. However, the government restated the 1977 PCO argument that ministerial and deputy ministerial responsibility and accountability was already clear. Despite the government s position, the 2006 Gomery Commission s report Restoring Accountability: Recommendations urged clearing up the long standing problem of fuzzy accountability for mismanagement. 22 FMI JOURNAL VOLUME 18, NO. 1

THE ACCOUNTING OFFICER The worst manifestations were displayed during its inquiry. The Commission recommended the Government should modify its policies and publications to explicitly acknowledge and declare that Deputy Ministers and senior public servants who have statutory responsibility are accountable in their own right for their statutory and delegated responsibilities before the Public Accounts Committee. So, what are Canadians getting? The Federal Accountability Act proposes to designate deputy ministers and heads of agencies as accounting officers. How close is the Canadian accounting officer to its British precedent? Given past practice, the accounting officer Canadians are getting is finally a major step toward clarifying responsibility and accountability in the federal government. However, Canadians are, clearly, not getting the British accounting officer. It is unclear why they should have to settle for a markedly weaker model and particularly one that weakens the bedrock principle of individual ministerial accountability to Parliament. The Canadian accounting officer s responsibility and accountability is much narrower, the function s deterrence value to mismanagement is weaker, and it dilutes the principle of ministerial responsibility it was supposed to reinforce. (Chart 1 compares the responsibility and accountability of the two accounting officers.) Unlike their UK counterparts, Canadian accounting officers don t have a personal responsibility and their responsibilities do not include the overall management, including staffing and department-wide procedures. Nor are they responsible for ensuring that standards of financial management are high and that financial systems promote the efficient and economical conduct of business and safeguard financial propriety and regularity. In addition, they do not have a responsibility to ensure that decisions on policy proposals fully take into account financial considerations and that ministers are given advice on financial propriety and regularity and prudent and economical administration, efficiency and effectiveness and value for money. In addition, unlike their UK counterparts, Canadian accounting officers are not required and probably cannot disclose to the Public Accounts Committee or the Auditor General instances where their advice has been overruled by ministers. The Auditor General will only receive the decision of the Treasury Board (a cabinet confidence) when a minister refers a dispute to the Board. This procedure weakens the deterrence value of the accounting officer regime to prevent imprudent and improper behaviour. The number of times a UK Accounting Officer has actually reported disputed issues to the Treasury department, the Comptroller and Auditor General, and to the Public Accounts Committee can be counted on one hand. However, this could happen, which makes for a strong deterrent. Without this deterrence the effectiveness of the proposed Canadian accounting officer function will be significantly reduced. As noted, the UK adoption of the Accounting Officer was intended to reinforce Parliament s control over the public purse by clarifying the principle of ministerial responsibility through the identification of the responsibilities of the permanent secretary. The focus is on individual ministerial responsibility. The Canadian version actually dilutes the principle of ministerial responsibility by transferring final accountability for departmental administration from the responsible minister to a group of ministers called the Treasury Board. Some may argue that since Treasury Board makes administrative policy and referring matters for decision to the Board increases its accountability. However, the Board is not responsible for running a department that is the statutory responsibility of the minister. Surprisingly, there has been little objection to substituting the collective accountability of Treasury Board ministers to Parliament for the direct individual accountability of the responsible minister. The government indicates that it is adopting the accounting officer concept because it is vital to government accountability that, within the framework of the minister s overall responsibilities and his or her accountability to Parliament, the roles and responsibilities of deputy ministers are clear. Given this principle, it is unclear why Canadians should have to accept a scaled down version of the UK Accounting Officer. Selected Bibliography D Aquino, Thomas and Doern, Bruce G. and Blair, Cassandra. Parliamentary Democracy in Canada: Issues for Reform. Methuen, 1983. Aucoin, Peter, Smith, Jennifer and Dinsdale, Geoff. Responsible Government: Clarifying Essentials, Dispelling Myths and Exploring Change, Canadian Centre for Management Development, 2004, Part 2: Ministerial Responsibility. Dobell, Peter. Reforming Parliamentary Practice: The Views of MPs, Policy Matters, No. 9 (December 2000) Doern, G.B. The Relevance and Transferability of Selected British Institutions of Financial Accountability to Canada: A Report and Briefing Document Prepared for the Royal Commission on Financial Management and Accountability Ottawa: Supply and Services Canada, 1977. Finer, S. F. Individual Responsibility of Ministers, in Ministerial Responsibility, Geoffrey Marshall, Oxford University Press, 1989 Franks, C.E.S., Not anonymous: ministerial responsibility and the British Accounting Officers. Canadian public administration 40:4 (winter 1997) Good, David A. The Politics of Public Management. Toronto: University of Toronto Press, 2003. Huntington, Ron M.P. and Lachance, Claude-Andre M.P. Accountability: Closing the Loop, Submission to the Special Committee on Standing Order and Procedure, November 8, 1982 Kernaghan, Kenneth. Ministerial Responsibility: Interpretations, Implications and Actions, Information Access Report 4: Access to Information Review Task Force, August 2001. Kernaghan, Kenneth. The Future Role of a Professional Non-Partisan Public Service in Ontario. (A Report to the Panel on the Role of Government), June 2003. Manion, J.L. The Challenge of the New Administrative Order: Post-Modern Accountability, Dewar Series Perspectives on Public Management, Values in the Public Service, Canadian Centre for Management Development, April 28, 1993 Marshall, Geoffrey. Ministerial Responsibility. Oxford University Press, 1989 Mitchell, J. R. Reply to C.E.S. Franks. Canadian Public Administration. Volume 40, No. 4 (Winter 1997) Mitchell, J. R. Authority and Accountability: Reflections on the Gomery Report March 2, 2006, www.sussex Circle.com/ideas Office of the Auditor General, Chapter 2 Accountability and Ethics in Government (November, 2003) Oreskes, Michael. Where Does the Buck Stop? Not Here. New York Times, Weekend Review March 28, 2004. Osbaldeston, Gordon. Keeping Deputy Ministers Accountable-Executive Summary. London: National Center for Management Research and Development, 1989. Pitfield, Michael. Bureaucracy and Parliament speech delivered to Ottawa Kiwanis Club. Ottawa: Ottawa Kiwanis Club, 1983. Plumptre, Timothy. Beyond the Bottom Line: Management in Government. Halifax, Nova Scotia: The Institute for Research on Public Policy, 1988. Savoie, Donald. Breaking the Bargain: Public Servants, Ministers and Parliament. Toronto: University of Toronto Press, 2003. Schaefer, Arthur. A wink and a nod: a conceptual map of responsibility and accountability in bureaucratic organizations, Canadian Public Administration, Volume 42, No. 1, Spring, 1999 Sutherland, S. L. Responsible Government and Ministerial Responsibility: Every Reform is its Own Problem, Canadian Journal of Political Science, XXIV: 1 (March 1991) Tasse, Roger O.C., Q.C. and Malcom Rowe, Q.C. Deputy Minister Task Force on Service Delivery, Vol. IV, Examining Key Questions, Part 1, Ministerial Accountability, October, 1996 AUTUMN 2006 FMI JOURNAL 23

Need to Develop an RFP? Read This First! Michelle Schulte You re running late on the way to an important meeting - you didn t know that there was construction taking place nearby. Your flight time was changed, the plane left without you, and now your vacation is ruined - you didn t remember to re-confirm your departure time with the airline. The hockey game went into overtime, causing you to get home late. Now, you won t get that report in tomorrow morning because there isn t enough time. How many of life s frustrations are caused by events truly beyond our control, and how many are the direct result of our failure to plan properly? When things go wrong, it is often our first reaction to lay the blame on factors outside of our control. However, these situations often truly frustrate us because we know, deep down, that if we had taken the time to plan properly, things probably would have turned out much differently. But we didn t, the unexpected happens and suddenly, we find ourselves having lost control of the situation. This is not an uncommon situation for many government managers when faced with the responsibility of executing a competitive procurement and request-for-proposal (RFP) process. Many managers within government are unaware of the procurement policies, obligations and restraints within which they must operate, and must rely on others to complete and execute a procurement process. The combination of these factors often results in the manager feeling a loss of control over an important project for which they are ultimately responsible, and the inevitable sense of frustration which accompanies this. Government managers are responsible for ensuring that their programs are well executed, and to this end, that the work required by them and their staff is accomplished on time. To assist them in fulfilling these responsibilities, managers often utilize and depend upon the services of qualified external contractors, offering specialized expertise within various disciplines. From the perspective of a busy and occasionally over-worked government manager, it is often very easy to overlook the demands of planning for the acquisition process to obtain these required services from external contractors. Program related priorities often arise with little to no lead time or advance warning. Staffing, while always a challenge, has become increasingly difficult in recent years due to growing demographic pressures. As many managers can attest, planning may be a virtue, but it is often little more than wishful thinking in an environment characterized by pressing deadlines, conflicting objectives and scarce resources. It takes as much energy to wish as it does to plan. Eleanor Roosevelt Adding to managers frustrations in this area, the procurement process can be especially time consuming when one considers the required minimum bidding periods for Request for Proposals (RFP s), not to mention the time and expertise needed to define requirements and write the Statements of Work (SOW) and RFP Selection and Evaluation Criteria. If these obstacles weren t problem enough, the procurement process further restricts the flexibility and discretion of government managers when it comes to issuing contracts. Non-competitive (i.e. sole source) contracting authority has been scaled back in many government organizations. Contract splitting is a perennial nono, and repetitive sole source contracting with a single contractor will most certainly draw the attention of auditors and contract Michelle Schulte Michelle Schulte is the Operations Manager with RFP SOLUTIONS - Procurement Strategies for Government, an Ottawa-based firm of procurement, legal, accounting and engineering professionals. RFP SOLUTIONS works exclusively for government agencies to help managers reduce the risks, delays and complexities associated with the RFP process. The firm works with government managers to develop effective and compliant RFP s and to conduct fair and consistent bid evaluations for RFP s. Michelle can be reached by telephone at (613) 728-1335 x224, or by e-mail at michelle@rfpsolutions.ca review committees. Where standing offers and other anticipatory contracting mechanisms do exist, they often come with restrictions on who can use them, the types of work which can be undertaken, which contractors can be selected, as well as limited $-values on call-ups/orders placed against the agreement. Combine these restrictions with the inability of managers to gaze into their crystal ball and accurately predict future requirements, and it should come as no surprise that the process leaves many managers feeling frustrated, and as though they have lost control. It should also come as little surprise that some managers, when faced with this scenario, will end up looking for shortcuts or other ways to by-pass this process. Burdened as it is with seemingly endless rules, regulations, policies, trade agreements and legal precedents, the competitive procurement process can be an endless source of frustration, and a process in which most government managers have very little knowledge or experience. However, seeking short-cuts or end-runs around the process are never the best option. In the end, such measures will inevitably result in introducing any one of a number of legal or reputational risks to the manager s organization, and in their more serious form these practices could land a 24 FMI JOURNAL VOLUME 18, NO. 1

