ARCHIVED - Crown Corporations and Other Corporate Interests of Canada 2007

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2.2 Crown Corporations Overview

2007 year in review

This section highlights new legislation, policies, and structural changes affecting federal parent Crown corporations that came into effect or were under development during the reporting period, from August 1, 2006, to July 31, 2007. The section also summarizes other relevant activities, including audits and special examinations of Crown corporations undertaken (and for the first time includes their total costs) as well as progress toward implementing measures to strengthen Crown corporations' governance regimes.

Structural changes–creation and dissolution of Crown corporations

Crown corporations are created through either an act of Parliament (typically, constituent legislation) or by articles of incorporation under the Canada Business Corporations Act. Since last year's report, one new parent Crown corporation, the Corporation for the Mitigation of Mackenzie Gas Project Impacts, was created and one deemed parent Crown corporation, the Cape Breton Growth Fund, reverted to subsidiary status.

The Mackenzie Gas Project Impacts Act came into force on November 10, 2006. This Act created the Corporation for the Mitigation of Mackenzie Gas Project Impacts. The Corporation is a non-agent Crown corporation, governed by Part X of the Financial Administration Act.Its mandate is to provide contributions to regional organizations with respect to projects that mitigate the existing or anticipated socio-economic impacts on communities in the Northwest Territories arising from the Mackenzie Gas Pipeline Project, consistent with criteria established and made public by the Corporation.

In addition, the Cape Breton Growth Fund Corporation, a wholly owned subsidiary of the Enterprise Cape Breton Corporation, saw its deemed parent Crown corporation status revoked by the Governor in Council on June 7, 2007. The subsidiary is preparing for dissolution because it has carried out its mandate to promote and assist economic development in the area, beyond coal mining.

Legislative changes affecting Crown corporations

A number of legislative provisions affecting Crown corporations came into effect during the year.

Tabled in February 2005, the Review of the Governance Framework for Canada's Crown Corporations outlined 31 measures to strengthen the accountability and transparency of Crown corporations. Since that time, action has been taken to implement most of the measures, through a combination of legislative and policy changes, with responsibility shared among the Treasury Board of Canada Secretariat, the Privy Council Office, the Canada School of Public Service, and Crown corporations.

The Federal Accountability Act, which received Royal Assent on December 12, 2006, addressed several of these 31 measures. The Act:

• permitted appointment terms for directors to be increased from three to four years;
• ensured that all audit committee members are independent from management;
• provided for the separation of the positions of chairperson and CEO in three Crown corporations^[15] where statutory amendments were necessary to effect the change; and
• extended the Access to Information Act and the Privacy Act to cover all Crown corporations^[16] that were not already subject to these Acts, as well as to all wholly owned subsidiaries.

The passage of the Federal Accountability Act also introduced or reinforced a number of other requirements affecting Crown corporations.

• The Financial Administration Act now includes offences for fraud and penalties for the misuse of public money or money of a Crown corporation;
• Amendments to the Auditor General Act permit the Auditor General of Canada to inquire into the use of funding under funding agreements, including those made by Crown corporations;
• The Public Servants Disclosure Protection Act now requires that the CEOs of Crown corporations publicly report on disclosed wrongdoing; and
• The newly created Conflict of Interest Act establishes in statute the existing obligations set out in the Conflict of Interest and Post-Employment Code for Public Office Holders.

Reviews

While 2 of the 44 parent Crown corporations (Business Development Bank of Canada and Export Development Canada) are required by their enabling legislation to undergo specific regular reviews,^[17] mandate reviews are conducted under the auspices of the responsible minister, subject to the approval of the prime minister, given his prerogative with respect to the machinery of government. These reviews typically assess the current mandate, the continuing need for the corporation, its record of cost-effective performance in meeting its objectives, and the consistency of those objectives with its mandate. One mandate review was completed in 2006‑07.

The minister responsible for the National Capital Commission (NCC) announced a mandate review of the Corporation in April 2006. The review covered, among other things, the NCC's functions and purposes, funding and cost of operations, and governance regime. The final report was published in December 2006.

Special examinations

Pursuant to section 138 of the Financial Administration Act, every five years^[18] each Crown corporation^[19] that is subject to Part X of the FAA is required to be the subject of a special examination. This examination is conducted by the external auditor(s) of the corporation (typically the Auditor General of Canada), and its purpose is to determine whether, in the period under examination, the corporation's financial and management practices and controls provide reasonable assurance that assets of the corporation are safeguarded and controlled, resources are managed economically and efficiently, and operations are carried out effectively.

Since last year's report, the Auditor General of Canada carried out special examinations of the following Crown corporations:

• the Canada Lands Company Limited;
• the Canadian Air Transport Security Authority; and
• the Canadian Museum of Nature.

Costs of audits and special examinations

In addition to special examinations, Crown corporations are required to maintain proper financial statements and to undergo annual audits. This year's report includes data on the costs of these activities for the first time. Because cost data are not available for the 2007 reporting period, however, 2006 cost data are used. Total costs of annual audits and special examinations for the 44 reporting parent Crown corporations and two wholly owned subsidiaries–the Jacques Cartier and Champlain Bridges Incorporated and the Seaway International Bridge Corporation Limited–for their fiscal years ending on or before March 31, 2006,^[20]amounted to about $19.44 million. Of this amount, the Auditor General of Canada costs totalled $16.10 million, and $3.34 million was paid to private sector auditors.

As at March 31, 2006, the Auditor General of Canada had completed special examinations for 11 Crown corporations at a total cost of $6.9 million, and the private sector completed one special examination for the Public Sector Pension Investment Board, at a cost of $348,340.

For this period, private sector firms carried out audits jointly with the Auditor General in the case of six Crown corporations, and were the sole auditor for three Crown corporations, as summarized below.

Achievements and awards

On January 19, 2007, the Treasury Board of Canada Secretariat held an awards and recognition event to celebrate achievements and highlight the dedication of public service employees who worked to achieve the targets set out for the Government On-Line and Service Improvement initiatives. The Service Improvement Initiative was launched in 2000 with the goal to improve client satisfaction in the delivery of the Government of Canada's key services to the public. Three Crown corporations won an award for excellence in service improvement. They are Canada Deposit Insurance Corporation, Canada Mortgage and Housing Corporation, and Canada Post Corporation.

Outstanding teamwork was also recognized in the case of two Crown corporations, Export Development Canada and the Canadian Commercial Corporation, each of which won an award of excellence in electronic client relationship management.

Exhibit 4: Parent Crown Corporations Grouped by Ministerial Portfolio
(as at July 31, 2007)

Display fulls size graphic

1. The Cape Breton Growth Fund Corporation reverted to a wholly owned subsidiary of the Enterprise Cape Breton Corporation by Order in Council (P.C. 2007-0951) on June 7, 2007.

2. The Corporation for the Mitigation of Mackenzie Gas Project Impacts was created by the Mackenzie Gas Project Impacts Act that came into force on November 10, 2006, by Order in Council (P.C. 2006-1273).

3. Old Port of Montréal Corporation Inc., a wholly owned subsidiary of the Canada Lands Company Limited, has been directed by Order in Council (P.C. 1987-86) to report as if it were a parent Crown corporation.

4. Parc Downsview Park Inc., a wholly owned subsidiary of the Canada Lands Company Limited, has been directed by Order in Council (P.C. 2003-1304) to report as if it were a parent Crown corporation.

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