NEED TO DEVELOP AN RFP manager in his/her Deputy Minister s office, in front of a contract review board or tribunal, in court, or worse. So, if the manager avoids temptation and avoids one or more of these procurement pitfalls, how does he/she then go about maintaining some degree of control within the procurement process, while at the same time compliantly obtaining the required contractor services within a reasonable time-line? Is there an alternative? Instead of crossing one s fingers and hoping for the best, knowledgeable and experienced managers become well informed, they develop and communicate realistic plans and they make full use of the tools available to them. While offering no guarantees, and short of any magic tricks, following the steps outlined below will almost always gain the manager an increasing degree of control and reduce his/her level of frustration with the contracting process. Step One: Establish a Plan and be Realistic Once the manager is aware and informed of the constraints and rules to which his/her intended procurement process is subject, it is imperative that he/she establish a plan of action and a realistic procurement timeline. By developing such a plan and clearly communicating it to key stakeholders, the manager is better positioned to ensure a common understanding of the situation and the associated trade-offs, as well as obtain the necessary buy-in from all stakeholders. Know that the competitive procurement process takes time, and be realistic when planning it out. There are a number of key stakeholders involved, including subject matter experts and representatives from legal and procurement. Stakeholder interests may conflict and schedules almost certainly will! So, become aware of and communicate the constraints you re operating within to those involved as early on in the process as possible. Manage your time accordingly and prepare senior management for a realistic (although perhaps seemingly lengthy) procurement time-line. This is one of the few areas within the procurement process that you are able to maintain some measure of control, so whenever possible, ask for and obtain more time if you absolutely need it. A couple of extra weeks could make all the difference when trying to establish a competitively awarded contract that is compliantly awarded, reflective of your requirements and enforceable at the contract management stage. While extending your time-line out may prove frustrating to you and other key stakeholders at this stage, this option is assuredly better than announcing to senior management at the last minute that the project is delayed due to poor planning on your part and a failure to communicate the trade-off decisions to all involved. Although difficult to remember at times, the goal is to competitively award an enforceable contract to the bidder representing best value for taxpayers money, not to play and win a game of beat the clock. In the future, to avoid the stress and pressures of delays to your project due to the procurement process, take a closer look at the externally acquired services on which you depend. Know when these contracts or call-ups expire and begin preparations now, if need be. Depending on the dollar-value and complexity of your service requirement, the procurement process may take several months to complete from procurement planning to award of the contract. If so, then it is always best to get ahead of the curve and plan ahead. Step Two: Assemble Your Team To assist in the process of defining your requirement, include individuals that are knowledgeable and interested in utilizing the acquired services. These contributors can be invaluable when defining the overall requirement, determining the content of the SOW, including the deliverables and milestones of the work to be completed, as well as in developing the RFP Selection and Evaluation Criteria to be applied in the evaluation of Bidders proposals. All are elements of an air-tight RFP resulting in a clear and enforceable contract. The decisions made when defining your requirement and developing the SOW will have a direct impact on the amount of time spent by you in managing the contract, once it is awarded. Spending a bit Strategic financial management Performance management Activity Based Costing Activity Based Planning and Budgeting 69 Vaudreuil Gatineau, Quebec PART OF THE TEAM PART OF THE SOLUTION J8X 2B9 Tel: (819) 595-9144 Fax: (819) 595-9725 Daniel Dubé: Daniel.Dube@synerma.com Michael Tinkler: Michael.Tinkler@synerma.com Ottawa Montreal Toronto AUTUMN 2006 FMI JOURNAL 25

NEED TO DEVELOP AN RFP more time and effort at this stage, and obtaining the required information and input of your colleagues, will pay off many times over throughout the duration of the contract. Keep in mind that the team working with you on the requirements definition and evaluation criteria development will also prove extremely valuable at the bid evaluation stage, when it comes time to evaluate the bidders on the technical merits of their proposals. For particularly complex requirements, and in the interest of saving time and expediting the procurement process, many government managers have opted to obtain the services of knowledgeable external procurement specialists to assist with and expedite the requirements definition process and the writing of the RFP components, including the SOW and Evaluation Criteria. As with many external contractors, these specialists can provide valuable guidance, knowledge and skills related to their discipline and are experienced in communicating complex requirements to the bidding community. Additionally, a procurement specialist may recommend options not yet considered which may prove to be a more efficient and effective means of procuring your required services, while minimizing the amount of time defining the requirements and determining a meaningful approach to the evaluation of bidders. A word of caution however, when using the services of an external contractor to assist in this process, always be sure that the individual retained is not a possible bidder on the ensuing RFP, and if necessary take steps to have them sign conflict-of-interest and non-participation waivers as a condition of their contract. Step Three: Involve your Contracting Authority at the Beginning A very common (and avoidable) mistake made when executing a procurement process is the oversight to include the responsible Contracting Authority as early on in the process as possible. The earlier you determine who the responsible Contracting Authority is and include this resource in the process, the better. A key resource for managers working their way through the maze of the procurement process, the Contracting Authority can provide insight into the rules and regulations applicable to your organization and specific requirement, as well as ensure that you and your organization are protected from the various risks associated with the procurement process. The Contracting Authority can provide you with the knowledge and understanding you may lack with regard to the procurement rules, and allow you to maintain a reasonable amount of control over the management of your procurement process. The nicest thing about not planning is that failure comes as a complete surprise, rather than being preceded by a period of worry and depression. Sir John Harvey Do keep in mind that, as with so many other areas in government these days, most internal Contracting groups are greatly understaffed and short on time. The Contracting Authority can only plan for and assist with projects of which they are aware. Therefore, the more lead time you provide to the Contracting Authority, the more likely they will be able to meet your expectations and support your desired project time lines. Hand anyone a document they didn t know existed, but for which they will ultimately be accountable and responsible, and you can reasonably expect that they will have questions and concerns that need to be addressed prior to its distribution. Wouldn t you? An oversight on the part of the manager to include their Contracting Officer early on in the process quickly translates into significant delays to the time-line and possibly, a good deal of rework to documents. With a bit of planning, this frustrating situation can be avoided by gaining insight and understanding of the Contracting Officer s role and responsibilities in the overall procurement process, and the time and information he/she requires to most effectively work with you in executing your procurement process. Step Four: Know the tools available to you Combine the massive demographic pressure associated with baby boomers retiring from the public service s Contracting groups, with the lack of standardization across government in developing SOW s and Evaluation Criteria, and the lack of knowledge which exists in this area, and it often amounts to a time consuming and frustrating experience for government managers. However, there are tools available to government managers to assist them in developing a compliant SOW and meaningful Evaluation Criteria. Available online from RFP Solutions (http://www.rfpsolutions.ca/ reference.htm), the Statement of Work Writing Guide is the foundation of the Treasury Board of Canada s Professional Development Certification Program s How to Write Better Statements of Work and Evaluation Criteria course offered through the Materiel Management Institute (MMI). This helpful tool is available free of charge, and can be downloaded from the RFP Solutions website at the URL above. By following the standards prescribed within the Writing Guide, managers can cut the time associated with developing an excellent SOW down from weeks to days, if not hours. By having a good understanding of those elements of the RFP process that are within your control and those which are not, planning ahead, establishing a strong team and making use of the tools available, government managers can minimize frustration, achieve better results and make the process work for them. 26 FMI JOURNAL VOLUME 18, NO. 1

The Financial Management Institute of Canada wishes to thank all the sponsors, exhibitors and advertisers who supported our activities during the 2005-06 fiscal year. The generous support of these organizations assist the FMI in successfully supporting our membership across Canada and attaining our vision: To be the preeminent source in Canada for best practices related to the management of public sector resources. Platinum Sponsors BMO Financial Group Gold Sponsors Association of Canadian Financial Officers (ACFO) CIBC SAP Canada WestJet Silver Sponsors Adirondack Furniture Technologies Berlitz Language Centre Canadian Government Executive Magazine CMA Canada IBM Canada Ltd. PricewaterhouseCoopers LLP QMR Staffing Solutions Robert Half Management Resources Université du Québec en Outaouais (UQO) Bronze Sponsors AIMCORP Chartered Accountants of Newfoundland and Labrador Certified General Accountants Association of Canada Certified General Accountants Association of Newfoundland and Labrador Certified Management Accountants of Ontario Decimal Technologies Multideas Promotions National Bank of Canada Ordre des CMA Section de l Outaouais RFP Solutions Samson & Associates Synerma Inc. Tri-Graphic Welch and Company LLP Government Exhibitors Canada School of the Public Service Campus Direct Canada Revenue Agency (CRA) Public Service Human Resources Management Agency of Canada PWGSC CRCD, Matane PWGSC Government of Canada Marketplace (GoCM) PWGSC Knowledge Exchange Service PWGSC Receiver General for Canada PWGSC - Shared Travel Services Initiative (STSI) TBS Office of the Comptroller General Partners Canada School of the Public Service Certified General Accountants - Ottawa and Gatineau Chapters Chateau des Charmes Institute of Chartered Accountants of Ontario Ottawa Congress Centre Society of Management Accountants For further information call Bruce Shorkey, FMI Marketing Coordinator, at (613) 829-9913 or email at Bruce. Shorkey@rogers.com. AUTUMN 2006 FMI JOURNAL 27

Play it again Sam! Strategic Planning The Resurrection Rocky J. Dwyer Acommon attribute among leading organizations is both the ability to develop and execute business plans in a savvy, flawless manner. Having organizational staff with a credible understanding of strategic planning as a concept and its utility as a viable management tool is also a common characteristic. Moreover, to be trusted by the public, today s organizations need to first and foremost, focus more selectively on identifying the key strategic directions, which guide and strengthen overall performance, competitiveness, and future success; and secondly, delivering on that commitment. The aim of the article is to provide those involved in the practice of planning with enhanced understanding of the concept of strategic planning from both a historical and current perspective, to identify and provide details on the key elements of strategic planning using a simplified model and lastly, to increase understanding of strategic planning,thus, ensuring organizational planning activities are in synchrony with and can contribute to an organization s business goals and organizational objectives. All of which, we contend, enable planning staff to support senior management in a deliberate and comprehensive manner so they can subsequently report results to stakeholders in timely, inclusive, and meaningful manner. Defining the Term The concept of strategy has its origins in military thinking (Mintzberg, 1989) derived from the Greek word stategia, meaning the office of a general. These generals gave strategic advice about managing battles to win wars (McGee & Prusak, 1993), rather than tactical advice about managing troops to win battle. From these military roots, strategic planning has always aimed at the big picture. The focus was on results or outcomes, rather than products or outputs. More recently, researchers such as Bryson (1988) defines Strategic planning as a disciplined effort to produce fundamental decisions and actions shaping the nature and direction of an organization s activities within legal bounds. Mitzberg explores a variety of popular definitions and subsequently develops his own definition, whereby he separates strategic planning into two separate components; planning and strategy. Mitzberg (1994) defines planning as... a formalized procedure to produce an articulated result, in the form of an integrated system of decisions and strategy as... a planning process, designed or supported by planners, to plan in order to produce plans. While others (Benveniste, 1989; Harris & DeSomine, 1994; Morgan, 1986), suggest strategic planning is a program of conceived and then articulated action with an inherent commitment and resources to give the organization a unified direction in order to achieve organizational goals. Several authors (Charney, 1995; Krallinger & Hellebust, 1993; Naylor, 1991; and Steiner, 1979) define strategic planning as the formulation of long-term external organizational goals and objectives, including the selection of strategies to achieve these goals and objectives. These definitions of strategic planning underscore the importance of strategic planning, however, each of these definitions is limiting in that it defines strategic planning in a somewhat narrow scope. Several authors, including Blackerby (1993) and Reinharth, Shapiro & Kallman (1981) have offered definitions that are more expansive, easily understood and subsequently more useful. Therefore, for the purpose of this paper, I will use Reinharth s, Shapiro s & Kallman s definition which describes strategic planning as a continuous and systematic process where people make decisions about intended future outcomes, how outcomes are to be accomplished, and how Rocky Dwyer Rocky Dwyer is a Principal with Chief Review Services, Department of National Defence (Canada). In addition, he is a MBA faculty member with the Centre of Innovative Management at Athabasca University (Alberta, Canada); and an adjunct faculty member at St. Paul University (Ottawa, Canada). He has been associated with numerous other private, public sector and not-for profit organizations in examining, validating and consultant capacities, and has presented papers and research findings at conferences and symposiums in Canada, the United States, South America and the Russian Federation. Contact Details: e-mail: rocky_dwyer@mba.athabascau.ca success is measured and evaluated. (Reinharth, Shapiro & Kallman, 1981). As a concept According to Hurst (1986) strategic planning appears to be facing an identity crisis of major proportions. Indeed, several researchers (Brunet & Walters, 1986; Boyd, 1991; Freeman & Robinson, 1987; Powel, 1992) express grave scepticism over strategic planning s ability to generate useful strategies that positively affect organizational performance. Other researchers have gone further, questioning the fundamental logic of strategic planning (Gimpl & Dakin, 1984; Huff & Reger, 1987). In particular, Mitzberg (1994) has developed an exhaustive case for why strategic planning, as initially conceived, cannot succeed. The essence of his case is that planning is an analytic activity and is incompatible with effective strategy formulation - an act that requires creative synthesis. In Mitzberg s words:...because analysis, is not synthesis, strategic planning is not strategy formulation. Analysis may precede and support synthesis, by defining the parts that can be combined into wholes. Analysis may follow and elaborate synthesis, by decomposing and formalizing its consequences. But analysis cannot substitute for synthesis. (Mitzberg, 1994) 28 FMI JOURNAL VOLUME 18, NO. 1

STRATEGIC PLANNING THE RESURRECTION Much of the above problem appears to derive from how the concept of strategic planning has been historically viewed. Theorists (Iser, 1989; Yanow, 1994) suggest researchers in the strategy field have, unwittingly and unnecessarily restricted themselves to a singular view regarding the concept of strategic planning. That is, strategic planning has been viewed as the planning of strategy versus planned strategy. Provided it is used in a consistent manner, a more liberal interpretation concerning the concept of strategic planning would acknowledge that planning can be derived from and support strategy formation in an organization. Furthermore, disillusionment with the concept of strategic planning is caused by the lack of knowledge in four key areas: what strategies are and why they are important; how strategies fit into the entire planning process; how to develop strategies; and how to implement strategies by bringing them to bear on current decisions. Unlike mid-range tactical planning or short-range planning (less than 2 years), strategic planning is primarily concerned with solving problems associated with external, environmental influences with long-range time horizons (more than 2 years). Specifically, it attempts to master the future by answering questions, which relate to the business the organization is in. Koontz (1972) suggests strategic planning be described from several points of view in order to fully grasp it s underlying concepts. First, strategic planning looks at the chain of cause and effect and consequences over time of an actual or intended decision and also at the alternative courses of action that are open in the future. When choices are made among the alternatives, they become the basis for making current decisions. Second, strategic planning is a process of deciding in advance what kind of planning effort is to be undertaken, when it is to be done, how it is to be done, who is going to do it and what will be done with the results. Third, strategic planning is an attitude, a way of life - managers and staff in an organization must believe strategic planning is worth doing and must want to do it as well as they can. Fourth, strategic planning must link into the organization s other plans - it is through such linkages that strategies are translated into decisions. Other Types of Planning Since this article deals with strategic planning, it is important that I differentiate strategic planning from two other types of planning - project planning and operational planning. Project planning refers to a type of planning which is oriented around the completion of well-defined event or activity by a specific target date. The introduction of a new harassment policy and the launching of a new career development program are examples of departmental activities for which project planning would be an appropriate managerial tool. Operational planning refers to short term (one year or less) or tactical planning. The traditional operating plan of an organization consists of twelve monthly plans or schedules to achieve goals and objectives of the long-term strategic plan - generally speaking, operating plans are very detailed. Designing Strategic Planning Models A strategic planning model is nothing more than a designed process that organizes and coordinates the activities of the individuals who are doing the planning. No universal formula exists for the simple and obvious reason that organizations differ in size, diversity of operations, the way they are structured, their management style and philosophy. Researchers, Lorange & Vancil (1976); suggest an effective strategic planning model requires a conditional design. That is, such a model must take into consideration the organization s situation, with particular emphasis to the size and diversity of the organization. Although, many models for strategic planning exist, most are not much different from each other. Various practitioners (Ansoff, 1984; Bryson, 1988; Camillus, 1986; Charney, 1995; Mitzberg, 1994; Schendel & Hofer, 1979; Steiner, 1979; Trotter, 1984) virtually agree that a strategic planning model could have as few as six elements, but perhaps has many as nine or ten elements, including: plan to plan mission, goals & values; strategic objectives; external analysis; internal analysis; development of strategic alternatives; strategy selection; implementation; and, control of the strategy. In a survey of planners (Ginter et al, 1985) found strong agreement on the underlying elements. From their study they concluded: Even though the normative model of strategic planning appears idealistic and excessively mechanistic in the sense that it appears to progress sequentially from one well defined state to another, contrary to the expectations of some, this does not confuse or intimidate those who are actually engaged in strategic planning in contemporary organizations. On the contrary, they appear to identify very easily with the normative model. (Ginter, Rucks & Duncan, 1985) As well, many authors suggest the design of a strategic planning process is not simply a mechanical exercise to be carried out by planning analysts and various technicians. Rather it involves a delicate balance of certain technical skills and the enthusiastic support of top management (Bryson, 1988; Mitzberg, 1994; Schendel & Hofer, 1979; Steiner, 1979). Additionally, in order to have an effective strategic planning model, the organization s most senior management must fully participate in the design of the model, if it is to be their planning system. Strategic Planning Models The search for strategic planning models will yield an enormous choice. Rather than presenting a significant number of models, two models - Bryson s and Blackerby s models will be presented in detail and several other models from noted researchers - Beckhard and Harris, Krone and Jayaram, Schendel and Hofer, and Rogers will be presented in an abbreviated format in order to highlight the different strategic planning models which organizations can utilize to undertake strategic planning. Bryson (1988) proposes a eight-step strategic planning process comprised of: development of an initial agreement about the strategic planning effort; identification and clarification of political & statutory mandates; development and clarification of mission and values; external environmental assessment; AUTUMN 2006 FMI JOURNAL 29

STRATEGIC PLANNING THE RESURRECTION internal environmental assessment; strategic issue identification; strategic development; and vision of success. Under Bryson s model, the first step involves the development of an agreement which maps out the purpose of the strategic effort; the preferred steps in the strategic planning process; the form and timing of reports; the role, functions and membership of the strategic planning committee; the role, functions and membership of the strategic planning team; and the commitment of necessary resources to proceed with the strategic planning effort. Step two in Bryson s model provides an opportunity to identify and clarify the externally imposed formal and informal mandates placed on the organization. Bryson suggests it is imperative for the organization to review and clarify the current mandates to ensure mandates can be met and to know what pursuits are permitted. Step three is the development and clarification of the organization s mission and values. According to Bryson, the organization s mission in conjunction with its mandate provides the justification for the organization s existence. As well, Bryson suggests the organization undertake a stakeholders analysis to ensure stakeholders are properly identified, the extent of their interests is assessed and an organizational performance analysis against stakeholders expectations is completed. Bryson s fourth step is an exploration of the environment external to the organization in order that the organization may identify opportunities and threats it may face. This stage might include an analysis of social and technological trends or events, customers or competitors. The fifth step of Bryson s model is an assessment of the organization itself, to identify its own strengths and weaknesses. Areas which the organization could assess include; resources, present processes, and performance indicators. When the results from the external assessment are combined with this step (internal assessment) it provides an opportunity for the organization to build on it s strengths and take advantage of opportunities, while it overcomes or minimizes weaknesses and threats. Together the first five elements of Bryson s model lead to the sixth step, the identification of strategic issues. Bryson defines strategic issues as...fundamental policy issues affecting the organization s mandate; mission and values; service level, clients, management or organizational design (Bryson, 1988). This step focuses organizational attention on what is truly important for the survival, prosperity and effectiveness of the organization - and provides in-depth information on how to achieve these objectives. In the seventh step of Bryson s model, strategies are developed to deal with the issues identified and flowing from the sixth step - identification of strategic issues. Step seven focuses on developing the policies, programs, actions, decisions and resource allocations that define what the organization is, what it does, and why it does it. Bryson s eighth and last step - vision of success; the organization articulates what it should look like as it successfully implements its strategies and achieves its full potential. According to Bryson (1988) an effective strategic planning model must meet several criteria. It must be technically workable, politically acceptable to key stakeholders, and must mesh with the organization s philosophy and core values. It must also be ethical, moral and legal. Bryson s model represents a generic process to strategic thought and action, and it is adaptable to a variety of organizations - both small and large. Blackerby (1994) suggests his eight-step strategic planning model is designed as an iterative and continuous process. Blackerby s model is comprised of: plan to plan mission, goals & values; external needs & trends assessment; strategic objectives; outcome measures; strategies priorities; strategies; and performance feed forward. The first step in Blackerby s model is plan to plan - this step describes how the organization will develop its strategic plan. According to Blackerby, plan to plan serves six functions including senior management s commitment to the strategic planning process; outlining the major steps, or tasks the organization must undertake in the strategic planning process; identifying the individuals involved in the process; development of a time sequence for the process; and identifying barriers to the strategic planning process. The second step in Blackerby s model - mission, goals and values, broadly describes the organization s vision of its future. Specifically, the mission statement describes the organization s purpose and is focused externally and shows the impact and effect of the organization s activities on customers. Goals, describe the general results or outcomes, the organization intends to achieve. Values describe concepts that are important to the organization in addition to its external accomplishments. Under Blackerby s third step, an external needs assessment is conducted of the key outside forces that influence the success an organization will have in achieving its mission and goals. Some organizations twin an internal needs assessment with the external assessment, whereby an analysis of the internal organization s strengths and weaknesses are assessed. Blackerby s fourth step is the identification of strategic objectives which are intended to describe an intended outcome and describe measurable targets of achievement, including minimum levels of acceptable performance for the organization. Additionally, Blackerby suggests good strategic objectives challenge the organization to achieve more profound results and contribute to advancing the organization in the direction indicated in its mission, goal and value statements. According to Blackerby, clear writing causes clear thinking (Blackerby, 1994). Under the fifth step of Blackerby s model is the element of strategic priorities whereby each strategic objective is ranked in terms of its relative importance to the organization. Blackerby suggests setting strategic objectives is a senior management decision, since the priority given to each of the objectives will guide later resource decisions. Under Blackerby s six-step - strategies, the organization identifies alternative approaches, which could lead to the achievement of strategic objectives. Included in this step are the ranking and rating of each of the approaches in terms of skills requirements, technology, and human or 30 FMI JOURNAL VOLUME 18, NO. 1

STRATEGIC PLANNING THE RESURRECTION capital costs as compared to cost-effectiveness. The last step in Blackerby s eight-step model process is performance feed forward. The purpose of this element is to compare actual organizational performance to planned organizational performance and for using this information in subsequent strategic planning cycles. Using this methodology provides an opportunity for the organization to analyze both the positive and negative outcomes; and thus expand and enhance strategies that contribute positive effects, and abandon strategies that contribute to negative effects. Blackerby (1994) suggests strategic planning is not about longterm versus short-term planning; rather, it is about a focus on external outcomes, instead of on internal outputs. Strategic planning is a major part of an organization s solutions, not its problems. Blackerby s conceptual model is designed to improve the efficiency and the effectiveness of any organization by uniting all components of the organization toward a common purpose, vision, and set of goals. It provides a proper forum for addressing conflicts, and support resolution efforts. Blackerby (1994) suggests... strategic planning can be a way out of the crisis-of-the-day reactive environment. Organizations who utilize strategic planning manage pro-actively and interactively. Other Strategic Planning Models Noted researchers, Beckhard and Harris, Krone and Jayaram, Schendel and Hofer, and Rogers have all developed strategic planning models. Although each of the models presented differ with respect to the number of elements, similarities exist throughout each of the models. Beckhard & Harris (1987) propose a seven-step strategic planning process for organizations. Their approach assumes organizations are open systems that must respond to multiple internal and external demands from multiple stakeholders. The first step in their process is to determine the core mission of the organization - i.e. its reason for being or purpose. Step two maps the current demand system - i.e. who are the stakeholders and what demands do they place on the organization? Step three maps the current response system - i.e. how is the organization responding to stakeholder demands? Step four maps the demand system that is likely to exist at a future point - i.e. what will the future hold in terms of demands and who will be the stakeholders? Step five requires senior management to identify a desired state - i.e. how should the organization appear at a future point? Step six consists of planning the necessary actions for achieving the desired state - i.e. articulating specific actions that the organization must take to achieve the desired state. Step seven examines feasibility, cost-effectiveness, and consequences of the actions chosen. According to Beckhard and Harris, involving the organization s senior management and having them work through a systematic process, increases the likelihood that the organization will achieve the desired future state. Krone & Jayaram (1976) created a technique called open system planning to assess the organization s environment in a systematic way. In open system planning, the organization s senior management develops three scenarios - present, realistic future, and idealistic future, for review and analysis. Under the present scenario, a description of the expectations and demands of the external environment and internal organization subgroup and groups, along with a description of the current response of those demands is developed. Next the organiza- 28 years of experience squeezed into 5 months of service. business has changed. What companies need today is a partner that s able to see one step ahead and is an expert at helping others do the same. No one understands this as well as Robert Half Management Resources an ally that has revolutionized the art of connecting the right people with the right organization. From CFOs to Internal Auditors, project or interim, Robert Half Management Resources is Canada s premier provider of the right finance and accounting professionals for the changing world of business and government. Visit us at roberthalfmr.com. Ottawa 360 Albert Street, Suite 520 Standing Offer # EN537-8-4015/143/ZJ Robert Half Management. 0805-6005 888-400-7474 roberthalfmr.com AUTUMN 2006 FMI JOURNAL 31

STRATEGIC PLANNING THE RESURRECTION tion completes a future scenario exercise to project future demands on the organization and project the organization s future state if the organization makes no adaptive changes. Lastly, the organization completes a idealistic future scenario which describes the ideal system and identifies actions which the organization must take to achieve this state. Subsequent to these activities, the organization completes an analysis to determine the feasibility and costs associated with various options. Krone and Jayaram (1976) suggest Open System planning helps decision makers to move back and forth from present to future and from what is to what should be. These word pictures make salient the need for organizational adaptation and change and lead to action planning and implementation. Schendel and Hofer (1979) suggest strategic planning models should comprise six steps; goal formulation; environmental analysis; strategy formulation; strategy evaluation; strategy implementation; and strategic control. Developing organizational goals is the first step; this means defining the mission and purpose of the organization. Next an assessment is made of the constraints and opportunities afforded by the environment - present and future. Schendel and Hofer suggest the present environment is known, while the future must be predicated. Next the organization, completes strategic plans, which have been derived from goals and environmental analysis. Strategic plans are then implemented, and subsequently these plans are monitored for results. Rogers (1981) strategic planning technique uses a series of two-day meetings involving the organization s senior management. Warm-up questions are used to focus the group on long-range patterns within the organization and within the environment; the process includes the group developing a response for the business of the organization, which, in turn, supports the development of a mission statement. The next step is to identify and analyse the various environmental segments that make demands on the organization. The next step for the organization to take is to identify the various stakeholders, both internal and external, to the organization, including the demands these stakeholders place on the organization. This provides the organization with the opportunity to identify it s current response to these demands; predict and project future demands from these stakeholders and prepare future organizational responses. Finally, the organization identifies its ideal or desired state and prepares implementation plans designed to bring about the desired future state. Conclusion Strategic Planning mandates a continuous and systematic process where organizations make decisions about intended future outcomes, how outcomes are to be accomplished, and how organizational success is measured and evaluated. Strategic Planning has the potential to make radical changes in the way organizations operate. In essence, a Strategic Planning Process needs a minimum of six essential elements. They are: a mission statement element; an assessment element; an objectives element; a measurement element; a strategies element and a performance review element. As well, a strategic planning process needs sufficient flexibility to accommodate the inclusion of other elements relevant and pertinent to meet an organization s specific needs. If a systematic approach, as previously described, is executed in a careful and conscious manner with full participation of an organization s management team, it should result in a process that delivers results. References Ansoff, H. I. The New Corporate Strategy. New York: Wiley, 1988 Beckhard, R., and R. T. Harris. Organizational Transitions: Managing Complex Change. Reading, MA: Addison-Wesley, 1987. Blackerby, P. Strategy Planning Armed Forces Comptroller. 1994, 39/1, 23-24. Bryson, John M. Strategic Planning for Public and Non-profit Organizations. San Francisco: Jossey- Bass, 1988. Charney, Cyril. The Manager s Tool Kit. New York: AMACOM, 1995. Gerstner, Louis V. Can Strategic Planning Pay Off? Business Horizons. 1972, 12, 5-16. Ginter, P. M., A. C. Rucks, and W. J. Duncan. Planners, Perceptions of the Strategic Management Process. Journal of Management Studies. XXII, 1985. Harris, David M., and Randy L. DeSimone. Human Resource Development. New York: Dryden Press, 1994. Hurst, D. K. Why strategic management is bankrupt. Organizational Dynamics. 15 (Autumn), 4-27. Koontz, Harold and Cyril O Donnell. Principles of Management: An Analysis of Management Functions. 5th ed. New York: McGraw-Hill, 1972. Krallinger, Joseph C., and Karsten G. Hellebust. Strategic Planning Workbook. New York: Wiley & Sons, 1993. Krone, C., and G.K. Jayaram. Open Systems Planning. New York: Holt, Rinehart & Winston, 1976. Lorange, Peter and Richard F. Vancil. How to Design a Strategic Planning System. Harvard Business Review. (September-October), 1976. McGee, James and Laurence Prusak. Managing Information Strategically. New York: John Wiley & Sons, 1993. Minitzberg, Henry. Mintzberg on Management: Inside our Strange World of Organizations. NewYork: Free Press, 1989. Naylor, Thomas H. Strategic Planning Management. OH: Planning Executives Institute, 1991. Reinharth, Leon, H. Jack Shapiro, and Ernest A. Kallman. The Practice of Planning: Strategic, Administrative and Operational. New York: Van Nostrand Reinhold, 1981. Rogers, Thomas H. Strategic Planning: A Major OD Intervention. American Society for Training and Development. ASTD Publications. 1981. 50-55. Schendel, Dan E., and Charles W. Hofer, eds. Strategic Management. Boston: Little, Brown, 1979. Steiner, George A. Strategic Planning. New York: Free Press, 1979. 32 FMI JOURNAL VOLUME 18, NO. 1

Whistleblower Protection for Financial Managers Christopher J. Stasuik and Matthew McGuire In keeping with the journal s theme of shining the Spotlight on Accountability, this article examines Canada s newest whistleblower protection initiatives. With almost unlimited access to an organization s information coupled with their understanding of the control processes, financial managers are in an excellent position to discover and report suspected wrongdoings. This article highlights the process and remedies available to whistleblowers in this new regime. It is instructive to first note the differences between the goals of the initiative and its shortfalls. More specifically, we examine in detail whether or not the proposed legislative changes [Bill C-2] provides effective protection for whistleblowers. [Bill C-2] proposes amendments to [Bill C-11]: The Public Servants Disclosure Act (the Act ) and is intended to strengthen Canada s whistleblowers protection provisions. We consider the most significant categories of suggested amendments to the Act to be (1) the expanded Public Sector Integrity Commissioner s powers; (2) the expanded application of the Act; and (3) the changes to the rules regarding Access to Information. Expanded Public Sector Integrity Commissioner s Powers The Public Sector Integrity Commissioner, under the new legislation, will be elevated to the status of an independent Agent of Parliament. The amendments provide the Commissioner with the purview to receive complaints regarding wrongdoing, follow up on their investigation, and report its findings to Parliament. Other powers include its increased authority to attempt to mediate a solution to the wrongdoing. Critics refute the independent status of the Commissioner by pointing out that it lacks the power to order corrective actions to fix the wrongdoing or to enforce the Commissioner s mediation attempts, as it is Christopher Stasuik Christopher Stasuik, Chartered Accountant, is a subject matter expert and audit consultant in the area of internal controls and governance standards such as the Sarbanes-Oxley Act, Bill 198, and Multilateral Instrument 52-109. Mr. Stasuik has been practicing public accounting for 6 years. Matthew McGuire Matthew McGuire is Manager of Forensic & Dispute Services with the Deloitte Financial Advisory Group in Ottawa. Matthew was previously an Intelligence Analyst with the Financial Transactions and Reports Analysis Centre of Canada (FINTRAC), responsible for the analysis, assessment and disclosure of tactical and strategic financial intelligence on suspected money laundering, terrorist financing and other threats to Canadian security. only permitted to make recommendations for Parliament to consider. It has also been noted that the Commissioner has not been granted the authority to offer remedies to protect whistleblowers from retaliations; this responsibility rests with the Public Servants Disclosure Protection Tribunal (the Tribunal ). The absence of this power is considered a weakness, since a witness is more likely to report an incident to an independent authority that can both protect the witness and punish the wrongdoer. Under the new regime, Canadian whistleblowers would not have the right to seek remedy through the court system even as a last resort (Federal Accountability Initiative for Reform [FAIR], 2006). The Court system is an independent forum where instances of wrongdoing are disclosed to the public. In contrast, some jurisdictions give whistleblowers the right to trial by jury (FAIR, 2006). Under the present regime, public sector employees have to first report suspected wrongdoings to their supervisors. The new regime would grant these employees direct access to the Public Sector Integrity Commissioner. The independence and expertise of the Commissioner will certainly be a welcome change to would-be whistleblowers, who might avoid the retaliation of their supervisor, who might be an unknown accomplice of the wrongdoer. Assuming that the wrongdoing is reported, what mechanisms are in place to finance the whistleblower s legal costs? The proposed changes to the Act permit the Public Sector Integrity Commissioner to authorize the payment of legal costs in the amount of $1,500 under normal conditions with $3,000 being the upper limit for exceptional circumstances. The maximum allotment is low considering the complexity of whistleblowing cases, and that an hour of a seasoned litigator s time can easily cost $500. One of Canada s prominent whistleblowers, Ms. Joanna Gualtieri, who reported to management about what she believed to be the extravagance and waste that occurred at the Department of Foreign Affairs and International Trade, was in one motion requested to pay costs of $378,000. The court assessment resulting from this motion was $80,000 (Jacobs, 2006). A witness to financial wrongdoing would consider the hardship associated with financing their defense costs considering that the assistance provided from the Commissioner is only a small offset. Gualtieri s legal cost example clearly demonstrates that individual whistleblowers are at an extreme disadvantage if a well-funded government department decides to rigorously defend its alleged wrongdoers. AUTUMN 2006 FMI JOURNAL 33

WHISTLEBLOWER PROTECTION FOR FINANCIAL MANAGERS Expanded Application of the Act The proposed amendments expand the scope of the existing Act: both contractors performing government work and crown corporations would be subject to the old and new provisions. A whistleblower would consider whether their department is covered by the legislation so that they are afforded the protections of the Act. The Canadian Forces, CSIS, and CSE are specifically excluded from the Act, and the RCMP personnel must first comply with their internal processes before following the provisions outlined in the Act. There have been many examples over the years of reprisals against the government whistleblowers (The Federal Accountability Act [FAA], 2005). As part of the Federal Accountability Act initiative, Parliament seeks to enhance the protections of public employees who disclose wrongdoings in the public sector. As previously mentioned, if a whistleblower were to report retaliation, the Commissioner could only refer the matter to the Public Servants Disclosure Protection Tribunal. The Tribunal has the power to decide whether a reprisal did in fact occur, to order action to remedy the situation, and to ensure that those who took reprisal are disciplined. The tribunal also has the power under the Act to summon witnesses, administer oaths, and receive evidence. In addition to all previous remedies available to labor boards, the Tribunal has the power to compensate the whistleblower by an amount of not more than $10,000 for pain and suffering that he or she may have suffered. Access to Information Bill C-2 calls for amendments to both the Access to Information Act [S. 222 of Bill C-2] and to the Privacy Act [S. 225 of Bill C-2]. According to these provisions, information obtained in the course of a Commissioner s investigation would be inaccessible. Consequently, a government might suppress the disclosure of whistleblowing instances or details. The Information Commissioner expressed concern regarding the impact Bill C-11 would have on the Access to Information Act and Privacy Act in his remarks made at the Financial Management Institute of Canada s 2004 Professional Development Week: information obtained or prepared by a person to whom wrongdoing may be reported be exempt from the Act for 20 years (Office of the Information Commissioner of Canada, 2004). He also suggested that the exemption was not warranted. Further in this same address he states that this new exemption is designed, perhaps unintentionally, to protect the government, not whistleblowers or persons against whom accusations are made (2004). These particular amendments favour the protection of the government and not the whistleblower or the accused persons. Furthermore, it is seemingly at odds with The Federal Accountability Act, which states that for real protection of whistleblowers the prompt public disclosure of information revealed by whistleblowers, except where national security or the security of individuals is affected (FAA, 2005). Conclusion Whistleblowers often pay a high price for their actions: accusations of financial impropriety involving public funds may involve personal, professional, and financial hardships. When a person with great courage and conviction chooses to initiate the whistleblower process, they need to be aware of the obstacles they face under the current legislative environment. Due to the membership composition of the Financial Management Institute, even though beyond the scope of this article, it is important to highlight the fact that professionally designated members should remember to consult their professional codes of ethics, for whistleblowing guidelines. Normally, professional ethic codes require their members to report wrongdoings and specify possible sanctions for compliance failures. Although the bill will improve the legislation surrounding the protection of whistleblowers, the obstacles remain, and the legislation falls short of its intention to protect whistleblowers. For additional information regarding this topic, please refer to the following websites: http://fairwhistleblower.ca; http://www.whistleblower.org; and http://www.dwatch.ca. References Federal Accountability Initiative for Reform. (2006). April 12 th, 2006: FAIR s Initial Reactions to the Accountability Act. Available online at: http:// fairwhistleblower.ca/news/press_releases.html# Reactions. Jacobs, D. (2006, May 22). A whistle blown, a decade lost. Ottawa Citizen, p.2. Office of the Information Commissioner of Canada. (2004), Remarks to the Financial Management Institute s Professional Development Week 2004 Financial Management in a Fishbowl. Available online at: http://www.infocom.gc.ca/speeches/ speechview-e.asp?intspeechid=105. The Federal Accountability Act: Stephen Harper s commitment to Canadians to clean up government, 4 November 2005, p.8. 34 FMI JOURNAL VOLUME 18, NO. 1

PROFESSIONAL DEVELOPMENT WEEK 2006 Spotlight on Accountability Ottawa Congress Centre November 28 December 1st, 2006 ACCOUNTING PROFESSIONAL DEVELOPMENT PROGRAMS Day 1 Tuesday November 28th 8:00 9:00 Coffee/tea & Continental Breakfast/Registration seminar 9:00 10:15 Keynote Speaker: John Ibbitson The Next Canada Spotlight on Accountability 10:45 16:00 Event 1 1 Event 1 2 Event 1 3 Event 1 4 Event 1 5 Resource Management What s new and improved: from the central agencies perspectives on the measures announced in the 2006 Budget to a departmental perspective presenting their Financial Management Matrix Model. Issues of the Day This stream will focus on accountability, in keeping with the overall theme of PD Week 2006. Perspectives will be offered from Treasury Board Secretariat, the private sector, and a federal government department. Information Management IT/IM issues affecting financial community including: IT Governance in a shared system environment; Security and international control standards called COBIT 4.0. International Perspectives What are the key public service renewal initiatives on the US government agenda? What is Canada doing to promote better government in other nations? CMA ~ Workshop Empower Yourself Feel Valued and Promote your Image Learn to create powerful, unique and lasting impressions using a proven system that positively promotes your skills, and rewards you with the recognition you deserve for the business contribution that you make. Free Seminars www.fmi.ca/pdweek/index.html A) BMO Acquisition Card and BMO Details Online 9:00-10:15 B) BMO Acquisition Card and BMO Details Online 10:45-12:00 C) BMO Acquisition Card and BMO Details Online 13:30-14:30 Day 2 Wednesday November 29th 8:00 9:00 Coffee/tea & Continental Breakfast/Registration seminar 9:00 10:15 Keynote Speaker: Michael Vaughan The Economy Demystified 10:45 16:00 Event 2 1 Event 2 2 Event 2 3 Event 2 4 Event 2 5 Working of Government Management and Reporting of the Public Service Pension Plan. Post-retirement Reflections on the Working of Government. Agenda for Results Come and learn about modern management practices, including the new financial management policy suite, fundamental controls and the experiences of a department in integrating the MAF throughout their organization. Le Francophile (Event in French) (English simultaneous interpretation available) Born with a silver spoon an unknown! Keynote Speaker: Jocelyne Cazin Recent evolution of GAAP in Canada! Enterprise Systems The world of enterprise systems is transforming itself rapidly. Join us as industry leaders share with us how revolutions in enterprise technologies and management have impacted their world. CA ~ Workshop Writing Better E-mails E-mail is a form of communication we love to hate. Learn a four-step process for writing e- mails. Save time and write better e-mails. Free Seminars www.fmi.ca/pdweek/index.html A) PWGSC The Shared Travel Services Initiative 9:00-10:15 B) PWGSC The Shared Travel Services Initiative 10:45-12:00 C) PWGSC The Shared Travel Services Initiative 13:30-14:30 AUTUMN 2006 FMI JOURNAL 35

Day 3 Thursday November 30th 8:00 9:00 Coffee/tea & Continental Breakfast/Registration seminar 9:00 10:15 Keynote Speaker: Charles-Antoine St-Jean, Comptroller General of Canada The Federal Accountability Act 10:45 16:00 Event 3 1 Event 3 2 Event 3 3 Event 3 4 Financial Services The Federal Accountability Act What it means for you, the finance community. Audited Financial Statements Are you ready? Preventing Fraud in the Public Sector. Internal Audit Focusing on the functional impact of accountability in today s environment, and the role that audit, finance and other key functions play in transparency and stewardship. Best Practices for Card Program Management Gartner Research: Purchasing card success. Client testimonials: Best practices. Panel discussion: Trends & opportunities. FMI ~ Workshop TB Submissions Come and learn about the challenges of preparing TB Submissions in today s environment. Find out about the process and the critical success factors from key people working with TB Submissions on a regular basis. Are you ready to be challenged? Free Seminars www.fmi.ca/pdweek/index.html A) SAP Canada Check website for further details 9:00-10:15 B) CMA Canada The CMA/CPFA dual designation program 10:45-12:00 C) Check website for further details 13:30-14:30 Day 4 Friday December 1st 8:00 9:00 Coffee/tea & Continental Breakfast/Registration seminar 9:00 10:15 Keynote Speaker: Bill Williams The 8th Habit: Find Your Voice and Inspire Others to Find Theirs. 10:45 15:00 Event 4 1 Event 4 2 18:00 01:00 Gala Human Dimension The 8th Habit...From Effectiveness to Greatness The new era in human history is GREATNESS, it s for FULFILLMENT! Are you prepared to passionately execute and make your significant contribution? Understand the 7 Habits of Highly Effective People and move beyond to The 8th Habit. CGA ~ Workshop Benefit from the Meetings & Business Aptitude Workshop Learn how to plan and manage meetings. Meet and tame the personalities that emerge during meetings including your own. Free Seminars www.fmi.ca/pdweek/index.html A) Check website for further details 9:00-10:15 B) CMA section Outaouais Check website for further details 10:45-12:00 Check the FMI website for a session list and more details at www.fmi.ca/pdweek/index.html 16:00 18:00 FMI President s Reception 36 FMI JOURNAL VOLUME 18, NO. 1

news CAPITAL CHAPTER The Capital Chapter kicked-off the 2006-07 season with a very well attended (over 130 participants) afternoon season opener and Annual General Meeting at the Ottawa Congress Centre. Outgoing President, Karen Robertson s welcome address reiterated the resounding success of the past season while incoming President, Philip Mostert outlined the objectives for the upcoming season: i) maintain the momentum from last year and continue to deliver quality Professional Development Days, ii) continue to strengthen the relationship with FMI National and fellow FMI Chapters, and news ONTARIO CHAPTER Creation of the Ontario Chapter The Office of the Provincial Controller is sponsoring the Ontario Chapter of the Financial Management Institute of Canada. The Ontario Chapter will provide education, share best practices and promote good financial management in the financial communities of the Ontario Government, Federal Government, municipalities, agencies of all levels of government and the broader public sector. A formation meeting was held on Tuesday May 16, 2006 and was attended by over 100 CFOs or their representatives from the Federal Government, Provincial Government, Municipalities, Hospitals, Boards of Education, Universities and Colleges, the professional accounting associations and financial management consultants. Speaking in support of the proposal to form a Chapter was: Robert Siddall, Provincial Controller, Ontario, iii) increase the membership base. Upon completion of the Annual General Meeting, Mr. Dick Pound, Canada s representative on the International Olympic Committee (IOC) and current Chair of the World Anti-Doping Agency (WADA) presented a very interesting and engaging discourse. Mr. Pound spoke of his efforts to brand and market the Olympic rings and his shrewd negotiation for Olympic television rights around the world. The audience became really engaged as Mr. Pound described WADA s efforts to rid all sports of CHAPTER NEWS The photo features some members of the Capital Chapter Board of Directors and our guest speaker Dick Pound. From left to right: Cindy Bourdeau, Allan Richards, Sye Mincoff, Karen Robertson, Dick Pound, Cathy Sparling, Anik Lapointe, Dan Maloley and Stephen Coaker. Jean Laporte, President, FMI National Mike Pestill, Regina Chapter FMI Ann-Marie Sahagian, Assistant Comptroller General of Canada Richard Kennedy, Chief Internal Auditor, Ontario Philip Howell, Associate Deputy Minister, Ministry of Finance, Ontario Jim R. McCarter, Auditor General of Ontario Bruce Bennett, Acting Provincial Controller The attendees were asked for their input into what an Ontario Chapter should do and what partnerships should be formed. The attendees then endorsed the formation of an Ontario Chapter, and elected Richard Slee of the Office of the Provincial Controller as Interim Chair, and Gordon Nowland, CA, CIA, Manager, Risk Assurance Service, Audit Services Team, Ontario Internal Audit; Sharda Batra, Manager Special Projects, Indian Affairs, Government of Canada; and Marcel Dumont, Director, Toronto Bureau, Province of Quebec as members of the Organizing and Bylaws Committee. doping. The session ended with a well attended networking hour during which members had a chance to speak with Mr. Pound, meet new members and reacquaint with former colleagues. A further meeting to form the Chapter, pass Bylaws and elect Officers was held, June 23, 2006. An interesting presentation/workshop was given by Nick Shepherd of EduVision on Values and Ethics, which was extremely well received. The Bylaws were approved as amended and the Officers were elected (see below). Fees for regular membership were set at $40 and for Students and retirees at $20. 1) President - Richard Slee, Office of the Provincial Controller 2) Vice-President Gordon Nowlan Ontario Internal Audit 3) Secretary Phil Watkins, Ontario Centre for Leadership and Learning 4) Treasurer Olga Lenskaia, Ministry of Health and Long Term Care 5) Director, Liaison, Federal Government - Patricia Buffam, Canadian Revenue Agency 6) Director, Liaison, Provincial Government Shafi Yakub, Ontario Ministry of Energy 7) Director, Liaison, Municipalities Robert Rupnik, Ministry of Community and Social Services AUTUMN 2006 FMI JOURNAL 37

CHAPTER NEWS 8) Director, Liaison, Broader Public Sector - Bob Allison, Superintendent of Education: Business and Corporate Services, Kawartha Pine Ridge District School Board 9) Director, Liaison, Professional Organizations - Mary Harsant, Workplace Safety and Insurance Board 10) Director, Marketing and Communications and Email Newsletter (vacant) 11) Director, Partnerships Werner Rodrigues, BearingPoint 12) Director, Professional Development Chris Lambert, Office of the Provincial Controller The new Board of Directors is currently developing an exciting program for the next year. news PRINCE EDWARD ISLAND CHAPTER The PEI Chapter recently awarded its first scholarship for post-secondary studies. All members and their dependents who are currently enrolled in full-time studies at a Canadian university or community college are eligible to apply. The chapter issued a single award valued at $500. news QUEBEC CHAPTER Demystifying the Role of Agents of Governance On May 31, 2006, close to 280 IGF- Québec members and participants gathered at the Quebec City Hilton for a thematic half day on: Demystifying the role of agents of governance. Diane Jean, Deputy Minister of Revenue, served as honorary chair for this activity and played an active role in planning it with the organizing committee. The high calibre of guest speakers also contributed greatly to the success of this event. Ms. Jean introduced the topic for the day. She outlined the context at the Quebec Ministry of Revenue by presenting the parties responsible for governance and for integrated risk management at her ministry both internally, with program evaluation and internal audit, and externally, with the Comptroller of Finance and the Auditor General. Finally, she outlined three key points in evaluating the risks of governance: Approach: Assessment of risks and control measures Analysis of types of control measures Review of Management Committee practices Improvement plan Results She described the implementation in 2004 of the project on Assessment of risks and control measures for tax revenues and refunds. She touched on the project objectives and the management and implementation structure, including the initial establishment of a management committee, an advisory committee and a coordination committee. Josette Legrand, Director of Financial Management, Ministry of Revenue, Government of Quebec Denis Garon, Assistant Deputy Minister of Processing and Technologies, then spoke about risk management in major technology projects. He gave an overview of risk analysis at Revenue Quebec. He stressed that this management method has been used in over 30 projects in the ministry, requiring an investment of 60 person-days per project, with between 8 to 15 major risks identified per project. Pictured above are Andrew Burt, President and Karla Koughan, the award recipient. Karla is currently enrolled in her third year of study at U.P.E.I. The chapter would like to extend their congratulations to Karla and we wish her all the best in her studies. Anyone interested in applying for our 2007 award should contact a member of the chapter executive for further details. Diane Jean, Deputy Minister of Revenue, Government of Quebec Ms. Jean introduced the three managers from her ministry who shared their experience. First, Josette Legrand, Director General of Financial Management, spoke about control and the reliability of financial data. Denis Garon, Assistant Deputy Minister, Ministry of Revenue, Government of Quebec Finally, Pierre Gagné, Director of Internal Audit and Investigations, outlined his role in the ministry as a partner. He provided a number of examples of intervention by 38 FMI JOURNAL VOLUME 18, NO. 1

CHAPTER NEWS his directorate, relating to the reliability of financial data, the protection of confidential information, and physical and computer security at sites. Pierre Gagné, Director of Internal Audit and Investigations, Ministry of Revenue, Government of Quebec During the second half of the event, Charles-Antoine St-Jean, Financial Comptroller for Canada, spoke about strengthening internal audit and financial management. He described the context for the approval of an internal audit policy by Treasury Board in October 2005, which came into effect on April 11, 2006, and will be implemented over a three-year period. He also touched on the Federal Accountability Act. In addition, he shared his vision for internal audit as seeking to restore the confidence of parliamentarians, Canadians and senior public servants in the internal audit function. Charles-Antoine St-Jean, Financial Comptroller for Canada On the topic of strengthening financial management, Mr. St-Jean presented the key principles for achieving this objective, including greater delegation of authorities to the departments by the Treasury Board Secretariat and greater emphasis on the organization s short-term and long-term strategic needs. He also presented a delivery model for 20 to 25 major organizations which overall account for nearly 90% of the Government of Canada expenditures. The model involves creating a model of the Chief of Finance with sole responsibility for all financial management related matters under the Deputy Minister s control in regards to the department s overall performance, who would be a member of the senior management team and who would report functionally to the Comptroller General on professional performance and other related matters. Manon Roy, of Leclerc Juricomptables Manon Roy, from the forensic accounting firm of Leclerc Juricomptables, followed with a presentation on Fraud: prevention is better than cure. Elements to consider while implementing a prevention program against embezzlement. She approached the topic by presenting various statistics on the average age of defrauders, their salary and their education level. She also outlined the factors conducive to an environment to prevent fraud, namely: An effective and functional system of internal controls Background checks for new employees Detection surveys and other specific audit procedures (fraud) Workplace monitoring A code of ethics Ethics must be part of corporate culture Policy on fraud and other illegal practices An ethics hotline Training Next, Monique Goyette, Finance Director for the Grande Bibilothèque de Montréal, presented the construction project valued at over $100 million. In particular, she spoke about the results after one year of operations, the initial institutional challenges, identification of risks, the control philosophy, and the factors contributing to the success of the Grande Bibliothèque. She reviewed the main events since 1998, such as the coming into force of the Act, the approval of the construction, the amalgamation of the Grande Bibliothèque and the Bibliothèque nationale du Québec, the opening and finally the merger with the Archives nationales du Québec. Ms. Goyette also outlined the challenges that arose such as taking over the building, staffing and staff training, the standardization and processing of 4 million documents and the development of the entire technological infrastructure. She described the services offered by the Grande Bibliothèque and noted that it received 8,400 visitors per day in 2006. Monique Goyette, Director of Finance, Grande Bibilothèque de Montréal She described the implementation of key governance control, including the bi-weekly monitoring of the overall schedule, the Coordination Committee, the monthly monitoring by the Construction Management Committee and the Advisory Committee of the Grande Bibliothèque. She also presented the external risks identified that pertained primarily to users unmet expectations, agreements with partners and their unions not being ratified, and the potential weaknesses in the bidding process or in dealings with suppliers, as well as internal risks such as a poor budget planning and insufficient resources for financial monitor- AUTUMN 2006 FMI JOURNAL 39

CHAPTER NEWS ing. Finally, Ms. Goyette outlined the key factors for success in the management of the Grande Bibliothèque project, such as obtaining the necessary resources and ensuring transparency in the management of the project for the government and the public. Finally, over the meal, the Auditor General of Quebec, Renaud Lachance, demystified his governance role for the National Assembly. He emphasized in particular that his audit activities relate to democratic control of the public good and that the Auditor General Act is the foundation for his governance role. In addition, he mentioned the three types of audit conducted: Financial audit; Compliance audit with laws, regulations, policies and guidelines; Value-for-money audit. Renaud Lachance, Auditor General of Quebec He also noted that the Office of the AGQ audits the financial statements of various government organizations and agencies that are managed by boards of directors. As a result, the AGQ is directly involved in the management of these organizations. The boards of directors also play a governance role, which is why a good relationship between these two parties must be established and maintained. Mr. Lachance concluded with three observations. First, he stated that governance practices differ among public-sector agencies, including departments, agencies and government corporations. Secondly, governance derives from economics and governance is now at the heart of the State activities. Finally, all work on the concept of governance (research, analysis or projects) fosters the sound management of public funds. For further information, the guest speakers presentations are available on the IGF- Québec Web site at www.igfquebec.com/ Nouveautes.html. Bertrand Carrier, President IGF-QC. Annual General Meeting Quebec City On September 13, 2006, at the Observatoire de la Capitale on the 31 st floor of the Marie-Guyart Building, at the heart of our legislative buildings, was held our 18 th annual general meeting, followed by the launch of our program of activities for 2006-2007. A light buffet was served, during which guests could enjoy an unobstructed view of Quebec City, including the Citadel, the St. Lawrence, IIe d Orléans, and the site of the QUEBEC 2008 celebrations, where the Public Sector Management Workshops (P.S.M.W. 2008) will be held in 2008. The event began with a big screen projection of our guest speakers from the past year, followed by a presentation by Serge Boisseau, outgoing president, of the Chapter s Activity Report for the year ending June 30, 2006. André Gignac, Secretary- Treasurer, then presented the audited financial statements as at June 30, 2006. A gift (a bronze statue by artist Anne Renard) was then presented to outgoing president Serge Boisseau by the IGF Quebec Chapter Founder, Pierre-André Paré, in appreciation for his three years of service as president. In addition to the hundred or so members in attendance, we were also pleased to have in attendance various governors and partners who are involved in our activities. We would like to point out that Richard Gagnon, Director, was responsible for organizing this event. Anyone interested in our Activity Report for 2005-2006 may view it on our Website at www.igfquebec.com, under Publications (other publications). The next item on the agenda was the launch of our 2006-2007 program of activities, by Bertand Carrier, the new president elected for a two-year term, who is also in charge of the Program Committee. The program includes: Four luncheon meetings, during which the following topics will be addressed: Success in business The role of financial market authorities - how to prevent and protect yourself against corporate fraud Corporate management in Quebec: successes and challenges Network building: the art of working together Two other topical subjects will also be addressed at thematic half-day meetings: Restoring public trust: governance rules Human capital: the challenge for our organizations After the introduction of our 2006-1007 program of activities, the first official announcement was made to our members, namely, that the IGF-Qc would host the Public Sector Management Workshops - 2008 (P.S.M.W. 2008) during the festivities marking the 400 th anniversary of Quebec City. The P.S.M.W. 2008 will be co-chaired by Jean Laporte, National Co-Chair, and Serge Boisseau, Co-Chair representing IGF-Qc. Mr. Carrier also thanked outgoing directors André Coté, Jean Mainguy and Brigitte Portelance for their steadfast dedication and in some cases for their countless and productive years devoted to the growth and advancement of our Chapter. The President also welcomed Marc Demonceaux, Regional Director General, Quebec Region Fisheries and Oceans Canada, who joined the Board of Governors, replacing Jean-Guy Beaudoin, whom we thank for serving on the Board of Governors. M. Marc Demonceaux The members of the 2006-2007 board of directors and of the board of governors were then introduced. 40 FMI JOURNAL VOLUME 18, NO. 1

CHAPTER NEWS Serge Boisseau Pierre-André Paré Bertrand Carrier Outgoing President and Serge Boisseau President, IGF-Quebec, for 2006-2007 BOARD OF DIRECTORS QUEBEC CITY CHAPTER President Bertrand Carrier, CA Vérificateur général du Québec Vice-President Renée Brassard, CGA Ministère des Ressources naturelles et de la Faune Secretary-Treasurer André Gignac Vice-President, Public Relations Roland Letarte, CA Directors: Serge Boisseau Parks Canada Norbert Chouinard, CGA Director Richard Couture La Financière agricole du Québec François Dion, CA Agence de la santé et des services sociaux de la Capitale nationale Ida Falardeau Ministère du Revenu Ubald Gagné Ministère du Conseil exécutif Michel Gagnon Commission de la Santé et Sécurité au travail Richard Gagnon, CA Financial Comptroller Suzanne Gingras, CA Société de l assurance automobile du Québec Louise Rheault Ministère de l Education, du Loisir et du Sport Pierre Sasseville, CA, CISA Ministère des Services gouvernementaux Monique Trudel Fisheries and Oceans Canada Michel Turner Secrétariat du Conseil du trésor BOARD OF GOVERNORS QUEBEC CITY CHAPTER Carole Boisvert, CA Financial Comptroller Marc Demonceaux Regional Director General, Quebec Region, Fisheries and Oceans Canada Jean Houde Sous-ministre, Ministère des Finances Diane Jean Sous-ministre, Ministère du Revenu Renaud Lachance, CA Vérificateur général du Québec Luc Meunier Secrétaire du Conseil du trésor Pierre-André Paré, FCA IGF-Québec Chapter Founder Pierre Roy Président-directeur général Régie de l assurance maladie du Québec François Turenne Sous-ministre, Ministère de l Emploi et de la Solidarité sociale To learn more about our program of activities for 2006-2007, our rates, mission and the word from our president, please see our Web site at www.igfquebec.com, under Programming. We took the opportunity to remind our guests that our activities cover a wide range of resource management - related fields including financial, human, material and information resources. These activities are designed to meet our current and future members needs and to maintain a steady increase in the number of group rate members. The Chapter s canvassing period runs from the launch of our program of activities on September 13 th to our first luncheon meeting on October 11 th. It is during this period that all departments and agencies will be canvassed to make this upcoming year a real success and to ensure that our guest speakers have sizeable audiences. After the activity, each participant has received a promotional pen featuring the IGF-QC colours and our Web site address, along with a paper copy of the 2006-2007program of activities. This promotional item was chosen by the AUTUMN 2006 FMI JOURNAL 41

CHAPTER NEWS Marketing Committee, under the direction of Ubald Gagné, Director. To learn more about the IGF-Qc., we invite you to visit our Web site whenever you wish and as often as you wish. news VANCOUVER CHAPTER The Vancouver Chapter ended the 2005/2006 year in May with its first recognition and networking event at the Renaissance Hotel in Vancouver. Both volunteers and our event sponsors (both the CGA and CMA Associations) were acknowledged for the success of the Vancouver Chapter. This is included a visit by the FMI National President Jean Laporte. The recognition was well received by the recipients. The New Year kicked off on September 28, 2006 with a full hot buffet breakfast at the Sandman Hotel, in Vancouver, followed by a guest speaker, Dr. Laugh, aka Chris Johnson, B. Ed., M. Ed. The workshop was called Restoring Humour & Humanity in the Work Place. He spoke from a personal and professional point of view. The format was similar to a comedy performance. Dr. Laugh advocates preventative medicine. The audience felt energized, rejuvenated, and equipped to care for the health of their own funny-bone. He focused on teaching the audience how to: create environments which foster good humour, respect, caring and nurturing; foster self-esteem and eliminate negative thinking. The audience learned to access their inner child and give it permission to be funny, humorous, playful and spontaneous. This event was filled to capacity of 100 participants. The Annual General Meeting followed the event. The membership drive for 2006/2007 began in early September and by September 28 th there were over 195 registered members. This is a new record for the Vancouver Chapter which has been steadily climbing year after year. Tentative events are scheduled for October and November. These will be announced shortly on the FMI Vancouver Chapter website. Our Management Team Samson, Pierre, M.Sc., FCGA - President St-Onge, Daniel, BBA - Vice-President, Training, Facilitation and Learning Solutions Daniel Charron, CMA Director Financial Services Administration Perron, Marilyn Manager Perron, Nathalie Administrative Assistant Our Services Coordinators Manoiu, Gabriela, BBA, M.Sc. Client Services Coordinator Gauvreau, Claudine, BBA, CA Grants & Contributions Tabatoni, Pascale, BBA, M.Sc. Management Consulting, Internal Audit & Evaluation Pesant, Mélissa, BBA, CGA Accounting and Tax Coordinator Management Consulting Services Internal Audit and Review Services Training, Facilitation and Learning solutions Accounting Services Financial Services Grants & Contributions Services Evaluation Services Contact us: 85 Victoria Street, Gatineau, QC J8X 2A3 (819) 772-0044 www.samson.ca samson@samson.ca Our Consultants Charron, Gilles, MBA Cleary, David, CA Coolen, Stan, CGA Cox, Lesli Darmody, Robert, CA Desrosiers Louis, B.Sc., M.Sc. Dillon Mark, CA Duciaume Luc, BBA, CGA Dupont, Gustave, M.Sc., CA Eady, Monique, B.Comm, MBA Farley, Mathieu, CA, CPA Glazer, Martin, CA Godbout, Jean-Pierre, BBA, CISA Heafy-Vandette Betty, CMA - SAP Accreditation Keen, Roger, Ph.D., CGA Lalonde, Robert R., M. Sc. Comm, FCGA Lanthier, Pierre, BA Milanovich, Gregory, BA Nolet, Marcel, B.Soc.Sc., CGA Pelletier, Claire, BBA, CGA Pender, Ted, BA Perron, Louise, CMA, MBA Pion, François, CGA Robbins, Jerry, B.Sc., M.Ed. Séguin, Gérard, MPA, BBA Simoneau, Kathleen, B.Comm Talbot, Yves, B.Comm, SPEC, ACC Walton, Karen, CA Wood, Ian, Chemistry Technologist 42 FMI JOURNAL VOLUME 18, NO. 1

FROM BEHIND THE GREEN EYESHADE Hey Buddy! Wanna buy a $2,000 hammer? Ihave been fascinated lately by a spate of newspaper articles speaking to the perceived vices and boondoggles of major public procurement and construction projects. In reading them, I am taken back to my early days as a contract auditor with the Canadian Government. As a puppy my stock-in-trade was auditing major government procurement activities for defense and aerospace and the construction of federal facilities. This involved work with the Canadian Commercial Corporation and other audit entities in other jurisdictions, such as the GAO in the U.S., and I gained insight into some issues that appeared to run true across many jurisdictions, including Canada. I remember often being accosted in those early days by people who had just learned what I did for the Government of Canada with snide comments about the now-infamous $2,000 hammer. They wanted to know how anyone could be so stupid to allow a contractor to claim $2,000 for a hammer. They wanted to know if I was even stupider to let this pass as an acceptable expense in my audit. For those of you too young to remember, in the mid-1980 s, there was a famous audit of a U.S. Navy contract where it was determined that the cost of a hammer worked out to $2,000 US. Well not being the kind of person who likes to look totally ridiculous about anything relating to my profession, I decided to read up on the $2,000 hammer. What I learned has stuck with me to this very day. You see it was not that this was a magical, all-singing-all-dancing hammer. It didn t float or glow in the dark. It wasn t made out of an anti-magnetic alloy or had the ability to resist radiation charges. Strangely, such hammers do exist and are probably worth $2,000, if not more. No, this was just a simple hammer. So why was it worth $2,000? As it turns out, the hammer didn t really cost $2,000. There was a much larger package of goods and services provided to the Navy that, when allocated down the food chain to our lowly little hammer, blew the final cost allocation into the stratosphere of quasi-hilarity. So why did the $2,000 hammer story gain so much traction? For that matter, why does any story of public cost overruns have the same legs as a sordid and lurid tale involving a senior political figure and one of their much younger assistants? Before I make my usually feeble attempt at sounding wise and well researched, let me just say that the phenomena of not hitting the mark on major projects is not the sole domain of the public sector. Ever heard of a car called the Delorean? I digress. The basic thing to remember here is that whopping cost blunders also occur in the private sector. However, the Law of Natural Selection applies very differently between the private and public sectors. In the former, the law is a little more brutal and a lot more definite. Making a big costing booboo on a major project or investment in the private sector can literally kill you. Not so in the public sector. The beast of state lives on no matter what costing or forecasting errors occur. So why does the story have more legs in the public sector when the result is usually more lethal in the private sector? To my sense its because the parties to the problem in the private sector have no real interest in seeing their mistakes dragged out for all to see. The managers and executives responsible are usually gone, the bankers, creditors and investors are suffering both embarrassment and financial losses and in, some cases, the organization itself doesn t even exist anymore. Accountability in the public sector works very differently. The machinery of state endures. Sure its captains may be tossed out and new ones elected, but the basic Bruce Manion Mr. Manion was born in Ottawa, Ontario in 1959 and graduated form the University of Ottawa with a Bachelor of Commerce degree. He was accepted into the Society of Management Accountants of Ontario in 1986. In April 2004, Bruce has been appointed Assistant Deputy Minister, Planning and Corporate Affairs Sector at PCH. His main objective is to promote Excellence in management at PCH. machinery that worked out the numbers remains somewhat undisturbed. But here is the rub. There are plenty of folks in and around the public sector who have either a mandate to hold the government of the day to account or who willingly take this role upon themselves under the banner of the peoples right to know or the need to defend taxpayers interests. Most democratic systems (actually all of them) also have built-in opposition mechanisms that strive to ensure that a duly elected government s power is kept in check to avoid excesses. One feeds the other and, bada-bing-badaboom, you have a perfect storm that has every change and lots of thunder and lightning. Long story longer. If your mistakes don t hurt you, will you ever learn from them? If you have a hoard of critics waiting to pounce on your every mistake, you have a much greater chance of feeling a bit more pain even if you are not several steps to mortality. So there is a systemic pressure for these stories to shock everyday folks out of complacency and demand that those handling the public purse do better. Then why wouldn t governments and public officials simply keep mum about their numbers until they are firm and not subject to grow at possibly the same rate as Pinocchio s nose? Well, governments actually have a powerful motive to spread the good word about public investments, particularly as an indication of support for a particular area of public policy such as defense or public infrastructure. In one of the articles referred to at the AUTUMN 2006 FMI JOURNAL 43

FROM BEHIND THE GREEN EYESHADE outset of this rant, the author addressed this very point. In the view of one of his sources, which is arguably quite debatable, elected officials simply do not have a vested interest in waiting around for the final numbers to be available. In fact, he cynically noted that most elected officials believe that they won t be around for the finished product so they get in on the ground floor of an initiative when the numbers are still very soft. I hasten to add that the same article provided a counterpoint in that he quoted another source stating that most elected officials want to be there for the ribbon cutting. It just doesn t always work out that way. So there is a certain method to all of this madness. Turns out that it is more about human nature than costing accuracy. Now before the costers among you throw up your hands in disgust and rush out to buy books by Freud and Kant, let me just say that there is still some room for hope for your advanced art. There is still the basic fact that many times the numbers can just be plain wrong and the result not a happy one. Good costing is always essential but there are real and tangible reasons why project costing goes out of whack. Price and volume variances, labour stoppages, organizational politics, weather and natural disasters all can have a hand in blowing out the best-intended cost estimates. Ever go to the job jar and take out that one project that you know is just going to be plain painful? Been there, done that. Those of you who have taken the trouble to look at the picture at the top of this column know that I am no Mike Holmes on any front! Last Christmas, while I was musing over my next topic for these hallowed pages, a tile on the stoop of my walk-in shower cracked. I told my household boss that this would be a piece of cake. Chip out the bad tile, put in a replacement from the small sample of similar tiles I had in the basement, a bit of grouting and Bob s your uncle! Well, as it turned out, Bob wasn t about to be anybody s uncle on this one. The tile cracked because it had no more support due to water damage to the shower base made out of water-proof wallboard and steel mesh. Ten days and $500 later, I had a beautifully restored shower enclosure, complete with a new door and marble stoop! As bad went to worse and I discovered the extent of the damage and associated repair, I spoke to the Boss. My sense was at least $1,500-$2,000 to get someone in to do it a professional. The other option was to do it myself and save our hard-earned money. I made it, sort of. I forgot that my billable time is worth about $75-$100 an hour. After 25 hours of the most brutal, dusty and back-breaking labour I have ever done, I was a big loser in the game, by as much as $2,000! There was one silver lining. I got to hang out at my favourite place on earth, the hardware store, and my tool collection expanded significantly. I still don t have a $2,000 hammer.but I still dare to dream! Tri-Graphic Printing (Ottawa) Ltd / Imprimerie Tri-Graphic (Ottawa) Ltée (613) 731-7441 1-800-267-9750 www.tri-graphic.com 44 FMI JOURNAL VOLUME 18, NO. 1